Title: Joseph Kassis and Kassis Superior Sign Co., Inc. v. The Ohio Casualty Insurance Company

State: new-york

Issuer: New York Appellate Court

Document:

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This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 117  
Joseph Kassis and Kassis Superior 
Sign Co., Inc., 
            Appellants, 
        v. 
The Ohio Casualty Insurance 
Company, 
            Respondent.
Lawrence M. Ordway, Jr., for appellants.
Vincent G. Saccomando, for respondent.
Siller Wilk LLP, amicus curiae.
LIPPMAN, Chief Judge:
We are asked to determine whether a landlord is an
additional insured under an insurance policy obtained by his
tenant such that the insurer is obligated to defend and indemnify
the landlord in an underlying personal injury lawsuit.  Joseph
Kassis (Kassis) leased property in Syracuse, New York to Kassis
Superior Sign Co., Inc. (Superior Sign), and Superior Sign
obtained a commercial general liability insurance policy on the
property from The Ohio Casualty Insurance Company (Ohio
Casualty).  On February 25, 2004, Andrew Holden, a Superior Sign
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No. 117
1  Kassis has standing to bring this action because a person
claiming to be an insured under an insurance policy may bring a
declaratory judgment action against an insurer "when an actual
controversy develops concerning the extent of coverage, the duty
to defend, or other issues arising from the insurance contract"
(Lang v Hanover Ins. Co., 3 NY3d 350, 353 [2004]). 
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employee, slipped on an accumulation of snow and/or ice on the
leased property and thereafter commenced the underlying action
against Kassis.  Ohio Casualty disclaimed on the ground that the
policy, which names only Superior Sign, did not afford Kassis
coverage.  Kassis and Superior Sign commenced this action seeking
a declaration that Ohio Casualty is obligated to defend and
indemnify Kassis in the Holden action.1  Supreme Court granted
plaintiffs' motion for summary judgment in part and declared that
Ohio Casualty is obligated to provide a defense in the Holden
action.  The Appellate Division reversed and found no obligation
to defend or indemnify (51 AD3d 1366 [4th Dept 2008]). 
Plaintiffs have appealed as of right, pursuant to CPLR 5601 (a),
and we now reverse.
Under the lease, Superior Sign is obligated to pay for
snow removal services and to 
“indemnify, defend, and hold harmless
Landlord from any and all damages, costs,
expenses, and liabilities for anything
arising out of the occupancy of the Premises
caused by Tenant or its agents and from any
loss or damage arising out of the acts of
Tenant or its agents or the failure of Tenant
to comply with the terms and conditions” 
of the lease.  The lease further provides that Superior Sign, "at
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No. 117
2  Under the policy, an "insured contract" includes a
"contract for a lease of premises" and "[t]hat part of any other
contract or agreement pertaining to your business . . . under
which you assume the tort liability of another party to pay for
'bodily injury' or 'property damage' to a third person or
organization."  "[T]ort liability" is further defined as a
"liability that would be imposed by law in the absence of any
contract or agreement."  
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its sole cost and expense and for the mutual benefit of Landlord
and Tenant, shall maintain a general liability policy . . .
providing coverage against claims for bodily injury, personal
injury and property damage" with specified aggregate and per
occurrence coverage amounts.  
Superior Sign obtained a commercial general liability
insurance policy from Ohio Casualty.  The policy provides bodily
injury coverage where "the insured is obligated to pay damages by
reason of the assumption of liability in a contract or agreement"
and that contract or agreement falls within the definition of an
"insured contract."  The parties do not dispute that Superior
Sign's lease is an "insured contract" as that term is defined in
the insurance policy.2  Moreover, the policy's blanket additional
insured provision extends coverage not simply to the named
insured, i.e., Superior Sign, but also to "any person or
organization whom [the named insured is] required to name as an
additional insured on this policy under a written contract or
agreement."  "'Additional insured' is a recognized term in
insurance contracts," and "the well-understood meaning of the
term is an entity enjoying the same protection as the named
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No. 
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insured" (Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99
NY2d 391, 393 [2003] [internal quotation marks and citation
omitted] [emphasis added]).  Notably, the insurance policy does
not require Superior Sign to provide Ohio Casualty with notice of
those persons or organizations Superior Sign is contractually
required to name as an additional insured on the policy. 
Superior Sign is not required to complete and return to Ohio
Casualty any notification forms listing those persons or
organizations that it intended to name as additional insureds
under the policy, nor does the policy require the submission of
any additional insured certificates or the like.   
Thus, in deciding the ultimate question -- i.e.,
whether Kassis is an additional insured under the subject policy
obligating Ohio Casualty to defend and indemnify him in
connection with the underlying personal injury action -- we need
only determine whether, under the lease, Superior Sign was
required to ensure that Kassis received general liability
insurance coverage equivalent to the coverage Superior Sign
enjoyed.  
Pursuant to the general liability insurance provision
of the lease in question, Superior Sign was obligated to obtain
coverage at specified monetary levels in the aggregate and per
occurrence against "claims for bodily injury, personal injury and
property damage, . . . at its sole cost and expense and for the
mutual benefit of [Kassis] and [Superior Sign]."  The natural and
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intended meaning of the term "mutual benefit" as used in this
provision is that Kassis and Superior Sign are intended to enjoy
the same level of coverage. 
The intent and meaning of the term "mutual benefit" in
the provision becomes clear when juxtaposed with the language of
the other insurance provisions of the lease.  The lease expressly
contemplates that both Kassis and Superior Sign will enjoy fire
insurance, and the lease further provides in an "Additional
Insurance" provision that Superior Sign may obtain certain types
of insurance coverage just for itself.  With respect to fire
insurance, Kassis, "at Tenant's sole cost and expense," is to
"keep the Premises insured for the benefit of the parties against
loss or damage by fire," and fire insurance "may be written
either under separate policies in Landlord's name or combined
with other coverages acquired by Tenant."  As for the additional
insurance provision, it specifies that Superior Sign, "at its
sole cost and expense, may maintain insurance coverage for its
benefit on Tenant's leasehold improvements and Tenant's personal
property in such amounts as Tenant deems appropriate with Tenant
assuming the risk of any co-insurance."  The additional insurance
provision also expressly permits Superior Sign to "effect for its
own account any insurance not required by the provisions of this
Lease, including business interruption insurance or insurance
covering Tenant's equipment and personal property."  Plainly,
where a disparity in coverage as between insureds was
contemplated -- i.e., where the insurance to be procured was not
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No. 
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for the insureds' "mutual benefit" -- it was expressly noted.
It is therefore clear that Superior Sign was obligated
under the lease to procure the same level of general liability
insurance coverage for Kassis as it obtained for itself, and
because of that, Kassis falls within the policy's additional
insured provision.  Because Kassis is considered an additional
insured, Ohio Casualty is obligated to defend him in the
underlying personal injury action and, if appropriate, indemnify
him as an additional insured in accordance with the policy.  The
parties' remaining contentions are without merit.
Accordingly, the order of the Appellate Division should
be reversed, with costs, and the judgment of Supreme Court
reinstated.             
*   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *
Order reversed, with costs, and judgment of Supreme Court,
Onondaga County, reinstated. Opinion by Chief Judge Lippman.
Judges Ciparick, Graffeo, Read, Smith, Pigott and Jones concur.
Decided June 25, 2009