RSUI Indemnity Company v. RCG Group (USA) et al
Filing
225
OPINION AND ORDER re: 213 CROSS MOTION for Summary Judgment filed by 968 Kingsmen LLC, 964 Associates LLC, RCG Group (USA), Reliance Construction, Ltd., East 51st Street Development Company, LLC, 209 MOTION for Summary Judgment filed by RSUI Ind emnity Company. For the foregoing reasons, RSUI's motion for summary judgment is granted. RCG's and E51's cross-motion for summary judgment is denied. RSUI is directed to submit to the Court, no later than August 6, 2012, a proposed form of judgment. (Signed by Judge Paul A. Engelmayer on 7/31/2012) (lmb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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RSUI INDEMNITY CO.,
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Plaintiff,
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-v:
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RCG GROUP (USA), et al.,
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Defendants.
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08 Civ. 7218 (PAE)
OPINION & ORDER
PAUL A. ENGELMAYER, District Judge:
On March 15, 2008, a tower crane constructing a residential high-rise development at 303
East 51st Street in Manhattan collapsed, killing seven people and injuring dozens more (the
“Accident”). This case involves one of the myriad insurance claims generated by the Accident.
Insurer RSUI Indemnity Company (“RSUI”) seeks a declaratory judgment that it owes no
coverage under a policy (the “Policy”) issued to defendants RCG Group, Reliance Construction,
Inc. (collectively, “RCG”) and East 51st Street Development Company and its affiliates (“E51”
and, with RCG, “defendants”) for their actions in relation to that crane collapse. RCG and E51
filed a negative-image counterclaim, seeking a declaratory judgment that the Policy covers any
liability they may incur as a result of the Accident. Discovery having concluded, the parties
cross-move for summary judgment on the question of whether the residential work exclusion in
the Policy bars coverage. For the following reasons, the Court concludes that it does.
Accordingly, RSUI’s motion is granted and RCG’s and E51’s cross-motion is denied.
[1]
I.
Undisputed Facts1
RCG is a Canadian company with expertise in building offices, retail and commercial
buildings, and condominiums. JSF ¶ 1. E51 is a New York corporation which owned the site,
303 East 51st Street (“303 East 51st”), at which the Accident occurred. Id. ¶ 2. RSUI is an
insurance company organized under the laws of New Hampshire, but with a principal place of
business in Atlanta, Georgia. Id. ¶ 5.
A.
E51 and RCG Agree to Pursue the Project at 303 East 51st
On or about March 21, 2007, E51 entered into an agreement with RCG, whereby RCG
would begin initial construction work at 303 East 51st. Id. ¶ 6. The agreement required RCG
and its subcontractors to procure and maintain liability insurance, with a minimum limit of $1
million per occurrence and $2 million in the aggregate, and to name E51 and its affiliates as
additional insureds. Id. ¶ 11. The agreement also required RCG and its contractors to procure
excess coverage with limits of $25 million per occurrence, with a minimum limit of $5 million
for subcontractors. Id. ¶ 12.
On January 28, 2008, RCG and East 51st signed another agreement, the construction
management agreement, pursuant to which RCG would, inter alia, provide supplies and services,
and supervise, direct, and control all aspects of the construction, including the hiring,
supervision, and control of all subcontractors on site. Id. ¶ 21.2 The construction management
1
The Court’s account of the underlying facts of this case is drawn from the parties’ Joint
Stipulation of Undisputed Facts (“JSF”) (Dkt. 196), which the Court requested the parties file in
lieu of a Local Rule 56.1 Statement. The Court thanks counsel for their professionalism,
diligence, and cooperation, as reflected in their working together, after more than three years of
litigation, to develop such a thoroughgoing recitation of the facts.
2
RCG appears to dispute whether this agreement was ever enforceable. See, e.g., JSF ¶¶ 15–16.
Neither party, however, argues that whether the construction agreement is binding is dispositive
[2]
agreement also provided for RCG to obtain liability insurance for the project, naming E51 as an
additional insured. Id. ¶ 22. RCG ultimately obtained, on July 4, 2007 for a one-year period, a
primary commercial general liability policy from Interstate Fire and Casualty Company. Id. ¶¶
57–58. That policy included an “additional insured” endorsement, providing coverage for “[a]ny
person or organization for whom you are performing operations when you and such person or
organization have agreed in writing in a contract or agreement that such person or organization
be added as an additional insured on your policy.” Id. ¶ 60. E51 was thus included as an
additional insured on RCG’s primary policy.
B.
RSUI Negotiates with RCG to Provide Insurance, and the Policy’s
“Residential Work” Exclusion
In March 2006, RSUI received, through its insurance broker, an invitation to provide an
excess liability coverage quote to RCG’s broker. Id. ¶ 33. Throughout the spring of 2006, RSUI
and RCG, through their respective broker intermediaries, negotiated the terms of the proposed
insurance. Id. ¶¶ 34–42.3 At the end of those negotiations, RSUI issued a commercial excess
liability policy to RCG for the policy period of July 4, 2006 to July 4, 2007. Id. ¶ 44. On or
about July 10, 2006, RSUI issued to RCG a binder for the 2006 to 2007 policy. Id. ¶ 43. That
policy was subsequently renewed on July 3, 2007, for the July 4, 2007 to July 4, 2008 policy
year. Id. ¶ 56.
That policy provided a limit of liability in the amount of $19 million, excess of
underlying insurance of $1 million for each occurrence and $2 million aggregate. Id. ¶ 44.
of this motion; the Court, therefore, does not address that issue.
3
Because neither party relies on any statement made during those negotiations—relying instead
on the language of the resulting contract—the Court need not rehearse those negotiations at
length.
[3]
Important here, the binder incorporated in the policy included an attachment entitled “Exclusion
– Residential Work.” Id. ¶ 43. That exclusion provides:
This insurance does not apply to any liability arising out of your operations or
“your work” on any “residential project.”
“Residential Project” shall mean apartments, single and multi family dwellings,
townhouses, duplexes, condominiums, or cooperatives (including any project
converted for individual or collective resident ownership), “mixed-use buildings”
or any other place of domicile, and shall include appurtenant structures and
common areas.
“Mixed-use buildings” shall mean structures and improvements thereto, which
contain both residential units and commercial space.
“Your work” and “suit” shall be as defined in the “underlying insurance.”
However, this exclusion does not apply to your operations or “your work” that is
on or in commercial space in “mixed-use buildings.”
We shall have no duty or obligation to provide or pay for the investigation or
defense of any loss, cost, expense, claim or “suit” excluded by this endorsement.
