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ST. PAUL FIRE & MARINE INS. CO. v. PROTECTION MUT.

January 28, 1986

ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Plaintiff, against PROTECTION MUTUAL INSURANCE COMPANY, Defendant


The opinion of the court was delivered by: LOWE

MARY JOHNSON LOWE, D. J.

This is an action between a landlord's insurance company and his tenant's insurer. In a previous opinion* we granted summary judgment to the defendant and dismissed the action. Presently before the Court is plaintiff's timely motion to reargue pursuant to local rule 3(j). For the reasons stated below we grant reargument in part and upon reconsideration we adhere to our previous determination.

 BACKGROUND

 The facts were stated in our previous opinion and are repeated here only in the briefest detail. Familiarity with the previous opinion is assumed.

 The dispute centers around commercial property in Manhattan. The property was held by Paul Saurel and the United States Trust Co. ("Trust") and was leased in part to Pellon Corporation ("Pellon") pursuant to a written lease. The plaintiff The St. Paul Fire and Marine Ins. Co. ("St. Paul") insured Trust's interest against fire loss. Protection Mutual Insurance Co., the defendant, ("Protection") issued a general business policy to Pellon protecting both the personalty and the betterments and improvements against loss including fire.

 The building was swept by fire. Protection paid Pellon's claim for loss of personal property. Pellon then demanded that Trust make repairs pursuant to P9(b) of the lease which states:

 
If the demised premises are partially damaged or rendered partially unusable by fire or other casualty, the damages thereto shall be repaired by and at the expense of the Landlord and the rent until such repairs shall be substantially completed shall be apportioned from the day following the casualty according to the part of the premises which is usable.

 When Trust failed to repair, Pellon brought an action against Trust and Trust impleaded St. Paul as a third-party defendant. St. Paul agreed to pay the loss, however, it demanded and received an "assignment" and "subrogation" of Pellon's "rights" against Protection. St. Paul then instituted this action asserting two principal claims. First it claimed that both policies were "excess" to each other and therefore under New York law each insurance company must bear a pro rata share of the loss. See Federal Ins. Co. v. Atlantic National Ins. Co., 25 N.Y.2d 71, 302 N.Y.S.2d 769, 250 N.E.2d 193 (1969). Second it claimed that it could sue Protection directly on the Protection policy, based on the assignment subrogation agreement.

 In our previous opinion we granted summary judgment on the first claim because the double insurance rule does not apply when the insureds or the insurable interests differ. In the instant case the policies covered different parties and one policy protected a leasehold while the other protected an interest in fee simple. Nothing in the plaintiff's motion for reargument provides any basis for reconsideration of this holding. Accordingly we deny the motion to the extent that it seeks reconsideration of the grant of summary judgment on the first claim.

 In the previous opinion we also granted summary judgment to the defendants on the second claim. We held that St. Paul could not recover against Protection as Pellon's subrogee because Pellon and Trust had contracted to shift the risk of loss to Trust.** In support of reargument St. Paul puts forth two contentions. First it points to a lease provision which it argues requires each party to look to its own insurance before seeking relief from the other party. Second, it claims that Protection forfeited any rights it may have against Trust as Pellon's subrogee by wrongfully denying Pellon's claim for betterments and improvements. Because these contentions were not discussed in the previous opinion we grant reargument and upon reconsideration adhere to our previous conclusion.

 DISCUSSION

 St. Paul's first argument is based on paragraph 9 (e) of the lease which states:

 
Nothing contained hereinabove shall relieve Tenant from liability that may exist as a result of damage for fire or other casualty. Notwithstanding the foregoing, each party shall look first to any insurance in its favor before making any claim against the other party for recovery of loss or damage resulting from fire or other casualty, and to the extent that such insurance is in force and collectible and to the extent permitted by law, Landlord and Tenant each hereby releases and waives all right of recovery against the other or anyone claiming through or under each of them by way of subrogation or otherwise. The foregoing release and waiver shall be in force only if both releasors' insurance policies contain a clause providing that such a release or waiver shall not invalidate the insurance and also provided that such a policy can be obtained without additional premiums.

 St. Paul argues that this provision "unequivocally requires that aside from any other obligations of the landlord or tenant, each party is required to first look to any insurance in its favor, before looking to the other for a loss by fire. "Memorandum ...


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