Opinion
3203/08.
March 19, 2010.
Dan Schiavetta, Jr., Esq., Murphy Higgins, LLP, Attorneys for Plaintiffs, New Rochelle, NY.
Rippi Gill, Esq., Meltio Adolfsen, P.C., Attorneys for Defendants, Zurich American Insurance Company and Zurich North American, New York, NY.
Jason T. Katz, Esq., Lewis Johs Avallone Aviles, LLP, Attorneys for Defendant, Collins Building Services, Inc., Melville, NY.
The following papers have been read on this motion:
Notice of Motion, dated 11-2-09 ..................... 1 Notice of Cross Motion, dated 1-20-10 ............... 2 Memorandum of Law in Opposition to Plaintiff's Motion And in Support of Cross-Motion, dated 1-20-10 ...... 3 Affirmation in Reply and in Opposition to Cross Motion, Dated, 2-25-10 ................................. 5 Reply Affirmation, dated 3-3-10 ..................... 4
This motion by the plaintiff's pursuant to CPLR 3212 and CPLR 3001 for summary judgment declaring that plaintiff The Chase Manhattan Bank, N.A., a National Banking Association ("Chase") is entitled to coverage as an additional insured on a certain insurance policy issued to defendant Collins Building Services, Inc. ("Collins") by defendants Zurich American Insurance Company and Zurich North America (jointly, "Zurich"), and ordering Zurich to reimburse plaintiff Liberty Mutual Insurance Company ("Liberty Mutual") for the costs of defending a certain personal injury action brought by defendant Austin David Dias against Chase, is denied.
The cross motion by Zurich pursuant to CPLR 3212 for summary judgment declaring that Zurich has no obligation to defend or indemnify Chase in connection with the Dias action is granted.
This is an insurance coverage declaratory judgment action. In all material respects, the facts of the case are undisputed.
Chase hired Collins to provide janitorial services at its premises at One Chase Manhattan Plaza in New York County, New York. They had a written contract setting forth the terms of their agreement, effective April 1, 2000, with a five year term. Among other things, the contract provided that "This Agreement may be extended by mutual consent of both parties in writing." Contract, 1.4.2. Collins was to provide insurance protecting both it and Chase from "any and all claims" made during the term of the Agreement. Contract, 14.1. There also was a merger clause, stating that the Agreement may be amended only by written agreement signed by both parties.
Subsequent to the expiration of the term at the end of March, 2005, Collins remained on the premises, continued to perform janitorial services, and was paid by Chase for those services.
On December 16, 2005, while Collins was still providing its services, Dias allegedly slipped and fell at the premises, the result of water on the floor, causing injury. A security guard at the premises, who was working either for Chase or for a private security contractor, saw what had happened and went to Dias's aid. By summons and complaint filed September 6, 2006, Dias commenced a personal injury action against Chase.
Collins had a commercial general liability policy from Zurich that was in effect at the time of the accident. Under an endorsement entitled, "Additional Insured — Designated Person or Organization" the following was added under "Name of Person or Organization": "ANY PERSON OR ORGANIZATION AS REQUIED [sic] BY A WRITTEN CONTRACT."
Chase's liability carrier was Liberty Mutual. By letter dated October 11, 2006, one of Liberty Mutual's claims managers, Michael J. Benedetti, wrote to Collins and informed it of the Dias claim, stating the date of loss as December 16, 2005, but providing no information as to when Chase or Liberty Mutual has first learned of the claim. In his letter, Benedetti stated that Liberty Mutual's investigation revealed that Collins "may owe" Liberty Mutual's insured, Chase, a defense and indemnity for the claim, and was thus placing Collins on notice of the loss.
Benedetti wrote to Collins again on October 30, citing section 14.1 of the Chase-Collins contract and formally tendering the claim to Collins.
Collins forwarded the October 11 letter to Zurich on October 18, and Zurich received it on October 20, 2006. On November 17, 2006 a claims case manager for Zurich, Christina Mirkovic, wrote two letters to Benedetti. One stated that several messages had been left for Benedetti, but that there had been no response. She requested the complete Liberty Mutual file so that Zurich could review the tender of the claim, noted as being October 11, 2006. Mirkovic also stated that Zurich was reserving its right to disclaim coverage given the date of loss in December, 2005 and the date of Benedetti's initial letter to Collins of October 11, 2006.
The second letter was a formal notice from Zurich denying the tender because the loss was not reported timely. In this letter Mirkovic cited relevant portions of the Zurich policy regarding the insured's duties, and stated that Zurich had first received notice of the Dias claim on October 20, 2006, when the date of the loss was December 16, 2005. Liberty Mutual provided a defense to Chase for the Dias claim.
