New York State Court of Claims

New York State Court of Claims

ZELNO v. STATE OF NEW YORK, #2008-015-077, Claim No. 113231, Motion No. M- 74844


Third-party action against Liberty Surplus Insurance Group was dismissed where the State was neither a named insured under the policy nor entitled to coverage under the "insured contract" provision of the policy.

Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):
Third-party defendant(s):
Claim number(s):
Motion number(s):
M- 74844
Cross-motion number(s):

Claimant’s attorney:
Martin Harding & Mazzotti, LLPBy: Craig A Cushing, Esquire
Defendant’s attorney:
and Third-party Claimant
Honorable Andrew M. Cuomo, Attorney General
By: Saul Aronson, EsquireAssistant Attorney General
Third-party defendant’s attorney:
Jaffe & Asher, LLPBy: Barak P. Cardenas, Esquire and Marshall T. Potashner, Esquire
Signature date:
October 8, 2008
Saratoga Springs

Official citation:

Appellate results:

See also (multicaptioned case)


The third-party defendant Liberty Surplus Insurance Corp. ("Liberty") moves for summary judgment pursuant to CPLR 3212 dismissing the third-party claim against it. The third-party action was commenced by the defendant-third-party claimant State of New York ("State") pursuant to Court of Claims § 9 (9-a)[1] seeking a declaration that Liberty and the other named third-party defendants are required to defend and indemnify it under certain policies of insurance. Claimant Carlton Zelno commenced this action for personal injuries sustained on September 22, 2005 during the course of his work on a construction project at the State Capitol building in Albany. The State of New York entered into a contract with Titan Roofing, Inc. ("Titan") for the rehabilitation of the roof (north quadrant) of the Capitol building and Titan entered into a subcontract with Monaco Restorations, Inc., the claimant's employer, to perform certain of the work. By Decision and Order of this Court filed January 10, 2007, claimant's motion to file a late claim pursuant to Court of Claims Act § 10 (6) was granted with respect to the claimant's Labor law § 240 (1) cause of action and was otherwise denied. The claim was thereafter filed on January 19, 2007. The State alleges in its third-party complaint that pursuant to its contract with Titan, Titan was required to procure an insurance policy of "protective liability and commercial general liability" (CGL) insurance naming the State as an additional insured for liability arising out of the work performed by Titan (Liberty's Exhibit D, third-party complaint, ¶ 7). The State asserts that a Certificate of Insurance was issued by Liberty to Titan reflecting coverage effective May 1, 2005 through May 1, 2006 and that the contract between these parties required that Titan defend and indemnify the State from suits, actions and damages relating to the performance of the work under the contract (Liberty's Exhibit D, third-party complaint, ¶ 11).

As pertinent here, the CGL policy secured by Titan, and issued by the movant herein, provided the following coverage:


1. Insuring Agreement

a. We will pay those sums in excess of the 'self-Insured Retention' that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies. . .

2. Exclusions

This insurance does not apply to:

* * *

b. Contractual Liability

'Bodily injury' or 'property damage' for which the insured is obligated to pay as damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages:

(1) Assumed in a contract or agreement that is an 'insured contract', provided the bodily injury or 'property damage' occurs subsequent to the execution of the contract. . .

An "insured contract" is defined to include the following:
f. The part of any . . . contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality), under which you assume the tort liability of another party to pay for 'bodily injury' or 'property damage' to a third person or organization. Tort liability means liability that would be imposed by law in the absence of any contract or agreement.

The claim was served and filed on January 19, 2007. The State notified Liberty of the claim by letter dated May 21, 2007 and requested the name of the firm which would be assigned to "protect the interest of the State of New York" (State's Exhibit D). Liberty issued a reservation of rights letter on May 25, 2007 and advised the State on June 12, 2007 that the matter was being reviewed and that all coverage issues would be addressed upon receipt of relevant documentation (State's Exhibits D and E).

In support of its motion for summary judgment, Liberty argues that the CGL policy issued to Titan does not reflect the State as either a named insured or an additional named insured and, as a result, dismissal of the third-party complaint is required. Counsel for Liberty notes that while the State "could be deemed an insured with respect to liability arising out of Titan's work that is included in the 'products - completed operations hazard' . . .", Mr. Zelno's claim does not fall within that category of coverage because Titan's work under the contract was not completed at the time claimant's accident occurred (attorney's affirmation in support of motion, ¶ 14, 16; Exhibit G). In opposition to Liberty's motion, the State argues that Titan purchased policies of insurance "in favor of the State of New York" to fulfill Titan's obligations to defend and indemnify the State pursuant to section 18.3 of the contract and "issued certificates of insurance covering both Titan and the State of New York" (attorney's affirmation in opposition to motion, ¶ 5). The contract provides, in this regard, as follows:
18.3 The Contractor shall indemnify and save harmless the State, its employees and agents from suits, actions, damages, and costs of every name and description relating to the performance of this Contract during its prosecution and until the acceptance thereof, and the State may retain such moneys from the amount due the Contractor as may be necessary to satisfy any claim for damages recovered against the State. The Contractor's obligations under this paragraph shall not be deemed waived by the failure of the State to retain the whole or any part of such moneys due the Contractor, nor shall such obligation be deemed limited or discharged by the enumeration or procurement of any insurance for liability for damages imposed by law upon the Contractor, subcontractor or the State.

