EDW Drywall Constr., LLC v. U.W. Marx, Inc.

189 A.D.3d 1720

135 N.Y.S.3d 204

EDW DRYWALL CONSTRUCTION, LLC, Respondent,

v.U.W. MARX, INC., et al., Appellants, et al., Defendant.

529276

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: October 13, 2020

Decided and Entered: December 3, 2020

Mastropietro Law Group, PLLC, Saratoga Springs (John P. Mastropietro of counsel), for appellants.

Couch White, LLP, Albany (Donald J. Hillmann of counsel), for respondent.

Before: Egan Jr., J.P., Mulvey, Aarons, Pritzker and Reynolds Fitzgerald, JJ.

MEMORANDUM AND ORDER

Egan Jr., J.P. Appeal from an order of the Supreme Court (McNally Jr., J.), entered May 20, 2019 in Rensselaer County, which, among other things, granted plaintiff's cross motion for partial summary judgment on its first cause of action and for summary judgment on its second, fourth and fifth causes of action.

On July 7, 2016, defendant U.W. Marx, Inc., a general contractor, entered into a subcontract for plaintiff to furnish and install sheetrock in connection with the renovation of a 126–unit apartment complex located in the Town of Liberty, Sullivan County. As part of the subcontract, plaintiff was required to provide U.W. Marx with certificates of insurance demonstrating that it had procured, as relevant here, commercial general liability insurance (hereinafter CGLI) naming, among others, U.W. Marx as an additional insured. Following receipt of plaintiff's insurance certificates, U.W. Marx discovered that plaintiff's CGLI did not provide coverage for bodily injury claims related to Labor Law §§ 240 and 241.¹ In an effort to avoid a dispute and/or delay on the project, on July 20, 2016, U.W. Marx agreed to pay, on plaintiff's behalf, the $52,678.03 premium associated with obtaining a replacement CGLI policy that provided coverage for bodily injury for Labor Law liability. In October 2016, the insurance carrier unilaterally cancelled this replacement policy for reasons unrelated to this case. As a result, U.W. Marx informed plaintiff that it could not remain on the job site without proper CGLI and demanded that it provide a current insurance certificate demonstrating that it had procured a policy providing for bodily injury coverage under the Labor Law.² Plaintiff did not thereafter obtain a compliant CGLI policy and, instead, again provided U.W. Marx with certificates of insurance for policies that expressly excluded coverage for Labor Law liability. With no resolution to the parties' insurance dispute forthcoming, U.W. Marx informed plaintiff that, given its continued failure to procure a CGLI policy that covered bodily injury under the Labor Law, it was hiring third-party subcontractors to complete plaintiff's scope of work under the subcontract. In February 2017, U.W. Marx provided plaintiff with a final recap and reconciliation, itemizing the associated costs and charges for the project, indicating that plaintiff owed it $7,415.92.

Plaintiff thereafter commenced this action against, among others, U.W. Marx and its surety, defendant General Casualty Company of Wisconsin (hereinafter GCCW), alleging causes of action for, as relevant here, wrongful termination, breach of contract, mechanic's lien foreclosure and recovery against a surety bond.³ GCCW answered and U.W. Marx separately answered and asserted a counterclaim for, among other things, breach of contract. Following joinder of issue, U.W. Marx and GCCW (hereinafter collectively referred to as defendants) moved for partial summary judgment on the issue of liability on U.W. Marx's breach of contract counterclaim and, correspondingly, for summary judgment dismissing the complaint against GCCW. Plaintiff opposed the motion and cross-moved for partial summary judgment on the issue of liability with respect to its first cause of action for wrongful termination and for summary judgment on its second cause of action for breach of contract, fourth cause of action to foreclose on its mechanic's lien and fifth cause of action for recovery against surety bond. Supreme Court denied defendants' motion and granted plaintiff's cross motion, determining that plaintiff did not breach the subcontract and, therefore, U.W. Marx wrongfully terminated plaintiff for failing to maintain adequate insurance coverage. Supreme Court also determined that the mechanic's lien that plaintiff filed was valid and, given that U.W. Marx filed a surety bond for the purpose of discharging said lien, plaintiff was also entitled to judgment against GCCW. Defendants appeal.

On a motion for summary judgment, it is the moving party's burden to establish its prima facie entitlement to judgment as a matter of law by presenting sufficient evidence demonstrating the absence of any material questions of fact (see Voss v. Netherlands Ins. Co., 22 N.Y.3d 728, 734, 985 N.Y.S.2d 448, 8 N.E.3d 823 [2014] ; Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ). Once a prima facie case has been established, the burden shifts to the party opposing the motion to demonstrate the existence of a material issue of fact (see generally Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ). In order to establish a cause of action for breach of contract, "a party must establish the existence of a contract, the party's own performance under the contract, the other party's breach of its contractual obligations, and damages resulting from the breach" ( Adirondack Classic Design, Inc. v. Farrell, 182 A.D.3d 809, 811, 122 N.Y.S.3d 790 [2020] ). It is well settled that a contractual agreement "that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" ( Matter of Olszewski v. Cannon Point Assn., Inc., 148 A.D.3d 1306, 1309, 49 N.Y.S.3d 571 [2017] [internal quotation marks and citations omitted] ). The failure of a party to comply with a contractual insurance procurement provision constitutes a material breach of contract (see Kinney v. Lisk Co., 76 N.Y.2d 215, 219, 557 N.Y.S.2d 283, 556 N.E.2d 1090 [1990] ; Spector v. Cushman & Wakefield, Inc., 100 A.D.3d 575, 575, 955 N.Y.S.2d 302 [2012] ); however, "[w]hen the language of a contract is ambiguous, its construction presents a question of fact which may not be resolved by the court on a motion for summary judgment" ( Van Etten Oil Co., Inc. v. Aero Star Petroleum, Inc., 131 A.D.3d 740, 741–742, 14 N.Y.S.3d 801 [2015] [internal quotation marks and citations omitted] ).

In support of their motion for partial summary judgment as to liability on the breach of contract counterclaim, defendants submitted, among other things, a copy of the subcontract between plaintiff and U.W. Marx, plaintiff's CGLI and umbrella insurance policies and the affidavit of U.W. Marx's director of operations. With respect to plaintiff's obligation to procure CGLI, section 13.1 of the subcontract provides that plaintiff, "at its sole cost and expense, shall maintain and keep in full force and effect" insurance coverage for CGLI, including certain minimum limits for "bodily injury" as stated in the endorsement contained in Exhibit B of the subcontract both "for itself and all additional insureds." Plaintiff procured a CGLI policy and provided insurance certificates to U.W. Marx; however, upon review, U.W. Marx discovered that plaintiff's policy excluded coverage for bodily injuries incurred...