Chase subsequently impleaded Collins in a third-party action, by third-party summons and complaint dated July 30, 2007.
Both Chase and Collins ultimately moved for summary judgment. By order dated October 16, 2008 the Court (Spinola, J.) dismissed the plaintiff's action. There is no indication that an appeal from that order was taken. Consequently, the present matter concerns the costs of the successful defense of the Dias law suit.
Chase and Zurich now move for summary judgment.
The Court agrees with Zurich that Chase did not enjoy the status of an additional insured under the Zurich policy, and for that reason no coverage exists.
In order for a party to enjoy such status, it must be able to point to a clear policy provision. That exists here. The Zurich policy contains the blanket provision that if such coverage was required under a written contract with Collins, its direct insured, coverage would exist for the demanding party. Therefore, if the contract between Chase and Collins had been extended in writing, as they had agreed could be done, there would be no doubt about Chase's status as an additional insured under the Zurich policy. However, the policy clearly requires a written agreement, and that requirement is clear and unambiguous. See generally, Sanabria v American Home Assur. Co., 68 NY2d 866 (1986); BassukBros., Inc. v Utica First Insur. Co., 1 AD3d 470 (2d Dept. 2003); see also, R/S Assoc. v Job Dev. Auth., 98 NY2d 29 (2002); W.W.W. Assoc. v Giancontieri, 77 NY2d 157 (1990). A court may not disregard clear policy language to find an ambiguity where none exists. Bassuk Bros., Inc. v Utica First Insur. Co., 1 AD3d at 471; Acorn Ponds v Harford Ins. Co., 105 AD2d 723 (2d Dept. 1984).
In effect, Chase argues that because it and Collins continued their relationship beyond the expiration date and through the time of the underlying incident, it qualifies as an additional insured. In support of this contention it cites Curreri v Heritage Property Investment Trust, 48 AD3d 505 (2d Dept. 2008). However, a careful reading of that case does not support the proposition that a written contract existed by dint of the parties' course of conduct; rather, the Curreri court stated that, "despite the fact that the original contract had expired, their conduct evidenced their mutual assent to a new contract embracing the same provisions and terms as their prior contract." (Emphasis supplied.) In other words, this was not a de facto continuation of the old contract; it was a new one.
This is not just a "fine distinction", as Chase's counsel argues. In simple terms, if it's a new contract, it can't be the old one. In the case at bar, only the old one was in writing, and a written contract was required before Zurich was obligated to provide coverage. See, National Abatement Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 33 AD3d 570 (1st Dept. 2006); see also, Rodless Properties, LP v Westchester Fire Ins. Co., 40 AD3d 253 (1st Dept. 2007). The parties' course of conduct may mean that as between Chase and Collins, the rights and obligations were identical, but even if so that does not alter the language of Zurich's separate policy, and that policy required a written contract. There wasn't one.
The Court notes that while this may seem harsh, it is just as easy to argue that it is reasonable as a business matter. An insurance carrier may want to insist on a clearly enforceable writing before coverage may be said to exist because an insurer is entitled to know what risks or parties it is covering and a "course of conduct" extension may not always be clear. It is possible that one party to the extension may deny that it was exactly the same agreement, and this could require a ruling from a court as to whether an extension was in effect, and under what terms. The fact that parties continue to deal with one another after the formal contract has expired does not necessarily mean that all terms continue to apply. Twitchell v Town of Pittsford, 106 AD2d 903 (4th Dept. 1984), affd 66 NY2d 824 (1985). Thus, for the sake of certainty as to its exposure, a carrier's rigid requirement of a writing cannot be said to be unreasonable.
In addition, the Court finds that even if Chase were an additional insured, Zurich was entitled under its policy to deny coverage for failure of Chase to provide timely notice of the claim. In its reply and in opposition to Zurich's cross motion, Chase concedes for purposes of these motions that its notice to Zurich was late; this Court would have so found in any event. However, Chase contends that Zurich's disclaimer was late. The Court disagrees. Even if one were to discount Mirkovic's attempts to contact Benedetti prior to her response to his initial letter, the delay in disclaiming coverage was 27 days and is reasonable as a matter of law. See, Steinberg v Hermitage Ins. Co., 26 AD3d 426 (2d Dept. 2006) [28 days]; see also, Public Service Mut. Ins. Co. v Harlen Housing Assocs., 7 AD3d 421 (1st Dept. 2004); Kramer v Governmental Employees Insurance Co., 269 AD2d 567 (2d Dept. 2000). The disclaimer was thus effective.
Accordingly, the motion is denied, the cross motion is granted, and the Court declares that Zurich had no obligation to defend or indemnify Chase with regard to the Dias claim and action resulting from the occurrence at Chase's property of December 16, 2005.
This constitutes the Decision and Order of the Court.