United States District Court, Northern District of New York
April 23, 2001
FEDERATED MUTUAL INSURANCE COMPANY, AS SUBROGEE OF AMERICAN HARDWALL SUPPLY COMPANY OF ROME, INC., D/B/A TRUE VALUE HARDWARE, PLAINTIFF,
WOODSTOCK '99, LLC, DEFENDANT. WOODSTOCK '99, LLC, THIRD-PARTY PLAINTIFF, V. ACE HARDWARE CORPORATION, THIRD-PARTY DEFENDANT.
The opinion of the court was delivered by: Hurd, District Judge.
On March 6, 2000, plaintiff Federated Mutual Insurance Co.
("Federated") commenced the instant action as subrogee of American
Hardwall Supply Company of Rome ("American") against defendant Woodstock
'99, LLC ("Woodstock") to recover payments in excess of $600,000 made to
its insured, American. Woodstock answered the complaint, and also filed a
third-party action against third-party defendant Ace Hardware Corporation
Federated now moves for partial summary judgment to dismiss Woodstock's
Thirteenth Affirmative Defense (waiver of subrogation) pursuant to
Federal Rule of Civil Procedure 56.*fn2 Defendants oppose. Oral argument
was heard on April 13, 2001, in Utica, New York. Decision was reserved.
Woodstock operated the Woodstock '99 festival in Rome, New York during
the summer of 1999 (the "festival"). This action arises out of property
damage sustained by American at the festival. It is based upon the
alleged negligence of Woodstock in failing to maintain security and crowd
control. Because of the limited nature of the relief sought on the
instant motion, only the facts pertinent to this motion will be stated
Ace contracted with Woodstock to become a sponsor for the festival (the
"Woodstock agreement"). Pursuant to the Woodstock agreement, Ace had the
right to designate a supplier of camping supply products for the
festival. By letter agreement dated July 16, 1999 (the "American letter
agreement"), Ace designated American as the exclusive supplier of camping
supply products at the festival. The American letter agreement required
American to indemnify Ace and Woodstock
(as well as certain other parties), and to obtain suitable insurance.
Plaintiff was the insurer of American for purposes of the festival.
Pursuant to the Woodstock agreement, Ace was obligated to indemnify
Woodstock for actions arising from the negligence of Ace, and to name
Woodstock as an additional insured on Ace's insurance policy for the
festival. Ace was also required to waive subrogation as against
Woodstock. The Woodstock agreement also required the suppliers designated
by Ace to waive subrogation against Woodstock.*fn3
The American letter agreement contained no waiver of subrogation;
however, it did contain the following statement:
As you know, Ace Hardware Corporation ("ACE") and
Woodstock '99, LLC ("Woodstock '99") entered into a
letter agreement dated June 1, 1999. Woodstock '99 has
subsequently prepared a formal agreement for Ace's
signature, a copy of which is attached for your
reference (the "Agreement"). Both the letter agreement
and the Agreement provide that one Ace retailer,
namely American Hardwall Supply Co. will have the
exclusive right to sell camping goods on the grounds
of the Woodstock '99 Festival.*fn4
Defendants contend that this "reference" to the Woodstock agreement was
intended to incorporate that agreement by reference into the American
III. STANDARD OF REVIEW
A. Summary Judgment
A moving party is entitled to summary judgment "if the pleadings,
depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as
a matter of
law." Fed.R.Civ.P. 56(c). The ultimate inquiry is whether a reasonable
jury could find for the nonmoving party based on the evidence presented,
the legitimate inferences that could be drawn from that evidence in favor
of the nonmoving party, and the applicable burden of proof. See Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202
(1986). In determining a motion for summary judgment, all inferences to
be drawn from the facts contained in the exhibits and depositions "must
be viewed in the light most favorable to the party opposing the motion."
United States v. Diebold Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d
176 (1962); Hawkins v. Steingut, 829 F.2d 317, 319 (2d Cir. 1987).