Id. ¶ 46 (the “Residential Work Exclusion” or “Exclusion”). The Exclusion thus contains an
exception for “‘your work’ that is on or in commercial space in a ‘mixed-use building.’” Id. (the
“Exception”). In turn, the “underlying policy”—issued by Interstate—defined “your work” as
follows:
“Your work” means:
a. Work or operations performed by you or on your behalf; and
b. Materials, parts, or equipment furnished in connection with such work or
operations.
“Your work” includes:
a. Warranties or representations made at any time with respect to the fitness,
quality, durability, performance or use of “your work”; and
b. The providing or of failure to provide warnings or instruction.
[4]
Id. ¶ 77.
C.
The Construction Project
The construction management agreement between RCG and E51 states that E51 “desires
to have developed and designed and constructed” a “Project” comprised of four “Subprojects”:
(1) the “high-rise residential condominium building” at 303 East 51st combined with an adjacent
townhouse at 309 East 51st Street; (2) an adjacent loft condominium building at 964 Second
Avenue; (3) a number of adjacent two-story commercial spaces at 968 Second Avenue, 972
Second Avenue, 974 Second Avenue, and 976 Second Avenue; and (4) a renovation of a
townhouse at 304 East 52nd Street. Id. ¶ 101.
From the period before construction began to the date of the Accident, E51 retained a
number of professional consultants to prepare plans, drawings, and other specifications which
became incorporated into the arrangement between E51 and RCG. Id. ¶ 104. Many of these
drawings and plans were submitted to governmental agencies, including the New York City
Department of Buildings (“DOB”), for approval. Witnesses from both E51 and RCG have
testified—and those parties do not dispute—that the building was built in accordance with those
plans. Id. ¶¶ 106–09.
A central issue in this case is whether the primary building at issue—303 East 51st—was
solely residential, or contained commercial space as well, such that it is fairly described at
“mixed-use.”
303 East 51st has been generally described by several documents and role players as a
“mixed-use” building—i.e., containing both residential and commercial elements. Two letters
from the project’s architects, dated March 10, 2006 and June 18, 2007, both described it as a
“mixed-use” project. Id. ¶ 110. Similarly, an executive of E51 stated in an affidavit that “East
[5]
51st Street did not intend and was not constructing the building to be solely residential.” Id. ¶
111. However, other contemporaneous documents are in tension with a finding that the building
was “mixed-use.” For example, another E51 executive who executed a personal guaranty
agreement with RCG described the building in that letter agreement as a “residential” tower. Id.
¶ 112. Both E51 and RCG have filed documents in New York state court, in cases arising out of
the construction, which describe the building as a “residential” tower. Id. ¶¶ 113–14.
There are a number of specific areas of the building as to which the parties disagree on
the proper characterization, in particular, whether the area was intended for any commercial use.
First, the cellar. Witnesses from E51 testified in depositions that 303 East 51st was
designed and built to have commercial storage space in its cellar. Id. ¶ 115. An RCG witness,
however, testified that an architectural drawing from January 2008—not long before the
Accident—depicted the cellar as housing mechanical units and storage space for the use of the
building’s residents only—i.e., not commercially-available storage. Id. ¶ 116. Additionally, a
March 13, 2008 architectural application to the DOB—made only two days before the
Accident—identified the proposed use of the building’s cellar as “residential accessory storage
space” and “mechanical rooms, electrical rooms, compactor room, break room, bathroom, supers
office, and supers workshop.” Id. ¶ 158. Also on March 13, 2008, E51 submitted an “Offering
Plan” for 303 East 51st to the New York State Attorney General’s Office. Id. ¶ 159. That plan
states that the offeror would sell licenses to 89 storage bins in the cellar, “which License Owners
(other than Sponsor) must at all times be Unit Owners, or owners of units in Proposed
Condominiums or Rental Buildings.” Id. ¶ 168.
Second, the third floor. Two E51 witnesses and one RCG witness testified that, once the
commercial buildings on Second Avenue (directly to the west of 303 East 51st) were completed,
[6]
there were to be one or more “knock outs” or passageways constructed between that complex of
buildings and the third floor of 303 East 51st’s southwest side. Id. ¶¶ 117, 120–24. Indeed,
according to both R51 and RCG witnesses, the entire west side of the third floor of 303 East 51st
was built without walls or windows, so that these “knock outs” could be added. Id. ¶ 121.
Additionally, an RCG witness also testified that a portion of the third floor of 303 East 51st was
intended to house storage space for the commercial tenants of the new buildings to the west, on
Second Avenue. Id. ¶ 119. In contrast to this testimony from E51 and RCG witnesses, RSUI’s
expert testified that no architectural drawing submitted to or approved by DOB depicted access
ways between 303 East 51st and the adjacent commercial buildings. Id. ¶ 130. The March 13,
2008 application to DOB proposed the following uses for the third floor: “two class A
apartments, mechanical room.” Id. ¶ 158. The March 13, 2008 Offering Plan indicated that E51
reserved the right to connect 303 East 51st to “adjacent buildings,” but did not specify from
which floor such connection would be made, or identify whether any such connection would be
to commercial space or used for a commercial purpose. Id. ¶ 164.
Third, the ground floor. A number of documents generated during the construction
process, refer to a “storefront” on the ground floor of 303 East 51st. These documents include
(1) a budget spreadsheet generated by RCG; (2) a construction schedule; (3) a cost estimate,
drawing upon a budget report; and (4) architectural drawings dated January 25, 2008. Id. ¶¶
134–38. The March 13, 2008 Offering Plan described 303 East 51st as containing 181
residential units, and one commercial unit. Id. ¶ 160.
The parties also dispute whether the ground floor was to contain “community space.”
RCG and E51 witnesses have both testified that 303 East 51st was intended to have “community
[7]
space” on the building’s first floor. Id. ¶ 141.4 RCG’s witnesses testified that this area was
intended to be accessible not only by the building’s residents, but also by the general public, and
that it was to become a children’s center upon the building’s completion. Id. ¶¶ 142–43. The
March 13, 2008 DOB application described the ground floor’s proposed uses as “residential
lobby,” “mail room,” “electric closet,” and “community facility,” while the Offering Plan of the
same date describes a community facility “on the Ground Floor which may be used for any
lawful purpose.” Id. ¶¶ 158, 161.
D.
