Case Name: Gilbane Building Co./TDX Construction Corp. et al., Respondents, v. St. Paul Fire and Marine Insurance Company et al., Defendants, and Liberty Insurance Underwriters, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 2016-09-15
Citations: 143 A.D.3d 146
Docket Number: 
Parties: Gilbane Building Co./TDX Construction Corp. et al., Respondents, v St. Paul Fire and Marine Insurance Company et al., Defendants, and Liberty Insurance Underwriters, Appellant.
Judges: Sweeny, J.P., Saxe and Gische, JJ., concur with Renwick, J.; Kahn, J., dissents in a separate opinion.
Reporter: Appellate Division Reports
Volume: 143
Pages: 146–172

Head Matter:
[38 NYS3d 1]
Gilbane Building Co./TDX Construction Corp. et al., Respondents, v St. Paul Fire and Marine Insurance Company et al., Defendants, and Liberty Insurance Underwriters, Appellant.
First Department,
September 15, 2016
APPEARANCES OF COUNSEL
Hardin, Kundla, McKeon & Poletto, P.A., New York City 0George R. Hardin of counsel), for appellant.
Saxe Doernberger & Vita, PC., New York City (.Richard W. Brown of counsel), for respondents.
Kaufman Dolowich & Voluck, LLP, Woodbury (.Michael L. Zigelman of counsel), for amicus curiae.

Opinion:
OPINION OF THE COURT
Renwick, J.
Plaintiffs Gilbane Building Co./TDX Construction Corp., a joint venture (the JV), and its individual members, Gilbane Building Company and TDX Construction Corporation, construction managers at a job site, seek a declaration that defendant Liberty Insurance Underwriters is obligated to defend and indemnify them, as an additional insured under a commercial general liability (CGL) policy issued by Liberty to a prime contractor. The principal issue in this appeal is the interpretation of the additional insurance endorsement in the policy which provides that an additional insured is "any person or organization with whom you [the insured] have agreed to add as an additional insured by written contract." Trial courts have arrived at conflicting interpretations of a similarly worded additional insured clause as to whether coverage is extended not only to those "with whom" the insured agreed, but also to those "for whom" the insured agreed to provide coverage. We hold that the subject additional insured clause covers only those that have written contracts directly with the named insured.
Factual and Procedural Background
The underlying action giving rise to this insurance coverage dispute involves a construction project on property in Manhattan owned by the City of New York that is part of the Bellevue Hospital campus. The project entailed the construction of a 15-story building with a double basement for use as a DNA lab for the Chief Medical Examiner of the City of New York. Pursuant to a contract with the City, the Dormitory Authority of the State of New York (DASNY) agreed to finance and manage the project.
The JV was retained by nonparty DASNY to provide construction management services in connection with the project. Under the construction management agreement, any prime contractor, whether retained by DASNY or otherwise, was required to name the construction manager as an additional insured under its liability policies.
Nonparty Samson Construction Company entered into a separate contract with DASNY to perform services as the prime contractor for all foundation and excavation work on the project. In its prime contract, Samson agreed to procure commercial general liability insurance with an endorsement naming as additional insureds: "Dormitory Authority of the State of New York, The State of New York, the Construction Manager (if applicable) and other entities specified on the sample Certificate of Insurance provided by the Owner." The sample Certificate of Insurance states:
"The following are Additional Insureds under General Liability as respects this Project:
"City of New York
"City of New York Health & Hospital Corporation
"Forensic Biology Laboratory
"Dormitory Authority-State of New York
"Gilbane/TDX Construction Joint Venture."
Samson, as required, obtained a policy from defendant Liberty for the relevant period, November 12, 2002 through November 12, 2003. The policy contained, as is relevant to this dispute, an "Additional Insured — By Written Contract" clause, stating:
"WHO IS AN INSURED (Section II) is amended to include as an insured any person or organization with whom you have agreed to add as an additional insured by written contract but only with respect to liability arising out of your operations or premises owned by or rented to you."
