Court Opinion

ID: 9945540
Source: CourtListenerOpinion
Date Created: 2024-02-27 21:10:24.728653+00
Date Added: 2024-06-11T14:25:31.840085
License: Public Domain

Gotham Indus. Servs. Inc. v Falls Lake Natl. Ins. Co.
               2024 NY Slip Op 30557(U)
                   February 21, 2024
           Supreme Court, New York County
        Docket Number: Index No. 653777/2022
                Judge: Nancy M. Bannon
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                                                                                                                         INDEX NO. 653777/2022
  NYSCEF DOC. NO. 107                                                                                              RECEIVED NYSCEF: 02/21/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. NANCY M. BANNON                                                PART                              42
                                                                                       Justice
            ----------------------------------------------------------------- ----------------X      INDEX NO.          653777/2022
             GOTHAM INDUSTRIAL SERVICES INC.,
                                                                                                     MOTION DATE          11-17-23
                                                         Plaintiff,
                                                                                                     MOTION SEQ. NO.       002 003
                                                 -v-

             FALLS LAKE NATIONAL INSURANCE CO. and                                                        DECISION, ORDER
             ACE PROPERTY & CASUAL TY INSURANCE CO.,                                                       and JUDGMENT

                                                         Defendants.
            ------------------------------------------------------------------- --------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 002) 27, 28, 29, 30, 31,
            32, 33, 34, 35,36, 37,38,39,40,41,42,43,44,45,46,47,48,49,50,51,52,53,54,55,56,57,59, 60,
            61, 62, 63, 64, 86
            were read on this motion to/for                                                       JUDGMENT-SUMMARY

            The following e-filed documents, listed by NYSCEF document number (Motion 003) 69, 70, 71, 72, 73,
            74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98,99
            were read on this motion to/for                                                       JUDGMENT-SUMMARY

                      In this insurance coverage dispute, the plaintiff, Gotham Industrial Services Inc.
            ("Gotham"), seeks a judgment against its primary commercial general liability insurer, defendant
            Falls Lake National Insurance Company ("Falls Lake"), and its umbrella general liability insurer,
            defendant ACE Property & Casualty Insurance Company ("ACE"), declaring that Falls Lake and
            ACE must defend and indemnify two non-parties to this action, Consigli Associates LLC
            ("Consigli") and One Beekman Owner, LLC ("One Beekman"), in an underlying personal injury
            action pending in Kings County Supreme Court brought against those two entities by one of
            Gotham's employees, Adam Pusztaszeri, entitled Pusztaszeri v Consigli & Associates, LLC and
            One Beekman Owner, LLC, Index No. 523364/2021 (the "Underlying Action"). Falls Lake now
            moves, pursuant to CPLR 3212, for summary judgment dismissing all claims against it and
            awarding it a declaration that it is not obligated to defend or indemnify Gotham or any other
            party in the Underlying Action (MOT SEQ 002). ACE likewise moves, pursuant to CPLR 3212,

             653777/2022 GOTHAM INDUSTRIAL SERVICES INC. vs. FALLS LAKE NATIONAL INSURANCE                               Page 1 of 6
             CO. ET AL
             Motion No. 002 003

                                                                            1 of 6
[* 1]
                                                                                                            INDEX NO. 653777/2022
  NYSCEF DOC. NO. 107                                                                              RECEIVED NYSCEF: 02/21/2024

            for summary judgment declaring that it is not obligated to defend or indemnify Gotham or any
            other party in the Underlying Action (MOT SEQ 003). Gotham opposes both motions. For the
            reasons that follow, both motions are granted.

                      As set forth in Gotham's complaint, Consigli, as construction manager, and One
            Beekman, as owner, entered into a subcontract with Gotham for work at a construction project
            located at One Beekman Street in Manhattan (the "Project"). Pursuant to this subcontract,
            Gotham agreed to defend and indemnify Consigli and One Beekman from all claims arising out
            of or resulting from the performance or non-performance of its work on the Project, and to
            procure insurance naming them as additional insureds. In the Underlying Action Pusztaszeri
            sued Consigli and One Beekman for damages alleging that he was an employee of Gotham and
            that, during the scope of his employment on January 27, 2021, he fell from a ladder at the Project
            site while paintingk, causing him to sustain physical injuries. 1 Gotham likewise alleges in its
            complaint herein that Pusztaszeri was its employee at the time Pustaszeri allegedly was injured.