The Accident
Due to the building’s height, construction of 303 East 51st required a tower crane. Id. ¶
172. The crane was first used in January 2008, when construction surpassed the ninth floor; the
crane was, at that time, attached at the third and ninth floors on the building’s south side. Id. As
the building grew taller, the crane periodically was raised, or “jumped,” up the side of the
building. Id. ¶ 174. The tower crane was erected by Stroh Engineering Services, P.C., a
contractor hired by Joy, a subcontractor retained by RCG. Id. ¶ 175. The crane was operated
and “jumped” by Rapetti Rigging, another contractor retained by Joy. Id. ¶ 176.
Before March 15, 2008, the crane was attached to the building solely at the third and
ninth floors, and was stabilized there by a number of steel girders attached to the building, which
were in turn attached to a “collar” around the crane’s superstructure. Id. ¶ 177–78. On March
15, 2008, the crane was scheduled to be “jumped” from the 18th floor to the 23rd floor, and was
to make a new attachment point at the 18th floor of the building. Id. ¶ 176. No work was being
done that day on the crane’s third floor attachment point—the only work scheduled for that day
on the third floor was cleaning, constructing a temporary plywood table, and making a door. Id.
4
An E51 witness also claimed that part of the building’ second floor was to be included in the
community space. Id. ¶ 144.
[8]
¶ 182. While the crane was being “jumped,” it collapsed, killing seven people, injuring dozens
more, and causing many millions of dollars in property damage. Id. ¶ 179.
E.
Post-Accident Litigation
More than 50 tort or tort-related lawsuits have been filed in New York State court as a
result of the Accident, with the majority having been consolidated into one action under the
caption In re East 51st Street Crane Collapse Litigation. Id. ¶¶ 184–85. E51 and RCG are
named as defendants or third-party defendants in each of the cases. Id. ¶ 186. The general thrust
of the underlying actions is that defendants, including E51, RCG, Rapetti, and Stroh were
negligent in carrying out their duties to provide safe equipment, adequate safety devices, and a
safe work place. Id. ¶ 187. A number of the actions arise specifically out of the injuries of those
who survived, but were injured in, the Accident. See generally id. ¶¶ 189–204. Seven lawsuits
seek damages for wrongful death, asserting E51’s and RCG’s responsibility by virtue of their
ownership and/or management of the building site at the time of the Accident. Id. ¶¶ 205–07.
Another 34 lawsuits seek recompense for property damage suffered by those who lived and
worked near the construction site. Id. ¶ 215.
II.
Procedural History
On or about April 9, 2008, RCG’s counsel delivered a written notice letter to RSUI
detailing the crane collapse, and the resulting deaths, injuries, and property damage. Id. ¶ 235.
On or about May 6, 2008, RSUI delivered a responsive letter disclaiming coverage for all claims
and suits arising out of the Accident. Id. ¶ 237. In late August 2008, E51 similarly notified
RSUI of the Accident and resulting claims and suits resulting therefrom. Id. ¶ 239. On or about
[9]
September 22, 2008, RSUI replied to E51, as it had to RCG, disclaiming all coverage for the
Accident. Id. ¶ 240.5
On August 13, 2008, RSUI commenced this declaratory judgment action, seeking a
declaration of its rights and responsibilities vis a vis E51 and RCG arising out of the Accident.
Dkt. 1.6 On November 7, 2011, after the parties conducted approximately three years of
discovery, the Court held a conference to discuss the parties’ expressed desire to cross-move for
summary judgment on the issue of the Residential Work Exclusion. See Dkt. 189. On January
20, 2012, pursuant to the Court’s suggestion, the parties filed a 308-paragraph Joint Stipulation
of Facts for the purposes of resolving these cross-motions. See Dkt. 195. On February 17, 2012,
RSUI filed its motion. Dkt. 209–10. On March 16, 2012, E51 and RCG filed their cross-motion,
accompanied by a memorandum of law which both opposed RSUI’s motion and supported their
own. Dkt. 213–14. On March 30, 2012, RSUI filed a memorandum of law functioning as both a
reply in further support of its own motion, and an opposition to RCG and E51’s motion. Dkt.
216. On April 13, 2012, E51 and RCG filed a reply memorandum of law in further support of
their cross-motion. Dkt. 219.
III.
The Parties’ Arguments
In support of its motion, RSUI argues that the plain language of the Residential Work
Exclusion bars coverage because 303 East 51st, as it was being constructed at the time of the
Accident, was a purely residential structure. However, RSUI argues, even if the Court finds that
303 East 51st contained commercial or community space, it is, at best, a “mixed-use” building
5
This process has been repeated numerous times as both RCG and E51 have notified RSUI of
each new Accident-related lawsuit as it was filed. See id. ¶¶ 238, 240.
6
This case was initially assigned to the Hon. Colleen McMahon, and then to the Hon. Deborah
A. Batts. The case was reassigned to this Court on October 14, 2011. See Dkt. 187.
[10]
equally covered by the Exclusion, and the Exception to the Residential Work Exclusion—
permitting coverage for actions arising out of work done in commercial areas in mixed-use
buildings—does not apply in this case, because the tower crane was not used on any portion of
the building that may have been even arguably commercial.
E51 and RCG counter that the building was neither purely residential, nor “mixed-use”
for purposes of the Policy, because the Policy defined “mixed-use” as having both residential
and commercial space, whereas 303 East 51st had residential, commercial, and community space.
However, E51 and RCG argue, even if the Exclusion does apply in the first instance, the
Exception to the Exclusion is applicable, because the tower crane’s attachment to the building is
a central issue in the underlying tort cases, and one attachment point was on the building’s third
floor, in the portion which E51 and RCG claim was commercial space.7
IV.
Summary Judgment Standard
Summary judgment may be granted only where the submissions, taken together, “show []
that there is 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). A court faced with cross-motions for summary judgment,
7
The parties have used considerable portions of their briefs to spar about issues that are
collateral to the decision on this motion. First, the defendants argue that the observations of
RSUI’s expert witness, Dr. Bramel, should be disregarded because he was not an eyewitness to
the building’s construction; Dr. Bramel testified that 303 East 51st was purely residential. See
Defs.’ Br. 27–29. This dispute is irrelevant, however, because, for the reasons that follow, the
Court is unpersuaded by defendants’ arguments on the merits even disregarding Dr. Bramel’s
testimony and even assuming as true defendants’ contrary assertions that the building had both
“commercial space” and “community space.” Second, RSUI argues forcefully that 303 East 51st
could have been legally constructed only in conformance with the architectural drawings
submitted to DOB, and, because Dr. Bramel has testified that no drawings were submitted to
DOB reflecting either “commercial” or “community” space, the building was, therefore, purely
residential. See Pl.’s Br. 12–16. The Court, in ruling for RSUI, does not rely on that argument.
