Wesco Ins. Co. v. Travelers Prop. Cas. Co. of Am.

• Court: New York Supreme Court
• Writing for the Court: LUCY BILLINGS, J.S.C.
• Citation: Wesco Ins. Co. v. Travelers Prop. Cas. Co. of Am., 2019 NY Slip Op 33619(U), Index No. 150732/2019 (N.Y. Sup. Ct. Dec 06, 2019)
• Decision Date: 06 December 2019
• Docket Number: Index No. 150732/2019
• Parties: WESCO INSURANCE COMPANY, Plaintiff v. TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, CAPITAL ONE, N.A., and CAPITAL ONE FINANCIAL CORP., Defendants

2019 NY Slip Op 33619(U)

WESCO INSURANCE COMPANY, Plaintiff v. TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, CAPITAL ONE, N.A.,and CAPITAL ONE FINANCIAL CORP., Defendants

Index No. 150732/2019

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 46

RECEIVED: December 11, 2019

December 6, 2019

NYSCEF DOC. NO. 50

DECISION AND ORDER

APPEARANCES:

For Plaintiff

Max W. Gershweir Esq.

Kennedys CMK LLP

570 Lexington Avenue, New York, NY 10022

For Defendant

Meg R. Reid Esq. and Brent Usery Esq.

Keane & Associates

485 Lexingon Avenue, New York, NY 10017

LUCY BILLINGS, J.S.C.:

I. RELIEF SOUGHT

Plaintiff Wesco Insurance Company moves for summary judgment against defendant Travelers Property Casualty Company of America and for a default judgment against defendant Capital One Financial Corp. C.P.L.R. §§ 3212(b), 3215. Wesco seeks a declaratory judgment that Travelers is obligated to defend and indemnify Wesco's insured, Waldman Management Corp., in an underlying personal injury action, Irving v. Capital One Bank, Index Number 100546/2016 (Sup. Ct. Richmond Co.), under an insurance policy that Travelers issued to its insured, Capital One Financial Corp., which named Waldman Management Corp. an additional insured. C.P.L.R. § 3001. Consequently, Wesco seeks reimbursement for Wesco's reasonable expenses in defending Waldman Management up to now. Wesco also seeks a declaratory judgment that Wesco owes no duty to defend and indemnify Travelers' insured, Capital One, in the underlying action. Id. Finally, Wesco seeks a declaratory judgment that the coverage of Waldman Management under the Travelers policy is primary over the coverage of Waldman Management under its own policy issued by Wesco and that, once Travelers is defending both Waldman Management and Capital One, the latter is barred from claiming against the former. Id. No party opposes this final declaratory relief. Only Travelers opposes the other relief Wesco seeks against Travelers. Travelers also cross-moves for summary judgment against Wesco, C.P.L.R. § 3212(b), seeking a declaratory judgment that Travelers owes no duty to defend or indemnify Waldman Management in the underlying personal injury action. C.P.L.R. § 3001.

II. UNDISPUTED FACTS

Aurelius Irving, the plaintiff on the underlying action, claims injury from falling on ice on the sidewalk outside Capital One's bank in Waldman Management's shopping center on Staten Island. Since Wesco presents the lease between the shopping center owner, Waldman Management, and the tenant of a unit in the shopping center, Capital One, even if no witness authenticates the lease on personal knowledge, Travelers may rely on the leaseto support Travelers' cross-motion. E.g., Mitchell v. Calle, 90 A.D.3d 584, 585 (1st Dep't 2011); Ayala v. Douglas, 57 A.D.3d 266, 267 (1st Dep't 2008); Navedo v. Jaime, 32 A.D.3d 788, 789-90 (1st Dep't 2006); Thompson v. Abbasi, 15 A.D.3d 95, 97 (1st Dep't 2005). See Joseph v. Board of Educ. of the City of N.Y., 91 A.D.3d 528, 529 (1st Dep't 2012); Dembele v. Cambisaca, 59 A.D.3d 352, 352 (1st Dep't 2009); Hernandez v. Almanzar, 32 A.D.3d 360, 361 (1st Dep't 2006).

A. The Lease

The lease defines "all walkways, sidewalks, driveways, stairways and parking lots which are part of the Shopping Center," including the sidewalks abutting the unit leased to Capital One, as "Common Areas." Aff. of Max W. Gershweir, Ex. B § 1.6. The sidewalks are not part of the "Demised Premises," which are limited to "the approximately 2,200 square feet . . . of the ground floor space . . . in the Building in the Shopping Center." Id.

Under the lease, the owner Waldman Management retained exclusive responsibility for "removal of . . . snow, ice . . . from the Common Areas," id. § 13.1, and otherwise to "maintain . . . the Common Areas, including the sidewalks in front of and behind the Demised Premises." Id. § 14.2. In fact, the court in the underlying action found Waldman Management responsible under the lease for maintenance of the sidewalk on which Irving fell, found a factual issue whether Waldman Management was liable for Irving's injury, and therefore denied Waldman Management's motionfor summary judgment dismissing Irving's claims against Waldman Management. The court in turn granted Capital One's motion for summary judgment dismissing all claims against Capital One, finding it not responsible for the icy sidewalk. The court did not determine whether the sidewalk was a public sidewalk owned by the City of New York or a private sidewalk within the shopping center owned by Waldman Management, but simply noted that, even if the lease did not expressly impose a duty on Waldman Management to remove the ice from the sidewalk and otherwise maintain it, New York City Administrative Code § 7-210(a) imposed a comparable duty.

