Wausau Underwriters Insurance Company v. Old Republic General Insurance Company
OPINION AND ORDER re: 43 MOTION for Summary Judgment filed by Wausau Underwriters Insurance Company: For the reasons stated above, Wausau's motion for summary judgment is granted. The Court concludes that, under the plain t erms of the relevant contracts, Old Republic is required to defend and indemnify the Broadway Defendants in the Burawski action. Wausau shall submit a proposed judgment consistent with the foregoing within one week of this Opinion and Order. The Clerk of Court is directed to terminate Docket No. 43 and to close the case. (Signed by Judge Jesse M. Furman on 8/7/2015) (tn)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
WAUSAU UNDERWRITERS INSURANCE
OLD REPUBLIC GENERAL INSURANCE
OPINION AND ORDER
JESSE M. FURMAN, United States 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.
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. (Decl. Supp. Mot. Summ. J. (Docket No.
48) (“George Decl.”), 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
Decl., 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 Decl., 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 Decl., 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.
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 (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, 477 U.S. at 325. “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).
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, 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 (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).
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.
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 Indem. 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 (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 (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.
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 the term is an entity enjoying the same protection as the named
insured.’” Kassis v. Ohio Cas. Ins. Co., 12 N.Y.3d 595, 599-600 (2009) (quoting Pecker Iron
Works of N.Y., Inc. v. Traveler’s Ins. Co., 99 N.Y.2d 391, 393 (2003)).
In this case, the parties appear to agree that whether Old Republic is obligated to defend
the Broadway Defendants turns on whether the allegations in Burawski’s complaint implicate the
“additional insured” endorsements in the Old Republic policy. (Pl.’s Mem. 4-7; Def.’s Mem.
Law Opp’n Pl.’s Mot. Summ. J. (Docket No. 53) (“Def.’s Mem.”) 4-6; Reply Mem. Law Further
Supp. Pl. Wausau Underwriters Ins. Co.’s Mot. Summ. J. (Docket No. 56) (“Pl.’s Reply Mem.”)
2-5). In arguing that Old Republic is obligated to defend, Wausau relies on two such
endorsements. (Pl.’s Mem. 4-6). The first provides, in relevant part, that the policy includes “as
an additional insured the person(s) or organization(s) shown” in an attached schedule, “but only
with respect to liability for ‘bodily injury,’ ‘property damage’ or ‘personal and advertising
injury’ caused, in whole or in part, by” either McGowan’s “acts or omissions” or “[t]he acts or
omissions of those acting on [McGowan’s] behalf . . . in the performance of [McGowan’s]
ongoing operations for the additional insured(s) . . . .” (Old Republic Policy 74). The attached
schedule states, in turn, that additional insured coverage extends to other parties “WHERE
REQUIRED BY WRITTEN CONTRACT.” (Id.). The second endorsement upon which
Wausau relies amends the Old Republic policy “to include as an insured the person or
organization shown” in another schedule, “but only with respect to liability arising out of
[McGowan’s] ongoing operations.” (Id. at 88). The relevant schedule for that endorsement
states that additional insured coverage extends “WHERE WRITTEN CONTRACT REQUIRES
INDEMNIFICATION FOR LIABILITY ARISING OUT OF [McGOWAN’S] ONGOING
Thus, both endorsements provide additional insured coverage where (1) such coverage is
required by written contract and (2) the liability at issue arose from an act or omission that was
part of McGowan’s “ongoing operations.” Here, there is no dispute that the CMA satisfies the
first prong as it is a written agreement that required McGowan to obtain general liability
insurance naming the Broadway Defendants as additional insureds. (Abraham Decl., Ex. 1, at
31-37). Wausau contends that the second condition — that the liability arise out of McGowan’s
ongoing operations — is also satisfied because Burawski’s complaint alleges that McGowan was
hired to perform work at 170 Broadway; that it was performing the work on October 23, 2012,
when Burawski was injured; and that his injury was caused by McGowan’s failure to adequately
maintain the site. (George Decl., Ex. 4 ¶¶ 20, 22, 25-26). It argues that those allegations
necessarily “suggest a reasonable possibility of coverage.” Euchner-USA, 754 F.3d at 141.