In the same vein, because RSUI has not sought to avoid coverage on the ground that RCG and
E51 were constructing the building in violation of applicable law, discussion of New York
building codes is, also, beside the point.
[11]
“need not grant judgment as a matter of law for one side or the other.” Lorterdan Props. at
Ramapo I, LLC v. Watchtower Bible & Tract Soc’y of N.Y., Inc., No. 11-cv-3656, 2012 U.S.
Dist. LEXIS 95693, at *37 (S.D.N.Y. July 9, 2012) (citing Pfizer, Inc. v. Stryker Corp., 348 F.
Supp. 2d 131, 140 (S.D.N.Y. 2004)) (internal quotation marks omitted). Each movant bears the
burden of demonstrating the absence of a material factual question; in making this determination,
the Court must view all facts “in the light most favorable” to the non-movant. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986); see also Holcomb v. Iona Coll., 521 F.3d 130, 132 (2d Cir.
2008). In undertaking this analysis, the Court “must evaluate each party’s motion on its own
merits, taking care in each instance to draw all reasonable inferences against the party whose
motion is under consideration.” Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir.
1993) (quoting Schwabenbauer v. Bd. of Ed., 667 F.2d 305, 313–14 (2d Cir. 1981) (internal
citations omitted)). “A party may not rely on mere speculation or conjecture as to the true nature
of the facts to overcome a motion for summary judgment,” because “conclusory allegations or
denials cannot by themselves create a genuine issue of material fact where none would otherwise
exist.” Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (citation omitted). Only disputes over
“facts that might affect the outcome of the suit under the governing law” will preclude a grant of
summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Additionally,
even where a motion for summary judgment is denied, the Court may “enter an order stating any
material fact . . . that is not genuinely in dispute and treating the fact as established in the case.”
Fed. R. Civ. P. 56(g); see also Pensioenfonds Metaal en Techniek v. Strategic DSRG, LLC, No.
09-cv-5644, 2011 U.S. Dist. LEXIS 9624, at *18 (S.D.N.Y. Jan. 24, 2011).
V.
Discussion
[12]
The parties’ cross-motions can be reduced to two primary issues: (1) is the Exclusion
applicable in the first instance—i.e., is the building solely residential or a “mixed-use” building
as defined in the Policy; and (2) if so, does the Exception to the Exclusion nonetheless apply to
permit coverage for E51 and RCG? These points are addressed, in order, after a review of
applicable New York insurance law.
A.
Principles of New York Insurance Law
Under New York law, “an insurance contract is interpreted to give effect to the intent of
the parties as expressed in the clear language of the contract.” Parks Real Estate Purchasing
Grp. v. St. Paul Fire & Marine Ins. Co., 472 F.3d 33, 42 (2d Cir. 2006); see also Vill. of Sylvan
Beach v. Travelers Indem. Co., 55 F.3d 114, 115 (2d Cir. 1995); St. Paul Fire & Marine Ins. Co.
v. Novus Int’l, Inc., No. 09-cv-1108, 2011 U.S. Dist. LEXIS 150317, at *23 (S.D.N.Y. Dec. 28,
2011). “[I]nsurance policies are read in light of ‘common speech’ and the reasonable
expectations of a businessperson.” Barney Greengrass, Inc. v. Lumbermens Mut. Cas. Co., 445
F. App’x 411, 414 (2d Cir. 2011) (summ. order) (quoting Belt Painting Corp. v. TIG Ins. Co.,
100 N.Y.2d 377, 383 (2003)); see also Ace Wire & Cable Co. v. Aetna Cas. & Sur. Co., 60
N.Y.2d 390, 398 (1983). “When the provisions are unambiguous and understandable, courts are
to enforce them as written.” Parks Real Estate Purchasing Grp., 472 F.3d at 42 (citing
Goldberger v. Paul Revere Life Ins. Co., 165 F.3d 180, 182 (2d Cir. 1999)); see also Essex Ins.
Co. v. Laruccia Constr., Inc., 71 A.D.3d 818, 819 (2d Dep’t 2010) (under New York law, courts
must give “unambiguous provisions of an insurance contract . . . their plain and ordinary
meaning”).
“The initial interpretation of a contract ‘is a matter of law for the court to decide.’” 10
Ellicott Square Court Corp. v. Mt. Valley Indem. Co., 634 F.3d 112, 119 n.8 (2d Cir. 2010)
[13]
(quoting Morgan Stanley Grp. Inc. v. New England Ins. Co., 225 F.3d 270, 275 (2d Cir. 2000));
see also White v. Cont’l Cas. Co., 9 N.Y.3d 264, 267 (2007). “Part of this threshold
interpretation is the question of whether the terms of the insurance contract are ambiguous.”
Parks Real Estate Purchasing Grp., 472 F.3d at 42 (citing Alexander & Alexander Servs., Inc. v.
These Certain Underwriters at Lloyd’s, 136 F.3d 82, 86 (2d Cir. 1998)).
“It is well settled that [a] contract is unambiguous if the language it uses has a definite
and precise meaning, unattended by danger of misconception in the purport of the [agreement]
itself, and concerning which there is no reasonable basis for a difference of opinion.” White, 9
N.Y.3d at 267 (citing Greenfield v. Philles Records, 98 N.Y.2d 562, 569 (2002)) (brackets in
original, additional citation and internal quotation marks omitted). Conversely, “[a]n ambiguity
exists where the terms of an insurance contract could suggest ‘more than one meaning when
viewed objectively by a reasonably intelligent person who has examined the context of the entire
integrated agreement and who is cognizant of the customs, practices, usages and terminology as
generally understood in the particular trade or business.’” Parks Real Estate Purchasing Grp.,
472 F.3d at 42 (quoting Lightfoot v. Union Carbide Corp., 110 F.3d 898, 906 (2d Cir. 1997))
(citation and additional internal quotation marks omitted); see also U.S. Licensing Assocs. v. Rob
Nelson Co., No. 11-cv-4517, 2012 U.S. Dist. LEXIS 58712, at *8 (S.D.N.Y. Apr. 26, 2012).