The policy also required that in the event of an "[o]ccurrence, [o]ffense, [c]laim [o]r [s]uit" defendant be notified "as soon as practicable." Endorsement No. 19 to the policy further provided:
"g. You must give us prompt written notice if any of the following conditions arise or if any injury involves the following: . . .
"(4) Any claim which may equal or exceed 50% of the insured's retention.
"(5) Any lawsuit or arbitration proceeding involving this policy brought against any insured.
"(6) Trial settings.
"(7) If defense counsel has been retained to defend a claim."
"h. In the event that you do not give us written notice within 30 days of the date you know or should have known of a claim or injury meeting one or more of the descriptions set forth in g. above, we shall have the option in our sole discretion to deny coverage under this policy if your failure to report any such loss has prejudiced our rights under this policy."
During the project, Samson's excavation and foundation work allegedly caused adjacent buildings to sink, resulting in significant structural damage to those buildings. In or about October 2003, the JV issued a change order to Samson for extra work to stabilize the adjacent buildings.
In 2006, DASNY commenced the litigation against Samson and Perkins Eastman, Architects, P.C., the project architect, seeking damages for Samson's negligence in performing the work. In or about December 2010, Perkins Eastman commenced a third-party action against the JV and its members individually. Plaintiffs provided notice of the third-party action to defendant Liberty by letter dated April 25, 2011, seeking a defense and indemnification. Liberty denied coverage to plaintiffs by letter dated July 20, 2011, stating that plaintiffs had provided no documentation that Samson, the named insured, was supposed to defend and indemnify them, and that, in any event, plaintiffs' notice of the third-party action five months after it had been initiated was not timely under the policy.
Plaintiffs then commenced this action seeking a declaration that Liberty is obligated to provide them with coverage. Following discovery, Liberty moved for summary judgment declaring that it is not obligated to provide plaintiffs with coverage under the policy. It argued that plaintiffs did not qualify as additional insureds and that plaintiffs had failed to satisfy the notice of occurrence and notice of suit conditions in the policy.
Supreme Court denied Liberty's motion, holding that plaintiffs qualified as additional insureds under the policy (2014 NY Slip Op 33766[U] [2014]). The court found that the policy "requires only a written contract to which Samson is a party" and that this requirement was met by Samson's written contract with DASNY, which obligated Samson to procure insurance naming as additional insured "the Construction Manager (if applicable)" and that the JV was undisputedly the construction manager (id. at *5-6).
On the issue of late notice, the court found that there was no express provision in the policy requiring an additional insured to give notice to the insurer of an occurrence or a lawsuit, only a provision requiring the named insured to give notice; that, accordingly, plaintiffs could rely on Samson's notice of occurrence, particularly since their interests were not adverse to Samson's; and that plaintiffs' reason for delaying five months in providing notice of the third-party action — that they needed to find the policy — was reasonable. Ultimately, the court declared that the JV is an additional insured under the Liberty policy.
Discussion
In this action for a judgment declaring the parties' rights under an insurance policy, this Court must be guided by the rules of contract interpretation because "[a]n insurance policy
is a contract between the insurer and the insured" (Bovis Lend Lease LMB, Inc. v Great Am. Ins. Co., 53 AD3d 140, 145 [1st Dept 2008]). As a result, the extent of coverage "is controlled by the relevant policy terms, not by the terms of the underlying trade contract that required the named insured to purchase coverage" (id.; see also Travelers Indem. Co. v American & Foreign Ins. Co., 286 AD2d 626, 626 [1st Dept 2001]).
"Generally, the courts bear the responsibility of determining the rights or obligations of parties under insurance contracts based on the specific language of the policies" (State of New York v Home Indem. Co., 66 NY2d 669, 671 [1985]). "[W]ell-established principles governing the interpretation of insurance contracts . . . provide that the unambiguous provisions of an insurance policy, as with any written contract, must be afforded their plain and ordinary meaning, and that the interpretation of such provisions is a question of law for the court" (Broad St., LLC v Gulf Ins. Co., 37 AD3d 126, 130-131 [1st Dept 2006]). "If, however, there is ambiguity in the terms of the policy, any doubt as to the existence of coverage must be resolved in favor of the insured and against the insurer, as drafter of the agreement" (id. at 131).
