United States District Court, S.D. New York
January 20, 2015
JANNA DELURY and GILBERT SEAMAN, Plaintiffs,
JOHN E. VAN BRAMER and JEANNE M. VAN BRAMER, Defendants. JOHN E. VAN BRAMER and JEANNE M. VAN BRAMER, Third-Party Plaintiffs,
DISCONNECT, LLC, Third-Party Defendant
For Janna Delury, Gilbert Seaman, Plaintiffs,
Third Party Defendants: William Gary Greenberg, LEAD ATTORNEY, Greenberg & Massarelli, LLP, Purchase, NY; Rebecca Foley Greenberg, Rebecca Greenberg, PC, Purchase, NY.
For John E. Van Bramer, Jeanne M. Van Bramer, Defendants, Third Parties Plaintiffs, Counter Defendants: John Michael Shields, Devitt Spellman Barrett, Smithtown, NY; Joshua Samuel Shteierman, Kelly Elizabeth Wright, Devitt, Spellman, Barrett, L.L.P., Smithtown, NY.
For Disconnect, LLC,
Third Party Defendant, Counter Claimant: Raymond M. D'Erasmo, Savona & Scully, New York, NY.
Vincent L. Briccetti, United States District Judge.
Third-party plaintiffs John E. Van Bramer (" Mr. Van Bramer") and Jeanne M. Van Bramer (collectively, the " Van Bramers") bring this action against third-party defendant Disconnect, LLC (" Disconnect"), for negligence, breach of contract, and fraud.
The two counts in the Van Bramers' third-party complaint are styled as " negligence" (Third-Party Compl. at 6), and " breach of contract/fraud/misrepresentation." (Id. at 4). The Van Bramers appear to bring two separate claims under the heading of breach of contract/fraud/misrepresentation. First, the Van Bramers assert Disconnect breached an agreement to defend and indemnify the Van Bramers in this action. Second, the Van Bramers assert Disconnect fraudulently induced them to rent their home to Disconnect for use in a film produced by Disconnect, by deceiving them into believing they were named as additional insureds on Disconnect's insurance policy.
Now pending is Disconnect's motion for summary judgment (Doc. #71), which, for the following reasons, is DENIED.
The Court has subject matter jurisdiction pursuant to 28 U.S.C. § § 1332 and 1367.
The parties have submitted briefs, statements of facts pursuant to Local Civil Rule 56.1, and affirmations with supporting exhibits, which reflect the following factual background.
I. The Contract Negotiations
Disconnect is a film production company. In 2011, Disconnect sought a location to film a movie. Disconnect employed location manager Damon Gordon to scout locations and negotiate rental agreements. In or around August 2011, Gordon and director Henry Alex Ruben were on a scouting trip when Ruben saw the Van Bramers' home at 42 Dexter Street in Yonkers, New York, and " fell in love with [the] house." (Wright Decl. Ex. D). Gordon subsequently contacted Mr. Van Bramer, and explained Disconnect was " doing a small-budget film" and " wanted to rent the house to film." (Wright Decl. Ex. C).
At first, Mr. Van Bramer " wasn't that interested" in renting his home to Disconnect (Wright Decl. Ex. C), but he eventually agreed after multiple conversations with Gordon. Throughout the course of these conversations, Mr. Van Bramer and Gordon discussed insurance coverage multiple times. Mr. Van Bramer testified Gordon " assured [him] multiple ways, verbally and in e-mail and [by] producing documents to [him], that [the Van Bramers] were fully insured." (Id.). Gordon acknowledged he told Mr. Van Bramer that Disconnect " ha[s] insurance" which " should" cover the Van Bramers. (Wright Decl. Ex. D).
Eventually, Gordon sent Mr. Van Bramer a copy of a " standard form" rental agreement, called a Location Agreement. (Wright Decl. Ex. D). The Location Agreement contains an " Indemnity/Insurance" provision. (D'Erasmo Decl. Ex. K). This provision states, in relevant part:
Producer will use reasonable care to prevent damage to the Property and agrees to indemnify and hold Owner harmless from and against any and all claims, demands, liabilities, damages losses and/or expenses (including, without limitation, reasonable outside attorney's fees and costs) arising from or in connection with any material breach of any of Producer's representations, warranties or agreements set forth herein and/or any gross negligence or willful misconduct on Producer's part caused directly by Producer's use of the Property. Producer shall maintain commercial general liability insurance in an amount no less than One Million Dollars ($1, 000, 000).
