2834 Church, LLC v. Golden Krust Caribbean Bakery & Grill., Inc.

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2020 NY Slip Op 35386(U)

2834 CHURCH, LLC, Plaintiff, v. GOLDEN KRUST CARIBBEAN BAKERY & GRILL. INC. AND GOLDEN KRUST CARIBBEAN BAKERY, INC., Defendants.

Index No. 509955/17

Supreme Court, Kings County

September 18, 2020

Unpublished Opinion

HON CAROLYN E. WADE, JUDGE .

The following e-filed papers read herein: NYCEF Doc. Nos.

Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) Annexed..................... 64-84

Opposing Affidavits (Affirmations) 91-107

Reply Affidavits (Affirmations) .................................................................................................................................109-121

Upon the foregoing papers, defendant Golden Krust Caribbean Bakery, Inc. (Bakery), moves for an order, pursuant to CPLR 3212, granting it summary judgment dismissing the complaint (motion sequence #3).

Background

The Underlying Action

In a related action, Raymond v 2834 Church, LLC and Golden Krust Caribbean Bakery &Grill, Inc., Kings County index Number 10150/2014 (the underlying action), Rose Raymond (Raymond) alleged that on February 6, 2014, she slipped and fell on ice in front of Golden Krust Caribbean Bakery &Grill, located at 2846 Church Avenue in Brooklyn, New York (the subject premises). Golden Krust Caribbean Bakery & Grill, Inc. (Grill) defaulted by failing to appear in the underlying action. 2834 Church, LLC (Church) settled the underlying action for $195,000.00.

The Instant Action

Church commenced this action against defendants Grill and Bakery (collectively, "defendants") for indemnification and contribution towards payment of the settlement in the underlying action, and for failing to procure and maintain liability insurance. Bakery submitted an Answer, and cross-claimed against Grill, but Grill failed to appear in this action, and is currently in default.

At an October 15, 2018 compliance conference, the court ordered defendants to provide all contracts, if applicable, within 30 days, and ordered Bakery to provide insurance coverage information within 30 days. Bakery did not comply, and on May 7, 2019, in the final pre-note order, Bakery was again ordered to provide all contracts, insurance, and applicable policy limits by May 24, 2019. As the court did not vacate the note of issue which had been filed, and discovery was not yet complete, the parties proceeded with depositions and discovery after the instant motion was filed.

The Lease, Sublease, and Franchising Agreement

Church as landlord/owner, and Grill, as tenant, entered into a September 1, 2013 lease agreement for "Golden Krust Caribbean Bakery &Grill" at the subject premises for a 10-year term from September 1, 2013 through August 31, 2023 (lease). The lease contains an indemnification provision requiring Grill to indemnify Church, and hold it harmless against any claims, liabilities, losses, and damages, and to procure insurance. The lease was executed by Sadik Mann on behalf of Church and by Louis Campbell, Grill's Secretary, on behalf of Grill.

On September 25, 2013, Grill, as sublessor, entered into a sublease with "Sirrub IV LLC (Donald Burris)" (Sirrub), as sublessee, for the subject premises^[1] for the full term of the master lease between Church and Grill. The stated purpose of the sublease was for Sirrub to operate a "Golden Krust Caribbean Bakery &Grill" franchise under the terms of a franchise agreement. Lowell Hawthorne (Lowell), president of Grill, and Donald Burris executed the sublease.

Five days later, on September 30, 2013, Lowell, in his capacity as CEO of Golden Krust Franchising, Inc. (Franchising) entered into a franchising agreement with Sirrub to operate a "Golden Krust Caribbean Bakery &Grill" restaurant for a ten-year period. Under the terms of the franchising agreement, Sirrub agreed to indemnify, defend and hold Franchising and its affiliates harmless against all claims, obligations and damages incurred in the defense of any claim. The franchising agreement further states that under no circumstances shall the franchisor or any other indemnified party be required to seek recovery from any insurer or other third party, or otherwise to mitigate their losses and expenses in order to maintain and recover a claim against Sirrub.

