MALECAJ v. WEST 70TH OWNERS CORP (2023)

In Motion Sequence No. 19, West 70th Owners Corp. (“West”) moves for an Order pursuant to CPLR 4211 and 4213 granting West judgment as a matter of law on its claim for contractual indemnification against New Order Construction Management, Inc. (“NOCM”), including reimbursement of all reasonable attorney's fees incurred by West and reimbursement of ninety percent (90%) of the settlement amount when paid by West to plaintiff; scheduling a fee hearing to determine the exact amount of fees to be reimbursed; and directing disclosure of NOCM's insurance policy with Main Street America within ten (10) days, to determine, among other things, whether defense costs would erode the policy.

In Motion Sequence No. 20, NOCM moves pursuant to CPLR § 4404 to set aside the jury verdict, and for other relief.

In Motion Sequence No. 21, third-party defendant Bronx Excavation Company, Inc. (“BEC”) moves pursuant to CPLR 4404 for an Order dismissing the third-party complaint against BEC.

In Motion Sequence No. 22, plaintiff moves to vacate, and for leave to reargue, the July 14, 2022 Decision and Order of this Court (Armstrong, J.), as entered and served with Notice of Entry on July 15, 2022, and upon reargument, to enforce the settlement with defendant West in the amount of $1,500,000; or should the Court find there was no meeting of the minds as to the terms of the settlement, to vacate the settlement and enforce the verdict against defendant West in the amount of $4,741,015; and in addition, for a preliminary injunction preventing defendant West from selling 45 West 70th Street in Manhattan until such time as the settlement or judgment is satisfied.

This Labor Law action arises out of an accident that occurred on August 1, 2012, during the renovation of a townhome located at 47 West 70th Street in New York City. The property was owned by West 70th Owners Corp., a cooperate apartment corporation whose shares were owned individually or through wholly owned LLC's belonging to non-parties Russell and Sandra Abrams.

On the date of the accident, plaintiff, an employee of third-party defendant BEC, was performing excavation for a pool in the subbasement. Plaintiff testified that as he was completing his work for the day, Russell Abrams determined that additional work had to be done that day. Abrams set up a platform or plank, and helped secure the plank and the platform. Abrams directed the plaintiff to excavate another two inches off the pool. Plaintiff was not provided any safety devices other than the plank. Plaintiff's co-worker, Pirioli, testified substantially in accord with plaintiff's testimony. After Abrams departed, the plank collapsed, causing the plaintiff to fall into the excavation and sustain extensive, permanent brain injuries.

This matter was tried with a jury in May 2022. During trial, the Court found that Labor Law 240 and 241(6) had been violated as a matter of law, and directed a verdict in plaintiff's favor as to these violations. The issues presented to the jury were, inter alia, whether defendant West directed and controlled the injury-producing work (thereby disqualifying West 70th Owners Corp. from the one and two-family “homeowner's exemption” and making it liable under Sections 240 and 241(6) of the Labor Law); whether defendant West violated Labor Law 200; whether defendant West's violation of Labor Law 200 was a substantial factor in causing plaintiff's injuries, and an apportionment of fault between the parties and damages.

Before the jury reached its verdict, plaintiff and West agreed to a high/low settlement for between $1,000,000 and $1,500,000.00.¹

Following the conclusion of trial, the jury rendered a verdict finding that NOCM was negligent and was fifty percent (50%) responsible for the accident; BEC was forty percent (40%) responsible for the accident; and West was ten percent (10%) responsible for the accident. The jury awarded damages in the total amount of $4,741,015.00.

