New York State Court of Claims

New York State Court of Claims

DASNY v. CITY UNIVERSITY OF NEW YORK, #2007-036-241, Claim No. 106693, Motion No. M-73283


Synopsis



Case Information

UID:
2007-036-241
Claimant(s):
DORMITORY AUTHORITY OF THE STATE OF NEW YORK and TRAVELERS INDEMNITY COMPANY
Claimant short name:
DASNY
Footnote (claimant name) :

Defendant(s):
CITY UNIVERSITY OF NEW YORK
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
106693
Motion number(s):
M-73283
Cross-motion number(s):

Judge:
MELVIN L. SCHWEITZER
Claimant’s attorney:
NEWMAN FITCH ALTHEIM MYERS, P.C.
By: Luis G. Sabillon, Esq. Guy P. Dauerty, Esq.
Defendant’s attorney:
ANDREW M. CUOMO, ATTORNEY GENERAL
By: Ellen S. Mendelson, Esq. Assistant Attorney General
Third-party defendant’s attorney:

Signature date:
November 13, 2007
City:
New York
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)


Decision


Claimants, the Dormitory Authority of the State of New York (“DASNY”) and Travelers Indemnity Company (“Travelers”), move for summary judgment on their claim against defendant, the City University of New York (“CUNY”), for contractual indemnification and reimbursement. Defendant opposes the motion and argues the claim should be dismissed on the grounds of the anti-subrogation rule, collateral estoppel and timeliness. While defendant does not actually cross-move for dismissal, CPLR 3212 (b) permits the court to grant such judgment without the necessity of a cross-motion where it appears that any party other than the moving party is entitled to a summary judgment. The court will consider defendant’s opposition as a cross-motion for summary judgment to dismiss the claim against it.[1] On January 17, 1997, Jose Oliveira fell while painting a staircase at 33 West 42nd St., New York County, then the CUNY Graduate Center building. Mr. Oliveira was employed by Triangle Services, Inc. (“Triangle”) which had a contract for cleaning and maintenance services with CUNY. DASNY owned the premises and leased it to CUNY and the City University Construction Fund (“the Fund”) (together as the “CUNY-DASNY lease”).

Mr. Oliveira and his wife commenced a personal injury action against DASNY on August 5, 1998 and obtained summary judgment on the issue of liability on May 17, 2001 based on the strict liability standard of Labor Law § 240 (1). This decision was affirmed on appeal by the Appellate Division, First Department. Oliveira v Dormitory Authority of the State of New York, 292 AD2d 224 [1st Dept 2002]. A jury then awarded $733,041.53 damages to Mr. Oliveira alone on May 9, 2002.

DASNY and its insurer Travelers commenced a declaratory judgment action against Triangle and its insurer National Union Fire Insurance Company of Pittsburgh, PA (“National Union”) in Supreme Court, New York County, Index No. 601494/1999. DASNY and Travelers asserted that Triangle’s policy with National Union named DASNY as an additional insured thereby insulating DASNY and Travelers from the loss. DASNY and Travelers prevailed in part on a summary judgment motion against National Union on April 29, 2003. The court found that both policies were in effect at the time of the accident, they were both primary policies to the loss, and National Union and Travelers thus were co-insurers. National Union eventually paid DASNY $109,353.03 (essentially DASNY’s self-insured portion under its Travelers’ policy), and paid Travelers $514,264.25 comprising half of DASNY’s defense fees in excess of $100,000 ($28,361.52) and half of Travelers’ payments to Mr. Oliveira ($400,307.30) plus statutory interest.

DASNY served a notice of intention to file a claim on CUNY on August 21, 2002 and on the Attorney General on August 29, 2002. Travelers served a notice of intention to file a claim on the Attorney General on August 29, 2002 and on CUNY on August 30, 2002. The claim on behalf of both claimants was served on the Attorney General on October 29, 2002 and on CUNY on November 1, 2002, and was filed with the Clerk on September 26, 2002. The claim sought

complete contractual indemnification and reimbursement of all legal fees and expenses in the Oliveira action, that is, reimbursement for what was not collected from National Union in the Supreme Court action. The predicate for the relief sought was CUNY’s obligation as lessee under its lease with DASNY, the lessor. In November 2003, claimants moved for summary judgment and CUNY cross-moved for summary judgment raising for the first time the anti-subrogation rule in its defense.[2] As the basis for this defense, CUNY submitted a certificate of insurance pertaining to National Union’s policy insuring Triangle which named CUNY and DASNY as additional insureds. Because National Union presumably would be prevented from suing CUNY and DASNY for a Triangle-related risk under the anti-subrogation rule, CUNY sought to extend the protection of the rule to this action by Travelers, apparently by reasoning: what National Union cannot do, Travelers cannot do either.