Finally, the lease obligated Capital One to procure commercial general liability insurance naming Waldman Management an additional insured, with which the tenant complied. A reciprocal provision obligated Waldman Management to procure insurance naming Capital One an additional insured. The lease obligates Capital One to indemnify Waldman Management, however, only for lawsuits and expenses, including reasonable attorneys' fees, in connection with bodily injury either caused by the tenant's negligence or arising from its failure to perform its obligations under the lease. Neither provision, the tenant's negligence nor its failure to perform its lease obligations, applies here.

B. Travelers' Insurance Policy

Wesco presents a certified copy of the insurance policy that Travelers issued to its insured, adding Waldman Management as anadditional insured, which Travelers does not dispute and on which it relies to support its cross-motion. The endorsement to the policy that adds the lessor of premises as an additional insured designates the premises covered as the premises leased to Capital One. The additional insured is any "lessor of premises with whom you have agreed in a written contract executed prior to loss to name as an additional insured, . . . but only with respect to liability arising out of that part of the premises leased to you." Gershweir Aff. Ex. A, at CGD1311095.

III. THE MOTION AND CROSS-MOTION FOR SUMMARY JUDGMENT

Parties to a commercial lease are free to allocate the risk of loss to third parties through insurance. Great N. Ins. Co. v. Interior Constr. Corp., 7 N.Y.3d 412, 418-19 (2006); Hogeland v. Sibley, Lindsay & Curr Co., 42 N.Y.2d 153, 157, 160-61 (1977); Reynoso v. Global Mgt. Enters., LLC, 154 A.D.3d 446, 447 (1st Dep't 2017); Berger v. 292 Pader Inc., 84 A.D.3d 461, 462 (1st Dep't 2011). Although there are limits on the extent to which a party may contract away liability and insulate itself from damages caused by its own culpable conduct, Abacus Fed. Sav. Bank v. ADT Sec. Servs., Inc., 18 N.Y.3d 675, 681 (2012); Sommer v. Federal Signal Corp., 79 N.Y.2d 540, 554 (1992), a contractual provision that requires one party to insure another is distinct from a provision that exempts a party from liability. Abacus Fed. Sav. Bank v. ADT Sec. Servs., Inc., 18 N.Y.3d at 681; Board of Educ., Union Free School Dist. No. 3, Town of Brookhaven v. Valden Assoc., 46 N.Y.2d 653, 656-57 (1979); Great Am. Ins. Co.of N.Y. v. Simplexarinnell LP, 60 A.D.3d 456, 456-57 (1st Dep't 2009).

New York General Obligations Law § 5-321 prohibits contracts that free an owner of real property from all liability to a tenant for the owner's own negligence, leaving the tenant with no recourse for losses incurred from the owner's acts or omissions. 159 MP Corp. v. Redbridge Bedford, LLC, 33 N.Y.3d 353, 361 (2019); Hogeland v. Sibley, Lindsay & Curr Co., 42 N.Y.2d at 160-61; Munsey v. Sindone, 147 A.D.3d 687, 688 (1st Dep't 2017); Berger v. 292 Pader Inc., 84 A.D.3d at 462. The insurance procurement provisions in the lease here, however, do not exempt the owner from liability or contract away its liability for its own culpable conduct in violation of General Obligations Law § 5-321, but permissibly require each party to obtain insurance and assign the risk of loss from any culpable conduct to the parties' respective insurers. Great N. Ins. Co. v. Interior Constr. Corp., 7 N.Y.3d at 418-19; Hogeland v. Sibley, Lindsay & Curr Co., 42 N.Y.2d at 161; Berger v. 292 Pader Inc., 84 A.D.3d at 462; Insurance Co. of N. Am. v. Borsdorff Services, Inc., 225 A.D.2d 494, 494 (1st Dep't 1996). See Mahon v. David Ellis Real Estate, L.P., 165 A.D.3d 600, 601 (1st Dep't 2018). Since the parties' assignment of their risk of loss to their respective insurers provided Capital One an avenue for recovery through the tenant's insurer, Travelers, General Obligations Law § 5-321 is not implicated, Great N. Ins. Co. v. Interior Constr. Corp., 7 N.Y.3d at 418-19; Hogeland v. Sibley, Lindsay & Curr Co., 42N.Y.2d at 161, especially since the lease imposes a mutual obligation on the parties to obtain insurance. See A to Z Applique Die Cutting v. 319 McKibbin St. Corp, 232 A.D.2d 512, 512-13 (2d Dep't 1996). Both parties to the lease agreed to procure insurance and seek compensation for their losses through their respective insurers.

The issue now is whether Wesco, which has defended its insured Waldman Management, may have recourse against Capital One's insurer, Travelers, and recover from the tenant's insurer payments for the owner's defense. Wesco insists that, even though Irving's injury did not arise from the ownership, maintenance, or use of the premises leased to Capital One, Waldman Management Corp.'s liability arises from its ownership of the leased premises, which is all that the Travelers policy's additional insured provisions require. If the sidewalk on which Irving fell was a private sidewalk, however, Waldman Management's liability does not arise from its ownership of the premises leased to Capital One, but arises from its ownership of the entire shopping center including its common areas, which include the sidewalk. If the sidewalk was a public...