                      On a motion for summary judgment, the moving party must make a prima facie showing
            of its entitlement to judgment as a matter of law by submitting evidentiary proof in admissible
            form sufficient to establish the absence of any material, triable issues of fact. See CPLR 3212(b );
            Jacobsen v New York City Health & Hosps. Corp., 22 NY3d 824 (2014); Alvarez v Prospect
            Hosp., 68 NY2d 320 (1986); Zuckerman v City of New York, 49 NY2d 557 (1980). Once such
            a showing is made, the opposing party, to defeat summary judgment, must raise a triable issue of
            fact by submitting evidentiary proof in admissible form. See Alvarez, supra; Zuckerman, supra.

                      For an insurance provider to disclaim any contractual duty to defend pursuant to a policy
            exclusion, it must demonstrate that the allegations in the underlying complaint against the
            insured (or additional insureds), such as those made against Consigli and One Beekman in the
            Underlying Action_. cast the pleadings wholly within that exclusion, that the exclusion is subject
            to no other reasonable interpretation, and that there is no possible factual or legal basis upon
            which the insurer may eventually be held obligated to indemnify the insured under any policy
            provision. See Frontier Insulation Contractors, Inc. v Merchs. Mut. Ins. Co., 91 NY2d 169

            1
             Consigli and One Beekman, in turn, filed a third-party complaint against Gotham for contribution and common law
            and contractual indemnification.
                653777/2022 GOTHAM INDUSTRIAL SERVICES INC. vs. FALLS LAKE NATIONAL INSURANCE               Page 2 of 6
                CO. ET AL
                Motion No. 002 003

                                                               2 of 6
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                                                                                                   INDEX NO. 653777/2022
  NYSCEF DOC. NO. 107                                                                        RECEIVED NYSCEF: 02/21/2024

            (1997). "The duty to defend is decided solely on the allegations in the complaint [against the
            insured] which must be accepted by a court as true." Cont'l Cas. Co. v Employers Ins. Co. of
            Wausau, 60 AD3d 128, 142 (1 st Dept. 2008). The duty to defend is broader than the duty to
            indemnify. See Fitzpatrick v Am. Honda Motor Co., 78 NY2d 61 (1991). An allegation creates
            a duty to defend whenever there is a "reasonable possibility of recovery under the policy." Id.;
            see also Frank v Cont'l Cas. Co., 123 AD3d 878 (2 nd Dept. 2014). If the allegations of the
            complaint fall within the scope of coverage, an insurer must defend. See Fitzpatrick v Am.
            Honda Motor Co., supra.

                   Falls Lake and ACE each submit, inter alia, the pleadings herein and in the Underlying
            Action, wherein both Pustaszeri and Gotham allege that Pustaszeri was an employee of Gotham
            at the time of his injury; the contract between Gotham, Consigli, and One Beekman, wherein
            Gotham agreed to include Consigli and One Beekman as additional insureds on its relevant
            insurance policies; and the insurance policy that each insurer respectively issued to Gotham. The
            Falls Lake policy includes an "Exclusion of Injury to Employees, Contractors, and Employees of
            Contractors," which provides that the policy does not cover:

                   (1) "Bodily injury" to any "employee" of any insured arising out of or in the course
                       of:
                           a. Employment by any insured; or
                           b. Performing duties related to the conduct of any insured' s business;
                   (2) "Bodily injury" to any contractor or any "employee" of any contractor arising
                       out of or in the course of the contractor or its employee performing services of
                       any kind or nature whatsoever;
                   (3) Any alleged obligation of any insured to indemnify or contribute with another
                       because of damages arising out of such "bodily injury" to an insured's
                       employee or any contractor or any contractor's employee[.]

