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U.S. Underwriter's Insurance Co. v. Ziering

February 2, 2009


The opinion of the court was delivered by: Joseph F. Bianco, District Judge

Attorney for plaintiff is Steven Verveniotis, Miranda Sokoloff Sambursky Slone Verveniotis, LLP, 240 Mineola Boulevard, Mineola, NY, 11501. Attorney for defendants William Ziering and 444 Franklin Avenue Corp. is Jason Stuart Firestein, Rubin & Licatesi, P.C., 591 Stewart Avenue, Fourth Floor, Garden City, NY, 11530. Attorney for defendants Al-Pros Construction, Inc. and Al- Faloq General Construction, Inc. is William Joseph Mitchell, Ahmuty, Demers & McManus, 200 I.U. Willets Road, Albertson, NY, 11507. The attorney for defendant Felicia Davis is Derek P. McDowell, 1476a Fulton Street, Brooklyn, NY, 11216.


U.S. Underwriter's Insurance Company (hereinafter, "U.S. Underwriter's" or "plaintiff") brings this action against defendants William Ziering ("Ziering"), 444 Franklin Avenue Corporation ("444"), Al-Pros Construction, Inc. ("Al-Pros"), Al-Faloq General Construction, Inc. ("Al-Faloq") and Felicia Davis ("Davis"), seeking a declaratory judgment pursuant to 28 U.S.C. § 2201 ("Federal Declaratory Act") for purposes of determining the parties' rights and liabilities with respect to insurance policy number CL 3084417 ("the policy") issued by plaintiff to Ziering doing business as ("d/b/a") 444 in 2005 and currently implicated in a state court action, captioned Felicia Davis v. William Ziering, et al., New York Supreme Court, Kings County, Index. No. 20621/05 ("the state action"), initiated by Davis as against the remaining defendants for alleged damage to her property. Specifically, in the instant action, plaintiff claims that, because defendants Ziering, 444, Al-Pros and Al- Faloq violated the terms of the policy by failing to provide timely notice of an occurrence which potentially gave rise to a claim and further assumed obligations towards Davis regarding alleged property damage, the policy affords no coverage to them for any occurrences alleged in the state action. Plaintiff seeks a declaration stating that it is not obligated to defend or indemnify any party to the underlying state action as to any claims asserted in those proceedings. Defendants Ziering, 444, Al-Pros, Al-Faloq and Davis,*fn1 in turn, have counter-claimed seeking a judgment dismissing plaintiff's complaint and declaring that plaintiff is obligated to defend them with respect to the underlying property damage state action. Defendants further counterclaim for attorney's fees incurred in the defense of the instant action. Defendants Ziering and 444 further claim that plaintiff violated a fiduciary duty owed to them by obtaining strategic, legal and financial benefit from the investigation related to the state action for purposes of assisting plaintiff's cause in the instant action and, therefore, plaintiff is estopped from denying them defense or indemnity in the state action. Plaintiff now moves for summary judgment in its favor. For the reasons stated herein, plaintiff's motion is denied in its entirety.


A. Facts*fn2

The Court has taken the facts described below from the parties' depositions, affidavits, exhibits, plaintiff's Local Rule 56.1 Statement of Facts ("Pl.'s 56.1"), defendants Al-Pros and Al-Faloq's Local Rule 56.1 Statement of Facts ("Al-Pros/Al-Faloq's 56.1") and defendant Ziering and 444's Local Rule 56.1 Statement of Facts ("Ziering/444's 56.1"). In ruling on a motion for summary judgment, the Court shall construe the facts in the light most favorable to the non-moving parties. See Capobianco v. City of New York, 422 F.3d 47, 50 (2d Cir. 2001).

Ziering d/b/a 444 was a named insured under an insurance policy numbered CL 3084417, issued by plaintiff for the coverage period of May 6, 2005 through November 6, 2005. (Pl.'s 56.1 ¶ 2.) The policy provided, in relevant part, that "in the Event of Occurrence, Offense, Claim or Suit, [the insured] must see to it that we are notified as soon as practicable of an 'occurrence' or an offense, which may result in a claim." (Id. ¶ 3.) The policy further stated that "[n]o insured will, except at that insured's own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent." (Id.)

