GRANITE STATE INSURANCE COMPANY, Plaintiff, v. AIM CONSTRUCTION OF NY, INC., LONGWOOD HOUSING DEVELOPMENT FUND COMPANY INC., MILTON GOYA, and UTICA FIRST INSURANCE COMPANY, Defendants.
This motion is brought in the context of an insurance declaratory-judgment action. That action itself arises out of a personal-injury lawsuit.
Defendant Milton Goya, while employed by defendant AIM Construction of NY Inc., was injured on a construction site owned by defendant Longwood Housing Development Fund Company. Goya brought a personal-injury action in Supreme Court, Bronx County against Longwood (and other defendants). Longwood then brought third-party claims for contractual and common-law indemnification and contribution against AIM Construction.
AIM's general-liability insurer, defendant Utica First Insurance Company, disclaimed coverage. AIM's workers'-compensation and employer-liability carrier, plaintiff Granite State Insurance Company disclaimed coverage as to Longwood's claims for contractual indemnity and contribution, but agreed to defend AIM as to the common-law indemnity and contribution claims, subject to a reservation of rights.
Granite State later brought this action for a declaration that it is not required to defend or indemnify AIM with respect to Longwood's third-party claims against AIM. Granite State now moves for summary judgment under CPLR 3212 on its claim for declaratory relief. Longwood opposes Granite State's motion as to its claims against AIM sounding in common-law indemnity and contribution. Utica First has also submitted brief opposition papers adopting Longwood's arguments.1 In addition, at this court's request Granite State, Longwood, and Utica First each submitted a supplemental letter brief on the scope of the duty to defend in this context.
Upon considering the parties' briefing on the motion, and the parties' supplemental submissions, this court concludes that Granite State is entitled to summary judgment.
A movant at summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, offering sufficient evidence to eliminate any material issues of fact. (See Santiago v Filstein, 35 AD3d 184, 185-186 [1st Dept 2006].) If the moving party makes a prima facie showing, the opponent of the motion must "present evidentiary facts in admissible form sufficient to raise a genuine, triable issue of fact" to defeat the motion. (Mazurek v Metropolitan Museum of Art, 27 AD3d 227, 228 [1st Dept 2006].) Reliance upon mere conclusions or unsubstantiated allegations will not defeat summary judgment. (See Corcoran Group, Inc. v Morris, 107 AD2d 622, 624 [1st Dept 1985], aff'd 64 NY2d 1034.)
As an initial matter, Granite State has made out a prima face showing that Longwood's contractual indemnification and contribution claims in the underlying action come within an express coverage exclusion in AIM's insurance policy for contract-based liabilities, and that Granite State therefore has no duty to defend or indemnify as to those claims. Longwood and Utica do not contest this showing. The branch of Granite State's summary-judgment motion seeking a declaration as to those claims is granted.
I. The Scope of Granite State's Duty to Defend
Longwood does strongly contest Granite State's argument that Granite State lacks a duty either to defend or to indemnify AIM against Longwood's common-law indemnity and contribution claims in the underlying action.
It is common ground between the parties that since AIM was Goya's employer at the time of Goya's injury and since Goya was acting within the scope of his employment, Longwood's common-law claims against AIM are governed by Workers' Compensation Law (WCL) § 11. Among other things, § 11 provides that "[a]n employer shall not be liable for contribution or indemnity to any third person based upon liability for injuries sustained by an employee" like Goya, "unless such third person proves through competent medical evidence that such employee has sustained a 'grave injury' " within the meaning of the statute.
In contesting Granite State's duty to defend AIM against Longwood's claims, the parties' filings on the present motion focused primarily on whether Longwood could potentially establish that Goya had suffered a "grave injury" within the meaning of WCL § 11. After briefing was complete, this court asked the parties also to submit letter briefs addressing, in effect, whether Granite State's duty to defend in fact turned on Longwood's chances of success against AIM in the underlying action.
Longwood's supplemental letter brief argues that Granite State's duty to defend AIM in the underlying action does not depend on whether Longwood can prevail on its common-law claims against AIM. Rather, the letter brief contends, the duty to defend "is exceedingly broad" and requires an insurer to defend "whenever the allegations" of the complaint in the underlying action "suggest a reasonable possibility of coverage"—even when those allegations plainly lack merit. (NYSCEF No. 43 at 1 [citations and internal quotation marks omitted]; accord NYSCEF No. 45 [same].) Longwood asserts that since its allegations against AIM here potentially implicate AIM's common-law liability in cases of grave injury, Granite State has a duty to defend.