Argument

 Motion Sequence No. 19

West argues that on April 30, 2012, John Collins of NOCM executed an Indemnification, Hold Harmless and Insurance Agreement requiring NOCM to hold West harmless for any judgments, including reasonable legal fees for claims arising in whole or in part and in any manner from the acts, omissions, breach or default of NOCM. NOCM further agreed that it would obtain and keep in force liability insurance and would defend and hold harmless West (among others) for personal injury, bodily injury and property damage. NOCM provided a Certificate of Insurance confirming that it purchased a policy of insurance with Main Street America with a per occurrence limit of $2,000,000 naming West as an additional insured. West contends that because the accident arose out of NOCM's work, West should qualify as an additional insured under the Main Street America policy as per written contract. As an additional insured under the NOCM policy, West argues, defense costs do not erode the policy limit, and there should be funds readily available from Main Street America to immediately reimburse West for the reasonable attorney's fees and costs expended on its behalf in the defense of this case.

NOCM argues in opposition that West's motion is predicated entirely upon the jury's apportionment of negligence against NOCM. NOCM maintains that the instant application for indemnification must be stayed until a final determination has been made in connection with NOCM's post trial motion (and anticipated appeal to the Appellate Division, First Department) to set aside the jury verdict and direct that judgment be entered dismissing the negligence claims against NOCM as a matter of law. In this regard, NOCM argues that no witnesses identified New Order Construction, or its principal, John Collins, as being present at the job site on the date of the accident, and that NOCM did not exercise any direction or control over the plaintiff's work at any time including the day of the accident. Rather, NOCM argues, the trial witnesses testified that their work was either directed or controlled by Bronx Excavation or Russell Abrams. As such, NOCM argues, it was reversible error for this Court to have permitted the jury to allocate fault to it.

NOCM additionally argues that it was not a statutory agent under Labor Law 240(1). Further, NOCM argues that even if NOCM is ultimately adjudicated liable under Labor Law 240(1), the violation of the statute is not the equivalent of negligence and does not give rise to an inference of negligence. Lastly, NOCM maintains that West's motion is precluded by Section 15-522.1 of the General Obligations Law on the ground that an indemnitor cannot obtain indemnification for its own acts of negligence.

Plaintiff, also opposing West's motion, contends that indemnity is premature absent payment by West of any amount of the settlement. As to West's claims as an additional insured, plaintiff contends that a certificate of insurance does not confer coverage, particularly where it includes a disclaimer of this type on the face of the certificate itself. Further plaintiff argues that estoppel does not apply as the insurer or an agent of the insurer did not issue the certificate.

 Motion Sequence No. 20

In Motion Sequence No. 20, NOCM moves pursuant to CPLR 4404 to set aside the jury verdict, and for other relief.

NOCM's primary argument is that West never conferred any authority to it to supervise or control that work, and thus NOCM was neither a general contractor nor a statutory agent. Instead, NOCM argues, it was merely a prime contractor responsible for its specific role, and any contrary finding is against the weight of the evidence.

NOCM argues that the jury erroneously determined that it was negligent, as there was no evidence that NOCM directed or controlled plaintiff's work at the time of the accident, which should be directed as a matter of law. Further, NOCM argues that the jury erroneously determined that NOCM was the general contractor and violated Labor Law 240(1), based on insufficient evidence. In this regard, NOCM argues that the jury improperly gave undue weight to building permits issued to NOCM as “general contractor,” when in fact all of the contractual evidence demonstrated that NOCM was only hired to provide specified work for Abrams pursuant to the Statements of Work. NOCM's contracts were devoid of any obligation to hire or fire subcontractors, supervise the performance of any other trades, schedule the work, perform project or safety meetings or to implement, monitor and enforce safety at the project. In this regard, NOCM argues that an alleged “Professional Services Agreement” never existed, and that the jury thus erroneously relied on the existence of such an agreement in finding that NOCM was a general contractor.

NOCM also seeks to set aside the verdict and have a new trial ordered due to alleged errors made in connection with the admission of evidence and jury charges.

Lastly, NOCM concedes that it failed to assert claims for contribution or indemnification against BEC as plaintiff's employer. NOCM argues that since the jury erroneously found that NOCM was the general contractor, in the event that determination is not set aside, NOCM is entitled to assert claims for common law indemnification against BEC.