The Court agrees. In fact, the allegations in the Burawski action are materially identical
to allegations that the New York Court of Appeals has held are, as a matter of law, sufficient to
raise a reasonable possibility of coverage. See, e.g., BP Air Conditioning Corp. v. One Beacon
Ins. Grp., 8 N.Y.3d 708, 715 (2007). As with this case, BP Air Conditioning involved a slipand-fall accident that, in turn, gave rise to a claim by a subcontractor that, as an additional
insured, it was entitled to a defense from the insurance provider of the primary insured, whose
work allegedly precipitated the accident. Id. at 712-13. The Court of Appeals concluded that the
reasonable possibility test was satisfied where the underlying complaint alleged that the primary
insured “was engaged in construction work at the work site where [the plaintiff] was injured, that
[the primary insured] breached its duty to keep the work site safe and that [this] breach caused
[the plaintiff’s injuries].” Id. at 715; see also Wausau Underwriters, 496 F. Supp. 2d at 360-61
(applying BP Air Conditioning and holding, under circumstances similar to this case, that the
duty to defend an additional insured was triggered where the plaintiff in the underlying action
allegedly sustained an injury on the construction site and due to the negligence of the named
insured). That description applies equally to this case and the allegations in the Burawski action.
(See George Decl., Ex. 4). Thus, applying BP Air Conditioning, the Court concludes that
Burawski’s alleged injury “arose out of” McGowan’s ongoing operations and the Broadway
Defendants were thus entitled to a defense from Old Republic.
Old Republic’s principal response is that Burawski’s injury could not have stemmed from
McGowan’s “acts or omissions” because McGowan had not yet begun the “Work” — a term it
argues is defined in the CMA to, in essence, encompass the actual construction of the hotel.
(Def.’s Mem. 4-6; see also CMA 9). That argument is unpersuasive. As an initial matter,
whether the “Work” as defined by the contract had begun is irrelevant because, as discussed
above, the injury “arose out of” McGowan’s ongoing operations, which is all that is necessary to
trigger the additional insured provisions. In any case, though, “Work” is defined in the CMA to
“include all labor, materials, equipment and services to be provided by [McGowan]” and, as
noted, one of the services to be provided by McGowan was the hiring of subcontractors. (Def.’s
56.1 Statement ¶¶ 33-35; CMA at 9). Thus, as McGowan was in the process of hiring of
subcontractors when Burawski was injured, the “Work,” as defined in the CMA, had in fact
Worth Construction Company v. Admiral Insurance Company, 10 N.Y.3d 411, 416
(2008), upon which Old Republic relies (Def.’s Mem. 4), does not require a contrary conclusion.
Worth involved a construction-site injury in which a worker slipped and fell on a set of stairs
installed by Pacific Steel, Inc., a sub-contractor on the project. 10 N.Y.3d at 414. The fall,
however, was caused by fireproofing material applied to the stairs by a different sub-contractor
after Pacific had completed its work on the project. Id. The injured worker sued Worth, the
general contractor, and Worth then sought a declaratory judgment that it was entitled to coverage
as an additional insured under Pacific Steel’s general liability policy. Id. The New York Court
of Appeals held that Pacific Steel was not obligated to defend, reasoning that the injury could not
be traced to any acts or omissions on the part of Pacific Steel because “an entirely separate
company” had applied the fireproofing and Pacific Steel had had no role in selecting that other
company. Id. at 415-416. Therefore, the Court held, “it could no[t] . . . be argued that there was
any connection between [the] accident and the risk for which [Pacific Steel’s insurance]
coverage was intended.” Id. at 416.
