Yonkers Lodging Partners, LLC v Selective Ins. Co. of Am. (2018 NY Slip Op 01090) (2024)

 Yonkers Lodging Partners, LLC, et al.,Appellants,
v
Selective Insurance Company of America, Respondent, et al.,Defendants.

Baxter Smith & Shapiro, P.C., White Plains, NY (Sim R. Shapiro of counsel), forappellants.

Hurwitz & Fine, P.C., Buffalo, NY (Dan D. Kohane of counsel), for respondent.

In an action, inter alia, for a judgment declaring that the defendant Selective InsuranceCompany of America is obligated to defend and indemnify the plaintiff Yonkers LodgingPartners, LLC, in an underlying action entitled Benitez v Cali S. W. Realty Assoc., L.P.,pending in the Supreme Court, Dutchess County, under index No. 4117/10, the plaintiffs appealfrom an order and judgment (one paper) of the Supreme Court, Westchester County (Connolly,J.), dated June 21, 2015, which granted the cross motion of the defendant Selective InsuranceCompany of America for leave to serve and file an amended answer, denied their motion forsummary judgment, in effect, declaring that the defendant Selective Insurance Company ofAmerica is obligated to defend and indemnify the plaintiff Yonkers Lodging Partners, LLC, inthe underlying action, and, upon searching the record, awarded summary judgment to thedefendant Selective Insurance Company of America, declared that the defendant SelectiveInsurance Company of America is not obligated to defend and indemnify the plaintiff YonkersLodging Partners, LLC, in the underlying action, and, in effect, dismissed the complaint insofaras asserted against the defendant Selective Insurance Company of America.

Ordered that the order and judgment is modified, on the law, by deleting the provisionthereof which, upon searching the record, awarded summary judgment to the defendant SelectiveInsurance Company of America, declared that the defendant Selective Insurance Company ofAmerica is not obligated to defend and indemnify the plaintiff Yonkers Lodging Partners, LLC,in the underlying action, and, in effect, dismissed the complaint insofar as asserted against thedefendant Selective Insurance Company of America; as so modified, the order and judgment isaffirmed, without costs or disbursem*nts, and the complaint is reinstated insofar as assertedagainst the defendant Selective Insurance Company of America.

The plaintiff Yonkers Lodging Partners, LLC (hereinafter YLP), entered into a contract withthe defendant Tritec Hospitality, LLC (hereinafter Tritec), to perform construction services onYLP's premises and the premises of the adjacent property owner, the defendant Mack-Cali SouthWest Realty Associates, LLC (hereinafter Mack-Cali). Tritec subsequently entered into asubcontract with the defendant Lea Rome, Inc. (hereinafter Lea Rome), pursuant to which LeaRome agreed to, among other things, perform asphalt paving for the construction project.Pursuant to the subcontract, Lea Rome agreed to indemnify and hold harmless Tritec and YLPfor any claims arising out of the performance of the subcontracted work, but only to the extentcaused by the [*2]negligence or omission of Lea Rome.Additionally, Lea Rome was required to procure and maintain a commercial general liabilityinsurance policy naming YLP and Tritec as additional insureds.

The defendant Selective Insurance Company of America (hereinafter Selective) issued apolicy to Lea Rome which contained an exclusion for bodily injury or property damage liabilityassumed under a contract. However, this section further stated that "[t]his exclusion does notapply to liability for damages: . . . [a]ssumed in a contract or agreement that is an'insured contract.' " The policy's definition of an "insured contract" included, inter alia,"[t]hat part of any other contract or agreement pertaining to your business . . . underwhich you assume the tort liability of another party to pay for 'bodily injury' or 'property damage'to a third person or organization." The policy also included an endorsem*nt entitled "BlanketAdditional Insureds—Broad Form Vendors—As Required By Contract" specifyingthat "Who Is An Insured is amended to include as an additional insured any person ororganization with whom you have agreed in writing in a contract, agreement or permit that suchperson or organization be added as an additional insured on your policy."

