Order, Supreme Court, New York County (Judith J. Gische, J.), entered March 31, 2008, which, insofar as appealed from, granted the motions of defendant insured Garito Contracting, Inc. (Garito) and defendant insurer Twin City Fire Insurance Co. (Twin City) to renew their prior motions for dismissal of the complaint and summary judgment, respectively, and, upon renewal, adhered to the prior order declaring that plaintiff general contractor Bovis Lend Lease LMB Inc. (Bovis) is an additional insured entitled to coverage, modified, on the law, to the extent of declaring that Bovis is not entitled to indemnification, and otherwise affirmed, with costs.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Andrias, J.P., McGuire, Moskowitz, Acosta, DeGrasse, JJ.
Bovis is an insured under the policy issued by Twin City to its insured, Garito, which was hired to perform demolition work. The plaintiff in the underlying personal injury action, John Armentano, sought to recover for injuries he sustained when he fell through an opening in the floor of the job site. The hole was created when a garbage chute was removed by Garito during its demolition work. Although Bovis and Garito had entered into a subcontract for the performance of the demolition work, neither party was able to locate a copy of the contract. Thus, the terms of the contract were at issue in the underlying personal injury action. In particular, there was an issue regarding whether or not Garito was obligated under the contract to perform temporary protection work.
In this declaratory judgment action, Bovis moved for summary judgment, arguing that its contract with Garito entitled Bovis to coverage as an additional insured on the policy issued by Twin City to Garito. Garito cross-moved for dismissal of the complaint and Twin City cross-moved for summary judgment. The motion court granted Bovis' motion and denied the cross motions. This Court affirmed, finding that "[a]lthough the contract was lost, Bovis properly established, through extrinsic evidence, that it required Garito to procure insurance coverage on its behalf" (Bovis Lend Lease LMB Inc. v Garito Contr., Inc., 38 AD3d 260, 261 ) (Bovis I). Our decision finding that a contract existed requiring Garito to procure coverage for Bovis as an additional insured said nothing with regard to the additional terms of the contract, as those terms properly were an issue for the jury in the underlying action.
In the underlying action, the jury found that: (1) Bovis was negligent and that its negligence was a substantial factor in causing Armentano to fall through the hole, and (2) Garito also was negligent but that its negligence was not a substantial factor in causing Armentano to fall. The jury's determination included a finding that Bovis did not prove that Garito agreed to provide temporary protection at the work site. Thereafter, in this action, Twin City moved to renew its motion for summary judgment and Garito joined in the motion. The court granted renewal but adhered to its prior determination.
Upon renewal, the court should have granted the motions based on the jury's determination in the personal injury action. The insurance policy issued by Twin City provided coverage to Bovis "only with respect to liability arising out of: . . . [Garito's] work' for [Bovis] . . . or . . . [a]cts or omissions of [Bovis] in connection with [its] general supervision of [Garito's] work.'" As is apparent from the jury's verdict, Bovis' liability neither arose out of Garito's work nor out of Bovis' supervision of Garito's work.
This case is controlled by Worth Constr. Co., Inc. v Admiral Ins. Co. (10 NY3d 411 ). In Worth, Murphy, the plaintiff in the underlying action, fell on stairs constructed by a subcontractor, Pacific, having slipped on fireproofing that had been applied to the stairs by another subcontractor. Supreme Court initially declared that the general contractor, Worth, was entitled to a defense and indemnification as an additional insured under the policy issued to Pacific, which provided coverage to Worth "only with respect to liability arising out of [Pacific's] operations" (10 NY3d at 415). Worth subsequently conceded, however, that the negligence claim it had asserted against Pacific in its third-party action was without merit and should be dismissed. Pacific's insurer then moved to renew its motion for summary judgment in the declaratory judgment action brought by Worth; Supreme Court granted the motion, holding that "Worth's concession that Pacific was not negligent established as a matter of law that Murphy's accident did not arise out of Pacific's operations and therefore [Pacific's insurer] was not required to defend or indemnify Worth under the terms of the policy" (10 NY3d at 415).