On June 2, 2005, the Honorable Alton R. Waldon, Jr. partially granted claimants’ summary judgment motion to the extent of declaring DASNY is entitled to indemnification from CUNY pursuant to the CUNY-DASNY lease. Unreported, Claim No. 106693, Motion No. 67691, Cross-Motion No. 68257, Waldon, J., June 2, 2005. Judge Waldon denied the balance of claimants’ motion because the DASNY-Travelers policy was not produced, thus preventing him from determining the applicability of the anti-subrogation rule to CUNY. He also denied CUNY’s cross-motion for summary judgment.

DASNY’s policy with Travelers in effect at the time of the accident has now surfaced and is attached to claimants’ current motion papers (Exhibits J and K). The only entry on the endorsement for “Additional Insured” is “As required by lease or contract.”

Anti-Subrogation Rule

Claimants argue that the anti-subrogation rule does not apply because whether CUNY is expressly an additional insured under the National Union policy has no bearing on whether it is entitled to coverage under DASNY’s policy with Travelers. They assert that CUNY is not expressly covered under DASNY’s policy with Travelers, but is only an additional insured under the DASNY-Travelers’ policy to the degree “required by lease or contract.” Claimants attach four leases by and among DASNY, CUNY and the Fund for the premises at issue. They are dated June 12, 1967 (with supplements through May 30, 1984), July 15, 1986 (with supplements through November 29, 1989), January 31, 1990 and May 25, 1994.

The court refers to the lease dated May 25, 1994, presumably the latest lease in force at the time of the January 17, 1997 accident.[3] There, in Section 2.08.1, DASNY was required to procure and maintain insurance for itself, CUNY and the Fund for bodily injury “arising out of the operations of contractors and sub-contractors in connection with the construction of Facilities.” In Section 2.08.2, DASNY was required to procure and maintain insurance for itself and the Fund for bodily injury “arising out of the existence or occupancy of the Leased Facilities,” but CUNY was not named as a required insured party in Section 2.08.2 as it had been in Section 2.08.1. Other sections of the lease impose obligations on CUNY. Section 2.09 labeled “Indemnification” provides that CUNY “indemnifies and holds harmless the [Dormitory] Authority, [and] the Fund . . . from any liability arising out of or relating to an occupancy or use of the Project by the City University.” Section 6.03 obliges CUNY to “hold, operate, maintain, repair and replace” the facility and its equipment at its expense. DASNY retained the right under the lease to make such repairs and replacements if CUNY failed to do so.

Claimants assert that DASNY had no obligation under Section 2.08.1 which, in relevant part, pertained to construction, to add CUNY as an additional insured in regard to Triangle’s work as a sub-contractor because Triangle was engaged in cleaning and maintenance of the facility, not construction in any fashion. They state that construction work on the Graduate Center had concluded years before and DASNY paid its last bill for construction work on February 22, 1996. No one, they contend, was working for DASNY at the site at the time of the accident in any capacity.

DASNY and Travelers thus argue that under terms of the CUNY-DASNY lease, CUNY must provide Travelers complete contractual indemnification and reimbursement of all of its legal fees and expenses in the underlying personal injury action. Claimants urge that the DASNY-Travelers policy and the CUNY-DASNY lease be given their plain meaning by the court. They contend that the underlying accident claim “arises out of CUNY’s use of the old Graduate Center, not out of DASNY’s construction of facilities there.”

The court agrees with claimants’ position that Mr. Oliveira’s accident did not arise in the course of construction work. Triangle, his employer, was hired to perform cleaning and maintenance services which apparently included painting a staircase. CUNY, as occupant of the premises, contracted with Triangle to maintain and repair the facilities as it was obliged to by Section 6.03 of the May 25, 1994 lease.

Section 2.08.2 of the CUNY-DASNY lease required DASNY to procure and maintain insurance for bodily injury “arising out of the existence or occupancy of the Leased Facilities” for itself and the Fund, but not CUNY by name. The court finds that, pursuant to Section 2.08.2 of the CUNY-DASNY lease, only the Fund was an additional insured under DASNY’s liability policy with Travelers because the policy required coverage of additional insureds as “required by lease or contract.” As an additional insured, it is the Fund that is protected from suit by Travelers under the anti-subrogation rule. Travelers insured DASNY and the Fund against the risk of bodily injury “arising out of the existence or occupancy of the Leased Facilities.” CUNY does not maintain that Section 2.08.2 extends liability coverage to itself as well as the Fund. The court finds that CUNY is not an additional insured under DASNY’s policy with Travelers for liabilities “arising out of the existence or occupancy of the Leased Facilities,” including the ordinary repairs, maintenance and operation of the Graduate Center building. CUNY is not afforded the benefit of the anti-subrogation rule, and its cross-motion for summary judgment to dismiss the claim on this ground is denied.