“[I]f the language of [an] insurance contract is ambiguous . . . the parties may submit
extrinsic evidence as an aid in construction, and the resolution of the ambiguity is for the trier of
fact.” State v. Home Indem. Co., 66 N.Y.2d 669, 671 (1985); see also Green Harbour
Homeowners’ Assn., Inc. v. Chicago Title Ins. Co., 74 A.D.3d 1655, 1658 (3d Dep’t 2010). If
the extrinsic evidence fails to cure the ambiguity, however, “the ambiguity . . . [must] be
resolved against the insurer which drafted the contract.” Home Indem. Co., 66 N.Y.2d at 671;
[14]
see also White, 9 N.Y.3d at 267 (citing United States Fid. & Guar. Co. v. Annunziata, 67 N.Y.2d
229, 232 (1986)); see also Woodhams v. Allstate Fire & Cas. Co., 748 F. Supp. 2d 211, 218
(S.D.N.Y. 2010); Hunt v. Ciminelli-Cowper Co., Inc., 93 A.D.3d 1152, 1154 (4th Dep’t 2012);
Appleby v. Chicago Title Ins. Co., 80 A.D.3d 546, 549 (2d Dep’t 2011); Tower Ins. Co. of N.Y. v.
Diaz, 58 A.D.3d 495, 496 (1st Dep’t 2009). This principle derives from the common law
doctrine of contra proferentem, which holds that, in the case of insurance contracts, “drawn as
they ordinarily are by the insurer,” Miller v. Cont’l Ins. Co., 40 N.Y.2d 675, 678 (1976), “it is the
insurance company which has the responsibility of making its intention clearly known.”
Stainless, Inc. v. Emp’rs Fire Ins. Co., 69 A.D.2d 27, 33 (1st Dep’t 1979).
Where, as here, an insurer “claims that an exclusion in the policy applies to an otherwise
covered loss,” the “insurer bears the burden of proof” to demonstrate that the exclusion applies.
Morgan Stanley Group, 225 F.3d at 276 n.1; see also MBIA Inc. v. Fed. Ins. Co., 652 F.3d 152,
158 (2d Cir. 2011); Bianchi v. Lorists’ Mut. Ins. Co., 422 F. App’x 56, 58 (2d Cir. 2011) (summ.
order) (citing Critchlow v. First UNUM Life Ins. Co. of Am., 378 F.3d 246, 256–57 (2d Cir.
2004)); Town of Massena v. Healthcare Underwriters Mut. Ins. Co., 98 N.Y.2d 435, 444 (2002)
(in context of insurer’s duty to defend, “[w]hen an exclusion clause is relied upon to deny
coverage, the burden rests upon the insurance company to demonstrate that the allegations of the
complaint can be interpreted only to exclude coverage”); Consol. Edison Co. of N.Y. v. Allstate
Ins. Co., 98 N.Y.2d 208, 220 (2002) (“Once coverage is established, the insurer bears the burden
of proving that an exclusion applies”). “[T]o ‘negate coverage by virtue of an exclusion, an
insurer must establish that the exclusion is stated in clear and unmistakable language, is subject
to no other reasonable interpretation, and applies in the particular case.’” Inc. Vill. of Cedarhurst
v. Hanover Ins. Co., 89 N.Y.2d 293, 298 (1996) (quoting Cont’l Cas. Co. v. Rapid-American
[15]
Corp., 80 N.Y.2d 640, 652 (1993)). “Policy exclusions ‘are not to be extended by interpretation
or implication, but are to be accorded a strict and narrow construction.’” Inc. Vill. of Cedarhurst,
89 N.Y.2d at 298 (quoting Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 311 (1984)); see
also Fed. Ins. Co. v. Int’l Bus. Machs. Corp., 18 N.Y.3d 642, 649 (2012).
However, where an insurer has shown that an exclusion applies, “‘[a]n insured must
demonstrate that an exception to an exclusion applies where coverage rests on the application of
such exception.’” CGS Indus. v. Charter Oak Fire Ins. Co., 777 F. Supp. 2d 454, 460 (E.D.N.Y.
2011) (quoting Monteleone v. Crow Constr. Co., 242 A.D.2d 135, 140 (1st Dep’t 1998)); see
also Bedford Affiliates v. Manheimer, 86 F. Supp. 2d 67, 75 (E.D.N.Y. 1999); State v.
Schenectady Hardware & Elec. Co., 223 A.D.2d 783, 784 (3d Dep’t 1996); State v. U.W. Marx,
Inc., 209 A.D.2d 784, 785 (3d Dep’t 1994); Longwood Cent. Sch. Dist. v. Commerce & Indus.
Ins. Co., No. 23402/09, 2012 N.Y. Misc. LEXIS 2690, at *11 (Sup. Ct. Nassau Cty. May 22,
2012); Sigma Contr. Corp. v. Everest Nat’l Ins. Co., 907 N.Y.S.2d 104, 2010 N.Y. Misc. LEXIS
405, at *27 (Sup. Ct. Kings Cty. Jan. 30, 2010); Martinez v. Colasanto Constr., Inc., 906
N.Y.S.2d 781, 2009 N.Y. Misc. LEXIS 3539, at *50 (Sup. Ct. Kings. Cty. Aug. 27, 2009); OTC
Int’l, Ltd. v. Underwriters at Lloyd’s of London Subscribing to Policy of Ins. No.
HN99ABXC255, 781 N.Y.S.2d 626, 2004 N.Y. Misc. LEXIS 49, at *3(Sup. Ct. Qns. Cty. Jan.
29, 2004); Travelers Ins. Co. v. Nory Constr. Co., 708 N.Y.S.2d 252, 255 (Sup. Ct. Monroe Cty.
Apr. 18, 2000).8
B.
Is the Exclusion Applicable?
8
The Court notes that earlier precedents of both this Court and the Second Circuit have held to
the contrary. See, e.g., New York v. Blank, 27 F.3d 783, 789 (2d Cir. 1994) (“where an exclusion
allows for an exception, the insurer bears the burden of showing that the exception to that
exclusion does not apply”); Town of Union v. Travelers Indem. Co., 906 F. Supp. 782, 787
(S.D.N.Y. 1995) (same) (citing Blank). Those precedents appear to have been overtaken by
subsequent developments in New York insurance law.
[16]
By way of review, the Exclusion provides that: “This insurance does not apply to any
liability arising out of your operations or ‘your work’ on any ‘residential project.’” “Residential
project,” in turn, is defined as: “apartments, single and multi family dwellings, townhouses,
duplexes, condominiums, or cooperatives (including any project converted for individual or
collective resident ownership), ‘mixed-use buildings’ or any other place of domicile, and shall
include appurtenant structures and common areas.” “Mixed-use buildings” is defined as
“structures and improvements thereto, which contain both residential units and commercial
space.”
