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Atlantic Casualty Ins. Co. v. C.A.L. Construction Corp.

July 29, 2008


The opinion of the court was delivered by: Dora L. Irizarry, United States District Judge


Plaintiff Atlantic Casualty Insurance Company ("Atlantic Casualty") brought this action against defendants C.A.L. Construction Corporation ("C.A.L.") and Israr Hussain ("Hussain") seeking declaratory relief, damages, and attorneys' fees. Defendants answered the complaint denying certain allegations and raising affirmative defenses. At the close of discovery, Atlantic Casualty filed the instant motion seeking summary judgment. Defendants failed to file any opposition to this motion.*fn1 For the reasons set forth below, this court grants in part and denies in part Atlantic Casualty's motion for summary judgment.

I. Background

A. Underlying State Court Action

The following facts are undisputed or, when disputed, construed in favor of the non-moving defendants. Hussain, a tenant, lived in a building owned by Azmai Iqbal ("Iqbal") in Elmhurst, New York. (Deckman Aff. ¶¶ 4-6). During Hussain's tenancy, C.A.L. and additional individuals and entities performed construction work at the apartment building pursuant to Iqbal's renovation plans. (Pl. Mem. 13). On the evening of June 12, 2005, Hussain tripped on construction debris, consisting of piping, discarded on a walkway outside the apartment building. (Pl. 56.1 ¶ 9; Hussain Depo Tr. 37). Hussain suffered physical injuries and incurred costs for medical treatment and lost wages during a period of disability. (Pl. 56.1 ¶ 5).

On December 13, 2005, Hussain filed a negligence suit against Iqbal, in New York State Supreme Court, Queens County, captioned Israr Hussain v. Azmai Iqbal, Index No. 26831/05. (Pl. 56.1 ¶¶ 5, 9; Deckman Decl. Ex. A). On April 5, 2006, Iqbal filed a third party complaint against C.A.L. (collectively the "Hussain Action"). (Pl. 56.1 ¶ 11; Deckman Decl. Ex. C). Atlantic Casualty, C.A.L.'s general commercial liability carrier, agreed to defend C.A.L. in the Hussain Action under a reservation of rights in a letter dated July 17, 2006. (Pl. 56.1 ¶ 14; Jones Aff. Ex. A).

On August 17, 2006, Atlantic Casualty brought this action against defendants C.A.L. and Hussain, seeking (i) a declaratory judgment relieving it of its duties to defend and indemnify C.A.L. or any other party to the Hussain Action for lack of coverage, (ii) damages on theories of unjust enrichment, indemnity, contribution, and contract, and (iii) attorneys' fees. See Compl. ¶¶ 23-27. Defendant C.A.L. answered denying untimely notice and lack of coverage and asserting an affirmative defense. Defendant Hussain answered and raised numerous affirmative defenses.

B. Iqbal-C.A.L. Agreement

Iqbal hired C.A.L. to perform certain construction work at the apartment building. Their contract consisted of several handwritten agreements and invoices. (Deckman Decl. Ex. D). C.A.L. and Iqbal agreed that C.A.L. would reconstruct the basement of the apartment building, build an exterior staircase, install doors, lights, air conditioning, and windows, and perform certain plumbing work, demolition work, electrical work, foundation work, brick work, and rooftop renovations. (Deckman Decl. 11).

C. Work Attributed to C.A.L.

Atlantic Casualty contends that C.A.L. operated as a general contractor, hiring subcontractors for various trades. (Pl. 56.1 ¶ 7; Pl. Mem. 4-5). The court reviewed the record for any evidence favorable to defendants on this point. C.A.L., through its president, Carlos Lazzo ("Lazzo"), admitted the following facts in a deposition taken in the underlying Hussain Action: (i) Lazzo had a New York City general contractor's license (Lazzo Depo. Tr. 11); (ii) C.A.L. was responsible for all non-plumbing work, including sheet rock installation, painting, brick work, rooftop renovations, certain demolitions, installation of a toilet and sink, construction of a driveway and an entrance ramp for the disabled, and electric work (Lazzo Depo. Tr. 25, 29-33, 61); (iii) C.A.L. hired and paid Scott Electric to perform electrical work (Lazzo Depo. Tr. 24, 25, 66-67, 93); (iv) C.A.L. paid for duct work performed by another company (Lazzo Depo. Tr. 83-84); (v) C.A.L. hired and paid a company to pour concrete for an exterior staircase (Lazzo Depo Tr. 84); (vi) C.A.L. hired and paid a company to install an exterior door (Lazzo Depo Tr. 84); (vii) C.A.L. scheduled and coordinated the work of the various trade workers, except for plumbing (Lazzo Depo. Tr. 29); and (viii) Scott Electric used pipes as part of its electric work (Lazzo Depo. Tr. 68-70). C.A.L. denied that it was responsible for hiring, supervising or paying the plumbing company, Tito Plumbing. (Lazzo Depo Tr. 22, 24, 28, 29, 77).

D. Atlantic Casualty-C.A.L. Policy

At the time of Hussain's injury, C.A.L. had a commercial general liability policy with Atlantic Casualty, policy number L068002494 (the "Policy"). (Pl. 56.1 ¶ 1; Jones Aff. Ex. C). C.A.L. submitted a "Contractors/Artisans Questionnaire" (the "Questionnaire") to Atlantic Casualty, prior to issuance of the Policy. (Jones Aff. Ex. B; Pl. Mem. 5). In the Questionnaire, C.A.L. stated that it operated solely as a subcontractor and limited its operations to interior carpentry and drywall work. (Jones Aff. Ex. B; Pl. Mem. 6). Relying on the information contained in the Questionnaire, Atlantic Casualty issued the Policy. (Parraga Aff. ¶ 6). The Policy insured C.A.L. for losses resulting from two specified operations-interior carpentry and drywall. (Jones Aff. Ex. C; Pl. Mem. 10). The Policy Declaration page contained only two classifications: "Carpentry - interior" and "Dry Wall or Wallboard Installation." (Jones Aff. Ex. C). There was no coverage for losses resulting from "operations which are not classified or shown on the Commercial General Liability Coverage Declarations, its endorsements or supplements" (Jones Aff. Ex. C); and losses "arising out of the actions of independent contractors/subcontractors for or on behalf of [C.A.L.]." (Jones Aff. Ex. C; Pl. Mem. 11).

The Policy set forth C.A.L.'s duty to provide notice to Atlantic Casualty of accidents, claims, potential claims, and legal proceedings. The Policy required C.A.L. to notify Atlantic Casualty of any occurrences, offenses, claims, or suits "as soon as practicable." (Jones Aff. Ex. C; Pl. Mem. 11). The Policy required C.A.L. to "immediately send [Atlantic Casualty] copies ...

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