Longwood's argument is an orthodox application of New York precedent regarding an insurer's duty to defend. Ordinarily, this court would agree. Indeed, a recent New York Commercial Division decision held as much, in the same substantive and procedural context as this motion. (See Granite State Ins. v Service Star LLC, 2018 NY Slip Op 51019 [U], at *2 [Sup Ct, NY County June 20, 2018].) This court is constrained, however, to hold otherwise by a decision of the Appellate Division, First Department, relied upon in Granite State's supplemental letter brief: National Union Fire Ins. Co. of Pittsburgh, PA v 221-223 W. 82 Owners Corp. (120 AD3d 1140 [1st Dept 2014]).2
National Union, like this case, involved an insurer's request for a declaration that it did not owe a duty to defend or indemnify an employer against third-party claims in an underlying personal-injury action because the employee-plaintiff had not suffered a "grave injury" within the meaning of WCL § 11. The trial court there held that since the issue of whether the underlying plaintiff's injury was "grave" for statutory purposes had not yet been determined, the insurer's duty to indemnify remained an open question and the insurer had still a duty to defend its insured. (See National Union Fire Ins. Co. of Pittsburgh, PA v 221-223 W. 82 Owners Corp., 2013 WL 9915077, at *1 [Sup Ct, Bronx County Dec. 30, 2013].)
The First Department reversed. The Court concluded that the insurer's submissions made out "a prima facie showing that the ligament and meniscal tears [the employee] allegedly sustained do not qualify" as grave injuries for statutory purposes, and that the employer "produced no evidence indicating that further discovery will yield material and relevant evidence" supporting a finding of grave injury. (120 AD3d at 1140.) Accordingly, the Court held, the insurer "has no obligation to defend or indemnify [the employer] for the underlying common-law indemnification and contribution claims." (Id. at 1140-1141.)
As this court understands the First Department's decision in National Union, then, where an employer seeks a defense from its insurer against third-party claims in an employee's personal-injury action, the insurer's duty to defend (and to indemnify) will frequently depend on whether the insurer can persuade the court in the coverage action that the employer should be entitled to summary judgment on the "grave injury" issue—whether or not the court in the underlying action has yet adjudicated that issue. National Union does not address the possibility for conflict between grave-injury determinations made by the court in the coverage action when adjudicating the duty to defend, on the one hand, and grave-injury determinations made by the court in the underlying action when adjudicating the merits, on the other.
Under National Union, Granite State's duty to defend does not turn on the allegations of Longwood's third-party complaint against AIM, as Longwood contends, but on whether Granite State has established as a matter of law that Longwood cannot prevail on its common-law claims against AIM.
II. Whether Granite State Is Estopped from Arguing that Goya's Injury Was Not "Grave"
Longwood also argues that Granite State is estopped from challenging the gravity of Goya's injury here because the court in the underlying action declined to dismiss Longwood's common-law claims against AIM. This court does not agree that Granite State is estopped.
For collateral estoppel to apply, "the identical issue must necessarily have been decided in the prior litigation and be decisive of the present action." (Stumpf AG v Dynegy Inc., 32 AD3d 232, 233 [1st Dept 2006].) That did not occur here. Rather, the prior order on which Longwood relies plainly rested on other grounds, and did not purport to address whether Goya had suffered a "grave injury."
In the underlying action in Supreme Court, Bronx County, AIM argued to Justice Suarez that Longwood's common-law claims against it should be dismissed as conflicting with WCL § 11. Justice Suarez, in considering this argument, noted that there were two independent circumstances in which a third-party plaintiff like Longwood could maintain such claims consistent with WCL § 11: "when the employee has sustained a grave injury or when there is a written contract entered into prior to the accident or occurrence by which the employer had expressly agreed to contribution or indemnification of the claimant." (New York Supreme Index No. 16048/2017, NYSCEF No. 32, at 6 [emphasis added].) Justice Suarez concluded that "there was an express indemnification provision in the agreement between AIM and Triboro, to which Longwood was a third-party beneficiary, that was entered into prior to the alleged date of loss." (Id. at 7.) Justice Suarez declined on that ground to dismiss Longwood's common-law claims against AIM. And he did not reach the question whether Goya had suffered a grave injury. (See id.) That ruling thus does not estop Granite State here as to the grave-injury issue.