RSUI argues that the Residential Work Exclusion in the Policy applies to deprive RCG
and E51 of coverage for liability arising out of the Accident. RCG and E51 argue that the
Exclusion does not apply, because the building (1) is not solely residential, and (2) is not
“mixed-use” as defined in the Exclusion, because it contains community space in addition to
residential space and commercial space. Based on the facts stipulated to by the parties, the Court
holds that the Exclusion applies, because, on those facts, the building is clearly “mixed-use” as
defined in the Exclusion.
The Court first addresses the portion of the Exclusion applicable to solely residential
buildings. There is sufficient evidence within the record to prevent a grant of summary judgment
to RSUI on that ground, because there are facts among those stipulated by the parties to
generating a triable issue as to whether the building was intended to, and was being constructed
to, contain some sort of commercial space. This evidence includes, but is not limited to: (1)
budget spreadsheets referring to “aluminum storefronts”; (2) a construction schedule describing
certain portions of the building as non-residential, and setting a timeframe for the construction of
storefronts; and (3) an architect’s drawings including details of storefronts. Thus, to the extent
[17]
that RSUI’s summary judgment motion argues that 303 East 51st was indisputably and wholly
residential, the motion is denied.
RSUI’s summary motion, however, is meritorious insofar as it contends that 303 East
51st was a “mixed-use” building under the definition provided in the Policy. E51 and RCG
counter that although a building containing residential and commercial uses is a “mixed-use”
building, a building that contains both of those uses and also community space is not a “mixeduse” building. That construction of this Policy term is quite unpersuasive.
“[T]he cardinal principle for the construction and interpretation of insurance contracts—
as with all contracts—is that the intentions of the parties should control. Unless otherwise
indicated, words should be given the meanings ordinarily ascribed to them and absurd results
should be avoided.” World Trade Ctr. Props., L.L.C. v. Hartford Fire Ins. Co., 345 F.3d 154,
184 (2d Cir. 2003), overruled in part on other grounds by Wachovia Bank, N.A. v. Schmidt, 546
U.S. 303 (2006).9 And, although exclusions are to be construed narrowly, and may not “be
extended by interpretation or implication,” Inc. Vill. of Cedarhurst, 89 N.Y.2d at 298, neither
may the Court disregard the plain language of the parties’ agreement to infer obstacles to
exclusion where none appear in the Policy. Cf. N.Y. Jur. 2d Insurance § 853 (“[I]n the process
of resolving ambiguities in favor of the insured, the court is not privileged to disregard or distort
language of a policy which is plain and unequivocal in order to find for an insured and is not
9
See also Gorman v. Consol. Edison Corp., 488 F.3d 586, 596 n.9 (2d Cir. 2007) (“canons of
construction forbid contractual interpretations that lead to absurd results”); Bank Julius Baer &
Co. v. Waxfield Ltd., 424 F.3d 278, 283 (2d Cir. 2005); Vector Capital Corp. v. Ness Techs. Inc.,
No. 11-cv-6259, 2012 U.S. Dist. LEXIS 36847, at *8–9 (S.D.N.Y. Mar. 16, 2012) (under New
York law, “a court should not interpret a contract in a manner that would be absurd,
commercially unreasonable, or contrary to the reasonable expectations of the parties”) (internal
quotation marks omitted); Bank of N.Y. Trust, N.A. v. Franklin Advisers, Inc., 674 F. Supp. 2d
458, 463–64 (S.D.N.Y. 2009) (“[A]n interpretation that gives a reasonable and effective meaning
to all of a contract is generally preferred to one that leaves a part unreasonable or of no effect”).
[18]
authorized to make a new contract for the parties, to disregard the evidence as expressed, or to
refine away terms of a contract expressed with sufficient clearness to convey the plain meaning
of the parties.”). Policy exclusions, like grants of coverage, are manifestations of the parties’
private negotiations and business judgment. Their form and breadth reflect the balance of risks
and benefits the parties achieved in those negotiations. Just as an insured’s purchase of
insurance coverage lays off certain risks, an insured’s assent to exclusions in that coverage is an
assumption of liability that the insured has bargained for. See XL Specialty Ins. Co. v. Level
Global Investors, L.P., No. 12-cv-1598, 2012 U.S. Dist. LEXIS 82164, at *64–65 (S.D.N.Y.
June 13, 2012) (citing, inter alia, Gluck v. Exec. Risk Indem., Inc., 680 F. Supp. 2d 406, 418
(E.D.N.Y. 2010)).
Even assuming the truth of all of defendants’ factual assertions—that the building
includes commercial and community space, in addition to residential space—the term “mixeduse” as defined in the Policy plainly describes 303 East 51st: it is, literally, a building which
“contain[s] both residential units and commercial space.”10 The plain language of the Policy is
not plausibly read any other way. Nor have RCG and E51 pointed to any evidence in the record
indicating that the parties (contrary to the clear definition of “mixed-use”) intended for this list to
be exclusive, i.e., to mean that a building was “mixed-use” only if it consisted exclusively of
residential units and commercial space. Rather, the only reasonable reading of this provision, “in
light of common speech,” Barney Greengrass, 445 F. App’x at 414, is that the Exclusion applies
10
If a building had a residential use and also community space, but no commercial use, it then
would not appear to qualify as “mixed-use” space as defined. However, RCG and R51 have not
made any such claim. They instead have argued, and adduced evidence, that the building
contained commercial space. Because the Court has denied one portion of RSUI’s motion for
summary judgment based on defendants’ sworn testimony that the building was to contain
commercial space, there would be a substantial argument that RCG and E51 would be estopped
from arguing on this alternative ground that the building was not a “mixed-use.” See, e.g.,
Republic of Ecuador v. Chevron Corp., 638 F.3d 384, 397–98 (2d Cir. 2011).
[19]
where a building has residential units and commercial units, regardless of whether or not spaces
in the building are also put to other uses.
Additionally, the Court finds inapposite or unpersuasive four cases cited by RCG and
E51 in support of their claim that the existence of “community” space makes the Exclusion
inapplicable. Defendants primarily rely on Bovis Lend Leave LMB Inc. v. Royal Surplus Lines
Ins. Co., 27 A.D.3d 84 (1st Dep’t 2005). There, the First Department held that a residential work
exclusion did not apply where the exclusion covered “apartments, single family and multi-family
dwellings, condominiums and townhouses,” but where the building was mixed-use, in that it
contained housing units and also units intended for other purposes, including a school. 27
A.D.3d at 93-94. Finding the exclusion inapplicable, the court explained:
“Mixed-use buildings” are not included in the exclusion’s list of the types of
buildings that constitute residential property. Indeed, only specific single-use
dwellings are included in the list, and it certainly is reasonable to interpret the
exclusion as inapplicable to mixed-use buildings.