            The ACE policy similarly includes a Contractor Exclusions and Limitations Endorsement
            containing an "Employer's Liability" exclusion, which provides that the policy does not cover:

                   "Bodily injury" to:
                   (1) An "employee", "temporary worker" or "volunteer worker" of the insured
                       arising out of and in the course of:
                           (a) Employment by the insured; or
                           (b) Performing duties related to the conduct of the insured' s business; or

             653777/2022 GOTHAM INDUSTRIAL SERVICES INC. vs. FALLS LAKE NATIONAL INSURANCE         Page 3 of 6
             CO. ET AL
             Motion No. 002 003

                                                          3 of 6
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  NYSCEF DOC. NO. 107                                                                        RECEIVED NYSCEF: 02/21/2024

                   (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 rendering or performing services
                       of any kind or nature whatsoever by such contactor, 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"[.]

            The term "casual laborer" is defined in that same endorsement as "any person providing work or
            materials to any insured for compensation of any type." These submissions establish, prima
           facie, that under a plain reading of the policies at issue, the allegations of the complaint in the
            Underlying Action fall within the exclusions quoted above, as Pustaszeri alleges he was an
            employee of Gotham and seeks to recover for bodily injuries allegedly suffered in the course of
            his employment.

                   Gotham's arguments in opposition are unavailing. Gotham first contends that both Falls
            Lake and ACE fail to demonstrate that they timely disclaimed coverage. However, the parties'
            submissions demonstrate that both defendants disclaimed "as soon as [was] reasonably possible."
            Insurance Law §3420(d)(2). See generally Sierra v 4401 Sunset Park, LLC, 24 Ny3d 514 (2014);
            Titan Indust. Svcs. Corp. v Navigator's Ins. Co., 233 AD3d 426 (1 st Dept. 2024); Endurance Am.
            Ins. Specialty Ins. Co. v Utica First Ins. Co., 132 AD3d 434 (1 st Dept. 2015) lv dism 27 NY3d
            1119 (2016). The submissions demonstrate that Falls Lake was first notified of this claim when
            it received a tender letter from Consigli, dated February 1, 2021, and that it thereafter sent a
            disclaimer letter via its coverage counsel on February 24, 2021, less than a month after
            Pustaszeri's alleged accident on January 27, 2021. While Gotham claims, in conclusory fashion,
            that it did not receive this letter, Falls Lake has provided the affidavit of its Claims Handler,
            Kevin Diggins, stating that he personally authorized the mailing of the disclaimer letter on
            February 24, 2021; the affirmation of its coverage counsel and counsel herein, Steven
            Verveniotis, stating that he personally arranged for and oversaw the mailing of the February 24,
            2021 disclaimer letter to Gotham and Consigli, among others, via the U.S. Postal Service, and
            that none of those letters were returned as undeliverable; and a pair of emails between
            Verveniotis and Diggins, both dated February 24, 2021, in which Diggins authorized the release
            of the disclaimer and Verveniotis confirmed that the disclaimer had been mailed.

             653777/2022 GOTHAM INDUSTRIAL SERVICES INC. vs. FALLS LAKE NATIONAL INSURANCE          Page 4 of 6
             CO. ET AL
             Motion No. 002 003

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  NYSCEF DOC. NO. 107                                                                        RECEIVED NYSCEF: 02/21/2024

                   Although some of this evidence was submitted by Falls Lake for the first time in reply,
            the court exercises its discretion to consider it because it is directly responsive to Gotham's
            opposition argument that timely disclaimer was not sufficiently shown by the disclaimer letter
            itself. See Hereford Ins. Co. v Vazquez, 158 AD3d 470,471 (!81 Dept. 2018); Home Ins. Co. v
            Leprino Foods Co., 7 AD3d 471, 472-73 (!81 Dept. 2004); Kelsol Diamond Co. v Stuart Lerner,
            Inc., 286 AD2d 586, 587 (!81 Dept. 2001). Moreover, Gotham itself produced a copy of the
            disclaimer letter which was marked "received" as of March 3, 2021. Gotham claims that it
            received this copy of the letter from Consigli on March 12, 2021, but even if that is the case, the
            fact that Consigli apparently received the letter as of March 3, 2021, is consistent with
            Verveniotis's account of the letter's mailing.