In opposition, BEC and ENDURANCE AMERICAN INSURANCE COMPANY (“Endurance”) contend that NOCM has failed to establish that its proposed amendment to the pleadings has merit. They argue that in view of the jury's fining that NOCM was s 50% at fault, NOCM may not seek common law indemnity. Moreover, in order to obtain recovery for indemnity, as opposed to a right to assert a claim for indemnity, it must be established that NOCM actually paid plaintiff more than its apportioned share.

Plaintiff, in his opposition, contends that NOCM has entirely failed to provide full and complete transcripts that would allow proper review of the post trial motions. Specifically, plaintiff argues, inter alia, that the arguments relating to whether NOCM is liable as a general contractor under the Labor Law should be rejected as the moving defendant failed to annex Abrams's entire trial transcript (i.e., the owner of the property who testified that he retained New Order as the general contractor for the renovation work pursuant to a Professional Services Agreement), and that defendant only attached the cross-examination of Collins (who testified as NOCM's principal).

In any event, plaintiff argues, the verdict was in accord with the weight of the evidence in that NOCM's arguments that it was not hired as the general contractor were contradicted and refuted by the trial testimony of Abrams, who testified he retained NOCM as the “general contractor” and gave New Order the “authority to direct and control the means and methods of the work of all the contractors on site,” including plaintiff's employer BEC. Moreover, according to Abrams, New Order continued to act as the general contractor until about a month after plaintiff's accident. Abrams, in addition, testified that he gave NOCM authority to implement and enforce safety measures on site, and authority to stop the work if it observed any unsafe work practices by BEC.

As to the Professional Services Agreement (the existence of which NOCM denies), Abrams testified that the Professional Services Agreement outlined New Order's overall responsibilities on this job, including NOCM's authority to direct and control the means and methods of the work of the subcontractors and to implement safety measures on this site for all the contractors, including BEC, and that Collins removed Abrams's copy of the Professional Services Agreement from the worksite.

As to the apportionment of liability, plaintiff maintains that it was completely logical for the jury to hold NOCM as general contractor responsible for not implementing the appropriate safety measures on site, such as sheeting, shoring and bracing the excavation or providing the requisite safety net and life line.

 Motion Sequence No. 21

In Motion Sequence No. 21, third-party defendant BEC moves pursuant to CPLR 4404 for an Order dismissing the third-party complaint against BEC.

Before the verdict, this Court dismissed West's contractual indemnity claim against BEC. As such, BEC maintains, the only claims remaining against BEC are common-law indemnity and contribution. BEC argues that West entered into a high/low agreement, and thus waived its right to seek contribution (see General Obligations Law § 15-108[c]). Further, the jury conclusion that West supervised and controlled plaintiff's work, and was actively negligent, precludes West from seeking common law indemnity.

 Motion Sequence No. 22

In Motion Sequence No. 22, plaintiff moves to vacate, and for leave to reargue, the July 14, 2022 Decision and Order of this Court (Armstrong, J.), as entered and served with Notice of Entry on July 15, 2022, and upon reargument, to enforce the settlement with defendant West in the amount of $1,500,000; or should the Court find there was no meeting of the minds as to the terms of the settlement, to vacate the settlement and enforce the verdict against defendant West in the amount of $4,741,015; and in addition, for a preliminary injunction preventing defendant West from selling 45 West 70th Street in Manhattan until such time as the settlement or judgment is satisfied.

Plaintiff now argues that in answering “yes” to Question No. 1 on the verdict sheet, finding that defendant West directed and controlled the injury-producing work, the one and two-family “homeowner's exemption” did not apply, and West was thus jointly and severally liable under Sections 240 and 241(6) of the Labor Law for the entire damage award. The questions on the verdict sheet relating to fault and apportionment, plaintiff argues, relate only to Section 200 of the Labor Law and any claims for contribution between the defendants, and in no way limit the jury verdict finding that West is jointly and severally liable for the entire $4,741,015 damage. Plaintiff concludes that under the terms of the $1,500,000-$1,000,000 high-low settlement, defendant West 70th Owners Corp. is thereby obligated to pay the higher amount of $1,500,000.