"A contract of insurance is ambiguous if the language therein is susceptible of two or more reasonable interpretations, whereas, in contrast, a contract is unambiguous if the language has a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion" (id. [citations and internal quotations and marks omitted]).
In this case, the "Additional Insured — By Written Contract" clause of the CGL policy provides additional insured coverage to "any person or organization with whom you [Samson] have agreed to add as an additional insured by written contract." Contrary to Supreme Court's determination, and consistent with our prior decisions in AB Green Gansevoort, LLC v Peter Scalamandre & Sons, Inc. (102 AD3d 425 [1st Dept 2013]) and Linarello v City Univ. of N.Y. (6 AD3d 192 [1st Dept 2004]), we find that the language in the "Additional Insured — By Written Contract" clause of the Liberty policy clearly and unambiguously requires that the named insured execute a contract with the party seeking coverage as an additional insured. Since there is no dispute that Samson did not enter into a written contract with the JV, Samson's agreement in its contract with DASNY to procure coverage for the JV is insufficient to afford the JV coverage as an additional insured under the Liberty policy.
AB Green and Linarello are instructive to the extent they interpreted additional insured provisions worded similarly to the one at issue here as requiring a written agreement between the insured and the organization seeking coverage as an additional insured. Most recently, in AB Green, this Court held that an owner does not qualify as an additional insured under a blanket additional insured endorsement when it did not have a direct contractual promise from the named insured to be given that status (102 AD3d 425). In that case, the plaintiff in the underlying action was injured at a construction site and sued AB Green as the property owner. The general contractor retained Scalamandre as a subcontractor and Scalamandre purchased concrete from Ferrara Brothers Building Materials Corp. pursuant to an unsigned purchase order.
Ferrara was insured by Liberty (defendant herein) under a commercial general liability policy. The policy contained a blanket additional insured endorsement that added an additional insured: "when you and such . . . organization have agreed in writing in a contract or agreement that such . . . organization be added as an additional insured on your policy" {id. at 426). The term "you" was defined in the policy as the named insured, Ferrara. Liberty argued that since AB Green did not produce any written agreement between itself and Fer-rara naming AB Green as an additional insured, under the plain language of the policy, there was no question of fact whether an agreement existed between Ferrara and AB Green and thus AB Green was not an additional insured under the policy.
AB Green argued that the title of the endorsement, "Additional Insured — Owners, Lessees or Contractors — Automatic status when required in construction agreement with you," automatically conferred additional insured status upon AB Green when Ferrara entered into the purchase order with Scalamandre {id. at 427). This Court rejected that argument, reasoning that the title did not alter the substance of the endorsement. AB Green argued, in the alternative, that the terms of the policy itself were ambiguous because the policy could be read to mean that the named insured and the party seeking to be an additional insured only needed to enter into written agreements with another party, not necessarily with each other. This Court rejected that argument as well, on the ground that this was not what the blanket endorsement provided.
In interpreting the additional insured provision literally — as requiring that there be a written agreement directly between the named insured and the putative additional insured — we relied on our prior decision in Linarello (6 AD3d 192), which involved the interpretation of an additional insured endorsement identical to the one contained in AB Green. In Linarello (6 AD3d 192), we affirmed an award of summary judgment declaring that two insurance carriers were not obligated to defend or indemnify a construction manager where their insureds had written contracts only with the site owner. We explained that the fact that the contracts between the site owner and insured subcontractors required them to name as additional insureds anyone designated by the site owner was of no moment given the policy's plain language. It simply meant that the putative third-party beneficiaries would have standing to sue for breach of the provisions in those contracts requiring that insurance be procured covering them as additional insureds.
Unlike the dissent, we are not persuaded by plaintiffs' argument that Linarello and AB Green can be distinguished because the additional insured clause in those cases involved language slightly different from than in the instant case. Plaintiffs contend that in those cases the conferral of additional insured status was "expressly limited" to cases "when you and such . . . organization have agreed in writing" that a party be named as an additional insured, whereas the "Additional Insured — By Written Contract" clause in the instant case does not include "any such explicit requirement of direct contractual relationship, only that Samson, as the named insured, agreed in writing to name the JV as an additional insured."