                   As to ACE, it demonstrated that it first received notice of claim when served with
            Gotham's complaint, and timely disclaimed coverage via the filing of its answer. It is well settled
            that the "written notice requirement of section 3420 can be satisfied by pleadings" in a case
            where insurer received first notice of loss by way of lawsuit. Thomson v Power Auth. of State of
            N.Y., 217 AD2d 495,497 (!81 Dept. 1995); see City of New York v St. Paul Fire and Marine Ins.
            Co., 21 AD3d 978 (2 nd Dept. 2005); Am. Mfrs. Mut. Ins. Co. v CMA Enterp., Ltd., 246 AD2d
            373 (1 st Dept. 1998). Gotham provides no persuasive authority to the contrary.

                   Gotham also contends that both of the relevant exclusions are inapplicable because
            Pustaszeri was purportedly an independent contractor rather than an employee of Gotham.
            However, even if Pustaszeri was an independent contractor working for Gotham, his injury
            would still fall within the scope of both policy exclusions. By its plain terms, the Falls Lake
            exclusion precludes coverage for bodily injuries suffered by the insured's "contractors."
            Similarly, the ACE exclusion precludes coverage for bodily injuries suffered by any "contractor,
            subcontractor ... or 'casual laborer' of any contractor or subcontractor," and defines a "casual
            laborer" as "any person providing work or materials to any insured for compensation of any
            type." Thus, regardless of whether Pustaszeri was injured while working for Gotham as an
            employee or an independent contractor, his personal injury claims fall within the scope of the
            relevant policy exclusions.

                   Gotham's remaining contentions have been considered and found to be
            unavailing.

             653777/2022 GOTHAM INDUSTRIAL SERVICES INC. vs. FALLS LAKE NATIONAL INSURANCE         Page 5 of 6
             CO. ET AL
             Motion No. 002 003

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  NYSCEF DOC. NO. 107                                                                        RECEIVED NYSCEF: 02/21/2024

                    Accordingly, upon the foregoing papers and after oral argument, it is

                    ORDERED that the motion of defendant Falls Lake National Insurance Company
            for summary judgment dismissing the complaint as against it (MOT SEQ 002) is granted;
            and it is further

                    ORDERED, ADJUDGED, and DECLARED that defendant Falls Lake National
            Insurance Company is not obligated to defend or indemnify the plaintiff, Gotham
            Industrial Services, Inc., or any other party, with respect to the accident and claims
            asserted in the underlying personal injury action pending in Kings County Supreme Court
            entitled Pusztaszeri v Consigli & Associates, LLC and One Beekman Owner, LLC, Index
            No. 523364/2021; and it is further

                    ORDERED that the motion of defendant ACE Property & Casualty Insurance
            Company for summary judgment dismissing the complaint as against it (MOT SEQ 003)
            is granted; and it is further

                    ORDERED, ADJUDGED, and DECLARED that defendant ACE Property &
            Casualty Insurance Company is not obligated to defend, indemnify, or reimburse the
            plaintiff, Gotham Industrial Services, Inc., or any other party, with respect to the accident
            and claims asserted in the underlying personal injury action pending in Kings County
            Supreme Court entitled Pusztaszeri v Consigli & Associates, LLC and One Beekman
            Owner, LLC, Index No. 523364/2021; and it is further

                    ORDERED that the Clerk shall mark the file accordingly.

                    This constitutes the Decision, Order, and Judgment of the court.

                    2/21/2024
                                                               ~c}NONE386
                      DATE                                                      NANCY M. BANNON, J.S.C.
             CHECK ONE:               0
                                      0
                                            CASE DISPOSED

                                            GRANTED
                                                                  El
                                                            □ DENIED
                                                                         NON-FINAL DISPOSITION

                                                                         GRANTED IN PART          □ OTHER
             653777/2022 GOTHAM INDUSTRIAL SERVICES INC. vs. FALLS LAKE NATIONAL INSURANCE           Page 6 of 6
             CO. ET AL
             Motion No. 002 003

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