Greater New York Mutual Insurance Company v. The Burlington Insurance Company et al

Filing 72

OPINION AND ORDER re: 53 CROSS MOTION for Partial Summary Judgment filed by The Burlington Insurance Company, 60 CROSS MOTION for Summary Judgment filed by Scottsdale Insurance Company, 50 MOTION for Partia l Summary Judgment filed by Greater New York Mutual Insurance Company. GNY's February 2, 2023 motion for partial summary judgment is granted. Burlington's February 22, 2023 cross-motion for summary judgment is also granted . Scottsdale's February 22, 2023 cross-motion for summary judgment seeking a declaration that Scottsdale and Burlington have equal obligations to defend Park City is granted; Scottsdale's cross-motion is otherwise denied. (Signed by Judge Denise L. Cote on 5/18/2023) (vfr)

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 1 of 14

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------ X
:
GREATER NEW YORK MUTUAL INSURANCE COMPANY, :
:
Plaintiff,
:
:
-v:
:
THE BURLINGTON INSURANCE COMPANY,
:
SCOTTSDALE INSURANCE COMPANY, and ABC
:
INSURANCE COMPANIES 1-10,
:
:
Defendants.
:
:
------------------------------------------ X

22cv2052 (DLC)
OPINION AND ORDER

APPEARANCES:
For the plaintiff:
Milber Makris Plousadis & Seiden, LLP
Jason Pozner
75 Livingston Avenue, Suite 103
Roseland, NJ 07068
For defendant The Burlington Insurance Company:
Lazare Potter Giacovas & Moyle LLP
Yale Howard Glazer
747 3rd Avenue, 16th Floor
New York, NY 10017
For defendant Scottsdale Insurance Company:
Kennedys CMK LLP
Ann Odelson
Erica Sanders
570 Lexington Avenue, 8th Floor
New York, NY 10022
DENISE COTE, District Judge:
In 2012, a worker was injured when he fell at a
construction site.

The parties in this insurance coverage

dispute -- the insurer for the owner of the property where the

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 2 of 14

accident occurred and the insurers for two contractors working
on the construction site -- have all moved for summary judgment.
The only dispute is over the duty to defend the owner of the
property in ongoing litigation in New York State brought by the
injured worker.

While the insurer for one contractor admits

that it has a duty to defend the owner, the insurer for the
other contractor -- Scottsdale Insurance Company (“Scottsdale”)
-- has denied such a duty.

For the following reasons, summary

judgment is granted against Scottsdale.
Background
I.

The Underlying Action
This dispute emerges from a construction accident in which

Luis Yaguachi, an employee of Lemi Restoration, Inc. (“Lemi”)
fell from a height on January 25, 2012.

The construction site

was owned by Park City 3 and 4 Apartments (“Park City”) and was
located at 97-37 63rd Drive, Queens, New York (“Project”).

Park

City had entered into contracts with Phoenix Building Restorer,
Inc. (“Restorer”) and Phoenix Bridging Inc. (“Bridging”) to work
on the Project.

Lemi was a subcontractor for Bridging.

On June 29, 2012, Yaguachi sued Park City, Restorer, and
Bridging in New York Supreme Court, Kings County (“Underlying
Action”).

The state court complaint alleges that Yaguachi was

“caused to fall by reason of the negligence of” Park City,

2

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 3 of 14

Restorer, and Bridging and brings a claim sounding in common law
negligence and claims under New York Labor Law.
Park City brought cross-claims of contractual
indemnification and breach of contract to procure insurance
against Bridging.

The contract between Park City and Bridging,

however, was not produced in discovery in the Underlying Action,
and in its motion for summary judgment, Bridging argued that it
“never entered into any agreements in which it agreed to
indemnify” Park City.

On February 13, 2018, the state court

granted Bridging’s motion for summary judgment on Park City’s
cross-claims (“State Court Decision”).

The state court found

that because there was “no written agreement between . . . Park
City and Bridging wherein Bridging agreed to indemnify” Park
City, Park City’s contractual indemnification claim had to be
dismissed.

Park City’s breach of contract to procure insurance

was similarly dismissed because “there is no written agreement
wherein Bridging agreed to procure insurance covering Park
City.”
The contract between Park City and Bridging (the
“Contract”) was eventually located.

The Contract between Park

City and Bridging was executed on January 4, 2012.

It included

an indemnity clause and required Bridging to add Park City as an
additional insured on its insurance policy.

