Zurich Am. Ins. Co. v. Wausau Bus. Ins. Co.

206 F.Supp.3d 818

ZURICH AMERICAN INSURANCE COMPANY, Plaintiff,

v.WAUSAU BUSINESS INSURANCE COMPANY, Defendant.

1:14-cv-3382

United States District Court, S.D. New York.

Signed August 29, 2016

Janet Patricia Ford, Jennifer Freda Mindlin, White, Fleischner & Fino, LLP, New York, NY, for Plaintiff.

Marshall Todd Potashner, Janet Jakyung Lee, Jaffe & Asher LLP, New York, NY, for Defendant.

Opinion and Order

ANDREW L. CARTER, JR., United States District Judge:

This is a dispute between two insurance companies over which is obligated to defend and indemnify certain defendants in a separate lawsuit filed in New York State Court for the County of New York, Robinson v. Brooks Shopping Centers LLC, et al. , Index No. 106847/13 (the "Underlying Action"). Specifically, Plaintiff Zurich American Insurance Company ("Zurich") seeks a declaratory judgment that Defendant Wausau Business Insurance Company ("Wausau") is obligated to defend and indemnify the owner and the management company of a shopping center against a personal injury lawsuit filed by a visitor to the shopping center. The parties now cross-move for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons stated herein, Wausau's motion is granted and Zurich's motion is denied.

BACKGROUND

I. Factual Background

Brooks Shopping Centers, LLC ("Brooks") owns the Cross County Shopping Center, in Yonkers, New York. (Def.'s Rule 56.1 Statement ("Def.'s 56.1"), ECF No. 51, ¶ 5.) Macerich Management Company ("Macerich") operates the shopping center. (Def.'s 56.1 ¶ 5.) Brooks entered into a contract with the Whiting-Turner Contracting Company ("Whiting-Turner"), a general contractor, pursuant to which Whiting-Turner would oversee and coordinate a construction project at the shopping center. (Def.'s 56.1 ¶ 9.) Whiting-Turner, in turn, entered into a subcontract with Montesano Brothers, Inc. ("Montesano"), pursuant to which Montesano would perform certain underground utility work at the shopping center. (Def.'s 56.1 ¶ 25.)

Under the contract between Brooks and Whiting-Turner, Whiting-Turner was required to purchase and maintain insurance to protect against claims which "may arise out of or result from the Contract operations in connection with the Project, whether such operations be by itself or by any subcontractor, by anyone directly or indirectly employed by any of them, or by anyone for whose acts any of them may be liable." (Def.'s 56.1 ¶ 24.) Plaintiff Zurich issued a general liability policy for the period from August 1, 2009, to August 10, 2010, to Whiting-Turner. (Def.'s 56.1 ¶ 28.) The policy has a liability limit of $2 million for each occurrence, and it has a $500,000 deductible for each occurrence for bodily injury. (Def.'s 56.1 ¶ 28.) Brooks and Macerich qualify as additional insureds under the Zurich policy. (Def.'s 56.1 ¶ 31.)

Under the contract between Whiting-Turner and Montesano, Montesano too was required to carry commercial general liability insurance and to include Whiting-Turner as an additional insured. (Def.'s 56.1 ¶ 26.) The contract provided that "Whiting-Turner, the Owner [Brooks] and other entities as may be reasonably requested shall be named as an additional insured" under the policy. (Def.'s 56.1 ¶ 26.) Defendant Wausau issued a general liability policy for the period from January 1, 2010, to January 1, 2011, to Montesano. (Def.'s 56.1 ¶ 13.) As relevant here, the policy contained two endorsements related to additional insureds: Item 10 and Item 11. (Def.'s 56.1 ¶ 17). Item 10 provides, in part, as follows:

Item 10—EXPANDED BLANKET ADDITIONAL INSURED AND WAIVER OF SUBROGATION (FOR INSTALLATION EXPOSURES)

A. SECTION II—Who is An Insured is amended to include any person or organization to whom you are obligated by a written agreement to procure additional insured coverage, provided that:

1. The "bodily injury", "property damage," or "personal and advertising injury" giving rise to liability occurs subsequent to the execution of the written agreement; and

2. The written agreement is in effect at the time of the "bodily injury," "property damage," or "personal and advertising injury" for which coverage is sought.

That person or organization shall be referred to as the additional insured.

The coverage afforded to the additional insured is limited to liability caused, in whole or in part, by the negligent acts or omissions of you, your employees, your agents, or your subcontractors, in the performance of your going operations.

(Def.'s 56.1 ¶ 18.) Item 11 provides, in part, as follows:

Item 11—BLANKET ADDITIONAL INSURED AND WAIVER OF SUBROGATION-PERSON OR ORGANIZATION

A. Section II—Who Is An Insured is amended to include as an additional insured any person or organization to whom you are obligated by a written agreement to procure additional insured coverage, but only with respect to liability for "bodily injury", "property damage" or "personal and advertising injury" caused in whole or in part, by your acts or omissions or the acts or omissions of those acting on your behalf .

