KDDI v. USA FITCH GROUP INC (2026)

This is a property-damage action. Plaintiff, KDDI America, Inc., subleased commercial premises from defendant Fitch Group, Inc., and obtained an all-risk insurance policy from defendant Mitsui Sumitomo Insurance USA Inc. In 2023, a burst pipe in equipment owned and controlled by Fitch caused water damage to KDDI's subleased premises. KDDI has alleged that it suffered damages of approximately $450,000. KDDI submitted an insurance claim for that claimed loss to Mitsui Sumitomo, of which Mitsui Sumitomo paid approximately $90,000.

KDDI then brought this action against Fitch and Mitsui Sumitomo, asserting negligence and breach-of-contract claims and seeking an award in damages of the remaining $360,000 for which KDDI had sought, but not received, payment under its insurance policy. Fitch now moves under CPLR 3211 (a) (1) to dismiss KDDI's claims against it. The motion is denied.

DISCUSSION

Fitch's motion is based on a waiver-of-liability provision in its lease with its landlord (nonparty Broad Financial Center, LLC), which the KDDI/Fitch sublease incorporated by reference. (See NYSCEF No. 3 at 25 ¶ 22 [a] [sublease incorporation-by-reference provision].) The lease provision, § 9.08 (c), provides that as long as "Tenant's right of full recovery under its aforesaid policy or policies is not adversely affected or prejudiced thereby, Tenant hereby waives any and all right of full recovery which it might otherwise have had against Landlord" for various forms of property damage, "to the extent that the same is covered by Tenant's insurance." (NYSCEF No. 2 at 33.) Fitch argues that this provision conclusively refutes KDDI's claims against it in this action. (See NYSCEF No. 21 at 5-11; NYSCEF No. 27 at 1-9.) This court disagrees.

The interpretive question presented on this motion is whether "covered by Tenant's insurance" in § 9.08 (c) refers to the scope of coverage of Tenant's policy, as Fitch argues (see NYSCEF No. 27 at 1-2, 5-6); or whether it instead refers also to the extent of payment under that policy of Tenant's loss, as KDDI contends (see NYSCEF No. 23 at 9, 13).

It is undisputed that the property damage to KDDI's property was within the scope of coverage of the insurance policy that it obtained from Mitsui Sumitomo. It is also undisputed that Mitsui Sumitomo did not pay the full amount of KDDI's claimed loss.

Thus, if "to the extent covered by its insurance" refers to the scope of coverage under the policy, KDDI's loss is "covered by its insurance" within the meaning of § 9.08 (c) of the lease. Under this first reading of the lease, KDDI has waived any claim against Fitch (leaving only its coverage claim against Mitsui Sumitomo). If, on the other hand, "to the extent covered by its insurance" refers not only to the scope of coverage, but also the extent of payment under the policy for a covered loss, the $360,000 in claimed-but-unpaid damage to KDDI's property is not "covered by KDDI's insurance" for § 9.08 (c) purposes. Under this alternative reading of the lease, KDDI has not waived its claims against Fitch.¹

The difficulty for Fitch at this stage of the action is that, considered in isolation, both possible readings of § 9.08 (c) are reasonable. And Fitch provides no authority for the proposition that in the context of a waiver-of-liability or waiver-of-subrogation provision, a waiver of claims for loss "to the extent covered by insurance" necessarily encompasses a loss that is within the scope of coverage but paid only in part. As a result, § 9.08 (c) does not conclusively refute KDDI's claims against Fitch, as required to warrant dismissal of those claims under CPLR 3211 (a) (1). Resolving the ultimate merits of KDDI's claims against Fitch (or against Mitsui Sumitomo), including the subsidiary question of how best to interpret § 9.08 (c), must be left for later in this action.

Accordingly, it is

ORDERED that Fitch's motion to dismiss KDDI's claims against it is denied; and it is further

ORDERED that the parties are directed to appear before this court for a telephonic preliminary conference on June 26, 2026.

DATE 5/29/2026

FOOTNOTES

1.   Under the second, alternative reading of § 9.08 discussed above, KDDI could pursue claims against both Fitch and Mitsui Sumitomo, but could not collect from both on any judgment that it were to obtain.

Gerald Lebovits, J.