3

Chandra Jain and

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 4 of 14

Michael Siwiec executed the Contract on behalf of Park City and
Bridging, respectively.
On April 13, 2022, Park City moved “to renew” Bridging’s
prior motion for summary judgment on the ground that Park City
had obtained the “previously missing signed contract” between
Park City and Bridging.

After oral argument, the state court

denied Park City’s motion for “failure the establish the
provenance of the contract and failure to provide a reasonable
excuse for the delay in production of the contract.”
II.

The Insurance Policies
Greater New York Insurance Company (“GNY”), the plaintiff

in this federal action, is the insurer for Park City.

The

Burlington Insurance Company (“Burlington”) is the insurer for
Restorer.

Scottsdale is the insurer for Bridging.

Scottsdale issued Bridging a commercial general liability
insurance policy with a policy period from June 15, 2011 to June
15, 2012 (“Scottsdale Policy”).

The Scottsdale Policy includes

as an additional insured “any person or organization for whom
[Bridging is] performing operations when [Bridging] 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 [Bridging’s] policy.”

Under the

Scottsdale Policy, its coverage for additional insureds required
by contract is primary and noncontributory.
4

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 5 of 14

On November 26, 2013, GNY tendered the defense of Park City
to Scottsdale.

On April 3, 2014, Scottsdale denied GNY’s

request on the ground that Scottsdale had “not been provided
with a valid executed agreement that requires that [Park City]
be named as an additional insured.”
III. Procedural History in Federal Lawsuit
GNY filed this action against Burlington and Scottsdale on
March 14, 2022, seeking a declaration that Burlington and
Scottsdale have and had a duty to defend Park City and that such
duties are primary to GNY’s. 1

GNY also brought claims against

Burlington and Scottsdale for breach of contract and equitable
contribution for the defense costs and expenses paid by GNY in
the Underlying Action.
Burlington brought a counterclaim against GNY asserting
that any obligation of Burlington to defend Park City is subject
to and limited by the obligations of GNY and other insurers
acting as primary insurers to Park City.

Burlington also

GNY also alleged that Scottsdale issued Bridging an excess
insurance policy (“Scottsdale Excess Policy”) and that Park City
is covered as an additional insured under the Scottsdale Excess
Policy as well. In its motion for summary judgment, GNY states
that the Scottsdale Excess Policy was identified in Scottsdale’s
initial disclosures in this action but was not produced in
discovery despite GNY’s requests. GNY’s motion, therefore, only
addresses the Scottsdale Policy. In response, Scottsdale argues
that any coverage under any excess policy issued by Scottsdale
would be excess over GNY’s primary coverage of Park City. The
Scottsdale Excess Policy and the parties’ obligations under that
policy are not addressed in this Opinion.

1

5

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 6 of 14

brought a cross-claim against Scottsdale asserting that if
Burlington is found to have a duty to defend Park City,
Scottsdale also owes such a duty to Park City.

Scottsdale

brought a cross-claim against Burlington asserting that if
Scottsdale is found to have a duty to defend Park City,
Burlington also owes such a duty to Park City.
Discovery ended on December 14. 2

GNY moved for partial

summary judgment on February 2, 2023, seeking a declaration that
Burlington and Scottsdale have and had a duty to defend GNY’s
insured, Park City, and those duties are primary to GNY’s duty
to Park City.

On February 22, Burlington and Scottsdale cross-

moved for summary judgment.
March 30.

The motions were fully submitted on

The evidence submitted with the motions includes

documents from the Underlying Action; the Contract; the
insurance policies; and a transcript from Siwiec’s deposition in
this action.
Discussion
Summary judgment may only be granted when “the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Civ. P. 56(a).

Fed. R.

“To present a genuine issue of material fact

On December 8, counsel for Siwiec moved to quash the non-party
subpoena served on Siwiec by Burlington. After a conference,
the motion to quash was denied on December 12. Siwiec’s
deposition took place on December 13.

2

6

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 7 of 14

sufficient to defeat a motion for summary judgment, the record
must contain contradictory evidence such that a reasonable jury
could return a verdict for the nonmoving party.”

Horror Inc. v.

Miller, 15 F.4th 232, 241 (2d Cir. 2021) (citation omitted).

In

considering a motion for summary judgment, a court “construe[s]
the facts in the light most favorable to the non-moving party
and must resolve all ambiguities and draw all reasonable
inferences against the movant.”

Kee v. City of New York, 12

F.4th 150, 158 (2d Cir. 2021) (citation omitted).
GNY seeks a declaration that Burlington and Scottsdale each
have a duty to defend its insured, Park City, and that this
obligation is primary and non-contributory to GNY’s duty to
defend to Park City. 3

Burlington does not oppose GNY’s motion

for summary judgment.

