Defendant moves to dismiss the claim of One Beacon Insurance Company. The
claim arises from a November 27, 2002 fire at premises in Richmond County that
had been leased by claimant’s subrogors to the State of New York for use
by the State Division of Parole. Following the fire, claimant paid its
subrogors $45,067.09 for damage sustained to the building. Claimant alleges
that the fire was caused by defendant’s negligent use of a sterno heater,
and sues to recover the insurance monies it paid out. Defendant’s motion
is based on a subrogation waiver clause contained in the lease, namely,
paragraph 35, which states in relevant part that:
Landlord shall carry Commercial Property Insurance in an amount equal to the
full replacement value of the premises and the building and will look solely to
such policy for the recovery of any loss of or damage to property, or loss of
income, rent or business resulting therefrom. Such insurance policy or policies
shall have endorsements waiving the insurer’s rights of recovery under
subrogation or otherwise in favor of the Tenant. Landlord shall provide a
Certificate of Insurance verifying this waiver.
See exhibit C to defendant’s moving papers. Insurance was in fact
procured, and the policy does include a subrogation waiver, i.e., paragraph I of
the Commercial Property Conditions, which provides that the insured “may
waive your rights against another party in writing . . . [p]rior to a loss to
your Covered Property or Covered Income.” See exhibit A to
claimant’s opposition papers. Claimant argues that the policy in this
case does not actually waive subrogation, but rather only “authorizes the
insurer to waive subrogation . . .” Such argument is
, Extaza of
34th Street v City Stores Co. Inc
., 62 NY2d 919, 479 NYS2d 5 (1984).
“Waiver of subrogation provisions, which reflect the parties’
allocation of the risk of liability between themselves to third parties through
the device of insurance, are generally valid and enforceable . . .”
Liberty Mutual Insurance Company v Perfect Knowledge, Inc., 299 AD2d 524,
526, 752 NYS2d 677, 678 (2d Dept 2002). Moreover, in the absence of
“overreaching or unconscionability,” subrogation waivers are valid
and not violative of the General Obligations Law or public policy. See,
e.g., Interested Underwriters at Lloyds v Ducor’s Inc., 103
AD2d 76, 77, 478 NYS2d 285, 286 (1st Dept 1984). There has been no allegation
of overreaching or unconscionability in this case.
Loctite VSI Inc. v Chemfab New York Inc., 268 AD2d 869, 701 NYS2d 723
(3d Dept 2000) contains facts similar to the instant case. There, premises
leased by the plaintiff-landlord to the defendant-tenant were damaged by fire,
and plaintiff’s insurer paid out under the policy. Plaintiff sued
defendant, alleging that the fire was caused by defendant’s negligence.
The insurance policy required the landlord to maintain fire insurance and to
obtain a waiver of subrogation from its insurer. The court held that
“[t]his lease agreement contains a waiver of subrogation clause in the
context of plaintiff’s obligation to obtain fire insurance. We conclude,
therefore, that the plain language of the lease prohibits plaintiff from
maintaining this action to recover damages from the defendant, even if the fire
was negligently caused by defendant, its agents or employees.” 268 AD2d
at 871, 701 NYS2d at 725.
Claimant’s argument that a waiver of subrogation will not be enforced
unless it is mutual and requires both parties to purchase insurance is
misplaced. The cases cited in support thereof, Radius, Ltd. v Newhouse,
213 AD2d 614, 624 NYS2d 227 (2d Dept 1995); Metropolitan Art Associates, Div.
of Metro Art Sales, Inc. v Wexler, 118 AD2d 548, 499 NYS2d 164 (2d Dept
1986); and Graphic Arts Supply, Inc. v Raynor, 91 AD2d 827, 458 NYS2d 115
(4th Dept 1982) are distinguishable. In all such cases, it was found that the
subject subrogation waivers were invalid as they were being used by a landlord
in violation of General Obligations Law §5-321. Such section
“renders void any lease provision purporting to exempt the lessor from
liability for his own acts of negligence in maintaining the demised
property.” Graphic Arts Supply, supra, 91 AD2d 827, 458
NYS2d 115. The court noted that “[t]he legislative intent prompting
enactment of this section was to prohibit widespread abuse by landlords who
frequently inserted clauses exonerating themselves from all responsibility for
their negligence.” 91 AD2d at 827-28, 458 NYS2d 116.
Accordingly, having reviewed the parties’
, IT IS ORDERED that motion no.
M-72205 be granted and that claim no. 109784 be dismissed.