Plaintiffs' argument, however, distorts the plain language of the additional insured clause of the Liberty policy issued to Samson. Indeed, plaintiffs place undue emphasis on the phrase "by written contract" and completely ignore the inclusion of the words "with whom" as the object of the verb phrase "you agree." When "whom" is used as the object of a verb or preposition, it refers back to the person mentioned previously. In effect, when plaintiffs argue that the language in the Liberty policy is much broader than the language in AB Green and Linarello, they want this Court to read the policy as extending coverage not only to those "with whom" Samson agreed, but also to those "for whom" Samson agreed to provide coverage. But when restricted to its plain meaning, the substance of this language is indistinguishable from the substance of the language of the policies in Linarello and AB Green, i.e., for an organization to be added as an additional insured, there must be a written agreement between the named insured and the organization seeking coverage (see also Zoological Socy., 2014 WL 3748545, *7, 2014 US Dist LEXIS 105359, *13 [finding similar language "clearly and unambiguously require(d) that the named insured execute a contract with the party seeking coverage as an additional insured"]; Murnane Bldg Contrs., 33 Misc 3d 1215[A], 2011 NY Slip Op 51943 [U]; Best Buy, 2009 NY Slip Op 30208[U]). That the additional insured clause could have been worded differently does not render it ambiguous or mandate that it must be construed in plaintiffs' favor (Federal Ins. Co. v International Bus. Machs. Corp., 18 NY3d 642, 650 [2012]).
Plaintiffs further argue that the requirement that the construction manager be named as an additional insured is clear from Samson's contract, which states that the "Construction Manager (if applicable) and other entities specified on the sample Certificate of Insurance provided by the Owner" are to be named as additional insureds. Moreover, plaintiffs point out that the sample certificate of insurance identifies the JV as an entity to be named as an additional insured.
These arguments do not mandate a different result. The language in the Samson/DASNY agreement, including the sample certificate of insurance, may be evidence that Samson was required to provide the JY with coverage, but, as this Court noted in Linarello, all that means is that the JV may have a claim against Samson for breach of the contract's insurance provision. It does not mean that the policy issued by Liberty can be judicially rewritten to cover the JV (Linarello, 6 AD3d at 195).
The dissent's reliance on this Court's observations in AB Green about the holding in American Home Assur. (26 Misc 3d 1223[A], 2010 NY Slip Op 50237[U] [2010]) is misplaced. To be sure, the "Additional Insured — By Written Contract" clause of the Liberty policy at issue here contains terms closely parallel ing those in the CGL policy in American Home, which this Court cited in observing that "policies containing broader language have been found to allow for an agreement naming an additional insured without an express contract between the parties" (AB Green, 102 AD3d at 426).
However, contrary to the dissent's contentions, this Court's observations in AB Green about the policy language in American Home are not controlling in this case. Rather, they were simply meant to compare and dismiss the cited non-binding authority as distinguishable on the facts. They did not preclude the possibility that we would decide a case analogous to the facts in American Home differently if presented with the opportunity. The instant case presents us with that opportunity. Contrary to the suggestions of American Home and other cases similarly decided by trial courts (see e.g. Plaza Constr. Corp., 2011 NY Slip Op 30709[U]), we find that the language in the analogous additional insurance clause of the instant Liberty policy clearly and unambiguously provides that for an entity to be included as an additional insured, it must have executed a contract with the named insured.
