Wausau Underwriters Ins. Co. v. Old Republic Gen. Ins. Co., 14–CV–3019 (JMF).

• Decision Date: 07 August 2015
• Docket Number: No. 14–CV–3019 (JMF).,14–CV–3019 (JMF).
• Citation: 122 F.Supp.3d 44
• Parties: WAUSAU UNDERWRITERS INSURANCE COMPANY, Plaintiff, v. OLD REPUBLIC GENERAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of New York

122 F.Supp.3d 44

WAUSAU UNDERWRITERS INSURANCE COMPANY, Plaintiff,

v.OLD REPUBLIC GENERAL INSURANCE COMPANY, Defendant.

No. 14–CV–3019 (JMF).

United States District Court, S.D. New York.

Signed Aug. 7, 2015.

Marshall Todd Potashner, Spencer Adam Marr, Jaffe & Asher LLP, New York, NY, for Petitioner.

Kenneth Robert Maguire, Katherine Mary Maguire, Ken Maguire & Associates PLLC, Garden City, NY, for Respondent.

OPINION AND ORDER

JESSE M. FURMAN, District Judge:

This case involves a dispute between two insurance companies over which is obligated to defend and indemnify the defendants in another lawsuit now pending in New York State Supreme Court for the County of New York, Burawski v. 170 Broadway NYC LP, et al., Index No. 154637/13 (the "Burawski action"). Specifically, Plaintiff Wausau Underwriters Insurance Company ("Wausau") brings suit against Defendant Old Republic General Insurance Company ("Old Republic") pursuant to Title 28, United States Code Section 1332 (and, presumably, Section 2201), seeking a declaratory judgment that Old Republic is obligated to defend and indemnify certain defendants in the Burawski action. Wausau now moves for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons that follow, the motion is granted.

BACKGROUND

On October 19, 2012, 170 Broadway NYC LP ("170 Broadway") entered into a construction management agreement ("the CMA") with McGowan Builders Inc. ("McGowan"), pursuant to which McGowan agreed to serve as the construction manager for a hotel being built at 170 Broadway in Manhattan, New York. (Decl. Supp. Mot. Summ. J. (Docket No. 44) ("Abraham Decl."), Ex. 1 ("CMA")). The CMA required McGowan to obtain a general liability insurance policy listing 170 Broadway and its affiliates as "additional insureds." (CMA at 35 ). McGowan apparently satisfied that requirement through a one-year general liability policy that it had already obtained in August 2012, with an effective date of August 12, 2012, from Defendant Old Republic. (Decl. Supp. Mot. Summ. J. (Docket No. 46) ("Potashner Decl."), Ex. 15 ("Old Republic Policy")). Separately, 170 Broadway maintained its own general liability protection in the form of a policy it obtained from Plaintiff Wausau. (Deck Supp. Mot. Summ. J. (Docket No. 48) ("George Deck"), Ex. 7).

In its capacity as construction manager, McGowan was responsible for overseeing several aspects of the project, including, most relevant here, hiring subcontractors and creating and maintaining a "site-specific safety plan." (Def.'s Resp. Pl.'s Statement Undisputed Facts (Docket No. 55) ("Def.'s 56.1 Statement") ¶¶ 34, 36). In connection with that role, on October 23, 2012, Adam Burawski, an employee of Tyco Integrated Security LLC ("Tyco"), came to the 170 Broadway site to meet with representatives of McGowan about providing security services for the project. (Def.'s 56.1 Statement ¶¶ 20–21). Before the meeting began, however, Burawski allegedly tripped and fell entering a bathroom, and sustained a serious injury. (Id. ¶ 19; George Deck, Ex. 4 ¶ 25).

In May 2013, Burawski filed suit in New York State Supreme Court against 170 Broadway and two of its affiliates, Carlyle Development Group LLC and Carlyle Partners II, LP, (collectively the "Broadway Defendants"). (George Deck, Ex. 3). Although it is unclear from the record exactly when the Broadway Defendants learned about the possibility of a lawsuit, it appears Burawski's attorney provided notice of a possible claim as early as February 2013. (McCune Aff. (Docket No. 51), Ex. 4 at 2). In any case, on June 26, 2013, the Broadway Defendants sent McGowan a letter tendering their defenses to the Burawski action and demanding indemnification under the Old Republic policy. (Def.'s 56.1 Statement ¶ 6). Old Republic was notified of the suit, in turn, between July 1, 2013 and August 2, 2013, when Wausau sent McGowan a letter formally requesting that it notify its insurer of the claim against the Broadway Defendants and indicating a belief that the claim fell within the additional insured coverage required by the CMA. (Id. ¶ 9; Potashner Decl., Ex. 17 at 22, 43, 45; see id., Ex. 8).

