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Osowski v. AMEC Construction Management

October 8, 2009


Third-Party plaintiffs appeal from a judgment of the Supreme Court, New York County (Jane Solomon, J.), entered July 21, 2008, inter alia, dismissing the third-party complaint, and from orders, same court and Justice, entered June 4, 2008 and June 23, 2008.

The opinion of the court was delivered by: Catterson, J.

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.

David B. Saxe, J.P., James M. Catterson, James M. McGuire, Karla Moskowitz, Rolando T. Acosta, JJ.

107097/05 59104/07

This action arises out of an accident that occurred during the construction of the New York Times Building in Midtown Manhattan. On May 13, 2005, the plaintiff Frank Osowski was seriously injured when a four-ton steel beam fell on him while he was unloading a truck at the construction project. As a result of the accident, Osowski's left leg and multiple toes on his right foot were amputated.

Prior to commencing construction on the project, on January 22, 2004, the New York Times Building, LLC (hereinafter referred to as "NYTB"), the owner of the building, entered into an agreement with AMEC Construction Management Inc. (hereinafter referred to as "AMEC") for construction management services for the project. Thereafter, on February 23, 2005, AMEC entered into a subcontract with DCM Erectors, Inc. (hereinafter referred to as "DCM"), Osowski's employer, for structural steel work at the project.

Both AMEC and DCM were enrolled in the Owner Controlled Insurance Program (hereinafter referred to as "OCIP") that NYTB had procured and implemented for the project*fn1. The OCIP provided, inter alia, commercial general liability insurance, workers' compensation and employers liability insurance, and excess insurance to NYTB, AMEC and all enrolled contractors, including DCM. The OCIP contained a waiver-of-subrogation provision which provided that "[t]he Owner and Contractor hereby waive all rights against each other and any of their Subcontractors [...] as to claims and damages covered by insurance obtained by the Owner under its OCIP program [...]" (emphasis added).

On May 19, 2005, Osowski and his wife commenced an action against NYTB/AMEC (hereinafter referred to as the "main action"). Nearly 21/2 years later, on October 22, 2007, American International Specialty Lines Insurance Corp. (hereinafter referred to as "AIG"), the first-layer excess insurer, issued a written denial of coverage to AMEC/NYTB in the main action. Its ground for denial was that, inter alia, its excess policy excluded coverage for bodily injury arising out of the loading or unloading of a vehicle.

On November 21, 2007, following AIG's disclaimer of coverage, AMEC/NYTB commenced an action against DCM, for common-law contractual indemnification and contribution (hereinafter referred to as the "third-party action"). Notably, absent AIG's disclaimer of coverage, the third-party action would have been prohibited by the "waiver of subrogation" provision in the OCIP, as well as by the antisubrogation rule.

On December 3, 2007, AMEC/NYTB commenced an insurance coverage declaratory judgment action against AIG. DCM was permitted to intervene in the declaratory judgment action to challenge AIG's denial of coverage. Less than a month later, on January 9, 2008, the trial court granted the Osowskis' motion for summary judgment on the issue of AMEC/NYTB's liability under sections 240(1) and 241(6) of the Labor Law.

On May 20, 2008, during the damages trial in the main action, a "Confidential Settlement and Release Agreement" was made between the Osowskis, NYTB and AMEC. Pursuant to the agreement, AMEC and NYTB agreed to secure funding in the amount of $12 million payable to the Osowskis, as follows: (1) a $2 million payment from Travelers; and (2) a $10 million irrevocable, unconditional letter of credit. In exchange for the $12 million settlement, the Osowskis released AMEC/NYTB from all claims relating to the events giving rise to the main action.

The following day, on May 21, 2008, counsel for the Osowskis announced, in open court, that the main action had been settled pursuant to a confidential settlement agreement with AMEC/NYTB. Immediately thereafter, DCM informed the court that DCM had not been made privy to the details of the settlement.

At that point, DCM was still a party to the two other actions involving the Osowski accident pending before the same court (i.e. the declaratory judgment action and the third-party action brought by AMEC/NYTB). The court, acknowledging the fact that DCM was preparing for a trial in the third-party action, inquired of AMEC/NYTB's counsel, Steve Palley, as to whose interests the confidentiality clause was designed to protect*fn2. Palley responded, "I can fairly say that the confidentiality ...

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