The dissent also argues that the additional insured provision at issue here "on its face is poorly drafted in terms of its syntax," and the dissent then proceeds to delete a word to arrive at the "plain and ordinary meaning" of the language. In our view, however, the grammatical gymnastics that the dissent engages in to create ambiguity fall short and distort what is actually in the text of the additional insured provision. The additional insured provision at issue here is clearly denominated "Additional Insured — By Written Contract" to indicate the manner in which the additional insured status is acquired, namely by written contract. The text of this provision then explicitly defines an additional insured (the who) to include "any person or organization with whom you [Samson] have agreed to add as an additional insured by written contract" (emphasis added). Given this context, the dissent ignores that the phrase "with whom you have agreed" is clearly intended to describe an entity contracting with Samsom, which is consistent with the additional modifier in the same sentence, "by written contract."
Under the circumstances, it is evident that the dissent's strained interpretation of the words "with whom" is an improper attempt to rework the words' plain purpose. This runs counter to the bedrock principle of contract interpretation that "a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (Greenfield v Philles Records, 98 NY2d 562, 569 [2002]). Since the policy language at issue here is clear and unambiguous, we must give effect to the phrase "with whom" by employing its plain meaning. We must reject the dissent's attempt to give the contract a meaning beyond that expressed and to contemplate what the parties may have subjectively intended by certain terms. Therefore, contrary to the dissent's suggestion, we "may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing" (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475 [2004] [internal quotation marks omitted]).
Finally, the dissent's dire prediction that "the majority's unduly narrow reading of Liberty's policy provision on additional insureds would upend the established customs and practices of the construction industry" rings hollow. In fact, in this appeal, plaintiffs themselves do not urge upon us equitable considerations. They simply make an unalloyed contract interpretation argument, which we reject.
As the Court of Appeals has made abundantly clear, "[E] quit-able considerations will not allow an extension of coverage beyond its fair intent and meaning in order to obviate objections which might have been foreseen and guarded against" (Caporino v Travelers Ins. Co., 62 NY2d 234, 239 [1984]). Ultimately, the dissent's argument ignores the fact that courts "may not disregard clear provisions which the insurers inserted in the policies and the insured [here, a sophisticated business entity that presumably relied on experts to advise it] accepted" (id.).
Since plaintiffs were unable to meet the threshold burden of establishing that the JV is an additional insured under the Liberty policy (see National Abatement Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 33 AD3d 570, 571 [1st Dept 2006]), there is no need to address their remaining argument as to whether, under the circumstances, the April 25, 2011 notice to Liberty of the third-party action constitutes timely notice of the occurrence and lawsuit.
Accordingly, the order of the Supreme Court, New York County (Anil C. Singh, J.), entered May 30, 2014, which denied the motion of defendant Liberty Insurance Underwriters for summary judgment declaring that plaintiff Gilbane Building Co./TDX Construction Corp., a joint venture, is not an additional insured under the policy issued by defendant to nonparty Samson Construction Company, and declared that plaintiff is an additional insured under the policy, should be reversed, on the law, defendant's motion granted, and the declaration vacated. The Clerk is directed to enter judgment declaring that plaintiff is not an additional insured under the subject policy.
. Compare American Home Assur. Co. v Zurich Ins. Co., 26 Misc 3d 1223[A], 2010 NY Slip Op 50237[U] [Sup Ct, Kings County 2010]; Plaza Constr. Corp. v Zurich Am. Ins. Co., 2011 NY Slip Op 30709[U] [Sup Ct, NY County 2011], with Murnane Bldg. Contrs., Inc. v Zurich Am. Ins. Co., 33 Misc 3d 1215[A], 2011 NY Slip Op 51943[U] [Sup Ct, Suffolk County 2011], revd on other grounds 107 AD3d 674 [2d Dept 2013]; Best Buy Co., Inc. v Sage Elec. Contr., Inc., 2009 NY Slip Op 30208 [U] [Sup Ct, NY County 2009], and Zoological Socy. of Buffalo, Inc. v CarvedRock, LLC, 2014 WL 3748545, 2014 US Dist LEXIS 105359 [WD NY, May 21, 2014, No. 10-CV-35A (Sr)]).
. "The express language of the . . . policy extends coverage to 'any person or organization with whom you [the named insured . . .] have agreed in a written contract to provide insurance as is afforded under this policy " (American Home Assur., 26 Misc 3d 1223[A], 2010 NY Slip Op 50237[U], *4).