Furthermore, Burlington and Scottsdale

agree that if they both have a duty to defend Park City, such
duties are equal and any reimbursement to GNY for the reasonable
costs and expenses incurred defending Park City in the
Underlying Action should be split equally between Burlington and
Scottsdale.

The only dispute, therefore, is whether Scottsdale

owes Park City a duty to defend, and if so, when that duty was
triggered.

3

GNY is not seeking summary judgment on its other claims.
7

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 8 of 14

The parties agree that New York law applies to this action.
“New York law distinguishes between the duty to indemnify and
the duty to defend.”

CGS Indus., Inc. v. Charter Oak Fire Ins.

Co., 720 F.3d 71, 76-77 (2d Cir. 2013).
is triggered by the filing of a lawsuit.”

“[T]he duty to defend
Admiral Ins. Co. v.

Niagara Transformer Corp., 57 F.4th 85, 93 (2d Cir. 2023)
(citation omitted).
In determining whether a duty to defend exists, courts
are to compare the allegations of the complaint to the
terms of the policy. If, liberally construed, the
claim is within the embrace of the policy, the insurer
must come forward to defend its insured no matter how
groundless, false or baseless the suit may be.
Century 21, Inc. v. Diamond State Ins. Co., 442 F.3d 79, 83 (2d
Cir. 2006) (citation omitted).

An insurer is required “to

provide a defense when it has actual knowledge of facts
establishing a reasonable possibility of coverage.”
v. Am. Honda Motor Co., 78 N.Y.2d 61, 67 (1991).

Fitzpatrick

The obligation

to defend applies with equal force to an additional insured.

BP

Air Conditioning Corp. v. One Beacon Ins. Grp., 821 N.Y.S.2d 1,
2 (1st Dep’t 2006).
“[D]istrict courts must distinguish between the duty to
defend and the duty to indemnify in determining whether each
issue posed in a declaratory-judgment action is ripe for
adjudication.”
omitted).

Admiral Ins. Co., 57 F.4th at 93 (citation

When the declaratory judgment action addresses the

8

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 9 of 14

duty to defend, the action is ripe for adjudication when the
court finds a “practical likelihood that a third party will
commence litigation against the insured.”

Id. (emphasis in

original).
A court retains discretion, however, to refuse to exercise
jurisdiction over a declaratory judgment action that it “would
otherwise be empowered to hear.”

Id. at 96 (citation omitted).

Courts consider the following factors when exercising such
discretion:
(1) whether the declaratory judgment sought will serve
a useful purpose in clarifying or settling the legal
issues involved; (2) whether such a judgment would
finalize the controversy and offer relief from
uncertainty; (3) whether the proposed remedy is being
used merely for procedural fencing or a race to res
judicata; (4) whether the use of a declaratory
judgment would increase friction between sovereign
legal systems or improperly encroach on the domain of
a state or foreign court; (5) whether there is a
better or more effective remedy; and (6) whether
concerns for judicial efficiency and judicial economy
favor declining to exercise jurisdiction.
Id. at 99-100 (citation omitted).
“The term res judicata . . . encompasses two significantly
different doctrines: claim preclusion and issue preclusion.”
Marcel Fashions Grp., Inc. v. Lucky Brand Dungarees, Inc., 779
F.3d 102, 107 (2d Cir. 2015).

“Federal courts are required to

give preclusive effect to state-court judgments whenever the
courts of the state from which the judgments emerged would do

9

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 10 of 14

so.”

Exxon Mobil Corp. v. Healey, 28 F.4th 383, 398 (2d Cir.

2022).

New York law of claim preclusion applies here.

Claim preclusion “bars litigation on a claim if an earlier
decision was (1) a final judgment on the merits, (2) by a court
of competent jurisdiction, (3) in a case involving the same
parties or their privies, and (4) involving the same cause of
action.”

Hansen v. Miller, 52 F.4th 96, 100-01 (2d Cir. 2022)

(New York law) (citation omitted).

“New York takes a pragmatic

and flexible attitude toward claim preclusion, recognizing that
the doctrine, if applied too rigidly, could work considerable
injustice.”

Id. at 101.

Scottsdale has and had a duty to defend Park City since the
date of GNY’s tender to Scottsdale -- November 13, 2013.
facts are undisputed.

