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

June 17, 2004.

AMERICAN MOTORIST INSURANCE COMPANY, as subrogee of JODAMO INTERNATIONAL, LTD., and CHUBB CUSTOM INSURANCE COMPANY, as subrogee of JODAMO INTERNATIONAL, LTD., Plaintiffs,
v.
MORRIS GOLDMAN REAL ESTATE CORP., Defendant.



The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

OPINION AND ORDER

I. INTRODUCTION

  Two insurance companies, American Motorist Insurance Company and Chubb Custom Insurance Company (collectively "Insurers") bring this action against Jodamo International, Ltd.'s ("Jodamo") landlord, Morris Goldman Real Estate Corp. ("Goldman"), to recover amounts paid to Jodamo, notwithstanding a waiver of subrogation clause found in Jodamo's Lease Agreement for property located at 321 Grand Street. The plaintiffs allege that Jodamo suffered property damage as a result of Goldman's grossly negligent conduct. Both parties now move for summary judgment. For the reasons stated below, summary judgment is granted in favor of the Insurers.

  II. BACKGROUND

  This Court has jurisdiction based on diversity of citizenship. American Motorist, Chubb, and Goldman are citizens of Illinois, Delaware, and New York, respectively.*fn1

  Jodamo is a designer menswear store located at 321 Grand Street in Manhattan, on property leased from Goldman since 1995.*fn2 On January 8, 1996, a portion of the store's wet pipe sprinkler system froze and ruptured,*fn3 flooding the store, and largely ruining Jodamo's inventory.*fn4 At that time, Jodamo was insured by Atlantic Mutual Insurance Company ("Atlantic Mutual"),*fn5 which compensated Jodamo for its losses. Atlantic Mutual then sued Goldman to recover the monies it paid to cover Jodamo's losses.*fn6 The case was tried on April 25, 2000, and the jury ultimately determined that Goldman's negligent failure to provide adequate heat to Jodamo had caused the sprinkler pipe to freeze and burst.*fn7

  The jury awarded Atlantic Mutual more than one million dollars, a figure that represented the full amount that Atlantic Mutual had paid to cover Jodamo's losses.*fn8 The amount paid by Atlantic Mutual represented the total retail price of each damaged item in the Jodamo inventory.*fn9 Goldman moved to set aside the jury verdict, but the motion was denied as untimely filed.*fn10 The denial of Goldman's motion was upheld on appeal.*fn11

  On January 23, 2000, before the Jodamo I jury reached a verdict, Jodamo's wet pipe sprinkler system froze again and burst again, flooding the store for a second time.*fn12 Jodamo's inventory was again damaged, and Jodamo collected an amount exceeding $450,000 from American Motorist and Chubb, which were now its insurers.*fn13 This figure was again based on the retail price of each damaged item.*fn14 The Insurers now seek recovery from Goldman for this second sprinkler system failure.

  For its defense, Goldman relies on a waiver of subrogation clause contained in the Lease Agreement.*fn15 Clause 9(e) of the Lease provides, in pertinent part, that each party "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."*fn16

  On August 6, 2003, this Court held that the waiver of subrogation clause would not bar this action if Goldman acted recklessly or was grossly negligent.*fn17 As the Insurers' initial complaint failed to allege gross negligence, the complaint was dismissed with leave to amend the complaint to include such a claim. That amended complaint is now before the Court, together with cross motions for summary judgment.

  III. SUMMARY JUDGMENT

  A. Legal Standard

  Summary judgment is permissible "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 judgment as a matter of law."*fn18 "An issue of fact is genuine if the evidence is such that a jury could return a verdict for the nonmoving party."*fn19 A fact is material when "it might affect the outcome of the suit under the governing law."*fn20

  The party seeking summary judgment has the burden of demonstrating that no genuine issue of material fact exists.*fn21 Accordingly, the non-moving party can defeat summary judgment by raising a genuine issue of material fact. However, she "must do more than simply show that there is some metaphysical doubt as to the material facts,"*fn22 ...


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