(Id.) Mr. Van Bramer testified that after receiving the agreement, although he " had no conversations about changes of the language" in the indemnification provision (Wright Decl. Ex. C at 34), he asked " to be named as additionally insured" on Disconnect's insurance policy. (Id. at 32). When the Location Agreement was signed, Gordon provided Mr. Van Bramer a Certificate of Liability Insurance, and " told [Mr. Van Bramer] this means [the Van Bramers] were fully covered." (Id. at 43). Mr. Van Bramer understood Gordon to be representing that the Van Bramers were named as additional insureds on Disconnect's insurance policy.
At some point during their discussions, Mr. Van Bramer and Gordon agreed that the rental payment would take the form of a check made out to Mr. Van Bramer's business, Regency Elevator Products, Corp. (" Regency"). Regency had no ownership interest in the Van Bramers' home. Gordon also apparently listed Regency as " Owner" on the first page of the Location Agreement. (D'Erasmo Decl. Ex. K). Mr. Van Bramer testified he never considered whether Regency should be listed on the Location Agreement; he " just thought about the check." (Wright Decl. Ex. C). The executed Location Agreement states " [t]his Agreement is made between Disconnect, LLC ('Producer') and Regency Elevator Products ('Owner'), " but contains Mr. Van Bramer's signature as " Owner" on the last page. (D'Erasmo Decl. Ex. K).
II. DeLury's Accident
Plaintiff Janna DeLury worked as a script supervisor for Disconnect, responsible for " maintaining all continuity while filming" and required to " take notes and keep track of every bit of film or video or sound that's been shot as we shoot it." (Wright Decl. Ex. A).
During filming, around 5:00 a.m. on October 15, 2011, DeLury fell on a staircase in the Van Bramers' home and was injured. DeLury testified she arrived at the Van Bramers' home in the afternoon of October 14, and worked through the night until her accident. When asked why she worked overnight, she stated: " We were shooting various scenes that we were assigned to shoot that day. And I was performing all of the various functions of my job during that time." (Id.) She also testified the weather was " stormy, " she went in and out of the house more than ten times that day, and more than fifty people associated with the movie were at the home. (Id.)
I. Legal Standard
The Court must grant a motion for summary judgment if the pleadings, discovery materials before the Court, and any affidavits show there is no genuine dispute as to any material fact and it is clear the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
A fact is material when it " might affect the outcome of the suit under the governing law. . . . Factual disputes that are irrelevant or unnecessary" are not material and thus cannot preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
A dispute regarding a material fact is genuine if there is sufficient evidence upon which a reasonable jury could return a verdict for the non-moving party. See id. The Court " is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried." Wilson v. Nw. Mut. Ins. Co., 625 F.3d 54, 60 (2d Cir. 2010) (internal quotation marks omitted). It is the moving party's burden to establish the absence of any genuine issue of material fact. Zalaski v. City of Bridgeport Police Dep't, 613 F.3d 336, 340 (2d Cir. 2010).
If the non-moving party has failed to make a sufficient showing on an essential element of his case with respect to which he has the burden of proof, then summary judgment is appropriate. Celotex Corp. v. Catrett, 477 U.S. at 323. If the non-moving party submits evidence that is " merely colorable, " summary judgment may be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. at 249-50. The non-moving party " must do more than simply show that there is some metaphysical doubt as to the material facts, and may not rely on conclusory allegations or unsubstantiated speculation." Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir. 2011) (citation and internal quotation marks omitted). The mere existence of a scintilla of evidence in support of the non-moving party's position is likewise insufficient; there must be evidence on which the jury could reasonably find for him. Dawson v. Cnty. of Westchester, 373 F.3d 265, 272 (2d Cir. 2004).
On summary judgment, the Court resolves all ambiguities and draws all permissible factual inferences in favor of the non-moving party. Nagle v. Marron, 663 F.3d 100, 105 (2d Cir. 2011). If there is any evidence from which a reasonable inference could be drawn in favor of the opposing party on the issue on which summary judgment is sought, summary judgment is improper. See Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc., 391 F.3d 77, 82-83 (2d Cir. 2004).