Relevant Insurance Policies

At the time of Raymond's accident, "Donald &Sonia Burris/Sirrub Services, Inc. DBA Golden Krust Caribbean Bakery &Grill" maintained a liability insurance policy for the subject premises, effective from June 24,2013 through June 24,2014, which was issued by Utica First Insurance Company (Utica). The certificate of insurance provides that Church was an additional insured under the Utica policy. The Utica policy further provides that, effective December 6, 2003, Grill was an additional insured.

In addition, Bakery had a commercial general liability insurance policy issued by Harleysville Preferred Insurance Company (Harleysville), with limits of $1,000,000.00 for the policy term of August 1, 2013 through August 1, 2014. During the same period, Bakery also had a commercial liability umbrella policy issued by Harleysville for $10,000,000.00.

By a February 29, 2016 letter, Utica informed Sirrub d/b/a Grill, as insured under the Utica policy, of Raymond's personal injury claim. Utica advised that coverage under the Utica policy does not apply, directed them to the form "Business Owners Special Policy" regarding notice to the carrier, and Utica disclaimed coverage on that basis.

Bakery's Motion for Summary Judgment

Bakery contends that it is entitled to summary judgment dismissing Church's claims for contractual indemnification and contribution because it never entered into any contract with Church. Bakery further contends that it never occupied the subject premises, and that it is not a proper party to this lawsuit.

Bakery submits an affidavit from Lorraine Hawthorne-Morrison (Morrison), Bakery's Chief Administrative Officer, attesting that Bakery: (1) was not responsible for negotiating, drafting or revising the terms of the leases, subleases or franchising agreements associated with, or on behalf, of Grill; (2) did not have any contractual duties or responsibilities to remove snow or ice from adjacent sidewalks at the subject premises; (3) did not have any written or verbal lease or maintenance/repair agreements with Church, Grill or Sirrub for the subject premises; (4) did not own, operate, control or have any other proprietary interest in the building or sidewalks of the subject premises; (5) did not manage, supervise control or direct employees or agents at the subject premises; (6) did not maintain or manage the subject premises, and never hired outside persons to remove snow and ice from the subject premise; (7) did not occupy the subject premises; (8) did not receive complaints from any person or entity about the presence of snow, ice or debris on sidewalks adjacent to the subject premises; and (9) otherwise had no contractual obligations with respect to the subject premises. Morrison further attests that Bakery never had a business relationship, either in writing or by custom and practice, with Grill, Sirrub or any other entity regarding the building and sidewalk adjacent to the subject premises.

Bakery contends that it is merely a manufacturer and supplier of Jamaican beef patties and bakery items to supermarkets and has nothing to do with the Golden Krust restaurants or retail operations. Bakery argues that the non-existence of any contracts entered into by Bakery for the subject premises, and its complete lack of a role, duty, or responsibility for the subject premises, refutes Church's claim for contractual indemnification and contribution.

Regarding Church's second cause of action based on Bakery's alleged failure to procure liability insurance, Bakery similarly contends that it did not enter into any written agreement requiring it to procure insurance, so that claim is also subject to dismissal. Bakery asserts that to the extent that plaintiff argues that Bakery breached some agreement to procure insurance, Bakery's insurance policy contains a broad form additional insured endorsement, which satisfies any such obligation.

Church's Opposition

Church contends that Bakery and Grill are the same entity doing business under the Golden Krust Brand, and that issues of fact and credibility as to ownership, operation and control of Grill preclude summary judgment in favor of Bakery. In support of this contention, Church asserts that Bakery's witness, Daren Hawthorne (Daren), president of Franchising's restaurant division, testified that the Golden Krust brands were a family run business started by his father, Lowell Hawthorne (Lowell). Daren testified that Lowell was the CEO of Bakery, Grill and Franchising at the time that the lease, sublease and franchising agreement for the subject premises were executed. Daren also testified that in 2013-2014, the directors and officers of Bakery, Grill and Franchising would collaborate, discuss, and come to mutual decisions benefitting the Golden Krust brand entities. Daren further testified that he had previously been legal counsel to the Golden Krust brands. Church contends that despite being a high ranking Franchising officer, Daren could not or would not provide a response regarding: (1) whether he also attends corporate meetings for Grill; (2) whether Morrison who is CAO for Franchising and Bakery, was also CAO for Grill; and (3) the identities of the officers/leadership team members of Franchising's, Bakery's, or Grill's Board of Directors. Church also points out that Daren testified on behalf of Bakery,...