That is not the case here. Burawski alleges that his accident was caused by the
negligence of McGowan, among other parties. (George Decl., Ex. 4 ¶ 26). Additionally,
McGowan was the project’s construction manager, and, therefore, in charge of the entire project,
not just a discrete component of the project, as Pacific Steel was in Worth. (Def.’s 56.1
Statement ¶¶ 32-33). Accordingly, unlike Worth, where the staircase at issue was “‘merely the
situs of the accident,’ . . . [and] there was no connection between the accident and Pacific’s
work,” Regal Const. Corp., 15 N.Y.3d at 39 (quoting Worth, 10 N.Y.3d at 416), Burawski’s
complaint alleges a clear connection between his injury and the risk for which the additional
insured endorsements in the Old Republic policy were intended, cf. Worth, 10 N.Y.3d at 416
(concluding that a sub-contractor was not an additional insured only where “it could no[t] . . . be
argued that there was any connection between [the] accident and the risk for which coverage was
intended (emphasis added)). Further, and in any event, facts outside Burawski’s complaint also
suggest the reasonable possibility that Old Republic would be required to defend the Broadway
Defendants. As noted, McGowan was responsible for hiring subcontractors for the 170
Broadway project. (Def.’s 56.1 Statement ¶ 33-35). Burawski was on the premises as a
representative of Tyco, a potential subcontractor, in connection with Tyco’s bid to work on the
project. (Id. ¶¶ 20-21). It is plainly a reasonable possibility that, under those circumstances,
Burawski’s injury could be said to “aris[e] out of” McGowan’s “acts or omissions” in connection
with its “ongoing operations,” namely its responsibility under the CMA to hire subcontractors.
(Old Republic Policy 74, 88).
Accordingly, the Court holds that, under the terms of the relevant endorsements, Old
Republic is indeed obligated to defend the Broadway Defendants in the Burawski action.
Old Republic’s Duty To Indemnify
As noted, Wausau also seeks a declaration that Old Republic is required to indemnify the
Broadway Defendants for any liability incurred in the Burawski action. The duty to indemnify is
“distinctly different” from the duty to defend, Servidone Constr. Corp. v. Sec. Ins. Co. of
Hartford, 64 N.Y.2d 419, 424 (1985), because it is measured by the “actual basis for the
insured’s liability” rather than “the allegations of [the] pleadings,” Hugo Boss Fashions, Inc. v.
Fed. Ins. Co., 252 F.3d 608, 627-28 (2d Cir. 2001) (internal quotation marks omitted). Thus, the
question is whether Burawski’s claims actually fall within the additional insured provisions in
the Old Republic policy. Relying principally on the New York Court of Appeals’s decision in
Regal Construction, Wausau argues that Burawski’s claims necessarily “ar[ose] out of”
McGowan’s “ongoing operations” and, thus, are covered by the endorsements in the Old
Republic policy. (Pl.’s Mem. 10-11; Pl.’s Reply Mem. 4-6).
The Court agrees. In Regal Construction, a subcontractor’s employee was injured at a
construction site, allegedly due to the general contractor’s negligence. 15 N.Y.3d at 36-38. The
injured employee sued the general contractor, who then sought indemnification from one of its
subcontractors, which had been required to maintain an insurance contract listing the general
contractor as an additional insured. See id. at 38. The subcontractor and its insurer sought a
declaratory judgment, arguing that they were not obligated to defend or indemnify the general
contractor because the injury was the result of the general contractor’s negligence and thus could
not have arisen out of the subcontractor’s operations. See id. at 37-38. The Court of Appeals
rejected their argument, holding that the insurer was obligated to indemnify the general
contractor. The Court began by observing that it had construed “arising out of” to mean
“originating from, incident to, or having connection with,” terms which require an “inquiry . . .
‘not [into] the precise cause of the accident but the general nature of the operation in the course
of which the injury was sustained.’” Id. at 38 (quoting Maroney v N.Y. Cent. Mut. Fire Ins. Co.,
5 N.Y.3d 467, 472 (2005) and Worth, 10 N.Y.3d at 416). Applying that standard, the Court held
that the fact that the employee was on the site and working for the subcontractor when he was
injured constituted a sufficient “connection between the accident and [the sub-contractor’s]
work” to establish that the injury “arose out of” the subcontractor’s acts or omissions. Id. at 3839. A policy covering liability “arising out of” the policyholder’s operations, the Court
explained, requires “only that there be some causal relationship between the injury and the risk
for which coverage is provided.” Id. at 38 (internal quotation marks omitted).
Applying Regal Construction, lower courts in New York have held that, where a person
is acting on behalf of the named insured, “it is not necessary to try the issue of causation” prior to
concluding that the relevant injury arose out of the named insured’s ongoing operations. See,
e.g., Nat’l Union Fire Ins., 103 A.D.3d at 474; Admiral Ins. Co. v. Am. Empire Surplus Lines Ins.