II. Negligence Claim
Section 11 of the New York Worker's Compensation Law (" Section 11") generally " prohibits third-party indemnification or contribution claims against employers." Rodrigues v. N & S Bldg. Contractors, Inc., 5 N.Y.3d 427, 429-30, 839 N.E.2d 357, 805 N.Y.S.2d 299 (2005). There are, however, exceptions to this blanket prohibition. A third party can bring a claim against an employer if the employee " sustained a 'grave injury, ' or the claim is based upon a[n indemnification] provision in a written contract." Id. at 430. To authorize a third-party claim, the written contract must contain " an indemnity provision applicable to the site or job where the injury" occurred. Id. at 432. The provision must also be " sufficiently particular to meet the requirements of [S]ection 11." Id.
The parties agree DeLury did not sustain a grave injury. Thus, the Court must determine whether the parties entered into a valid written contract with an indemnification provision. Disconnect contends the Van Bramers are not parties to the Location Agreement because the first page of the Location Agreement lists " Regency Elevator Products" as the owner of the home. The Van Bramers respond they are the proper parties.
A. Proper Parties to the Location Agreement
" In reviewing a written contract, a trial court's primary objective is to give effect to the intent of the parties as revealed by the language they chose to use. When the question is a contract's proper construction, summary judgment may be granted when its words convey a definite and precise meaning absent any ambiguity." Seiden Assocs., Inc. v. ANC Holdings, Inc., 959 F.2d 425, 428 (2d Cir. 1992) (internal citation omitted). Ambiguous language is " that which is capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business." Id. (internal quotation marks omitted). " Summary judgment as to the meaning of a contract term may not be granted when the term's meaning is not clear or is reasonably susceptible to more than one interpretation." Record Club of Am., Inc. v. United Artists Records, Inc., 890 F.2d 1264, 1270 (2d Cir. 1989).
" The determination of whether a contract term is ambiguous is a threshold question of law for the court."
Walk-In Med. Ctrs., Inc. v. Breuer Capital Corp., 818 F.2d 260, 263 (2d Cir. 1987). " [W]here the contract language creates ambiguity, extrinsic evidence as to the parties' intent may properly be considered. Where there is such extrinsic evidence, the meaning of the ambiguous contract is a question of fact for the factfinder." JA Apparel Corp. v. Abboud, 568 F.3d 390, 397 (2d Cir. 2009) (internal citations omitted).
Because it is unclear whether the Van Bramers or Regency Elevator Products is the proper party to the contract, the Location Agreement is ambiguous. The first page of the Location Agreement states, " [t]his Agreement is made between Disconnect, LLC ('Producer') and Regency Elevator Products ('Owner')." (D'Erasmo Decl. Ex. K). However, the last page of the Location Agreement contains Mr. Van Bramer's signature as " Owner" of the home.
Also, if Regency were the proper party to the Location Agreement, the indemnification clause would be rendered meaningless because Regency had no ownership interest in the home. An entity with no ownership in the home clearly cannot be indemnified for an accident that occurs in the home. Thus, Disconnect's contention that Regency is the proper party to the contract conflicts with the " cardinal principle of contract construction: that a document should be read to give effect to all its provisions and to render them consistent with each other." Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 63, 115 S.Ct. 1212, 131 L.Ed.2d 76 (1995).
Because the contract is ambiguous, the Court must consult parol evidence to determine the proper party to the Location Agreement. See Nina Penina, Inc. v. Njoku, 30 A.D.3d 193, 193-94, 816 N.Y.S.2d 451 (1st Dep't 2006) (holding " [s]everal conflicting provisions render the contract terms ambiguous. . . . [Thus, t]his contract cannot be properly interpreted, under the circumstances, without entertaining parol evidence.").
A consideration of extrinsic evidence reveals a dispute of material fact as to the intended party to the contract. The Van Bramers owned the home listed in the contract, and Gordon was aware the Van Bramers--and not Regency Elevator Products--owned the home. Both Mr. Van Bramer and Gordon testified Gordon made at least some representations to Mr. Van Bramer that Disconnect's insurance would cover the Van Bramers. Additionally, Gordon testified his custom was to explain to homeowners that Disconnect " provided the insurance." (Wright Decl. Ex. D). Thus, a reasonable jury could find the Van Bramers were parties to the Location Agreement based on this extrinsic evidence.