This Court previously held that the plaintiff was entitled only to the “low” end of the verdict, and that plaintiff's settlement allows plaintiff to recover only $1,000,000 from defendant West.

Discussion

Plaintiff's motion to reargue (Motion Sequence No. 22) is denied in its entirety. The issues were extensively conferenced, and the Court adheres to its prior determination. A showing has not been made that the plaintiff is entitled to an injunction at this time. The foregoing is without prejudice to the plaintiff seeking injunctive relief if defendant West fails to timely pay the amount of the settlement within 30 days after service of a copy of this Order with notice of entry thereon.

Defendant BEC's motion (Motion Sequence No. 21), seeking an Order pursuant to CPLR 4404 dismissing the third-party complaint against BEC is granted without opposition. To establish a claim for common law indemnification, a party must show that (1) it has been held vicariously liable without proof of any negligence or actual supervision on its part, and (2) the proposed indemnitor was either negligent or exercised actual supervision or control over the injury-producing work. (See Naughton v City of New York, 94 AD3d 1, 940 N.Y.S.2d 21 [1st Dept. 2012]). As West was found actively negligent, West cannot seek common law indemnity. West's negligence (as opposed to mere vicarious liability) was amply established at trial, as clearly West was at fault based on Abrams’ conduct in directing the use of a plank that ultimately failed, causing injury to the plaintiff and a party that is negligent cannot seek indemnity, as BEC argues. Further, West, having entered into a settlement, cannot seek contribution. Where one defendant settles with plaintiffs, that defendant's cross claims against another defendant for contribution with respect to plaintiffs’ claims are barred by General Obligations Law § 15-108. (Rivera v 203 Chestnut Realty Corp., 173 AD3d 1085, 1085 [2d Dept. 2019].)

As to Motion Sequence No. 20, NOCM moves, as noted above, pursuant to CPLR 4404 to set aside the jury verdict, and for other relief. The burden on a movant seeking to have a jury verdict set aside and judgment entered in favor of the moving party under CPLR 4404 (a) is a heavy one, and a jury verdict in favor of a party should not be set aside unless that jury “could not have reached the verdict upon any fair interpretation of the evidence” (Lichtenstein v Bauer, 203 AD2d 89, 89 [1st Dept 1994]). Viewing the evidence in a light most favorable to the nonmovant (see Szczerbiak v Pilat, 90 NY2d 553, 556 [1997]), the movant must persuade the court that there was “simply no valid line of reasoning and permissible inferences which could possibly lead rational [persons] to the conclusion reached by the jury on the basis of the evidence presented at trial” (Cohen v Hallmark Cards, 45 NY2d 493, 499 [1978]).

The key consideration here is whether there was sufficient evidence to establish that NOCM acted as a general contractor. In this regard, as indicated above, all of the relevant transcripts have not been provided. However, the issue was squarely presented to the jury, and there was ample testimony that NOCM's principal entered into agreements to act as a general contractor, and that a written agreement existed but was removed from the jobsite by Collins.

It was thus up to the jury to determine whether Collins agreed contractually to act as a general contractor. Even if the giving of a missing document charge is ultimately found to be in error on appeal, there was ample evidence presented for the jury to find that NOCM was a general contractor and thus responsible for worksite safety.

Further, the jury could find that NOCM was actively negligent in failing to place netting or take other appropriate actions so as to render the excavation area safe for workers. Although the duty to provide a safe place to work under Labor Law § 200 does not extend to the plaintiff's own tools or the manner in which the plaintiff is doing his or her own work, a property owner or general contractor may be held responsible for injuries to employees of a subcontractor that arises “from a defect or dangerous condition on the property itself.” (Ortega v. Puccia, 57 AD3d 54 [2d Dep't 2008].)