III. Whether Granite State has Sufficiently Established that Goya Did Not Suffer a Grave Injury
This court further concludes that on this record, Granite State has sufficiently established that Goya did not suffer a grave injury within the meaning of WCL § 11. Thus, under National Union, Granite State lacks a duty to defend (or to indemnify) AIM in the underlying action.
WCL § 11 carefully and specifically defines which types of injuries qualify as a "grave injury." These "categories . . . are extremely limited and should be narrowly construed." (Fleischman v Peacock Water Co., 51 AD3d 1203, 1204 [3d Dept 2008], citing Fleming v Graham, 10 NY3d 296, 300 .) Here, the only statutory category that Goya's injuries could potentially come within is "permanent and total loss of use" of a "leg" or "foot" due to from his having severely broken his right leg in a fall.
Granite State has submitted admissible evidence—in the form of several reports affirmed under penalty of perjury by physicians who examined Goya—that Goya has not suffered the permanent and total loss of use of his right leg. (See CPLR 2106; see also Bissell v Town of Amherst, 41 AD3d 1228, 1229 [4th Dept 2007].) That is, these reports reflect that at most, due to his broken leg Goya needs to use a cane, walks with a visible limp, and experiences serious pain and loss of range of motion in his right leg and hip. Such impairment, though plainly significant for Goya in his daily life, falls short of total loss of use of the leg or foot for purposes of WCL § 11.3
As was the case in National Union, neither Longwood nor Utica has come forward with contrary evidence indicating that Goya has, in fact, totally lost the use of his right leg. Nor have they given some reason to think that further discovery in the underlying action might uncover such contrary evidence. This court therefore concludes that Granite State has established as a matter of law that it does not owe AIM a duty to defend or indemnify in the underlying action.
Accordingly, for the foregoing reasons it is hereby
ORDERED that the branch of Granite State's motion seeking summary judgment under CPLR 3212 as to Longwood's claims against AIM in the underlying action for contractual indemnification and contribution is granted; and it is further
ORDERED that the branch of Granite State's motion seeking summary judgment under CPLR3 3212 as to Longwood's claims against AIM in the underlying action for common-law indemnification and contribution is granted; and it is further
ADJUDGED AND DECREED that plaintiff Granite State Insurance Company has no duty to defend or indemnify defendant AIM Construction of NY, Inc. in the underlying personal-injury action captioned Goya v. Longwood Housing Development Fund Co., Inc., pending in Supreme Court, Bronx County under Index No. 23359/2014; and it is further
ORDERED that Granite State shall serve a copy of this order with notice of its entry on all parties and on the office of the County Clerk, which shall enter judgment accordingly; and it is further
ORDERED that notice of entry may be served by mail or overnight delivery service, with Granite State to e-file a copy of notice of entry (and accompanying affidavit(s) of service) on NYSCEF once filing of notices of entry in pending nonessential matters is again permitted by order of Chief Administrative Judge Lawrence Marks.
1. For concision, this decision's references to arguments made by Longwood in opposition to Granite State's motion also encompass Utica's adoption of Longwood's arguments.
2. In Service Star, the insurer seeking a declaration of no-duty-to-defend did not cite this First Department decision to the court in that case.
3. See e.g. Fleischman (51 AD3d at 1205 [holding as a matter of law that injured person did not suffer grave injury due to loss of use of his leg where his symptoms "include severe swelling, a loss of ability to ambulate properly, a significant limp, a loss of range of motion and a loss of stability and flexibility"] [internal quotation marks omitted] ); Trimble v Hawker Dayton Corp. (307 AD2d 452, 453 [3d Dept 2003] [holding as a matter of law that injured person did not suffer grave injury due to loss of use of his hand where he could "extend and close his right thumb and fingers sufficiently to grasp, hold and carry objects in his right hand"] ). Cf. Benedetto v Carrera Realty Corp. (32 AD3d 874, 876 [2d Dept 2006] [holding as a matter of law that injured person suffered grave injury due to loss of use of his legs where he "cannot use his feet at all, is confined to a wheelchair, and can ambulate only with the use of crutches and braces by dragging his lower body and using his upper body for support"] ).
Gerald Lebovits, J.