Collateral Estoppel

CUNY argues that the issue involved in the dispute here, that is, whether CUNY is responsible to indemnify and reimburse DASNY-Travelers for what they did not collect from National Union, already has been determined by the Supreme Court where it was held that Travelers and National Union were co-insurers for the loss. Claimants had commenced that action for a declaratory judgment on coverage after they appealed the jury’s verdict on liability in the Oliveira action. According to CUNY, while they chose not to appeal the decision that Travelers and National Union were co-insurers for the loss, they fully litigated this issue and now are barred by the doctrine of collateral estoppel. CUNY maintains that collateral estoppel applies because the issues are identical in the pending action here; those identical issues were decided in the prior action in Supreme Court; and the parties against which collateral estoppel is being asserted had a full and fair opportunity to litigate those issues. See Kaufman v Eli Lilly & Co., 65 NY2d 449 [1985].

Claimants deny the applicability of the collateral estoppel doctrine in this matter. They argue that CUNY was not a party to either of the Supreme Court actions which preceded this claim, including the declaratory judgment action. The determination for a declaratory judgment did not address contractual rights and obligations under the CUNY-DASNY lease, the overarching issue here. They argue there has not been a full and fair opportunity to litigate this issue because no court has yet examined whether CUNY is required to indemnify and reimburse DASNY for its role in the Oliveira case.

The court agrees with claimants’ position that collateral estoppel is inappropriate in this matter. CUNY was not a party to the Supreme Court proceedings emanating from Mr. Oliveira’s accident. The declaratory judgment action brought by claimants resolved only the respective obligations of the claimants and of National Union with regard to the damages award in the underlying personal injury case. While the declaratory judgment decision addressed the duration of the CUNY-Triangle service contract and the attendant obligation of National Union to insure DASNY in behalf of Triangle, the court’s holding with regard to that question was that “CUNY and Triangle impliedly renewed the contract [and thus] Triangle continued to have an obligation to provide insurance to DASNY . . . [which] continued to be covered by the National Union policy” through the date of the accident. CUNY is never mentioned again in the remaining two pages of the decision which then allocated the Oliveira damages between National Union and Travelers.

This court finds the issue of whether claimants merit contractual indemnification and reimbursement by CUNY has not been litigated prior to this claim and denies CUNY’s motion for summary judgment dismissing the claim on this ground.

Time of Filing

While both sides refer to the third dispositive issue raised by CUNY as the “statute of limitations,” in fact it concerns the timeliness of serving the notice of intention and serving and filing the claim pursuant to Court of Claims Act § 10. The parties agree Travelers, as DASNY’s insurer that paid a portion of the Oliveira jury award, is subrogated to DASNY and may exercise any rights DASNY has concerning the payment. They come to different conclusions, however, on whether claimants’ serving a notice of intention and serving and filing a claim against CUNY were timely. CUNY asserts this claim ultimately sounds in tort and thus accrues from the date of the accident. Liberty Mut. Ins. Co. v Clark, 296 AD2d 442 [2d Dept 2002] (“It is well settled that since the nature of subrogation is derivative of the underlying tort action, the cause of action accrues from the date of the accident, not the date of payment”). Claimants, on the other hand, contend the claim is for indemnification and reimbursement, a contract claim, which accrues from the date payment was made. Tedesco v A.P. Green Indus., Inc., 8 NY3d 243, 247 [2007] (“The statute of limitations on a claim for indemnity or contribution accrues only when the person seeking indemnity or contribution has paid the underlying claim”); McDermott v City of New York, 50 NY2d 211, 217 [1980] (“Since the cause of action is not complete until loss is suffered, familiar Statute of Limitations principles dictate that accrual occurs upon payment by the party seeking indemnity”).

CUNY contends that the tort-based claim accrued on January 17, 1997, the date of the accident, and that the claim had to be served and filed or a notice of intention to file such a claim served ninety days of the accident to comply with Court of Claims Act § 10 (3). CUNY further argues that even if this claim is viewed as a contract-based cause of action, the six-month time period within which to serve and file a claim or serve a notice of intention to file such a claim under Court of Claims Act § 10 (4) also had to be measured from the date of the accident. Here, the notice of intention was served on CUNY on August 21, 2002 and on the Attorney General on August 29, 2002 and service and filing of the claim was complete on November 1, 2002. Under these circumstances, CUNY concludes that both time limits were exceeded and the claim was time-barred before Travelers’ right of subrogation ever existed and CUNY points to an apposite observation of the Court of Appeals that “this sort of risk is inherent in subrogation.” Allstate Ins. Co. v Stein, 1 NY3d 416, 422 [2004]. By adhering in all instances to an accrual date of January 17, 1997, CUNY argues that claimants long exceeded all statutory time limits available to them – ninety days to serve a notice of intention or serve and file a claim sounding in tort, six months to serve a notice of intention or serve and file a claim sounding in contract, two years after serving a notice of intention to file the appropriate claim, three years within which to move for leave to file a late tort claim or six years within which to move for leave to file a late contract claim.