The Court does find, however, that the apportionment of damages was clearly erroneous. As indicated above, the jury rendered a verdict finding that NOCM was negligent and was fifty percent (50%) responsible for the accident; BEC was forty percent (40%) responsible for the accident; and West was ten percent (10%) responsible for the accident. The credible evidence was that Abrams was present at the jobsite immediately prior to the accident, and that he directed the use of the plank as a scaffold. In addition, the credible evidence was that representatives of BEC and NOCM were not present on the day of the accident. Under these circumstances, where West was clearly actively negligent, the apportionment of fault of only 10% to West was against the weight of the evidence. The allocation of only 10% of fault to the actual party who directed and controlled the work that plaintiff was performing at the time of his accident is clearly against the weight of the evidence, as there is no way it could have been reached by any fair interpretation of the evidence. (Register v. SAS Morrison, LLC, 189 AD3d 591 [1st Dept. 2020].)

NOCM seeks to amend its answer to assert claims for indemnification against BEC as plaintiff's employer. NOCM argues that since the jury erroneously found that NOCM was the general contractor, in the event that determination is not set aside, NOCM is entitled to assert claims for common law indemnification against BEC. However, as BEC correctly argues, NOCM may not seek common law indemnity, as NOCM was itself found to be negligent.

With respect to West's motion for contractual indemnification from NOCM (Motion Sequence No. 19), the Court has not considered plaintiff's arguments in opposition. As a stranger to the contract, plaintiff has no standing to contest West's right to indemnification. As to NOCM's opposition, it is predicated on arguments that the NOCM was not actively negligent, which the Court has rejected. Consequently, West is entitled to partial contractual indemnity. However, such a determination must await a retrial of the proper allocation of fault as to both West and NOCM. The motion is therefore denied with leave to renew following an allocation of fault upon retrial.

The Court finds that the additional arguments not addressed herein are either without merit, or do not affect the final resolution of the foregoing motions.

Accordingly, it is hereby,

ORDERED that plaintiff's motion to reargue (Motion Sequence No. 22) is denied in its entirety, without prejudice to a further application for injunctive relief if defendant West 70th Owners Corp. fails to timely pay the amount of the settlement as indicated herein within 30 days after service of a copy of this Order with notice of entry thereon, and it is further

ORDERED that defendant Bronx Excavation Company, Inc.’s motion (Motion Sequence No. 21) for an Order pursuant to CPLR 4404 dismissing the third-party complaint against BEC is granted without opposition, and the third party action is hereby severed, and the third party complaint is dismissed as to Bronx Excavation Company, Inc., and the Clerk is directed to enter judgment dismissing all claims against Bronx Excavation Company, Inc., and it is further

ORDERED that New Order Construction Management, Inc.’s motion pursuant to CPLR 4404 to set aside the jury verdict (Motion Sequence No. 20) is granted solely to the extent of setting aside the apportionment of fault as to all parties, and the action shall be retried on the issue of apportionment of fault only, and it is further

ORDERED that Motion Sequence No. 19 is denied with leave to renew following an allocation of fault upon retrial of this action as indicated above.

This is the Decision and Order of the Court.

FOOTNOTES

1.   The high/low settlement provided as follows:“Just wanted to advise the court that we have a settlement between the plaintiff and between defendant West 70th Owners Corp. and the terms of the settlement are $1 million-$1.5 million high-low agreement. So that if the jury were to award a verdict against Mr. Abrams of anything from a defendants’ verdict up to $1 million that Mr. Abrams would pay $1 million. Should the jury award anything over $1.5 million against Mr. Abrams, he would only pay $1,500,000. Should the jury award anything between 1,000,000 and 1,500,000 that is the amount that Mr. Abrams would pay. In addition to that, Mr. Abrams has asked for six months to pay in a lump sum and we have agreed to those terms.”

Adrian Armstrong, J.