Id. at 94.
Bovis is clearly distinguishable. Simply put, under the policy at issue, mixed-use
buildings fell outside the definition of residential property: The policy, in defining the residential
work exclusion, did not indicate that that exclusion applied where the building had mixed uses.
By contrast, here, both residential-only uses and mixed-uses are, separately, excluded. Bovis
does not shed light on the issue of whether a “mixed-use” exclusion defined to include buildings
with residential and commercial uses applies where additional uses are present. Put differently,
the defendants’ reading of the mixed-use exclusion here as containing an exhaustive list of uses
draws no support from Bovis, which did not even involve a mixed-use exclusion.
Similarly inapposite is QBE Ins. Co. v. ADJO Contr. Corp., 934 N.Y.S.2d 36, 2011 N.Y.
Misc. LEXIS 3973 (Sup. Ct. Nassau Cty. Apr. 5, 2011). The court there found a residential work
[20]
exclusion inapplicable to construction of an apartment complex because that project was not “a
single-family dwelling, a townhouse, a condominium, a co-operative, or a multi-track housing
development” as defined in the exclusion. Id. at *151. That case, however, is distinguishable
because the policy exclusion was for residential, not mixed, uses, and reasonably did not apply
where a use in question fell outside the types of types of residential property enumerated in the
list.
Defendants’ reliance on Aspen Ins. UK Ltd. v East Coast Pres. Co. LLC, 934 N.Y.S.2d
32, 2011 N.Y. Misc. LEXIS 3875 (Sup. Ct. Kings Cty. June 9, 2011) is also wide of the mark.
There, the court denied an insurer’s motion for summary judgment based on a residential work
exclusion, reasoning that it was an issue of fact whether the building under construction—a
nursing home—fit into one of the enumerated categories of “human dwellings.” Id. at *21. It
was, therefore, a factual question whether the construction at issue fit into any of the enumerated
categories. That situation is not present here, where it is undisputed that 303 East 51st contained
both attributes necessarily for it to qualify as “mixed-use” under the Policy, and the legal issue is
whether the presence of an additional uses disqualified the building from fitting that category.
Finally, the Court declines to follow Brend Contracting Corp. v. United Nat’l Ins. Co.,
831 N.Y.S.2d 346, 2006 N.Y. Misc. LEXIS 2782 (Sup. Ct. Kings. Cty. June 23, 2006). There,
an insurer moved for summary judgment, based on a residential work exclusion, against a
contractor who had been constructing a building of cooperative apartments. The exclusion in
that case provided that:
This insurance does not apply to injury or damage directly or indirectly arising
out of, caused by or resulting from “your products” or “your work” in connection
with any single custom house or a house which is part of multiple tract housing or
condominium or other multi-unit residential projects. Projects which are mixeduse, any part residential or any part commercial, are considered to be a residential
project subject to this endorsement.
[21]
2006 N.Y. Misc. LEXIS 2782, at *8. The court held:
Here, where the exclusion provision fails to specifically include cooperatives in
the types of buildings that constitute residential projects, questions of fact exist as
to whether the exclusion is applicable in this case (see Bovis Lend Lease LMB,
Inc. v. Royal Surplus Lines Insurance Company, 27 AD3d 84, 806 N.Y.S.2d 53
[1st Dept. 2005]).
Id. at *17.
To be sure, in one respect, Brend assists RCG and E51, in that it treats a mixed-use
component of a residential exclusion, defined as “any part residential or any part commercial,” as
inapplicable where a third use (cooperatives) was present. But, for two reasons, the Court
declines to follow Brend. First, the cited passage in Brend is dicta. Earlier in the opinion, the
court had held that summary judgment was unavailable at all to the insurer, because it was an
issue of fact whether the insurer had unduly delayed in disclaiming coverage and was estopped
from doing so. See id. at *15–16. The court took up the notice argument first, holding that:
[T]here is some evidence that [the insurer] received notice on July 29, 2003,
which would mean that United took more than two months to notify plaintiff that
it was disclaiming coverage. Here, questions of fact exist as to when United
received notice of the occurrence and as to whether it disclaimed coverage in a
timely fashion which precludes granting summary judgment to any party in this
action.
Id. Second, Brend’s treatment of the issue relevant here was limited to a single sentence. The
court did not identify, let alone analyze, the issue of whether the definition listing the attributes
of a mixed-use structure excluded structures containing additional attributes. See id. at *17. And
in support of its conclusion, Brend cited only Bovis, which, as noted above, is inapposite.
The Court therefore holds that, given its plain language, the Exclusion, insofar as it
covers “mixed-use buildings,” unambiguously applies here. Coverage is, therefore, barred,
unless RCG and E51 can show that the Exception to the Exclusion is applicable.
[22]
C.
Does the Exception to the Exclusion Apply?
Under the Exception to the Exclusion, RSUI must cover claims arising out of the
insureds’ operations or work “on or in commercial space in ‘mixed-use buildings.’” Because
RSUI has shown that the Exclusion applies, for there to be coverage, RCG and E51 bear the
burden of demonstrating that the Exception to the Exclusion applies. See supra Section V.A.
Defendants have not carried that burden.
The insurance claims in this case arise out of the March 15, 2008 collapse of the tower
crane. At the time, the crane was being “jumped” up the building’s superstructure, and a new
attachment point was being added at the 18th floor. As noted, the crane was positioned on the
south side of the building and was attached at the third and ninth floors of the building. It is
undisputed that the crane sat at ground level; however, there is no record evidence that the crane
was attached to the building’s ground floor, let alone to any arguably commercial space on the
ground floor. See JSF at passim (nowhere indicating that the crane was attached in any way to
the building’s ground floor). Nor is there evidence that the building’s second floor, which some
witnesses have testified was intended to contain community space, was utilized in supporting the
crane or any work on it. See id. (nowhere identifying any crane-related work on the second
floor). It is, finally, undisputed that, at and above the fourth floor, 303 East 51st was purely
residential. JSF ¶ 171 (no community space above second floor); see also id. ¶ 140; id. at passim
(describing no commercial space higher than the third floor). Therefore, if the Exception to the
Exclusion is to apply and preserve coverage for RCG and E51, it must be as a result of the
crane’s attachment point on 303 East 51st’s third floor. To assess this claim requires nuanced
attention to the facts relating to that attachment point, as follows.