B. The Indemnification Provision
Next, the Court must consider whether the indemnification provision in the Location Agreement complies with the requirements of Section 11. This " involves a two-part inquiry." Rodrigues v. N & S Bldg. Contractors, Inc., 5 N.Y.3d at 432. First, the Court must determine whether the indemnification provision is applicable to the site where the injury took place. Id. Here, the indemnification provision clearly states it applies to " the Property, " defined earlier in the Location Agreement as the Van Bramers' home at 42 Dexter Road. (D'Erasmo Aff. Ex. K). Thus, the provision covers the site where the injury took place.
Next, the Court must determine whether the indemnification provision is sufficiently particular and unambiguous to meet the requirements of Section 11. Under New York law, " when a party is under no legal duty to indemnify, a contract assuming that obligation must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed." Rodrigues v. N & S Bldg. Contractors, Inc., 5 N.Y.3d at 433 (internal brackets omitted). " The promise should not be found unless it can be clearly implied from the language and purpose of the entire agreement and the surrounding facts and circumstances." Id. However, " [s]o long as a written indemnification provision encompasses an agreement to indemnify the person asserting the indemnification claim for the type of loss suffered, it meets the requirements of the statute." Id.
Here, the Location Agreement is explicit in its promise to " hold Owner harmless" from " any gross negligence or willful misconduct" by Disconnect on " the Property." (D'Erasmo Aff. Ex. K). The central question is thus whether Disconnect's conduct rose to the level of " gross negligence or willful misconduct." (Id.). Under New York law, " gross negligence is defined as conduct that evinces a reckless disregard for the rights of others or 'smacks' of intentional wrongdoing. It is conduct of an aggravated character which discloses a failure to exercise even slight diligence, and a disregard of consequences which may ensue from the act." Travelers Indem. Co. of Conn. V. Losco Grp., Inc., 136 F.Supp.2d 253, 256 (S.D.N.Y. 2001) (internal quotation marks and citation omitted). " The issue of gross negligence is ordinarily a question of fact for a jury to determine." Charter Oak Fire Ins. Co. v. Trio Realty Co., 2002 WL 123506, at *5 (S.D.N.Y. Jan. 31, 2002).
Plaintiffs note Disconnect required DeLury to work through the night without sleeping before her fall at 5:00 a.m. the next morning. They also point out " the weather was stormy, " and " [m]ore than 50 people were in the Van Bramer's one family, split level house." (Third-Party Pls.' Opp'n at 7-8; Wright Decl. Ex. A). Plaintiffs thus appear to suggest Disconnect was grossly negligent in requiring DeLury to work all night, and allowing the home to be filled past its capacity. Although it is a close call, drawing all reasonable inferences in the Van Bramers' favor, a reasonable jury could find gross negligence on these facts.
In sum, triable issues of fact exist as to whether the Van Bramers were parties to the contract, and whether Disconnect's conduct rose to the level of gross negligence. Summary judgment on Disconnect's negligence claim must therefore be denied.
III. Breach of the Location Agreement
As discussed above, a reasonable jury could find the Van Bramers were parties to the Location Agreement, and Disconnect's conduct rose to the level of gross negligence. Therefore, issues of fact remain as to whether Disconnect breached the Location Agreement, and summary judgment on the breach of contract claim is inappropriate.
The Van Bramers additionally contend Disconnect " is liable for misrepresentation/fraud/breach of the oral representations and assurances Mr. Gordon made to the Van Bramers prior to execution of the agreement." (Third-Party Pls.' Opp'n at 18).
Proof of fraud under New York law requires a showing that " (1) the defendant made a material false representation, (2) the defendant intended to defraud the plaintiff thereby, (3) the plaintiff reasonably relied upon the representation, and (4) the plaintiff suffered damage as a result of such reliance."  Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d at 19. Disconnect does not contest materiality or damages. Accordingly, the Court will consider only whether there are triable issues of fact as to intent to defraud and reasonable reliance.