Claimants, while not identifying the exact date of payment by Travelers of the Oliveira award, point to their filing of the claim on September 26, 2002 and service on the Attorney General on October 29, 2002 and CUNY on November 1, 2002, as being within the six months after the May 9, 2002 jury verdict allowed for filing a contract claim under Court of Claims Act § 10 (4). They ignore the implication of Tedesco and McDermott that September 26, 2002 actually might have been too early to file an indemnification claim and assert that their claim did not accrue “until some time after the jury verdict.” Claimants also state the notice of intention extended their time to file a claim, but then flatly assert a six-year statute of limitations to file their claim, ignoring the two-year time limit imposed by Court of Claims Act §§ 10 (3) and (4), and the discretionary relief which may be sought from the court under Court of Claims Act § 10 (6).

Identification of the nature of this claim ultimately establishes the time limit for its filing. CUNY agreed to indemnify and hold harmless DASNY and the Fund “from any liability arising out of or relating to an occupancy or use of the Project by the City University” in Section 2.09 of the May 25, 1994 CUNY-DASNY lease. Mr. Oliveira’s accident occurred while he was painting a staircase in the CUNY Graduate Center building. His employer contracted to provide cleaning and maintenance services to CUNY, the building’s tenant under a lease with DASNY which required CUNY to “maintain, repair and replace” the premises and its equipment. Under these circumstances, the court finds that Mr. Oliveira’s accident took place in the ordinary maintenance or repair of the premises, an activity which arose out of CUNY’s occupancy or use of the premises. CUNY must indemnify and hold harmless DASNY for the ensuing liability according to their lease agreement. See North Star Reinsurance Corp. v Continental Ins. Co., 82 NY2d 281 [1993].

This claim by Travelers, as DASNY’s subrogee, against CUNY is properly read as a claim for contractual indemnification which accrued from the date of payment of the Oliveira award. The court cannot find this claim to be timely. Claimants never offer a date of payment or even suggest that payment occurred before the claim was filed. At best, they state the payment came “some time after the jury verdict.” Given the import of the declaratory judgment decision of April 29, 2003 which found National Union and Travelers to be co-insurers, it is reasonable to infer that Travelers waited for this judicial decision before making payment no less than seven months after the claim was filed. Conversely, the claim for contractual indemnification and reimbursement did not accrue until at least seven months after the claim was filed, making this claim when filed premature and requiring its dismissal. Maller v State of New York, (UID No. 2006-036-503, Claim Nos. 110215, 110396, Motion No. M-70724, Schweitzer, J.) (Indemnity “claims must be dismissed as premature, since no judgment has been entered, much less paid, in the underlying action”); see Bay Ridge Air Rights, Inc. v State of New York, 44 NY2d 49 [1978].
* * *

In sum, the omission of CUNY from Section 2.08.2 of the lease denies it the protection of the anti-subrogation rule. There has been no prior determination concerning contractual indemnification and reimbursement by CUNY to the claimants in regard to the Oliveira case. Only the respective obligations of National Union and of the claimants have been resolved by the Supreme Court. The claim filed on September 26, 2002 was premature because the cause of action for contractual indemnification and reimbursement did not arise until an unidentified later date. Accordingly, this claim is dismissed.


November 13, 2007
New York, New York

HON. MELVIN L. SCHWEITZER
Judge of the Court of Claims




[1].The court read and considered the following papers on the instant motion: claimants’ notice of motion and exhibits, together with affirmation of Stephan A. Boiko in support dated April 23, 2007 and exhibits; defendant’s affirmation in opposition dated September 12, 2007 and exhibits; claimants’ affirmation in reply dated October 15, 2007 and exhibits.

[2].The anti-subrogation rule is intended to prevent an insurer from recovering from its insured that loss or damage the risk of which the insured had passed along to the insurer under the policy. “An insurer has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered.”
Pennsylvania General Ins. Co. v Austin Powder Co.
, 68 NY2d 465, 468 [1986].
[3].It is not helpful that claimants cite the July 15, 1986 lease exclusively, and sometimes inaccurately, by attributing to a section of that lease language actually found in a different lease under that specified section.