Court Opinion

ID: 806088
Source: CourtListenerOpinion
Date Created: 2012-08-07 14:22:29+00
Date Added: 2024-06-11T15:11:23.166217
License: Public Domain

10-3941-cv
In re September 11 Property Damage

                        UNITED STATES COURT OF APPEALS
                            FOR THE SECOND CIRCUIT

                                 SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER
FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY
ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL
APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY
CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.

          At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Daniel Patrick Moynihan
United States Courthouse, 500 Pearl Street, in the City of New
York, on the 7th day of August, two thousand twelve.

PRESENT:
             RALPH K. WINTER,
             CHESTER J. STRAUB,
             DENNY CHIN,
                       Circuit Judges.

- - - - - - - - - - - - - - - - - - - - -x

             In re SEPTEMBER 11 PROPERTY
             DAMAGE AND BUSINESS LOSS
             LITIGATION

THE PORT AUTHORITY OF NEW YORK &
NEW JERSEY,
                    Defendant-Third Party
                    Plaintiff-Appellant,

                   - v. -                                        10-3941-cv

CITIGROUP, INC., CITIGROUP GLOBAL MARKETS
HOLDINGS INC.,
                    Defendants-Appellees,
                   - v. -
GARY MICHAEL LOW, et al.,
                    Plaintiffs,

                 - and -

AMERICAN AIRLINES, INCORPORATED, et al.,
                    Defendants,

                 - and -

ELLEN MARIANI,
                      Claimant.

- - - - - - - - - - - - - - - - - - - - -x

FOR DEFENDANT-THIRD PARTY         LEAH SEARS (Paul Andrew Scrudato,
PLAINTIFF-APPELLANT:              Beth D. Jacob, Donald Allen Klein,
                                  on the brief), Schiff Hardin LLP,
                                  Atlanta, Georgia, and New York, New
                                  York.

FOR DEFENDANTS-APPELLEES:         CHRISTOPHER P. MOORE (Thomas J.
                                  Moloney, on the brief), Cleary
                                  Gottlieb Steen & Hamilton LLP, New
                                  York, New York.

            Appeal from the United States District Court for the

Southern District of New York (Hellerstein, J.).
            UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the order and opinion of the district court is

AFFIRMED.

            Defendant-Third Party Plaintiff-Appellant the Port

Authority of New York and New Jersey (the "Port Authority")

appeals from the district court's order and opinion dated

September 1, 2010, granting summary judgment to Defendants-

Appellees Citigroup, Inc. and Citigroup Global Markets Holdings,

Inc. (together, "Citigroup") on the Port Authority's claims for

                                   -2-
indemnification.1   We assume the parties' familiarity with the

facts and procedural history of the case and the issues presented

for review, which we summarize below.

          In 1968, the Port Authority and Consolidated Edison

Company of New York ("Con Ed") entered into a fifty-year lease

for an electrical substation at the World Trade Center.   The

lease reserved to the Port Authority the right to construct a

building over the substation.   In 1980, the Port Authority

entered into a lease agreement with what is now Silverstein

Properties ("Silverstein") permitting Silverstein to construct an

office building -- 7 World Trade Center ("7WTC") -- above the

substation.   Once constructed, 7WTC was to be owned by the Port

Authority and leased to Silverstein.

          In 1988, Citigroup2 agreed to lease portions of 7WTC
from Silverstein, and it installed diesel emergency generators on

the fifth floor, along with a fuel supply system connected to two

6,000-gallon fuel tanks under the loading dock of the building.

In a separate agreement with the Port Authority (the "Consent

     1
          The district court did not enter a separate judgment
dismissing the action. When a judgment is required to be set out
in a separate document but is not, judgment is deemed entered 150
days after the entry of the dispositive order. Fed. R. Civ. P.
58(c)(2)(B). Despite the lack of a judgment, this Court has
jurisdiction to hear the appeal of the order, which was a "final
decision" within the meaning of 28 U.S.C. § 1291. See Leftridge
v. Conn. State Trooper Officer No. 1283, 640 F.3d 62, 66-67 (2d
Cir. 2011) (finding this Court has jurisdiction to review a
"final decision" -- "one which ends the litigation on the merits
and leaves nothing for the court to do but execute the judgment"
(internal quotation marks omitted)).
     2
          "Citigroup," in the context of lease negotiations,
refers to both Citigroup and its predecessor, Salomon Inc.
                               -3-
Agreement"), Citigroup agreed to indemnify the Port Authority

with respect to:

           (a) any and all claims (i) arising from (A)
           the operation, maintenance or management by
           [Citigroup] of the Demised Premises, or (B)
           any work or thing whatsoever done, or any
           condition created in or about the Demised
           Premises during the Term by [Citigroup] . . .
           and (b) all reasonable costs, expenses and
           liabilities incurred in or in connection with
           each such claim or proceeding brought
           thereon.

(A 932).

           In 1999, the New York City Office of Emergency

Management ("OEM") constructed an emergency command center on the

twenty-third story of 7WTC.   OEM installed a back-up generator

system that utilized multiple diesel fuel tanks.

           On September 11, 2001, terrorists attacked Towers One

and Two of the World Trade Center.    As the towers collapsed,

debris fell on 7WTC, setting it on fire.    Eventually, 7WTC

collapsed as well.

           A series of lawsuits followed.   In Consolidated Edison
Co. of New York, Inc. v. Port Authority ("Aegis I"), 02 Civ. 7188
(AKH) (S.D.N.Y.), Con Ed and, inter alia, its insurers, Aegis

Insurance Services, Inc., asserted claims against the Port

Authority, as owner of 7WTC, for the "negligent design, approval,

inspection, installation, maintenance, operation, conduct and

control of [7WTC] . . . and the diesel fuel tanks therein."

