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Supreme Court, Appellate Division, First Department, New York.

Antonio ENCARNACION, Plaintiff, v. MANHATTAN POWELL L.P., et al., Defendants.

Manhattan Powell L.P., et al., Third Party Plaintiffs-Appellants, v. Vertical Design Construction Corp., Third-Party Defendant-Respondent. [And a Fourth-Party Action]

Decided: February 18, 1999

SULLIVAN, J.P., NARDELLI, LERNER and RUBIN, JJ. Joseph A. Oliva, for Third Party Plaintiffs-Appellants. B. Jennifer Jaffee, for Third-Party Defendant-Respondent.

Order, Supreme Court, Bronx County (Bertram Katz, J.), entered March 18, 1998, which, to the extent appealed from, denied defendants/third-party plaintiffs' motion for summary judgment against third-party defendant Vertical Design Construction Corp. on the fourth cause of action of their amended complaint, unanimously reversed, on the law, without costs or disbursements, and the motion granted as to liability only and the matter remanded for further proceedings.   Order, same court and Justice, entered September 16, 1997, which, inter alia, denied defendants/third-party plaintiffs' motion for summary judgment against third-party defendant Vertical Design Construction Corp., unanimously dismissed, as academic, without costs or disbursements.

Plaintiff, a bricklayer employed by third-party defendant Vertical Design Construction Corp., a subcontractor, was shot by an unknown assailant at the work site.   Defendants/third-party plaintiffs Manhattan Powell LP and State Construction & Development Corp. are the owner of the premises and general contractor on the job, respectively.   In its subcontract with State, Vertical had agreed to indemnify and hold harmless Manhattan and State from any claims arising out of Vertical's work.   Another provision of the subcontract required Vertical to “obtain, maintain and pay for all insurance required” and to name “[State], [Manhattan] ․ as additional insureds as their interests may appear.”   When Manhattan and State tendered the defense of the underlying action to Vertical, Empire Insurance Group, Vertical's liability insurer, responded by advising that neither was listed as an additional insured under Vertical's policy.

 With respect to the earlier of the two orders on appeal, Manhattan and State had moved for summary judgment on the third-party complaint on the ground that Vertical breached its contractual obligation to procure insurance.   The IAS court properly denied the motion because it was based upon a claim not alleged in the third-party complaint, which had alleged, instead, that Vertical was contractually bound to indemnify them in the event of a recovery against them in the main action.

 Taking their cue from the IAS court, State and Manhattan moved to amend the third-party complaint to allege a cause of action for failure to procure insurance, as contractually required, and for summary judgment based on Vertical's breach of that obligation.   The IAS court granted leave to amend in accordance with the proposed amended complaint submitted but denied summary judgment because of an “apparent defense”, i.e., a disclaimer of coverage based on late notice, an issue which nowhere appears in the record and is therefore unpreserved and which, in any event, is irrelevant to the issue of Vertical's liability on the failure to procure insurance claim.   We reverse and grant summary judgment based on that claim.

The record is clear that Vertical was obligated to procure insurance for State and Manhattan naming them as additional insureds.   It is equally clear that Vertical failed to do so since on neither motion did it offer any proof that, in fact, it had obtained such insurance.   In such circumstances, Vertical is liable for the resulting damages, including the amount of damages awarded to or paid to the injured party in the main action, within the limits of the policy that was to have been procured, as well as the costs incurred in defense of the main action (see Kinney v. G.W. Lisk Co., 76 N.Y.2d 215, 219, 557 N.Y.S.2d 283, 556 N.E.2d 1090.)

Nor is the award of summary judgment inappropriate for the reason that Vertical had not yet answered the amended third-party complaint.   The issue is not raised on appeal.   In any event, in two substantive motions dealing with the issue of its failure to procure insurance Vertical has failed to offer or even suggest a valid defense.


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