On August 29, 2013, Old Republic notified Wausau that the claim did not fall within the additional insured coverage in the Old Republic Policy and, therefore, that it would not defend or indemnify the Broadway Defendants pursuant to the policy covering McGowan. (George Decl., Ex. 9). In the letter, Old Republic expressly reserved the right to interpose additional reasons for denying coverage in the future. (Id.; see Def.'s 56.1 Statement ¶ ¶ 14–15). Shortly thereafter, on September 4, 2013, Burawski filed an amended complaint also naming McGowan as a defendant. (George Deck, Ex. 4). In April 2014, Wausau commenced this lawsuit, seeking a declaration that Old Republic is obligated to provide the Broadway Defendants with a defense and with indemnification. (Docket No. 2). It now moves for summary judgment.

LEGAL STANDARDS

Summary judgment is appropriate where the admissible evidence and the pleadings demonstrate "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a) ; see also Johnson v. Killian, 680 F.3d 234, 236 (2d Cir.2012) (per curiam). An issue of fact qualifies as genuine if the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; accord Roe v. City of Waterbury, 542 F.3d 31, 35 (2d Cir.2008). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "In moving for summary judgment against a party who will bear the ultimate burden of proof at trial, the movant's burden will be satisfied if he can point to an absence of evidence to support an essential element of the nonmoving party's claim." Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir.1995) (citing Celotex, 477 U.S. at 322–23, 106 S.Ct. 2548 ).

In ruling on a motion for summary judgment, all evidence must be viewed "in the light most favorable to the non-moving party," Overton v. N.Y. State Div. of Military & Naval Affs., 373 F.3d 83, 89 (2d Cir.2004), and the Court must "resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought," Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc., 391 F.3d 77, 83 (2d Cir.2004). To defeat a motion for summary judgment, the non-moving party must advance more than a "scintilla of evidence," Anderson, 477 U.S. at 252, 106 S.Ct. 2505, and demonstrate more than "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The non-moving party "cannot defeat the motion by relying on the allegations in [its] pleading or on conclusory statements, or on mere assertions that affidavits supporting the motion are not credible." Gottlieb v. Cnty. of Orange, 84 F.3d 511, 518 (2d Cir.1996) (internal citation omitted).

DISCUSSION

As noted, Wausau claims that Old Republic has a duty to defend and indemnify the Broadway Defendants in the Burawski action. Old Republic denies that it owes either duty. In addition, Old Republic contends that, even if it otherwise would owe these duties, it is excused from performance because the Broadway Defendants failed to provide timely notice of the potential lawsuit. The Court will considers these arguments in turn.

A. Old Republic's Duty To Defend

The Court begins with Wausau's argument that Old Republic is obligated to defend the Broadway Defendants in the Burawski action. (Mem. Law Supp. Pl. Wausau Underwriters Ins. Co.'s Mot. Summ. J. (Docket No. 45) ("Pl.'s Mem.") 4–11). "[A]n insurer's duty to defend presents a question of law appropriate for resolution by summary judgment." Wausau Underwriters Ins. Co. v. QBE Ins. Corp., 496 F.Supp.2d 357, 360 (S.D.N.Y.2007) (citing Avondale Indus., Inc. v. Travelers Indent. Co., 887 F.2d 1200, 1204 (2d Cir.1989) ). Under New York Law—which the parties agree applies, see Cargill, Inc. v. Charles Kowsky Res., Inc., 949 F.2d 51, 55 (2d Cir.1991) —an "insurer's duty to defend its insured is exceedingly broad." Regal Const. Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 15 N.Y.3d 34, 37, 904 N.Y.S.2d 338, 930 N.E.2d 259 (2010) (internal quotation marks omitted). An insurer must defend its insured whenever "the allegations of the complaint suggest a reasonable possibility of coverage." Euchner–USA, Inc. v. Hartford Cas. Ins. Co., 754 F.3d 136, 141 (2d Cir.2014) (internal quotation marks omitted); see also Fitzpatrick v. Am. Honda Motor Co., 78 N.Y.2d 61, 65, 571 N.Y.S.2d 672, 575 N.E.2d 90 (1991) ("[A]n insurer may be contractually bound to defend even though it may not ultimately be bound to pay, either because its insured is not factually or legally liable or because the occurrence is later proven to be outside the policy's coverage."). And even where a complaint itself does not suggest the possibility of coverage, the insurer nevertheless has a duty to defend if facts outside the complaint suggest that the claim is within the scope of the relevant insurance policy. See Fitzpatrick, 78 N.Y.2d at 66, 571 N.Y.S.2d 672, 575 N.E.2d 90. In both cases, "[a]ny doubt as to whether the allegations state a claim within the coverage of the policy must be resolved in favor of the insured and against the carrier." Euchner–USA, 754 F.3d at 141 (internal quotation marks omitted). Moreover, an insurer's duty to defend is the same regardless of whether the defendant is a named insured in the policy or is instead an additional insured. That is because "additional insured" is " ‘a recognized term in insurance contracts, and the well-understood meaning of...