Matthew J. Lodge, for appellant Lend Lease (US) Construction.
Richard J. Lambert, for appellant Extell West 57th Street
C. Silverberg, for respondents.
action, plaintiffs seek a declaration of coverage under a
program of builder's risk insurance furnished by
defendants for loss - specifically, damage to a tower crane -
caused by Superstorm Sandy. At issue here is the question
whether the crane is covered in the first instance under the
insurance provided for temporary works and, if so, whether
the contractor's tools exclusion defeats that initial
grant of coverage. Also at issue - and critical to our
analysis - is the question whether the contractor's tools
exclusion is ineffective because it would render the coverage
granted in the first instance for temporary works illusory.
Assuming that the policy contains coverage for the crane in
the first instance, we conclude that the contractor's
tools exclusion would defeat that coverage, and that such
exclusion does not render the coverage afforded under the
temporary works provision of the policy illusory. We
therefore affirm the Appellate Division order granting
summary judgment declaring that defendants have no obligation
to provide coverage for the subject loss under the policy.
October 2012, plaintiff Extell West 57th Street LLC (Extell)
was constructing a 74-story skyscraper - commonly known as
the One57 Building - at 157 West 57th Street in Manhattan.
Extell had retained plaintiff Lend Lease (US) Construction
LMB Inc. (Lend Lease) to act as the construction manager for
that project and, in that capacity, Lend Lease had contracted
with nonparty Pinnacle Industries II, LLC (Pinnacle) for
certain structural concrete work with respect to that
endeavor. Pursuant to its contract with Lend Lease, Pinnacle
was to furnish and install, among other things, two diesel
fuel tower cranes.
one of those cranes is at issue here. That crane was
installed on a reinforced slab on the 20th floor of the
building and, once all other trade work was completed at the
project, it was to be dismantled and removed from the site.
Several components of the crane, including beams cast into
the slab and materials reinforcing the locations at which the
crane was "tied" to the building as it arose next
to that edifice, were designed to permanently remain part of
the building upon the completion of construction.
October 29, 2012, the crane had risen approximately 750 feet
from its base. On that day, Superstorm Sandy made landfall in
the New York City area. One of the most dramatic images of
that landfall depicts the damage caused to the crane when the
boom of the crane collapsed in high winds and teetered
precariously from a height equal to the top of the building.
Afterwards, "[t]he... blocks [surrounding the building]
were evacuated for six days and the crisis became a riveting
symbol of the city's wounded infrastructure"
(Charles V. Bagli, As Crane Hung in the Sky, a Drama
Unfolded to Prevent a Catastrophe Below, New York Times,
Nov. 6, 2012 [available at:
time of that incident, Extell was the named insured on a
program of builder's risk insurance containing coverage
in the amount of $700 million, that is, the total estimated
cost of the project. The program is referred to as the
"policy, " but it actually is an amalgamation of
five separate insurance contracts, each of which was issued
by a different defendant-insurer and each of which covers a
different percentage of the aggregate risk. Defendant Zurich
American Insurance Company assumed half of the aggregate risk
and furnished the "lead" policy with respect to
issue in this action is whether the policy covers damages
sustained by Extell (the named insured) and Lend Lease (an
additional insured) resulting from the weather-related harm
to the crane . That determination turns on whether
the crane is covered under the policy in the first instance
and, if so, whether the policy's contractor's tools,
machinery, plant and equipment exclusion (generally,
contractor's tools exclusion) defeats that coverage.
defendants' denial and disclaimer of coverage with
respect to this matter,  plaintiffs commenced this action
seeking, among other things, a declaration that the crane is
covered property under the policy, and that coverage for the
crane is not subject to any policy exclusion.
Court entered an order denying the competing motions and
cross motions for summary judgment that eventually were filed
with respect to that coverage question, ruling that there is
an issue of fact whether the contractor's tools exclusion
defeats coverage for the subject loss. On appeal, however,
the Appellate Division - with two Justices dissenting
modified that order by granting defendants' cross motions
for summary judgment and declaring "that defendants have
no obligation to provide coverage under the... policy"
(136 A.D.3d 52, 61 [1st Dept 2015]). The court held that
"the... crane was integral, not 'incidental to the
project, ' and therefore does not fall within the
[policy's] definition of Temporary Works"
(id. at 54). "Even if the... crane fell within
the definition of Temporary Works, " the court added,
"the contractor's tools ... exclusion would be
applicable and... enforceable" (id.). By
contrast, the dissenters would have affirmed Supreme
Court's order, reasoning that there is an issue of fact
whether the policy contains coverage for the crane in the
first instance (see id. at 69 [Mazzarelli, J.P., and
Richter, J., dissenting]), and that, although the
contractor's tools exclusion pertains to the crane, such
exclusion is unenforceable because to apply that exclusion
here "would be to render coverage for temporary works
illusory" (id. at 70). In essence, the
dissenters concluded that the application of the
contractor's tools exclusion effectively would defeat all
of the coverage granted in the first instance by the
policy's temporary works provision, and that such
exclusion therefore is unenforceable as a matter of public
appeal to this Court as of right (see CPLR 5601
[a]), and we now ...