Aegis I, 02 Civ. 7188 (AKH), Am. Compl. (Dec. 9, 2003), ECF No.

10, ¶ 35(a).   The district court granted summary judgment to the

Port Authority on Con Ed's breach of contract and negligence

                                -4-
claims.   This Court vacated the dismissal, Aegis Ins. Servs.,

Inc. v. Port Auth., 435 F. App'x 18 (2d Cir. 2011) (summary

order), and the parties subsequently settled, Aegis I, 02 Civ.

7188 (AKH), Stipulation and Order of Dismissal (June 13, 2012),

ECF No. 287, at 1-2.

           In Certain Underwriters at Lloyds, London v. Port Auth.

("Certain Underwriters"), Citigroup's subrogated insurers sued

the Port Authority for negligence with respect to the design,

approval, inspection, installation, maintenance, operation,

conduct, control, and location of diesel fuel tanks in 7WTC and

with respect to inadequate fire proofing.   Certain Underwriters,
02 Civ. 7328 (AKH), Am. Compl. (Dec. 4, 2002), ECF No. 5.      The

case settled.   Certain Underwriters, 02 Civ. 7328 (AKH),

Stipulation and Order of Dismissal (July 9, 2008), ECF No. 42.

           The Port Authority filed this case below, asserting

claims against Citigroup for indemnification with respect to

Aegis I and Certain Underwriters pursuant to the indemnification

provision in the Consent Agreement.   The Port Authority and

Citigroup cross-moved for summary judgment.   The district court

denied the Port Authority's motion and granted Citigroup's,

noting that the allegations in the Aegis I and Certain
Underwriters complaints were not "sufficiently broad to implicate

Citigroup's conduct," and holding that, in any event, the

"indemnification obligations do not extend to claims regarding

latent design defects in Citigroup's diesel fuel system and

backup generator."   In re Sept. 11 Litig., 734 F. Supp. 2d 542,

550 (S.D.N.Y. 2010).   The Port Authority now appeals.

                                -5-
             We review a district court's grant of summary judgment

de novo.     Johnson v. Killian, 680 F.3d 234, 236 (2d Cir. 2012)

(per curiam).

             We hold that the district court properly dismissed the

Port Authority's claim against Citigroup for indemnification.

The indemnification provision in the Consent Agreement required

Citigroup to reimburse the Port Authority with respect to claims

arising from "the operation, maintenance or management by

[Citigroup] of the Demised Premises" or "any work or thing" done

or "any condition" created "in or about the Demised Premises" by

Citigroup.    (See A 932).   No such claims were asserted by the

plaintiffs in either Aegis I or Certain Underwriters.

             In the Notice of Claim submitted to the Port Authority

before the commencement of Aegis I, the plaintiffs alleged that

the negligent installation, construction, and maintenance of the

OEM diesel fuel tanks caused the damage to the plaintiffs'

clients' property.    Aegis I, 21 MC 101 (AKH), Notice of Claim

(Oct. 7, 2009), ECF No. 953, Exh. 16, ¶ 3 ("New York City . . .

so negligently, recklessly and carelessly installed, located,

constructed and maintained diesel fuel tanks located in [7WTC] as

to cause the collapse of [7WTC] and damage property of claimants'

insured.").    Nowhere in the Aegis I notice of claim is there a
reference to the Citigroup fuel tanks.    Although the notice of

claim includes general references to "the diesel fuel tanks" at

7WTC in its second paragraph, the next paragraph provides the

specifics of the claim and it refers only to the New York City

                                  -6-
tanks.   Nor did the complaint and amended complaints in Aegis I

reference the Citigroup fuel tanks.   The complaints focused

solely on the OEM tanks and "diesel fuel tanks," with no specific

mention of Citigroup.   See Aegis I, 02 Civ. 7188 (AKH), Second

Am. Compl. (July 11, 2008), ECF No. 133, ¶¶ 12-15, 19-20, 35, 40-

42; see also Aegis I, 02 Civ. 7188 (AKH), First Am. Compl. (Dec.

9, 2003), ECF No. 10.

           Similarly, the notice of claim and complaints filed in
Certain Underwriters did not allege that Citigroup was

negligent.3   See Certain Underwriters, 02 Civ. 7328 (AKH), Second

Am. Compl. (Apr. 4, 2003), ECF No. 14 (referring only to the OEM

tanks, "diesel fuel, stored in tanks that the Port Authority

designed, and/or approved," and "all diesel fuel storage tanks"

related to "all emergency standby generator systems installed and

utilized within 7 WTC").

           Neither Aegis I nor Certain Underwriters, therefore,

triggered the indemnification provision, as the cases did not

involve claims against the Port Authority arising from

Citigroup's "operation, maintenance or management" of its diesel
fuel tanks in 7WTC.

     3
          In fact, the plaintiffs in Certain Underwriters were
Citigroup's subrogated insurers, suing the Port Authority for
negligence related to the destruction of Citigroup's property and
tenancy at 7WTC. See In re Sept. 11 Litig., 734 F. Supp. 2d at
548 ("Since Lloyds sued as subrogee of its insured, Citigroup, it
did not allege that Citigroup was negligent or otherwise
responsible for Tower 7's collapse."). Of course, they did not
allege that Citigroup was negligent.

                                -7-
          We have considered the Port Authority's remaining

arguments and conclude that they are without merit.   Accordingly,

the order of the district court is hereby AFFIRMED.

                              FOR THE COURT:
                              CATHERINE O'HAGAN WOLFE, CLERK

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