In late 2004 or early 2005, 444 purchased property located at 16 Roosevelt Place in Brooklyn, New York, with the purpose of constructing a three-family dwelling which would be placed on the market for sale. (Firestein Aff. ¶ 4.) Ziering hired a contractor, Al-Faloq, to perform the construction activities on the premises, which included excavation and creation of a foundation on the lot. (Id. ¶¶ 5-6.) Ziering contends that he reached an agreement with Al-Pros and/or Al-Faloq wherein either would procure an insurance policy, prior to commencing construction activities, which would name Ziering as an insured. (Ziering Aff. ¶ 25.) Ziering paid Al-Pros $500 for this accord, but does not recall if the additional insurance was ever provided. (Id.) He believed, however, that any claims for monetary damages arising from construction activities on his property would be covered under insurance provided by either Al-Pros or Al-Faloq. (Id. ¶ 27.)

Construction commenced some time between May 12 and May 19, 2005. (Firestein Aff. ¶ 7.) Ziering maintains that he did not supervise, direct or control the construction activities conducted on his property. (Ziering Aff. ¶ 20.)

On or about May 22, 2005, Ziering received a complaint from Davis, the owner of the adjacent lot located at 14 Roosevelt Place, that her property had sustained damages purportedly caused by construction activities taking place at 16 Roosevelt Place. (Pl.'s 56.1 ¶ 9.) By letter dated May 23, 2005, written by Ziering on behalf of Al-Faloq, Al-Faloq agreed to make certain repairs to Davis' property, addressing "cracks in the basement," door realignment, basement spackling and patio resurfacing. (Id. ¶ 10.) In the verified complaint filed in the state action, Davis represents that this was a "nominal[] offer[] to make superficial repairs to [Davis's] home." (Hazard Aff., Ex. C.)

According to Ziering, between May 23 and May 24, 2005, Ziering encountered New York City Building Inspector Kevin Post exiting Davis' residence, who represented to him that upon inspection of the residence, he had found no defects. (Ziering Aff. ¶ 18.) By letter dated June 1, 2005, Davis informed Al-Faloq and Ziering that "the damages are quite severe to be patched up . . . ." (Pl.'s 56.1 ¶ 11.) Ziering recalls reading this letter, but cannot specify when he did so. (Ziering Dep. at 77-80.)

By letter dated June 16, 2005 and addressed to Ziering and Al-Faloq, counsel for Davis advised both parties that construction activities at 14 Roosevelt Place were causing damage to Davis' residence on the adjacent property. (Pl.'s 56.1 ¶ 12.) Ziering recalls reading this letter, but cannot specify when he did so. (Ziering Dep. at 80-83.) By facsimile letter dated July 13, 2005, addressed to Davis' counsel and copied to Ziering, Professional Engineer Brian E. Flynn stated that he had "unsuccessfully tried for the past two weeks since June 28th, 2005 to arrange for a building inspection of Felicia Davis's property at 14 Roosevelt Place, in Brooklyn." (Second Verveniotis Decl. ¶ 4, Ex. A.) Ziering asserted in the underlying state action that "we did attempt to have [Flynn] make an inspection but the plaintiff refused access." (First Verveniotis Decl. ¶ 4, Ex. A.)*fn3

By letter dated July 15, 2005, counsel for Ziering informed counsel for Davis that "both Al Falooq [sic] Construction and 444 Franklin Avenue Corp. have agreed to repair any and all damage that may have been caused to your client's property as a result of the new construction . . . ." (Hazard Aff. ¶ 17, Ex. G.) Ziering's counsel further stated: "My client remains willing to rectify any damage that was caused to Ms. Davis [sic] home, however, it appears that Ms. Davis does not wish to cooperate." (Id.) Ziering has asserted in the instant action that this "so-called stated willingness was not that of WILLIAM ZIERING or 444 FRANKLIN AVENUE CORPORATION" but that "the repairs were to have been made by AL-PROS CONSTRUCTION INC. and/or AL-FALOQ GENERAL CONSTRUCTION, INC., who had [sic] previously agreed to make certain repairs to the property of FELICIA DAVIS." (Ziering Aff. ¶ 10.)

On July 20, 2005, Davis filed a Summons and Verified Complaint in New York State Supreme Court, Kings County against Ziering, 444, Al-Pros and Al-Faloq, alleging that construction activities conducted at 16 Roosevelt Place by the named defendants were the proximate cause of damages to her residence. (Pl.'s 56.1 ¶ 5.) The next day, Davis filed an Order to Show Cause seeking to enjoin further construction activities at the site. (Id. ¶ 6.) On August 1, 2005, plaintiff first received notice of Ziering and 444's claim via facsimile letter forwarded by the Maureen Quigley Insurance Agency, attaching Davis' Summons, Verified Complaint and Order to Show Cause, filed in the state action. (Id. ¶ 4.) In his affidavit opposing the Order to Show Cause, ...

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