U.S. Underwriters Ins. Co. v. Kenfa Madison, LLC

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U.S. UNDERWRITERS INSURANCE COMPANY, Plaintiff, v. KENFA MADISON, LLC, JUAN ORTIZ, H&K NY CORP., NY CONSTRUCTION WORK, INC., U.S. ONE CONSTRUCTION INC., and DESIGN GROUP IN H&K, INC., Defendants.

No. 20-CV-2761 (NGG) (LB)

United States District Court, E.D. New York

August 30, 2023

MEMORANDUM & ORDER

NICHOLAS G. GARAUFIS, UNITED STATES DISTRICT JUDGE

Plaintiff U.S. Underwriters Insurance Company (“U.S Underwriters”) filed a declaratory judgment action against Defendants Kenfa Madison, LLC (“Kenfa”) Juan Ortiz, H&K NY Corp., NY Construction Work, Inc. (“NY Construction”), U.S. One Construction Inc. (“US One”), and Design Group in H&K Inc. (Compl. (Dkt 1.)) The Complaint seeks a declaration that no insurance coverage is available to Kenfa relating to claims arising from a workplace injury to Defendant Ortiz at 204-208 Northern Boulevard, Bayside, New York 11.361. (the “Insured Premises”) that occurred on August 1 2017. Before the court is Plaintiff's Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56. (Mot. for Summ. J. (“Mot.”) (Dkt. 42).) For the reasons stated below, the motion is DENIED.

I. BACKGROUND

U.S. Underwriters began issuing commercial insurance policies to Kenfa in May 2015. (Ex. A to Proto Decl. (Dkt. 43-1) at 7.) One of these was a commercial package policy (the “Policy”) effective from May 15, 2017 to May 15, 2018. (See Pl's. 56.1 St. (Dkt. 42-9) ¶ 2; Defs. 56.1 Resp. (Dkt. 45-7) ¶ 2.) The Policy insured two locations that, at all relevant times were owned by Kenfa: 45-03 204th Street, Bayside, NY 11361 and 204-08 Northern Boulevard, Bayside, NY 11361. (Pl's. 56.1 St. ¶¶ 1, 3; Def's 56.1 Resp. ¶¶ 1, 3.) The Policy contained a Commercial General Liability Coverage Form, which explained the terms and conditions of coverage, (Pl's. 56.1 St. ¶ 4; Def's 56.1 Resp. ¶ 4), as well as an exclusion (the “L-500 Endorsement”) that modified and excluded coverage for bodily injuries. This exclusion reads as follows:

(1) “Bodily injury” to any “employee”, “volunteer worker” “temporary worker” or “casual laborer” arising out of or in the course of:

(a) Employment by any insured; or

(b) Performing duties related to the conduct of any insureds business;

(2) “Bodily injury” to any contractor, subcontractor, or any “employee”, “volunteer worker”, “temporary worker” or “casual laborer” of any contractor or subcontractor arising out of or in the course of the rendering or performing services of any kind or nature whatsoever by such contractor, subcontractor or “employee”, “volunteer worker”, “temporary worker” or “casual laborer” of such contractor or subcontractor for which any insured may become liable in any capacity; or

(3) Any obligation of any insured to indemnify or contribute with another because of damages arising out of such ‘bodily injury”; or

(4) “Bodily injury” sustained by the spouse, child, parent, brother or sister of any “employee”, “volunteer worker”, “temporary worker” or “casual laborer” of any insured, or of a contractor, subcontractor, or of any “employee”, “volunteer worker”, “temporary worker” or “casual laborer” of any contractor or subcontractor as a consequence of any injury to any person as set forth in (1) and (2) above.

This exclusion applies to all claims and “suits” by any person or organization for damages because of such ‘bodily injury”, including damages for care and loss of services and any claim under which any insured may be held liable under any Workers' Compensation Law. “Casual laborer” means any person providing work or materials to any insured for compensation of any type.

(Ex. E to Proto Decl. (Dkt. 43-5) at ECF 47.)

On August 22, 2017, U.S. Underwriters received notice of a liability claim from Kenfa, explaining that Juan Ortiz, a “[c]ontractor's [e]mployee, fell down while working at the insured premises on August 1,2017.” (Pl's. 56.1 St. ¶ 6; Defs. 56.1 Resp. ¶ 6.) Ortiz's attorney later explained to U.S. Underwriters that “Ortiz was injured when he fell from a ladder while working at a construction site at 204-08 Northern Boulevard, Bayside, NY.” (Pl's. 56.1 St. ¶ 7; Defs. 56.1 Resp. ¶ 7.) The attorney also told U.S. Underwriters that Ortiz's “employer is U.S. One Construction, Inc., a subcontractor at the site.” (Pl's. 56.1 St. ¶ 7; Defs. 56.1 Resp. ¶ 7.)

