For plaintiffs, Latham & Watkins LLP
For defendant Hudson Specialty Insurance Company, Steptoe & Johnson LLP
Shirley Werner Kornreich, J.
In this insurance action, plaintiffs seek a declaratory judgment that the defendant insurers are obligated to indemnify and defend them against claims for personal injury arising out of a fire at plaintiffs' work site. Defendant Hudson Specialty Insurance Company (Hudson) moves to dismiss pursuant to CPLR 3211(a)(1). Plaintiffs oppose. For the reasons that follow, the court grants the motion and dismisses Hudson from the case.
This is yet another action arising out of the tragic fire that occurred at 130 Liberty Street (formerly known as the Deutsche Bank building) on August 18, 2007, during which two firefighters lost their lives. The building, which had been severely damaged by the terrorist attack of September 11, 2001, had been conveyed in 2004 to the Lower Manhattan Development Corporation (LMDC) for purposes of redevelopment. LMDC hired plaintiffs URS Corporation and URS Corporation - New York (collectively, URS) to provide "owner representative services" in connection with the building (amended complaint, ¶ 16). LMDC then retained Bovis as general contractor for the project to "deconstruct" the building. Certain other companies also were retained to perform services in connection with the project, including Site Safety, LLC (Site Safety), Regional Scaffolding & Hoisting Co. (Regional Scaffolding), and The John Galt Company (John Galt). Each of these companies procured insurance policies to indemnify them against any claims or litigation costs arising out of their work on the project and, according to URS, named URS as an additional insured: Bovis from defendant Zurich American Insurance Company (Zurich), Site Safety from Zurich and defendant Steadfast Insurance Company (Steadfast), and Regional Scaffolding from defendant Liberty Surplus Insurance Corporation (Liberty). Finally and most relevant here, John Galt purchased contractors pollution liability coverage from defendant Hudson (see affirmation of Matthew J. Gaul, Aug 7, 2013, exhibit 2 [the Hudson Policy]).
Under the Hudson Policy, the insurer was obligated to "pay on behalf of the insured those damages for bodily injury or property damage... that the insured becomes legally obligated to pay... [i]f the damages result from a pollution condition at any site where any insured... is performing... any contracting or remediation operations, " subject to certain conditions (Hudson Policy, part I [A]). A "pollution condition" was defined as "the discharge, dispersal, release or escape of smoke, vapors, fumes, acids, alkalis, toxic chemicals liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water which results in bodily injury or property damage" (Hudson Policy, part II). Hudson had the "right and duty to provide for the defense of the insured with respect to a claim made against the insured" (id.). The contract explicitly noted that it did not provide commercial general liability (CGL) coverage (see Hudson Policy, common policy declarations page & coverage part declarations).
Following the 2007 fire, a number of firefighters or their estates commenced actions (the Underlying Actions) against LMDC and others (including URS), seeking to hold them liable for death or injury caused by the fire. Specifically, the complaints allege, inter alia, that the defendants there failed to maintain working standpipes, emergency lighting or proper signage in the building, allowed the obstruction of stairways and did not clear away piles of flammable debris (Gaul affirmation, exhibits 4—11). As a result, it was alleged, the fire could not be timely suppressed, and the firefighters who were injured or died were unable to escape (id.). Claiming that it was covered as an additional insured under the abovementioned policies, URS presented defendants herein, including Hudson, with tenders for coverage, which were denied in whole or in part. On November 15, 2012, URS commenced the instant action by filing a verified complaint against Zurich and Steadfast. About seven months later, on the consent of all parties, URS filed an amended complaint adding Liberty and John Galt's pollution insurer, Hudson, as defendants. Liberty answered; Hudson made the instant motion to dismiss, arguing that the Underlying Actions do not allege injuries arising out of a "pollution condition" and, therefore, are not covered by the Hudson Policy.
On a motion to dismiss the court must accept as true the facts alleged in the complaint as well as all reasonable inferences that may be gleaned from those facts (Amaro v Gani Realty Corp., 60 N.Y.3d 491 ; Skillgames, L.L.C. v Brody, 1 A.D.3d 247, 250 [1st Dept 2003] citing McGill v Parker, 179 A.D.2d 98, 105 ; Mazzai v Kyriacou, 98 A.D.3d 1088, 1090 [2d Dept 2012]; see also Cron v Harago Fabrics, 91 N.Y.2d 362, 366 ). The court is not permitted to assess the merits of the complaint or any of its factual allegations, but may only determine if, assuming the truth of the facts alleged, the complaint states the elements of a legally cognizable cause of action (Skillgames, id., citing Guggenheimer v Ginzburg, 43 N.Y.2d 268, 275 ). Dismissal on the basis of documentary evidence, per CPLR 3211(a)(1), is warranted only where such evidence "conclusively establishes a defense to the asserted claims as a matter of law" (Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, L.L.P., 96 N.Y.2d 300, 303  quoting Leon v Martinez, 84 N.Y.2d 83, 87-88 ). Deficiencies in the complaint may be remedied by affidavits submitted by the plaintiff (Amaro, 60 N.Y.3d at 491). "However, factual allegations that do not state a viable cause of action, that consist of bare legal conclusions, or that are inherently incredible or clearly contradicted by documentary evidence are not entitled to such consideration." (Skillgames, 1 A.D.3d at 250, citing Caniglia v Chicago Tribune-New York News Syndicate, 204 A.D.2d 233 [1st Dept 1994]).
Hudson argues that it has no duty to defend URS in the Underlying Actions, as its policy was intended to indemnify the insured against claims for environmental harm. As noted, the Underlying Actions allege that the various entities responsible for overseeing the deconstruction project negligently allowed fire hazards to be created which caused the plaintiff firefighters to be injured or killed by the fire which broke out in the building on August 18, 2007. For the most part, the complaints simply state that the relevant firefighter-plaintiff was seriously injured by the fire in the course of the performance of his duties, through no fault of his own; two of the complaints allege smoke inhalation as a cause of death. Hudson maintains that none of these injuries could plausibly be held to have arisen out of a "pollution condition, " as that term is defined in the Hudson Policy. In opposition, URS notes that two of the Underlying Actions mention "toxic smoke, " and argues that the August 18, 2007 fire constituted a "release" of smoke or other contaminant, thereby qualifying as a pollution condition.
Hudson argues, in part, that its policy should be interpreted narrowly in light of the fact that the policy was clearly meant to supplement a CGL policy, since: 1) the Hudson Policy itself notes that it does not provide CGL coverage; and 2) John Galt in fact procured a CGL policy from another carrier, third-party defendant American Empire Surplus Line Insurance Company (American Empire). According to Hudson, these claims properly fall under the scope of the CGL policy rather than the Hudson Policy, whose respective scopes, Hudson argues, were obviously ...