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AMERICAN MOTORIST INS. CO. v. MORRIS GOLDMAN REAL ESTATE

August 6, 2003

AMERICAN MOTORIST INSURANCE COMPANY, AS SUBROGEE OF JODAMO INTERNATIONAL, LTD., AND CHUBB CUSTOM INSURANCE COMPANY, AS SUBROGEE OF JODAMO INTERNATIONAL, LTD., PLAINTIFFS -AGAINST- MORRIS GOLDMAN REAL ESTATE CORP. DEFENDANT


The opinion of the court was delivered by: Shira Scheindlin, District Judge

OPINION AND ORDER

American Motorist Insurance Company ("American Motorist") and Chubb Custom Insurance Company ("Chubb Custom") (collectively "Insurers"), as subrogees of Jodamo International Ltd. ("Jodamo"), bring this subrogation action against Jodamo's landlord, Morris Goldman Real Estate Corp. ("Goldman"). Jodamo allegedly suffered property damage due to Goldman's inadequate maintenance of the leased premises. Goldman moves to dismiss this suit pursuant to the waiver of subrogation clause contained in Jodamo's lease. For the reasons stated below, the Insurers' Complaint is dismissed with leave to amend.

I. BACKGROUND

This action arises from property damage suffered by Jodamo, the owner of a retail clothing store specializing in [ Page 2]

luxury mens clothing and accessories. American Motorist is an Illinois corporation and subrogee of Jodamo. Complaint ("Compl.") ¶ 1. Chubb Custom is a Delaware corporation and also a subrogee of Jodamo. Id. ¶ 2. Goldman is a New York corporation. Id. ¶ 5.

On December 29, 1995, Jodamo and Goldman entered into a Lease Agreement, whereby Jodamo leased property from Goldman, at 321 Grand Street, New York, New York. See Lease Agreement, Attachment to 6/20/03 Letter to Court from Richard Dawson, attorney for Goldman. Clause 9(e) of the agreement, entitled "Destruction, Fire and Other Casualty," contains a waiver of subrogation clause providing that:

Nothing contained hereinabove shall relieve [Jodamo] from liability that may exist as a result of damage from 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 for 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, [Goldman] and [Jodamo] each hereby releases and waives all right of recovery against the other or any one claiming through or under each of them by way of subrogation or otherwise.
Id. at ¶ 9(e) (emphases added).

On January 23, 2000, a portion of the store's wet pipe sprinkler system froze, ruptured, and discharged water. Compl. ¶ 16. The water ran for several hours and damaged Jodamo's [ Page 3]

inventory. Id. ¶¶ 18-19. As a result, the Insurers paid Jodamo an amount in excess of $430,000. Id. ¶ 19.

On January 16, 2003, the Insurers filed suit against Goldman for negligence and breach of contract. More specifically, the Complaint alleges that Goldman's negligent maintenance of the sprinkler system and the leased premises caused the water damage to Jodamo's property. Id. ¶¶ 22-24. The Complaint further alleges that Goldman was required under the Lease to properly maintain the sprinkler system and Goldman's negligence breached the contract. Id. ¶¶ 25-31. Goldman contends that the Insurers are not entitled to bring this action because Jodamo agreed, by executing the Lease, to waive any subrogation claims against Goldman. The Insurers, however, argue that the waiver of subrogation clause does not preclude claims of gross negligence or breach of contract.

II. LEGAL STANDARD

Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a motion to dismiss should be granted only if "`it appears beyond doubt that the plaintiff can prove no set of facts in support of [its] claim which would entitle [it] to relief.'" Weixel v. Board of Educ. of New York, 287 F.3d 138, 145 (2d Cir. 2002) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957) (alterations omitted)). At the motion to dismiss stage, the issue "`is not whether a plaintiff is likely to prevail [ Page 4]

ultimately, but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleading that a recovery is very remote and unlikely but that is not the test.'" Phelps v. Kapnolas, 308 F.3d 180, 184-85 (2d Cir. 2002) (quoting Chance v. Armstrong, 143 F.3d 698, 701 (2d Cir. 1998)).

The task of the court in ruling on a Rule 12(b)(6) motion is "merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof." Pierce v. Marano, No. 01 Civ. 3410, 2002 WL 1858772, at *3 (S.D.N.Y. Aug. 13, 2002) (internal quotation marks and citations omitted). When deciding a motion to dismiss, courts must accept all factual allegations in the complaint as true, and draw all reasonable inferences in plaintiff's favor. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). While courts may not consider matters outside the pleadings, ...


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