On August 23, 2017, U.S. Underwriters wrote to Kenfa that because Ortiz was injured as an employee or casual laborer of a contractor, “the policy does not cover this matter” based on the L-500 Endorsement, and that U.S. Underwriters would not “handle this matter on behalf of Kenfa.” (Pl's. 56.1 St. ¶ 8; Defs. 56.1 Resp. ¶ 8; see also Ex. 3 to Bums Aff. (Dkt. 42-4) at ECF 3-5.) In September 2017, Ortiz's attorney sent U.S. Underwriters a courtesy copy of a complaint that Ortiz intended to file against Kenfa, H&K NY Corp., and NY Construction asserting claims for negligence and violation of New York Labor Law (“NYLL”) §§ 200, 240, and 241. (Pl's. 56.1 St. ¶¶ 11, 13; Defs. 56.1 Resp. ¶¶ 11, 13.) The complaint alleged that Ortiz was lawfully on the Insured Premises on August 1, 2017 when he fell from a ladder and was injured. (Pl's. 56.1 St. ¶ 12; Defs. 56.1 Resp. ¶ 12.) The complaint did not mention whether Ortiz was employed by one of the contractors or subcontractors when injured. (Pl's. 56.1 St. ¶ 14; Defs. 56.1 Resp. ¶ 14.) U.S. Underwriters then sent another letter to Kenfa on September 20, 2017 reasserting its disclaimer of coverage based on the L-500 Endorsement, (Pl's. 56.1 St. ¶ 15; Defs.56.1 Resp. ¶ 15), but agreeing to defend Kenfa against Ortiz's claims subject to a right to seek a declaratory judgment to confirm its coverage position. (Pl's. 56.1 St. ¶¶ 16-17; Defs. 56.1 Resp. ¶¶ 16-17.)

Ortiz commenced an action in the Supreme Court of New York, County of Queens on October 16, 2017 against Kenfa, H&K NY Corp., NY Construction, Design Group in H&K, and Amko Electrical Construction and Maintenance, Inc. (the “Underlying Action”). (Pl's. 56.1 St. ¶ 19; Defs. 56.1 Resp. ¶ 19.) The complaint in the Underlying Action asserted the same allegations and claims as the courtesy copy that Ortiz's attorneys had previously given to U.S. Underwriters. (See Pl's. 56.1 St. ¶¶ 20-21; Defs. 56.1 Resp. ¶¶ 20-21.) Though the complaint did not reference Ortiz's employer, Ortiz filed a Verified Bill of Particulars on November 27, 2018 asserting that he was employed by U.S. One as a “helper” at the time of the accident. (See Pl's. 56.1 St. ¶¶ 22-23; Defs. 56.1 Resp. ¶¶ 22-23.) Kenfa then filed a third-party complaint against U.S. One seeking to recover damages if it were found liable for Ortiz's injuries. (See Pl's. 56.1 St. ¶ 24; Defs. 56.1 Resp. ¶ 24; Ex. J to Proto Decl. (Dkt. 43-11) at 3, 4.)

U.S. Underwriters initiated the instant declaratory judgment action on June 22, 2020, invoking the court's diversity jurisdiction. (Compl. ¶ 8.) Ortiz filed his Answer on September 18, 2020, (Ortiz Answer (Dkt. 23)), and Kenfa filed an Answer on September 21, 2020, asserting fifteen affirmative defenses and four counterclaims. (Kenfa Answer (Dkt. 24).) Defendants U.S. One, NY Construction, H&K NY Corp., and Design Group in H&K, LLC never appeared in this action and the clerk entered default against them on August 6, 2020. (Dkts. 16-19.) U.S. Underwriters now moves for summary judgment, asking the court to: 1) find that it has no duty under the Policy to defend or indemnify Kenfa against Ortiz's claims in the Underlying Action; 2) grant its request to withdraw from Kenfa's defense in the Underlying Action; and 3) provide other relief as the court deems just and proper. (Pl's. Mot. at 25.)^[1]

According to U.S. Underwriters, Kenfa hired U.S. One to perform construction and repair work at the Insured Premises and Ortiz was injured while working in his capacity as an employee of U.S. One. (Pls.' 56.1 St. ¶¶ 25-27, 29.) U.S. Underwriters also asserts that Ortiz was employed by one of the contractors working on the Insured Premises and was injured in this capacity. (Id. ¶¶ 28, 30.) Kenfa admits that it hired U.S. One to work at the Insured Premises, but states that it is unaware of the legal relationship between U.S. One and NY Construction, (Defs. 56.1 Resp. ¶¶ 2526)), and that Ortiz's employment status is disputed. (Id. ¶¶ 28-30.)

II. STANDARD OF REVIEW

The court's role on a motion for summary judgment “is not to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Lionel v. Target Corp., 44 F.Supp.3d 315, 318 (E.D.N.Y. 2014) (quoting Cioffi v. Averill Park Cent. Sch. Dist. Bd. of Educ., 444 F.3d 158, 162 (2d Cir. 2006)).^[2] Summary judgment is appropriate 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.” Am. Empire Surplus Lines Ins. Co. v. Certain Underwriters at Lloyd's London, No. 16-CV-5664 (AMD) (JO), 2018 WL 10456838, at *4 (E.D.N.Y. July 23, 2018) (quoting Fed.R.Civ.P. 56(a)). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue of fact.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A genuine issue of fact cannot be established by “[c]onclusory allegations, conjecture, and speculation.” Kerzer v. Kingly Mfg., 156 F.3d 396,400 (2d Cir. 1998).

“[T]he party opposing summary judgment must identify specific facts and affirmative evidence that contradict those offered by the moving party to demonstrate that there is a genuine issue for trial.” Certain Underwriters, 2018 WL 10456838, at *4. If the nonmovant is unable to establish that each element is at least reasonably disputed based on the evidentiary record, the motion should be...