[23]
The crane’s tower was stabilized by collars wrapping around it, which were secured to
the building with metal I-beams. JSF ¶ 177. On March 15, 2008, three stabilizing I-beams were
bolted to the crane tower’s collar on one end, with the other end bolted to three points on the
third floor. Id. ¶ 178. As noted above, various RCG and E51 witnesses testified in depositions
that an area on the west side of the building was meant to be “knocked out” for connection to the
commercial buildings immediately to 303 East 51st’s west. RCG and E51 therefore contend that
this space is properly treated as “commercial” space. See id. ¶¶ 121–25.
However, the Joint Statement of Facts stipulates that this allegedly-commercial area is
limited to the space denoted as “T.O. Slab 47’-9””, which is depicted in architectural drawing A104. Id. ¶ 125 (citing Record Document # 52 (Dkt. 201-1 at p. 7)). Importantly, T.O. Slab 47’9” appears in the upper left hand side of that drawing, on the building’s northwest side. See Dkt.
201-1 at p. 7. The crane, by contrast, was affixed to 303 East 51st’s south side. JSF ¶ 173.
Although the parties have agreed that three girders stabilizing the crane’s tower were connected
to three points on the building’s third floor, id. ¶ 178, there is no record evidence whatsoever
tending to show that the girders were connected to any part of T.O. Slab 47’-9”—i.e., the portion
of the third floor that was arguably commercial. Indeed, the Joint Statement of Facts does not
refer to any document or testimony indicating that the crane was attached to or supported by the
allegedly-commercial portion of the third floor.
RCG and E51 counter with two arguments. First, they argue that, to secure the I-beams
to the third floor, RCG and its hired subcontractors must have performed “work” or “operations”
“on or in” the “commercial southwestern side of the third floor.” Defs.’ Reply 11. But that
claim finds no support in the Joint Statement of Facts; there, RCG and E51 stipulated that the
arguably-commercial space on the third floor is limited to T.O. Slab 47’-9”. This particular area
[24]
is not on the “southwestern side” of the third floor at all—it is instead on the northwestern side
of that floor, on the opposite side of the building from the crane and its fixtures. See Dkt. 201-1
at p. 7. Nor have RCG and E51 adduced any evidence whatsoever supporting the claim (whose
relevance, in any event, is uncertain) that workers must have travelled through T.O. Slab 47’-9”
while undertaking crane-related work on the opposite side of the building. As to this argument,
RCG and E51 have, therefore, failed to carry their burden to show the Exception’s applicability.
Second, RCG and E51 theorize—without record support—that “one possible theory of
recovery under the allegations in the underlying claims is that the decision to leave the entire
western side of the third floor open destabilized the crane’s attachment at the third floor.” Defs.’
Reply 11. This is significant, they contend, because New York law requires an insurer to defend
where a “complaint contains any facts or allegations which bring the claim even potentially
within the protection purchased, the insurer is obligated to defend.” Id. (citing Technicon Elecs.
Corp. v. Am. Home Assurance Co., 74 N.Y.2d 66, 73 (1989)). RCG and E51 posit, in fact, that
“the crane’s attachment to any part of a floor containing commercial space would clearly
constitute work or operations ‘on or in commercial space,’ as would the crane’s use on the
superstructure of the entire Building.” Defs.’ Reply 11 (underline in original).
These arguments are not persuasive. They are not based on evidence presented to this
Court, but, instead, are based on speculation as to what a third party may conceivably someday
claim, in the underlying litigation, to be the cause of the Accident.
However, such conjecture is insufficient to satisfy defendants’ burden to prove coverage.
It is well-settled that, in evaluating scenarios under which coverage is claimed to exist, the Court
“will not hypothesize or imagine episodes or events that cannot be found among the allegations,
and cannot reasonably be deduced from them.” Stamford Wallpaper Co. v. TIG Ins., 138 F.3d
[25]
75, 81 (2d Cir. 1998). And it is also well-settled that “[t]o defeat summary judgment . . .
nonmoving parties ‘must do more than simply show that there is some metaphysical doubt as to
the material facts,’ . . . and they ‘may not rely on conclusory allegations or unsubstantiated
speculation.’” Jeffreys v. City of N.Y., 426 F.3d 549, 554 (2d Cir. 2005) (quoting Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) and Fujitsu Ltd. v. Fed.
Express Corp., 247 F.3d 423, 428 (2d Cir. 2001)). “Such an issue is not created . . . by surmise
or conjecture on the part of the litigants.” United States v. Potamkin Cadillac Corp., 689 F.2d
379, 381 (2d Cir. 1982) (internal citations omitted).
This case has proceeded through more than three years of discovery, and, as defendants
note, more than 50 underlying lawsuits regarding the Accident are pending. In seeking to show
that their claims as to theories of liability in those cases are non-speculative, defendants have had
fertile ground to draw upon—in the form of more than 50 complaints or amended complaints
(and, where applicable, refined allegations) in these cases. Defendants, however, have failed to
point to any actual allegations in the tort actions which would potentially trigger the Exception.
Instead, they offer only imagined, speculative scenarios in support of their argument that the
Exception has been triggered.
Accordingly, RCG and E51 have failed to carry their burden of showing that coverage is
maintained by virtue of the Exception to the Exclusion. RSUI’s motion is therefore granted, and
defendants’ motion denied.11
11
Although it is sufficient to resolve this motion that defendants raised no triable issue of fact as
to whether the crane’s supports were anchored to the claimed commercial space on the third
floor, the Court is constrained to note that RCG’s and E51’s proffered evidence that there was, in
fact, such space is exceedingly frail. After more than three years of discovery, the sole evidence
supporting defendants’ assertion that the third floor was to contain commercial space is the
deposition testimony of a number of defendants’ principals. That testimony, of course, postdates the Accident, and was offered—without any corroborating documentary evidence—at a
[26]
CONCLUSION
For the foregoing reasons, RSUI's motion for summary judgment is granted. RCG's and
E51 's cross-motion for summary judgment is denied. RSUI is directed to submit to the Court, no
later than August 6, 2012, a proposed form ofjudgment.
SO ORDERED.
PwJA.~
Paul A. Engelmayer
United States District Judge
Dated: July 31, 2012
New York, New York
time when the defendants had a substantial incentive to establish coverage under the Policy. Had
this matter proceeded to trial, such testimony, lacking any documentary corroboration, would
have been open to substantial impeachment.
[27]
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