Co., 96 A.D.3d 585, 588-589 & n. 5 (App. Div. 1st Dep’t 2012); Hunter Roberts Constr. Grp.,
LLC v. Arch Ins. Co., 75 A.D.3d 404, 408 (App. Div. 1st Dep’t 2010); see also Liberty Mut. Ins.
Co. v. Zurich Am. Ins. Co., No. 11-CV-9357 (ALC) (KNF), 2014 WL 1303595, at *5 (S.D.N.Y.
Mar. 28, 2014) (holding that an injury incurred by an individual acting on behalf of the named
insured necessarily arose out of the named insured’s ongoing operations, and therefore summary
judgment could be granted without a determination regarding the negligence of the additional
insured). That is because, as these cases make clear, whether an injury was legally caused by a
party’s actions is a much more demanding question than whether the injury arose out of those
actions. See, e.g., Admiral Ins. Co., 96 A.D.3d at 588. In other words, it is possible to determine
whether an injury arose out of an insured’s operations without reaching a determination on
liability, so a final determination on causation is not necessary. As the Court has already
concluded that Burawski’s injuries arose out of McGowan’s ongoing operations, it follows that
the Broadway Defendants are entitled to indemnification from Old Republic even without a
determination regarding legal causation.
To be sure, at the time of the incident giving rise to this case, Tyco — Burawski’s
employer — was not a subcontractor of McGowan, but only a potential subcontractor. In the
Court’s view, however, that fact would not affect the New York Court of Appeals’s conclusion if
confronted with the facts of this case — given that McGowan was responsible for keeping the
site safe and for selecting subcontractors, and Burawski’s injury occurred while he was on site in
connection with Tyco’s bid to become a subcontractor. See, e.g., Runner v. N.Y. Stock Exch.,
Inc., 568 F.3d 383, 386 (2d Cir. 2009) (noting that when sitting in diversity jurisdiction, it is the
responsibility of the Court to “carefully predict how the state’s highest court would resolve the
uncertainties . . . identified” by the Court (quoting The Travelers Ins. Co. v. Carpenter, 411 F.3d
323, 329 (2d Cir. 2005)). That is, Burawski’s alleged injury plainly had “some causal
relationship” to — it originated from, was incident to, and had a connection with — the “risk for
which coverage is provided,” namely McGowan’s operations. Regal Constr., 15 N.Y.3d at 38
(internal quotation marks omitted). In other words, the fact that the injured party was an
employee of a potential subcontractor rather than an actual subcontractor is immaterial, at least
where, as here, the injury occurred in connection with the potential subcontractor’s bid to work
on the project and the insured had some role in evaluating the potential subcontractor’s bid.
Old Republic’s arguments to the contrary are unpersuasive. Old Republic relies again on
Worth (Def.’s Mem. 4-5), but — as discussed above and in Regal Construction itself, see 15
N.Y.3d at 38-39 — Worth is easily distinguished from this case. Next, Old Republic contends
that summary judgment on indemnification cannot precede a determination of liability in the
Burawski action. (Def.’s Mem. 6-8). But, as noted, New York courts have held that the question
of indemnification can be resolved first where, as here, the contract at issue provided for
indemnification for liability related to injuries “arising out of” the named insured’s ongoing
operations. See, e.g., Regal, 15 N.Y.3d at 38; Nat’l Union Fire Ins., 103 A.D.3d at 474; Admiral
Ins., 96 A.D.3d at 589. Moreover, the cases cited by Old Republic to the contrary are inapt as
they involved policies that contained liability exclusions (such as for negligence of the additional
insured), and thus the insurer’s obligation to indemnify the insured could not be resolved on the
basis of the “arising out of language” alone. See, e.g., Stout v. 1 E. 66th St. Corp., 90 A.D.3d
898, 903 (App. Div. 2d Dep’t 2011) (denying summary judgment for essentially the same
reasons that the Court of Appeals did in Worth, namely that the named insured’s work was
merely the situs of the accident and that there was no connection between its work and the
injury); Pavarini Constr. Co. v. Liberty Mut. Ins. Co., 270 A.D.2d 98, 99 (App. Div. 1st Dep’t