The State argues that "[a]s Titan's insurance carrier, Liberty is legally obligated to defend and indemnify the State based on Titan's indemnification agreement with the State" (attorney's affirmation in opposition to motion, ¶ 6). In support of this argument, the State relies on the "insured contract" exception to the exclusion of coverage for contractual liability, arguing Liberty should defend and indemnify the State pursuant to the terms of the CGL policy providing coverage for contractual indemnity. The State argues alternatively that Liberty's failure to timely disclaim coverage pursuant to Insurance Law § 3420 (d) precludes an effective disclaimer of coverage or denial of liability at this late date.

It is axiomatic that insurance coverage extends to those entities or individuals defined as insured parties under the relevant terms of the policy (Sanabria v American Home Assur. Co., 68 NY2d 866,868 [1986]; Catholic Health Servs. of Long Is., Inc. v National Union Fire Ins. Co. of Pittsburgh, Pa., 46 AD3d 590, 592 [2007). "Put another way, where the insurance contract does not name, describe, or otherwise refer to the entity or individual seeking the benefit thereof as an insured, there is no obligation to defend or indemnify" (State of New York v American Mfrs. Mut. Ins. Co., 188 AD2d 152, 155 [1993]; Catholic Health Servs. of Long Is., Inc. v National Union Fire Ins. Co. of Pittsburgh, Pa., supra; State of New York v Liberty Mut. Ins. Co., 23 AD3d 1084 [2005]). Liberty established on the motion that the State was neither a named insured nor an additional named insured under the terms of the CGL policy issued to Titan. The certificates of insurance submitted in opposition to the motion merely reflect Titan as the named insured and the State as a "certificate holder". Nowhere in these certificates is the State named as an additional insured (see State's Exhibit B). Even where a certificate of insurance reflects a party as an additional insured, however, such a certificate generally includes the provision, as it does here, that "[t]his certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies below" (State's Exhibit B). Certificates such as those relied upon here are clearly insufficient to establish that the State was insured under the CGL policy issued by Liberty (cf. American Ref-Fuel Co. of Hempstead v Resource Recycling, 248 AD2d 420, 423 [1998]; Buccini v 1568 Broadway Assoc., 250 AD2d 466, 469-470 [1998]).

Nor can the State successfully oppose Liberty's motion with the argument that "[a]s Titan's insurance carrier, Liberty is legally obligated to defend and indemnify the State based on Titan's indemnification agreement with the State" (attorney's affirmation in opposition to motion, ¶ 6). The CGL policy issued by Liberty provides Titan, its insured, coverage for liability assumed in an "insured contract" (claimant's Exhibit G, p.14). This provision affords coverage only to Titan, and only with respect to damages it becomes legally obligated to pay pursuant to an assumption of liability contained in an insured contract (Kassis v Ohio Cas. Ins. Co., 51 AD3d 1366, 1368 [2008]). Notably, even had the CGL policy issued by Liberty named the State as an insured, coverage afforded under the policy provisions governing "insured contracts" would be available only to Titan as it was Titan, not the State, which assumed the tort liability of another (Nuzzo v Griffin Tech., 222 AD2d 184 [1996]; cf. Antonitti v City of Glen Cove, 266 AD2d 487 [1999]).

Lastly, the State's argument that Insurance Law § 3420 (d) precludes Liberty's disclaimer of coverage must fail. Insurance Law § 3420 (d), applicable only to claims for death or bodily injury, provides the following:
If under a liability policy delivered or issued for delivery in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant.

While it is well settled that an insurance company will be estopped from disclaiming coverage based on an exclusion in a policy where it has delayed unreasonably in doing so, this rule is inapplicable to create coverage where there was never any insurance in effect in the first instance (Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185 [2000]; Zappone v Home Ins. Co., 55 NY2d 131 [1982]). As the Court of Appeals explained in Matter of Worcester Ins. Co., supra, "[d]isclaimer pursuant to section 3420 (d) is unnecessary when a claim falls outside the scope of the policy's coverage portion. Under those circumstances, the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed" (Id. at 188). The CGL policy issued by Liberty never insured the State and, thus, a disclaimer pursuant to Insurance Law § 3420 (d) was unnecessary.

Liberty has established that it has no duty to defend or indemnify the State in the primary action. Accordingly, third-party defendant Liberty Surplus Insurance Corp.'s motion for summary judgment dismissing the third-party complaint and any and all cross-claims against it is granted and it is

ADJUDGED AND DECLARED that the third-party defendant Liberty Surplus Insurance Corp. is not obligated to defend or indemnify the defendant-third-party claimant State of New York in the primary action pursuant to the Commercial General Liability policy.

October 8, 2008
Saratoga Springs, New York

Judge of the Court of Claims

The Court considered the following papers:
  1. Notice of motion dated April 15, 2008;
  2. Affirmation of Barak P. Cardenas dated April 15, 2008 with exhibits;
  3. Memorandum of Law of Marshall T. Potashner, Esquire dated April 15, 2008;
  4. Affirmation of Saul Aronson dated July 8, 2008 with exhibits.

[1]. Section 9(9-a) gives the Court of Claims jurisdiction: "To make a declaratory judgment as defined in section three thousand one of the civil practice law and rules with respect to any controversy involving the obligation of an insurer to indemnify or defend a defendant in any action pending in the court of claims, provided that the court shall have no jurisdiction to enter a judgment against an insurer pursuant to this subdivision either: (i) for money damages; or, (ii) if the insurer would otherwise have a right to a jury trial of the controversy with respect to which the declaratory judgment is sought."