A divided panel of this Court reversed (40 AD3d 423 ), but the Court of Appeals reversed and reinstated the order of Supreme Court awarding summary judgment to Pacific's insurer (10 NY3d at 415). As the Court held, "[o]nce Worth admitted that its claims of negligence against Pacific were without factual merit, it conceded that the staircase was merely the situs of the accident. Therefore, it could no longer be argued that there was any connection between Murphy's accident and the risk for which coverage was intended" (id. at 416). Notably, the policy defined the term "[y]our work" to include "[m]aterials, parts or equipment furnished in connection with [Pacific's] work or operations" (id.). The Court nonetheless held that "the fact that the stairs constituted [m]aterials, parts or equipment furnished in connection with [Pacific's] work or operations' under the Your work' provision, [did not] entitle Worth to defense and indemnification where, as here, Worth conceded that the stairs themselves were not a proximate cause of Murphy's injury" (id. [first and second brackets in original]).
As Twin City argues, the jury's finding that Garito's negligence was not a substantial factor in causing Armentano to fall is as conclusive as the admission by Worth that Pacific's activities were not a proximate cause of the underlying accident. That finding, after all, established that Bovis' liability did not arise out of Garito's work for Bovis or out of acts or omissions of Bovis in connection with its general supervision of Garito's work. To the contrary, the jury found that Bovis' liability arose out of its own work (see also Harriman Estates Dev. Corp. v General Acc. Ins. Co., 309 AD2d 575 ). Just as the staircase created by Pacific was "merely the situs" of the accident, so, too, the hole created by Garito was "merely the situs" of the accident. Thus, as Worth makes clear, "liability arising out of" a named insured's work is absent where, as here, the named insured is absolved of liability. Accordingly, to require Twin City to indemnify Bovis is to confer a windfall on Bovis' insurer, plaintiff National Union Fire Insurance Co.
Our decision in Bovis I does not require a different result. We neither required Twin City to indemnify Bovis nor found that Bovis would be entitled to indemnification for its own negligence. As the broad duty to defend " arises whenever the allegations within the four corners of the underlying complaint potentially give rise to a covered claim'" (Worth, 10 NY3d at 415, quoting Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 ), we properly held that Twin City was obligated to provide Bovis with a defense. In the absence of a jury finding in the underlying action, any claim of an entitlement to indemnification would be premature. To the extent that our opinion may be interpreted as providing for defense and indemnification, we clarify that we required only coverage for a defense. The possibility of a jury finding that would obligate Garito to indemnify Bovis was sufficient to trigger Twin City's obligation to provide a defense (BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708, 715 ).
What justified our holding in Bovis I -- the possibility of a jury finding that would obligate Garito to indemnify Bovis -- cannot justify a holding that Garito is obligated to indemnify Bovis. To the contrary, the negation of that possibility by the jury's actual finding should be given effect on the issue of indemnity (see Harriman Estates, 309 AD3d at 575-576; City of Niagara Falls v Merchants Ins. Group, 34 AD3d 1263 ).
The dissent loses sight of the well-settled principle that the duty to defend is broader than the duty to indemnify (BP A.C., 8 NY3d at 714-715; Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137 ; Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66, 73 ). As has long been recognized, "[t]he insured's right to representation and the insurer's correlative duty to defend suits . . . are in a sense litigation insurance' expressly provided by the insurance contract" no matter how baseless the allegations contained in the complaint may be (Servidone Constr. Corp. v Security Ins. Co. of Hartford, 64 NY2d 419, 423-424 ). "A declaration that an insurer is without obligation to defend a pending action could be made only if it could be concluded as a matter of law that there is no possible factual or legal basis on which [the insurer] might eventually be held to be obligated to indemnify [the insured] under any provision of the insurance policy'" (id. at 424, quoting Spoor-Lasher Co. v Aetna Cas. & Sur. Co., 39 NY2d ...