2000) (holding that summary judgment as to the duty to indemnify was premature where the
policy contained an exception for injuries caused by the negligent acts of the additional insured
and there had not yet been a negligence determination in the underlying action); Evans v. Royal
Ins. Co., 192 A.D.2d 1105, 1105 (App. Div. 4th Dep’t 1993) (declining to grant summary
judgment where a question of fact remained about whether the injury arose from activity covered
by the policy’s liability exclusions); see also Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. XL
Ins. Am., Inc., No. 12-CV-5007 (JSR), 2013 WL 1944468, at *6-7 (S.D.N.Y. May 7, 2013)
(denying summary judgment, under California law, in favor of the plaintiff after concluding that
the policy required a showing that the injury at issue was “caused by” the named insured’s
Finally, Old Republic claims that indemnification is appropriate only in cases of
vicarious liability. (Def.’s Mem. 8-9). In making that argument, however, Old Republic relies
exclusively on cases interpreting insurance agreements that were expressly limited to vicarious
liability. For example, Old Republic relies primarily on Wilson Central School District v. Utica
Mutual Insurance Co., 123 A.D.3d 920 (App. Div. 2d Dep’t 2014). (Def.’s Mem. 8-9). In that
case, the Court held that an endorsement providing additional insured coverage, “but only to the
extent that such additional insured is held liable for [the primary insured’s] acts or omissions
arising out of and in the course of ongoing operations performed by [the primary insured] or [its]
Although the Appellate Division’s decision in Pistolesi v. N. Country Ins. Co., 210
A.D.2d 961 (App. Div. 4th Dep’t 1994), is less clear, in denying summary judgment the Court
cited only cases in which there was a substantial question regarding whether the underlying acts
fell into a coverage exclusion. See id. at 962. Accordingly, the Court does not read that case to
hold that there is a blanket prohibition against granting a declaratory judgment prior to
determination of liability in the underlying action. Moreover, reading the case to hold otherwise
would conflict with the New York Court of Appeals’s decision in Regal Construction.
subcontractors,” provided coverage to the additional insured only where it was held vicariously
liable for the primary insured’s actions. Id. at 921 (emphasis added) (internal quotation marks
omitted). That holding, however, was rooted in the contractual language quoted above, which is
plainly limited by its terms to covering vicarious liability. As there is no similar limitation in the
additional insured provisions of the Old Republic Policy — indeed, as noted, those provisions
extend coverage to any liability arising out of McGowan’s ongoing operations (Potashner Decl.,
Ex. 15, at 89) — Wilson is inapt.
Additionally, Old Republic’s reading of Wilson is foreclosed by the Court of Appeals’s
decision in Regal Construction. If it were the case that, as Old Republic contends, a
determination as to vicarious liability were a prerequisite to resolving every additional insured
claim for indemnification, then it would be impossible to determine the duty to indemnify prior
to determining legal causation. But, as discussed, Regal Construction states that a duty to
indemnify exists under an additional insured provision that provides coverage for liability
“arising out of” an insured operations where “there [is] some causal relationship between the
injury and the risk for which coverage is provided.” Regal, 15 N.Y.3d at 38. That standard
plainly does not require a determination regarding vicarious liability.
In short, on their face, the plain terms of the contracts at issue require Old Republic to not
only defend the Broadway Defendants in the Burawski action, but also to indemnify the
Broadway Defendants in the event they are found liable in that action. Further, the Court finds
that the Old Republic policy is “primary” rather than “excess” to any coverage provided by
Wausau’s policy (see Pl.’s Mem. 11-14), as Old Republic’s memorandum does not respond to
Wausau’s argument on that score. See Cowan v. City of Mount Vernon, — F. Supp. 3d —, No.