A. Intent to Defraud
Disconnect contends the Van Bramers cannot show Gordon " had the present intent to deceive the Van Bramers with respect to any additional insured status." (Third-Party Defs.' Mem. at 5). However, when Mr. Van Bramer asked to be named as an additional insured on Disconnect's policy, Gordon presented him with a Certificate of Liability Insurance (the " Certificate"). The Certificate named the " insured" as " Disconnect, LLC, " and the " certificate holder" was the " Van Bramer Residence." (Wright Decl. Ex. F). Mr. Van Bramer testified Gordon represented that the Certificate " mean[t] [the Van Bramers] were fully covered." (Wright Decl. Ex. C). Finally, Mr. Van Bramer testified Gordon said " nobody would ever rent a house out to a movie if they weren't insured by the movie company and that [the Van Bramers] had nothing to worry about." (Id.).
From these facts, a reasonable jury could conclude Gordon intended to cause Mr. Van Bramer to believe the Van Bramers were named as additional insureds under Disconnect's policy. Although is unclear whether Gordon knew with certainty that the Van Bramers were not additional insureds--and thus, whether he could have possessed the requisite intent to deceive--this is exactly the type of issue that precludes summary judgment.
B. Reasonable Reliance
" In assessing the reasonableness of a plaintiff's alleged reliance, [a court must] consider the entire context of the transaction, including factors such as its complexity and magnitude, the sophistication of the parties, and the content of any agreements between them." Emergent Capital Inv. Mgmt., LLC v. Stonepath Grp., Inc., 343 F.3d 189, 195 (2d Cir. 2003) (internal citation omitted). " The law is indulgent of the simple or untutored; but the greater the sophistication of the [plaintiff], the more inquiry that is required" before he can claim reasonable reliance. Crigger v. Fahnestock & Co., 443 F.3d 230, 235 (2d Cir. 2006). Moreover, when " the representation relates to matters that are not peculiarly within the other party's knowledge and both parties have available the means of ascertaining the truth, New York courts have held that the complaining party should have discovered the facts and that any reliance under such circumstances therefore would be unjustifiable." Lazard Freres & Co. v. Protective Life Ins. Co., 108 F.3d 1531, 1542 (2d Cir. 1997).
Disconnect contends Mr. Van Bramer is a sophisticated businessman because he negotiated and signed multiple contracts per year on behalf of Regency. However, the transaction with Disconnect was of an entirely different type than Mr. Van Bramer was accustomed to dealing with in connection with his business. Additionally, Mr. Van Bramer typically consults his broker on insurance issues related to Regency; however, he did not consult his broker, or any attorney, with respect to the Location Agreement or the validity of the the Certificate. Although Mr. Van Bramer is not " simple or untutored, " Crigger v. Fahnestock & Co., 443 F.3d at 235, there is a genuine issue of material fact as to whether he was sophisticated in the particular type of transaction he entered with Disconnect.
Moreover, although Disconnect does not press this argument, the Van Bramers must demonstrate their reliance was reasonable despite Mr. Van Bramer's access to information that may have revealed the falsity of Gordon's representations. With diligent examination, Mr. Van Bramer might have concluded the Certificate did not name the Van Bramers as additional insureds. However, only Disconnect--and not Mr. Van Bramer--could know for sure whether Disconnect actually had named the Van Bramers as additional insureds, and nothing about Mr. Van Bramer's dealings with Gordon should have raised Mr. Van Bramer's suspicions about Gordon's honesty. Thus, the Court cannot conclude, as a matter of law, Mr. Van Bramer's receipt of the Certificate required him to investigate Gordon's statements further before relying upon them.
Because " reasonable reliance is often a question of fact for the jury rather than a question of law for the court, " the Court finds a jury could conclude the Van Bramers' reliance on Gordon's oral representations was reasonable. STMicroelectronics, N.V. v. Credit Suisse Sec. (USA) LLC, 648 F.3d 68, 81 (2d Cir. 2011); see also N. Shipping Funds I, LLC v. Icon Capital Corp., 998 F.Supp.2d 301, 321 (S.D.N.Y. 2014) (denying summary judgment on fraud claim because jury could find reasonable reliance although plaintiff " arguably had access to critical information"). Summary judgment on the fraud claim is therefore denied.
Disconnect's motion for summary judgment is DENIED.
The Clerk is instructed to terminate the motion. (Doc. #71).
All counsel are directed to appear for a pre-trial conference on February 20, 2015, at 2:15 p.m. The parties should be prepared to address all issues related to trial management, including potential severance of the third-party claims. At that time, the Court will set a schedule for pre-trial submissions, and a trial date.