1. In performance of your ongoing operations; or

2. In connection with premises owned by you provided that:

(a) The "bodily injury", "property damage" or "personal and advertising injury" giving rise to liability occurs subsequent to the execution of the agreements; and

(b) The written agreement is in effect at the time of the "bodily injury", "property damage", or "personal and advertising injury" for which coverage is sought.

That person or organization shall be referred to as additional insured. [...]

C. Exclusions

The insurance does not apply to:

1. Any premises or equipment leased to you.

2. Any construction, renovation, demolition or installation operations performed by or on behalf of you, or those operating on your behalf.

(Def.'s 56.1 ¶ 19.)

In June 2011, Roxanna Robinson commenced the Underlying Action in New York Supreme Court, against Brooks and Macerich Real Estate Company.¹ (Pl.'s Rule 56.1 Statement ("Pl.'s 56.1"), ECF No. 43, ¶ 2.) Ms. Robinson alleged that on April 5, 2010, she slipped and fell while walking by or through a construction site located at the Cross County Shopping Center. (Exh. B ("Underlying Compl."), Mindlin Decl., ECF No. 54-2, ¶ 4.) She alleged that Brooks and Macerich "created a dangerous condition by failing to adequately protect [her] from ongoing construction" (Underlying Compl. ¶¶ 11, 25), and that she was "caused to fall due to the negligence of the defendants ..." (Underlying Compl. ¶¶ 10, 24.) She alleged that "the accident and resulting injuries ... were caused solely by the negligence of the defendants and not due in any part to the negligence of plaintiff." (Underlying Compl. ¶ 6.) As a result of her fall, she alleged, she suffered from severe injuries, and she sought damages in the amount of $1,000,000. (Underlying Compl. ¶¶ 28-29.)

On October 3, 2011, Whiting-Turner reported the complaint to Zurich, its insurer, and advised Zurich that Whiting-Turner had received correspondence from Brooks's insurance carrier "regarding an incident involving Ms. Roxana Robinson, who alleges she fell in a ditch due to construction." (Pl.'s 56.1 ¶ 8.) Whiting-Turner's claim to Zurich also noted, "The work performance in the area where the alleged incident occurred was the responsibility of Montesano Brothers, Inc." (Pl.'s 56.1 ¶ 9; Exh. C, Mindlin Decl., ECF No. 54-3, 7.) Zurich retained a law firm to defend Brooks, and eventually Macerich as well, in the action. (Pl.'s 56.1 ¶ 10.) Zurich later brought a third-party action against Montesano, alleging that Brooks and Macerich had entered into a prior agreement with Montesano to perform certain construction work and that any injuries to Ms. Robinson were caused and brought about by the negligence of Montesano. (Pl.'s 56.1 ¶¶ 11-12.)

In a decision dated September 21, 2015, Judge Manuel J. Mendez of the New York Supreme Court, New York County, granted summary judgment in favor of Brooks and Macerich, concluding that they neither created the defective condition, nor had actual or constructive notice of the defective condition, and that Ms. Robinson failed to put forth any admissible evidence to the contrary. (Exh. E ("State Ct. Order"), Mindlin Decl., ECF No. 54-5.) Judge Mendez also granted summary judgment in favor of Montesano, the third-party defendant, concluding that "the alleged defect causing Ms. Robinsons' fall was de minimis and therefore not actionable." (State. Ct. Order.) On that basis, Judge Mendez held that Brooks and Macerich had not "stated a basis for summary judgment as to [their] claims for common law and contractual indemnification." (State Ct. Order.) Ms. Robinson, Brooks, and Macerich have each moved to reargue, and each has also filed a notice of appeal of different aspects of Judge Mendez's decision. (Pl.'s 56.1 ¶ 16.)

II. Procedural Background

On May 9, 2014, Zurich initiated this action against Liberty Mutual Insurance Company, an affiliate of Wausau. (ECF No. 2.) On September 22, 2014, Zurich filed an amended complaint, correcting the name of Liberty Mutual Insurance Company to Wausau Business Insurance Company and adding Travelers Constitution State Insurance Company as a defendant. (ECF No. 13.) The parties exchanged document discovery. (See, e.g. , ECF No. 32.) On December 3, 2015, following the close of discovery, the parties voluntarily discontinued the action against Travelers without prejudice. (ECF No. 41.) On January 11, 2016, the parties cross-moved for summary judgment. (ECF Nos. 42–53.)

LEGAL STANDARD

"The Court shall grant summary judgment if the movant shows that there is no 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 Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Material facts are those facts that may affect the outcome of the case. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue of fact...