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Fireman's Fund Insurance. Co. v. State National Insurance Co.

Supreme Court of New York, First Department

December 26, 2019

Fireman's Fund Insurance Company, et al., Plaintiffs-Respondents,
State National Insurance Company, Defendant-Appellant.

          Stonberg Moran LLP, New York (Sherri N. Pavloff of counsel) and Farber Brocks & Zane L.L.P., Garden City (Tracy L. Frankel of counsel), for appellant.

          Kritzer Law Group, Smithtown (Karl Zamurs of counsel), for respondents.

          John W. Sweeny, Jr., J.P. Rosalyn H. Richter, Barbara R. Kapnick, Cynthia S. Kern, Anil C. Singh, JJ.

          KAPNICK, J.

         Defendant appeals from an order of the Supreme Court, New York County (Nancy M. Bannon, J.), entered July 10, 2018, which granted plaintiffs' motion for summary judgment declaring that they are additional insureds under an insurance policy issued by defendant to nonparty Upgrade, and are entitled to coverage under that policy in connection with the underlying personal injury action, and that the policy is primary, and so declared, and denied defendant's cross motion for summary judgment, inter alia, declaring that it is not obligated to defend or indemnify plaintiffs in the underlying action.

         At issue in this appeal is whether plaintiffs Windsor Apartments, Inc. (Windsor) and Argo Real Estate, LLC (Argo) are additional insureds under a policy issued by defendant State National Insurance Company (State National) to nonparty Upgrade Contracting Company, Inc. (Upgrade), arising out of the operations of Upgrade in connection with an underlying personal injury action. Because the language of the additional insured endorsement must be construed broadly, the motion court correctly held that plaintiffs Windsor and Argo are additional insureds under the policy, and that the coverage provided under that policy is primary.

         The underlying personal injury action involved a trip and fall in October 2014 at premises owned by plaintiff Windsor and managed by plaintiff Argo. Prior to the accident, Windsor had contracted with Upgrade to perform "exterior restoration of exposed concrete catwalks... and other repairs" in connection with a renovation project at the premises to restore the outside passageways on each floor of the building. Upgrade's work had been completed prior to the accident. The contract called for Upgrade to waterproof the walking surfaces including the catwalks, but did not obligate Upgrade to choose the paint color for the waterproofing project. The contract required Upgrade to obtain insurance for its work and to name Windsor, Argo, the architect, and others specified in the contract as additional insureds on a primary basis. The Upgrade contract also required Upgrade to indemnify and hold harmless the owner, its agents, and employees "from... all claims, losses, damages or liability arising out of or in connection with the operations and performance of the Work specified under this Contract."

         Defendant State National issued a commercial general liability (CGL) policy to Upgrade during the relevant time period. The policy contained a "Blanket Additional Insured" Endorsement that limited coverage to operations performed by or on behalf of Upgrade:

"It is agreed that this Policy shall include as additional Insureds any person or organization to whom the Named Insured [Upgrade] has agreed by written contract to provide coverage, but only with respect to operations performed by or on behalf of the Named Insured and only with respect to occurrences subsequent to the making of such written contract."

         The State National policy also stated that its coverage was primary, with exceptions not applicable here, for damages arising out of the premises or operations for which an entity is added as an additional insured.

         The policy issued by plaintiff Fireman's Fund Insurance Company (Fireman's) to Windsor and Argo provided that coverage was excess when its insureds, Windsor and Argo, have other primary insurance available to them covering liability for damages arising out of the premises or operations for which they have been added as an additional insured.

         In 2015, Mary Jane Schudde commenced the underlying action against Windsor, Argo (and eventually against the architectural firm [Bertolini] as well) in Supreme Court, Orange County, alleging that she sustained injuries when she fell while attempting to pass through a door leading from an interior vestibule to an outdoor passageway on the 14th floor of the subject premises. There was a single step down from the vestibule to the passageway. The complaint alleged negligence against Windsor for the lack of color differentiation on the flooring surfaces, thereby creating an illusion of a flat surface, specifically as follows:

"[I]n painting the surface beyond the threshold strip of the aforesaid door, the riser and the passageway floor with the same high solid battleship gray paint creating the exact color and texture of all surfaces in an area where there is a change in elevation, where the riser height is relatively low causing an individual with normal depth perception to be less likely to perceive the change in elevation quickly enough to accommodate that person's step forward and under circumstances where the change of elevation occurs a very short distance from the door threshold onto the passageway surface rendering the change in elevation not immediately apparent...; in failing to incorporate visual clues at the leading edge of the threshold step; in failing to place a sign so as to warn of the elevation change when leaving the vestibule onto the passageway; in failing to resurface or paint the tread and passageway with contrasting colors; in failing to have installed on the nosing or leading edge of the tread so as to be viewable in de[s]cent a coloring identifying a step or change in elevation."

         Windsor and Argo commenced a third-party action for contractual indemnification against ...

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