12-CV-6881 (KMK), 2015 WL 1400088, at *15 (S.D.N.Y. Mar. 27, 2015) (“Federal courts may
deem a claim abandoned when a party moves for summary judgment on one ground and the
party opposing summary judgment fails to address the argument in any way.” (internal quotation
The Defense of Untimely Notice
That does not end the matter, however, as Old Republic contends that, even if it would
otherwise be obligated to defend and indemnify the Broadway Defendants, it need not do so
because it did not receive timely notice of Burawski’s claim. (Def.’s Mem. 9-13). Wausau
responds that Old Republic did receive timely notice; that, even if it did not receive timely
notice, Old Republic waived any defense based on timeliness of the notice; and that Old
Republic cannot assert a late-notice defense because it has not identified any evidence suggesting
that it was prejudiced by the alleged delay in receiving notice. (Pl.’s Mem. 14-20). Wausau has
the better argument. Even assuming arguendo that Old Republic did not receive timely notice
and did not waive any defense based on the timeliness of notice, Old Republic’s inability to
show that it was prejudiced by the late notice precludes it from denying coverage solely on that
New York law previously allowed insurers to deny coverage on the basis of late notice,
without regard for whether the late notice caused any prejudice. In 2008, however, the law was
amended and, for policies issued after January 17, 2009 — a universe that includes the Old
Republic policy — insurers may not deny claims on the ground of late notice in the absence of
prejudice. See N.Y. Insur. Law. § 3420(a)(5); see An Act to Amend the Civil Practice Law and
Rules and the Insurance Law, in Relation to Liability Insurance Policies § 8, 2008 N.Y. Sess.
Laws 388 (McKinney 2008). When notice is untimely, but nevertheless given within two years
of the accident or occurrence — as the notice was here (see Def.’s 56.1 Statement ¶¶ 9, 19) —
the insurer has the burden of proving that it was prejudiced by the late notice. N.Y. Insur. Law.
§ 3420(c)(2)(A). To carry that burden, an insurer must show that the failure to provide timely
notice “materially impair[ed] the ability of the insurer to investigate or defend the claim.” N.Y.
Insur. Law § 3420(c)(2)(C); see Atl. Cas. Ins. Co. v. Value Waterproofing, Inc., 918 F. Supp. 2d
243, 254 (S.D.N.Y. 2013). Thus, in order to deny coverage, Old Republic must show that it was
prejudiced by the late notice. (See Pl.’s Reply Mem. 7-8).
Significantly, Old Republic must show that the delay in giving notice itself “materially
impair[ed]” its ability “to investigate or defend the claim.” N.Y. Insur. Law § 3420(c)(2)(C).
Here, although Burawski was injured on October 23, 2012 (Def.’s 56.1 Statement ¶ 19), there is
no evidence in the record that the Broadway Defendants received notice of the possibility of a
claim by Burawski prior to February 2013. (McCune Aff., Ex. 4). Thus, February 1, 2013 is the
earliest that the Broadway Defendants were required to notify Old Republic about Burawski’s
claim. See, e.g., Sparacino, 50 F.3d at 143 (explaining that an insured’s obligation to provide
notice is triggered when “circumstances known to the insured at that time would have suggested
to a reasonable person the possibility of a claim”). It follows that Old Republic has to show
prejudice as a result of the delay between February 1, 2013, and July 2013, when it received
notice. It cannot rely on any prejudice that it may have suffered as a result of the four months
between the accident and the date upon which the Broadway Defendants first learned of
Burawski’s potential claim. Any such prejudice would not be the result of untimely notice.
Old Republic identifies three ways in which it was allegedly prejudiced by the late notice
it received from the Broadway Defendants: first, by not being able to photograph the accident
site; second, by not being able to conduct a timely investigation, including witness interviews, of
the facts surrounding the claim; and, third, by not being able to engage in pre-suit negotiations
with Burawski. (Def.’s Mem. 12-13; McCune Aff. ¶ 10). With respect to the first two ways,
however, Old Republic neither points to evidence suggesting that the accident site was
substantially unchanged between October 2012 and February 2013 nor explains how the site
changed between February and July 2013 such that it could no longer conduct an adequate
investigation. In the absence of such proof, Old Republic’s conclusory assertions that it would
have taken actions that, for unspecified reasons, it could not take after it received notice are
insufficient to raise a triable issue of fact as to prejudice. See, e.g., Plaza ex rel. Rodriguez v.