In April 2009, Carlos Benitez, and his wife suing derivatively, commenced an action againstTritec and Mack-Cali to recover damages for personal injuries he allegedly sustained while hewas working at the construction site as an employee of Lea Rome. In October 2010, Triteccommenced a third-party action against Lea Rome for contractual indemnity, common-lawindemnity, and contribution. In June 2011, Mack-Cali commenced a second third-party actionagainst, among others, YLP, alleging that it had breached a contract pursuant to which it agreedto indemnify and hold Mack-Cali harmless for claims arising out of the performance of theconstruction work and to procure insurance.

Thereafter, YLP and its insurance carrier, Citizens Insurance Company of America(hereinafter together the plaintiffs), commenced this action, inter alia, for a judgment declaringthat Selective is obligated to defend and indemnify YLP in the underlying action as an additionalinsured and reimburse Citizen for the defense costs the plaintiffs incurred in defending thesecond third-party action. In its answer, Selective, among other things, admitted that YLP was anadditional insured, but asserted that the contractual exclusion applied. The plaintiffs moved forsummary judgment, in effect, declaring that Selective was obligated to defend and indemnifyYLP in the underlying action as an additional insured. Selective cross-moved for leave to servean amended answer to deny that YLP was an additional insured. In opposition to the plaintiffs'motion for summary judgment, Selective argued that YLP did not qualify as an additionalinsured. The Supreme Court granted Selective's cross motion for leave to serve an amendedanswer, denied the plaintiffs' motion for summary judgment, and, upon searching the record,awarded summary judgment to Selective, declared that Selective was not obligated to defend andindemnify YLP in the underlying action, and, in effect, dismissed the complaint insofar asasserted against Selective.

The Supreme Court providently exercised its discretion in granting Selective's cross motionfor leave to serve an amended answer. In the absence of prejudice or surprise to the opposingparty, leave to amend a pleading should be freely granted unless the proposed amendment ispalpably insufficient or patently devoid of merit (see CPLR 3025 [b]; [2017]; Markowits v Friedman, 144 AD3d 993, 995 [2016]; Galanova v Safir, 127 AD3d 686,687 [2015]). A determination whether to grant such leave is within the court's discretion, and theexercise of that discretion will not be lightly disturbed (see Civil Serv. Empls. Assn. v County of Nassau, 144 AD3d 1075,1076 [2016]; Confidential Lending, LLCv Nurse, 120 AD3d 739, 741 [2014]). Here, the plaintiffs failed to demonstrate that anyprejudice or surprise would result from the proposed amendment, and the proposed amendmentwas not palpably insufficient or patently devoid of merit.

Upon granting Selective's motion for leave to serve an amended answer, the Supreme Courtproperly determined that YLP did not qualify as an additional insured, as there was no writtenagreement between it and Lea Rome pursuant to which Lea Rome agreed to procure insurancenaming YLP as an additional insured (see Harco Constr., LLC v First Mercury Ins. Co., 148 AD3d 870,872 [2017]; , 153 [2016]; Structure Tone, Inc. v National Cas.Co., 130 AD3d 405, 406 [2015]; Kel-Mar Designs, Inc. v Harleysville Ins. Co. of N.Y., 127 AD3d662, 663 [2015]; Mayo vMetropolitan Opera Assn., Inc., 108 AD3d 422, 425 [2013]; , 426 [2013]; Linarello v City Univ. of N.Y., 6 AD3d192, 195 [2004]). Accordingly, the court properly denied the [*3]plaintiffs' motion for summary judgment, in effect, declaring thatSelective is obligated to defend and indemnify YLP in the underlying action as an additionalinsured.

However, the Supreme Court erred by searching the record and awarding summary judgmentto Selective. Although YLP does not qualify as an additional insured, the Selective policycontains an exception to the contractual exclusion for liability assumed pursuant to an insuredcontract. There are triable issues of fact as to Selective's obligations to YLP under Lea Rome'sinsured contract with Tritec. Accordingly, on this record, Selective was not entitled to adeclaration that it is not obligated to defend and indemnify YLP in the underlying action, ordismissal of the complaint insofar as asserted against it.

The parties' remaining contentions are without merit. Dillon, J.P., Balkin, Miller and LaSalle,JJ., concur.