This decision has been referenced in a table in the New York Supplement.
Sterling E. Tipton, Esq., Hannum Feretic Prendergast & Merlino, LLC, for Plaintiff.
Christopher G. Wosleger, Esq., Havkins Rosenfeld Ritzert & Varriale, LLP, for Defendants.
ANIL C. SINGH, J.
Plaintiff 137 Broadway Associates, LLC (Broadway) commenced this declaratory judgment action seeking a defense and indemnification from defendant Leading Insurance Group Company, Ltd. (Leading) in an underlying negligence action.
Leading moves to dismiss the present action pursuant CPLR §§ 3211(a) and 3212. Broadway cross-moves for summary judgment pursuant CPLR § 3212 on their Third and Fourth causes of action. Broadway seeks a declaratory judgment stating that the insurance policy between Leading and 602 West 137th Deli Corp. d/b/a Nadal One Deli (Nadal) was in full effect on the relevant dates in the underlying action and that Leading is obligated to defend, indemnify, and reimburse it in the underlying action pursuant to the terms of the insurance contract.
The material facts are as follows. Before renting from Broadway, Nadal was a commercial tenant at a different premises located at 3381 Broadway in Manhattan. This building was wholly owned by Cromwell Associates (Cromwell) until 2006 when they sold the premises to Extell 601 West 137th Street, LLC (Extell). While a tenant at 3381 Broadway, Nadal maintained an insurance policy with Leading.
Nadal moved to its current location at 3379 Broadway in Manhattan pursuant to an assignment of lease dated May 5, 2011. As part of the assignment, Nadal agreed to purchase insurance and " include Landlord [Broadway] and SDG Management Corp. as named insured." Nadal chose to maintain its insurance policy with Leading. The policy was renewed on June 26, 2011. A change of address in the policy from 3381 Broadway to 3379 Broadway took effect on August 26, 2011.
The policy provided insurance coverage to Nadal for risks associated with property damage, general liability, crime, inland marine, auto, and garbage based on a premium of $1,343.00. Nadal paid a surcharge of $8.39 in order to list an additional insured on the Business owners Coverage Form. As a line item, the additional insured was listed as " ADD'L INSD— MANAGERS OR LESSORS OF PREMISES," and the specific terms of the contract provided that the additional insured would be covered for liability arising from the " ownership, maintenance or use" of the property. However, Cromwell, Nadal's former landlord, and not Broadway, the current landlord, was listed as the additional insured on the June 26, 2011 policy (Policy).
On December 31, 2011, at approximately 11:30 AM Deborah Livermore, plaintiff in the underlying action, allegedly tripped and fell into the basement of Nadal and suffered injuries. Ms. Livermore sued both Nadal and Broadway for her injuries. Following the commencement of the underlying action, Broadway requested that Leading defend and indemnify it based on its insurance policy with Nadal. Leading declined to do so, citing that Cromwell, not Broadway, was listed as the additional insured on the Policy. Following the denial of coverage, Broadway commenced the present action seeking declaratory judgment for defense, indemnification, and reimbursement from Leading pursuant to the terms of the Policy.
At issue here is whether the mistake of listing Cromwell as the additional insured on the Policy precludes Broadway from obtaining a defense and indemnification from Leading in the underlying action.
Leading argues that the only mistake that occurred was a unilateral mistake on the part of Nadal, and that Nadal's unilateral mistake in listing Cromwell as the additional insured precludes Broadway from receiving coverage. The basis of Leading's argument is the well-established principle that an unambiguous, mutually agreed upon written instrument should be upheld by courts without deference to the unilateral mistake made by one party to the agreement ( see e.g., Sixty Sutton Corp. v. Illinois Union Ins. Co., 34 A.D.3d 386 (1st Dept.2006); see also N.Y. First Ave. CVS, Inc. v. Wellington Tower Assocs., L.P., 299 A.D.2d 205, 205 (1st Dept.2002) (holding that parties seeking to contest the presumptive validity of a contract may do so by showing " in no uncertain terms" that either fraud or a mutual mistake exists, as well as " what was really agreed upon between the parties" ). Leading argues that because of the clarity of the law on the issue of unilateral mistake, the case should be disposed on this basis.
This argument, however, fails to recognize a long line of cases holding that " [t]he name of the insured stated in the policy is not the sole factor to be considered in determining who was the intended insured" ( Laura Accessories, Inc. v. Travlers Ins. Co., 67 A.D.2d 638, 639 (1st Dept.1979)). When the intent to cover a risk is clear and one party innocently, mistakenly, and unilaterally lists a nonentity as the additional insured, New York courts have held that it is appropriate to regard that mistake as a mutual mistake and to honor the intent of the contract rather than uphold the erroneous drafting ( see Id. (overturning the trial court's dismissal for incorrectly naming the covered entity, and requiring discovery so that the parties could ascertain the risk the insurance contract intended to cover); Matter of Lipshitz v. Hotel Charles, 226 App. Div. 839, aff'd 252 N.Y. 518 (insurance company was required to indemnify the owners of a hotel when the intent to insure those owners was clear, even though they were incorrectly named in the contract); see also New York Casualty Insurance Company v. Shaker Pine, Inc., 262 A.D.2d 735 (3d Dept.1999) (insurer cannot disclaim coverage for the inadvertent misidentification of an insured party when there is an undisputed obligation to cover risk associated with construction on the identified property); Stanley Cheperuk v. Liberty Mutual Fire Insurance Company, 263 A.D.2d 748 (3d Dept.1999) (insurer's undisputed obligation to cover the risk to a mortgage holder applies even when the mortgage holder is misidentified in the contract); Court Tobacco Stores, Inc. v. Great Eastern Insurance Company, 43 A.D.2d 561 (3d Dept.1973) (insurer could not withhold insurance coverage due to an error listing " Court Tobacco Co." as the insured party rather than " Court Tobacco Stores, Inc." )).
Leading relies upon Tanchum Portnoy v. Allstate Indemnity Company, 82 A.D.3d 1196 (2d Dept.2011) to argue that denial of coverage is appropriate even if there is a mutual mistake when the insurance company did not intent to cover the risk associated with that mistake. Tanchum is readily distinguishable. There, the insurer was not in the business of providing coverage to residential properties, rendering their inadvertent agreement to insure the plaintiff's residential property an error worthy of disclaiming coverage ( Id. ...