N.Y. Health & Hosp. Corp. (Jacobi Med. Ctr.), 949 N.Y.S.2d 25, 31 (App. Div. 1st Dep’t 2012)
(finding a “general claim” of prejudice insufficient to show prejudice); Anonymous v. N.Y. State
Dep’t of Health, 927 N.Y.S.2d 1, 1 (App. Div. 1st Dep’t 2011) (“Conclusory allegations that the
passage of time has dulled witnesses’ memories do not demonstrate actual prejudice”). In short,
there is no support in the record for either the proposition that Old Republic could have
conducted a meaningful site investigation in February 2013 or that the passage of time between
February and June 2013 materially impaired its ability to conduct such an investigation. Thus, it
cannot show prejudice on either of these grounds.
Similarly, Old Republic’s third basis for prejudice, the inability to engage in pre-suit
negotiations, does not raise a triable dispute of fact. (Def.’s Mem. 13). As an initial matter, Old
Republic does not provide any explanation of why pre-suit negotiations would have been more
effective at resolving the dispute than the negotiations in which it could have engaged after July
2013. Moreover, Old Republic does not assert that it has ever engaged in negotiations with
Burawski. Thus, there is no basis in the record to conclude that pre-suit negotiations would have
been more effective than post-suit negotiations and, as such, no reasonable jury could conclude
that Old Republic’s inability to engage in pre-suit negotiations constituted material prejudice.
Old Republic’s failure to identify any actual evidence of prejudice is in stark contrast to
those cases in which Courts have found prejudice due to late notice. For example, in Atlantic
Casualty, the Court held that an insurer was prejudiced by the late notice it had received from its
insured where the accident site had been destroyed between the date on which the insured
learned of the possibility of a claim and the date on which it provided notice. See 918 F. Supp.
2d at 255-56. In reaching that conclusion, the Court also recited the various steps that the insurer
had taken to mitigate this prejudice — including visiting the site, asking for photographs of the
site, and interviewing employees of the insured — before ultimately determining that these steps
were insufficient. Id. at 256. Here, by contrast, Old Republic neither identifies any evidence of
prejudice nor explains how it has tried to remedy this prejudice to Old Republic.
Those failures are especially telling because Old Republic is providing a defense to
McGowan, even though McGowan gave notice of the possibility of a law suit even later than the
Broadway Defendants. (Def.’s Mem. 15; Potashner Decl. ¶ 61). That is, if the alleged delay in
receiving notice from the Broadway Defendants had actually caused Old Republic prejudice, it
would plainly be in a position to identify with specificity the ways in which it did. As Old
Republic fails to explain, let alone provide evidence of, how the Broadway Defendants’ late
notice “materially impair[ed] the ability of the insurer to investigate or defend the claim,” N.Y.
Insur. Law § 3420(c)(2)(C), the Court concludes, as a matter of law, that Old Republic was not
entitled to deny coverage on the basis of late notice. Accordingly, Old Republic is obligated to
defend and indemnify the Broadway Defendants in the Burawski action.
Wausau’s Entitlement to Costs and Interest
Finally, Wausau contends that it is entitled to reimbursement for its costs of defending
the Broadway Defendants, plus interest accruing from April 1, 2014. See Nat’l Union Fire Ins.,
103 A.D.3d at 474 (“In the event of a breach of the insurer’s duty to defend, the insured’s
damages are the expenses reasonably incurred by it in defending the action after the [insurer’s]
refusal to do so.” (internal quotation marks omitted)). (Pl.’s Mem. 20-21). Old Republic does
not dispute that, if it breached a duty to defend, it must reimburse Wausau for Wausau’s
reasonable costs plus interest. As the Court has concluded that Old Republic had a duty defend,
and there is no question that Old Republic has not provided the required defense, it follows that
Old Republic has breached its duty to defend the Broadway Defendants. Accordingly, Wausau’s
request for reasonable costs plus interest is GRANTED.
For the reasons stated above, Wausau’s motion for summary judgment is granted. The
Court concludes that, under the plain terms of the relevant contracts, Old Republic is required to
defend and indemnify the Broadway Defendants in the Burawski action.
Wausau shall submit a proposed judgment consistent with the foregoing within one week
of this Opinion and Order. The Clerk of Court is directed to terminate Docket No. 43 and to
close the case.
Date: August 7, 2015
New York, New York
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