The

The Contract required Bridging to include

Park City as an additional insured under Bridging’s insurance
policy. 4

The Scottsdale Policy, in turn, includes as an

additional insured any organization with which Bridging

In its response to GNY’s Rule 56.1 Statement of Undisputed
Facts (“56.1 Statement”), Scottsdale neither admits nor denies
that the Contract contained such a requirement. Under the Rule
56.1 of the Southern and Eastern Districts of New York’s Local
Rules, a statement in a party’s 56.1 Statement is deemed
admitted for the purposes of the summary judgment motion unless
“specifically controverted” with admissible evidence by the
opposing party. Given that Scottsdale did not specifically
controvert the existence of the Contract, its existence is
deemed admitted.

4

10

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 11 of 14

contracted to include as an additional insured under Bridging’s
insurance policy.

The complaint in the Underlying Action

includes allegations that come within the ambit of the
Scottsdale Policy.

Therefore, Scottsdale had and has a duty to

defend Park City in the Underlying Action.
Scottsdale argues that this Court cannot rule on
Scottsdale’s duty to defend Park City because the state court
dismissed Park City’s contractual indemnification and breach of
contract to procure insurance claims against Bridging on the
ground that “there [was] no written agreement” between Park City
and Bridging. 5

Because of this conclusion, Scottsdale asserts,

this Court cannot find that a written contract that required
Bridging to add Park City as an additional insured on its policy
exists, and without such a contract, Park City is not an
additional insured under the Scottsdale Policy.

The legal basis

for Scottsdale’s argument is not entirely clear, but Scottsdale
appears to argue that the doctrine of claim preclusion and this
Court’s discretion should prevent any acknowledgment of the
existence of the Contract or enforcement of the unambiguous
terms of its insurance policy.

No party has explained why the Contract not timely produced in
the Underlying Action even though its existence was acknowledged
by Siwiec in a deposition in the Underlying Action.

5

11

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 12 of 14

Scottsdale’s argument fails for several reasons.

First,

GNY is not a party in the Underlying Action, and Scottsdale has
not argued that GNY is in privity with Park City for the
purposes of claim preclusion.

Second, GNY’s claim in this

federal action and Park City’s claims in the Underlying Action
are not the same.

The State Court Decision addressed Park

City’s claims against the contractor for contractual
indemnification and breach of contract for failure to procure
insurance.

Here, GNY is seeking a declaration that under the

Scottsdale Policy, Scottsdale has and had a duty to defend Park
City.

These are distinct claims, and this Court is not

obligated to ignore the Contract.

Finally, no final judgment

has been entered in the Underlying Action.
There is also no reason to abstain from deciding this duty
to defend claim.

This decision will serve a useful purpose.

It

resolves the uncertainty regarding the defense of Park City in
the Underlying Action.

Contrary to Scottsdale’s suggestion,

this Court’s decision will not encroach upon the state court’s
domain.

Nothing in this decision need alter the state court’s

ruling on Park City’s contractual indemnification and breach of
contract cross-claims.
Scottsdale also argues that the six-year statute of
limitations on GNY’s action for a declaration of breach of
contract has expired because the statute of limitations began to
12

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 13 of 14

run when Scottsdale denied GNY’s tender letter on April 3, 2014.
This is incorrect.

“A cause of action based on an insurer’s

alleged breach of a contractual duty to defend accrues only when
the underlying litigation brought against the insured has been
finally terminated and the insurer can no longer defend the
insured even if it chooses to do so.”

Ghaly v. First Am. Title

Ins. Co. of N.Y., 644 N.Y.S.2d 770, 770 (2d Dep’t 1996).
the Underlying Action has not yet concluded.

Here,

Therefore, the

relevant statute of limitations has not expired.
Lastly, Scottsdale argues that if it has a duty to defend
Park City, that duty was not triggered until April 13, 2022, the
date Scottsdale claims it became aware of the Contract through
Park City’s motion to renew in the Underlying Action.
is incorrect.

This too

As a preliminary matter, Scottsdale provides no

admissible evidence to support its assertion that it first
became aware of the Contract on April 13, 2022.

In any event,

Scottsdale had “actual knowledge of facts establishing a
reasonable possibility of coverage” when it received the tender
letter from GNY on November 26, 2013.
67.

Fitzpatrick, 78 N.Y.2d at

Its duty to defend was therefore triggered on that date.
Conclusion
GNY’s February 2, 2023 motion for partial summary judgment

is granted.

Burlington’s February 22, 2023 cross-motion for

summary judgment is also granted.
13

Scottsdale’s February 22,

Case 1:22-cv-02052-DLC Document 72 Filed 05/18/23 Page 14 of 14