Wilkofsky, Friedman, Karel & Cummins, New York (Mark L.
Friedman of counsel), for Cavan Corporation of NY, Inc.,
Ahmuty, Demers, & McManus, Albertson (William J. Mitchell
of counsel), for New Puck, LLC, Puck Residential Associates,
LLC and Kushner Companies, LLC, appellants-respondents.
Keidel, Weldon & Cunningham, LLP, White Plains (Howard S.
Kronberg of counsel), for the Ducey Agency, Inc.,
Piper LLP (US), New York (Aidan M. McCormack of counsel), for
Acosta, P.J., Friedman, Webber, Oing, Moulton, JJ.
Supreme Court, New York County (Gerald Lebovits, J.), entered
on or about August 12, 2016, which, to the extent appealed
from as limited by the briefs, denied the motion by
third-party defendant the Ducey Agency, Inc. (Ducey) and the
cross motion by defendant Cavan Corporation of New York, Inc.
(Cavan) for summary judgment declaring that plaintiff has a
duty to defend Cavan in an underlying personal injury action,
and denied plaintiff's cross motion for summary judgment
declaring that it has no such duty to defend Cavan,
unanimously modified, on the law, to grant plaintiff's
cross motion and to declare that plaintiff has no duty to
defend Cavan in the underlying personal injury action, and
otherwise affirmed, without costs.
2012, Cavan entered into a "Construction Management
Agreement" (CMA) with the other defendants in this
action (the owners), under which Cavan agreed to function as
"construction manager" for a building project on
Lafayette Street in Manhattan. The CMA provides that Cavan is
to receive compensation in the form of a fixed fee of $600,
000, in addition to a payment of $1, 700, 000 as
reimbursement "for all reasonable and customary staffing
and overhead costs incurred by [Cavan] in the performance of
its duties hereunder." In October 2013, the principal of
the project's sidewalk restoration contractor was injured
in the course of the work and subsequently commenced the
underlying personal injury action against Cavan, the owners
and another entity. The complaint in the underlying action
alleges that Cavan had been engaged as "the general
contractor and/or construction manager" for the project.
issue in the present declaratory judgment action is whether
plaintiff, an insurer, is obligated to defend Cavan in the
underlying personal injury action pursuant to a commercial
general liability insurance policy issued to Cavan that was
in effect at the time of the accident. While the policy
generally provides coverage for "bodily injury"
arising out of Cavan's work, it contains an endorsement
entitled "Exclusion - Construction Management for a Fee,
" providing that the insurance does not apply to losses
"arising out of construction management, '
regardless of whether such operations are conducted by you or
on your behalf." The endorsement defines
"construction management" to mean "the
planning, coordinating, supervising or controlling of
construction activities while being compensated on a fee
basis by an owner or developer" (emphasis added).
action, plaintiff seeks a declaration that it is not
obligated to defend Cavan in the underlying personal injury
action, or to defend any additional insured under Cavan's
policy, on the ground, inter alia, that Cavan's
operations as a "construction manager" under the
CMA were within the policy's exclusions for construction
management operations. In addition, plaintiff seeks to
recover the amounts it has expended to date in defending
Cavan in the underlying action under a reservation of rights.
Cavan has brought a third-party action against Ducey, its
insurance broker, for negligence in procuring the policy.
order appealed from arose from Ducey's motion and
Cavan's cross motion for summary judgment declaring that
plaintiff is obligated to defend Cavan in the underlying
action, and from plaintiff's cross motion for summary
judgment declaring that it has no such obligation, based on
the construction management exclusion and Cavan's alleged
failure to comply with the policy's notice conditions to
coverage. As relevant to this appeal, Supreme Court denied
summary judgment to all parties, finding that there were
triable issues as to whether Cavan was functioning as a
construction manager so as to fall within the exclusions and
as to whether Cavan gave plaintiff timely notice of the
underlying claim. In addition, the court stated that Ducey,
the third-party defendant, had no standing to move for
summary judgment against plaintiff because no direct claim
was pending between plaintiff and Ducey. Each party has
appealed from this order to the extent aggrieved thereby.
that plaintiff is entitled to summary judgment declaring that
the policy does not afford Cavan coverage in the underlying
action pursuant to the exclusion for construction management,
which, as previously noted, defines "construction
management" to mean "the planning, coordinating,
supervising or controlling of construction activities
while being compensated on a fee basis "
(emphasis added). Even though the complaint in the underlying
action alleges that Cavan may have been acting as general
contractor for the project, and notwithstanding that it may
ultimately be determined in that action that Cavan was
actually functioning as the project's general contractor
for purposes of the claim under Labor Law § 240(1)
(see Walls v Turner Constr. Co., 4 N.Y.3d 861');">4 N.Y.3d 861
), the policy, in defining the term "construction
management, " excluded from coverage operations for
which Cavan was "being compensated on a fee basis."
Under the CMA, Cavan was compensated for its work on this
project by a flat fee of $600, 000, plus reimbursement in a
prescribed amount for overhead and staffing expenses, rather
than by progress payments covering the cost of the work done
by the trade contractors plus an additional increment to
provide Cavan with a profit. Accordingly, whether or not
Cavan was acting as a general contractor, the CMA establishes
that it was "being compensated on a fee basis, "
not a cost-of-work-plus-profit basis, and this suffices to
bring its operations within the scope of the exclusion for
"Construction Management for a Fee." In view of
this determination, we need not consider whether summary
judgment was warranted on the issue of notice. 
contrary to the view expressed by Supreme Court, Ducey, as a
third-party defendant, was entitled to move for summary
judgment disposing of plaintiff's claim against Cavan,
the third-party plaintiff, and to assert counterclaims
against plaintiff (see CPLR 1008 [with the exception
of personal jurisdictional defenses, "(t)he third-party
defendant may assert against the plaintiff in his or her
answer any defenses which the third-party plaintiff has to
the plaintiff's claim... (and) (t)he third-party
defendant shall have the rights of a party adverse to the
other parties in the action, including the right to
counter-claim, cross-claim and appeal"]).