Nevertheless, "the litigant opposing summary judgment `may not rest upon
mere conclusory allegations or denials' as a vehicle for obtaining a
trial." Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d
Cir. 1980) (quoting SEC & Research Automation Corp., 585 F.2d 31, 33 (2d
 In order for a document to be incorporated by reference into an
agreement, two essential elements must be satisfied. First, the document
to be incorporated must be identified with sufficient specificity. See
Chiacchia v. National Westminster Bank USA, 124 A.D.2d 626, 628,
507 N.Y.S.2d 888 (2d Dep't 1986). Second, there must be a clear
manifestation of an intent to be bound by the terms of the incorporated
instrument. See PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1201 (2d Cir.
1996) (quoting Lamb v. Emhart Corp., 47 F.3d 551, 558 (2d Cir. 1995)).
Only the second element is at issue in this case.
 The arguments of the defendants in opposition to the instant motion
is predicated upon three facts. First, that the letter constituting the
American letter agreement contains the word "reference." Second, that
American obtained insurance in accordance with the requirements of the
Woodstock agreement. Third, that because American needed to refer to the
Woodstock agreement to understand its obligation to Ace, it must have
been incorporated. These facts do not provide a persuasive basis for the
application of the doctrine of incorporation by reference to the waiver of
subrogation contained in the Woodstock agreement.
While it true that the American letter agreement does contain various
references to the Woodstock agreement — such as to the Woodstock
agreement's definition of "Third Parties" and "Government Entities"
— there is no mention or reference to the Woodstock agreement's
waiver of subrogation provision. Under the American letter agreement
(which was drafted by a Senior Attorney in Ace's legal department), Ace
required American to indemnify it, Woodstock, and other parties entitled
to indemnification under the Woodstock agreement, for losses caused by
the negligence of American. Unlike Ace, American was not required by any
party to waive the right of subrogation against Woodstock for Woodstock's
negligence in exchange for the right to sell its goods at the festival.
Regardless of whether or not Woodstock and Ace intended to require
American to waive subrogation as against Woodstock, there is no clear
manifestation of such an intent in the American letter agreement. Under
the American letter agreement, American agreed to indemnify Ace and
Woodstock, and to obtain insurance. There is no evidence in the American
letter agreement of any intent to bind American to all the terms and
conditions of the Woodstock agreement, regardless of whether such terms
and conditions were
specifically mentioned in the agreement which American signed.
Notwithstanding the absence of any express language incorporating the
terms of the Woodstock agreement into the American letter agreement,
counsel for Ace asserted at oral argument that the provision, "I have
received a certificate of insurance from your insurance carrier and am
having it reviewed by our insurance department," indicates that the
parties intended for the Woodstock agreement's insurance provisions
(including the waiver of subrogation requirement) to apply to American.
No such intent is apparent from this statement. In fact, it is undisputed
that the insurance obtained by American and provided to Ace for its
review did not comply with the Woodstock agreement in that it neither
waived subrogation nor listed Woodstock as an additional insured. By
accepting the insurance provided by American, Ace impliedly acknowledged
that American was not required to comply with the subrogation waiver in
the Woodstock agreement.
It is apparent from the terms of the American letter agreement that the
Woodstock agreement was provided to American for informational purposes
— i.e., to substantiate and explain American's duties under its
contract with Ace. This is wholly inadequate to manifest a clear
intention on the part of American and Ace that, by accepting the American
letter agreement, American was also accepting all of the terms and
conditions of the Woodstock agreement. Counsel for Ace conceded as much
at oral argument by arguing that the Woodstock agreement was attached to
the American letter agreement to provide guidance to American as to its
obligations under the American letter agreement.
Because the mere use of the word "reference" is insufficient to
manifest the requisite intent for an incorporation by reference, and
because there is no evidence that either party manifested a clear intent
that American be bound by the terms of the Woodstock agreement,
plaintiffs motion for summary judgment as to Woodstock's Thirteenth
Affirmative Defense must be granted.
Therefore, it is,
1. Plaintiffs motion for partial summary judgment is GRANTED;
2. Defendant's Thirteenth Affirmative Defense is DISMISSED; and
3. Defendant's Eleventh Affirmative Defense is DISMISSED by