FRIEDMAN, J.P.
The outcome of this appeal turns on whether defendants New York City Transit Authority (NYCTA) and Metropolitan Transit Authority (MTA) are entitled to coverage from plaintiff
The underlying personal injury action arose from a subway construction project in Brooklyn, for which defendants NYCTA and MTA engaged nonparty Breaking Solutions to supply concrete-breaking excavation machines and personnel to operate the machines under NYCTA's direction. Pursuant to the insurance requirements of its contract, Breaking Solutions obtained a commercial general liability policy from Burlington for the period from July 17, 2008, through July 17, 2009. The Burlington policy includes endorsements designating NYCTA, MTA and the City (the fee owner of subway properties, which are leased to NYCTA) as additional insureds, with such additional insured coverage restricted to, in pertinent part, liability for bodily injury "caused, in whole or in part," by "acts or omissions" of Breaking Solutions.
On February 14, 2009, an explosion occurred in the Brooklyn subway tunnel that was being excavated by a Breaking Solutions machine. The explosion occurred when the excavator came into contact with an energized electrical cable buried below the concrete. It is undisputed that it had been NYCTA's responsibility to identify and mark or protect hazards in advance, so as to enable the excavator operator to avoid them, and to shut off power to electrical cables in the work area. Thomas Kenny, an employee of NYCTA, was injured when he fell from an elevated work platform as a result of the explosion.
In April 2009, Kenny and his wife (suing derivatively) commenced a personal injury action against the City and Breaking Solutions in the United States District Court for the Eastern
The City, as a putative additional insured under Breaking Solutions' policy, tendered its defense in the Kenny action to Burlington. While Burlington accepted the tender, it initially did so subject to a reservation of the right to withdraw from the City's defense, and to deny it indemnification, in the event it emerged that the loss was not caused in whole or in part by Breaking Solutions' acts or omissions. In December 2009, however, NYCTA sent Breaking Solutions a letter warning that outstanding and future payments under its contract would be withheld unless Burlington agreed to indemnify the City (to which, as previously noted, NYCTA had its own contractual indemnification obligation). Thereafter, Burlington stated that it would indemnify the City in the Kenny action, essentially withdrawing its previous reservation of rights. As a Burlington executive subsequently explained by affidavit in this action, Burlington withdrew its reservation of rights with respect to the City's coverage in the Kenny action "as an accommodation to its policyholder," Breaking Solutions.
In or about March 2010, the City commenced a third-party action against NYCTA and MTA, asserting claims for contractual indemnification pursuant to the 1953 lease and for common-law contribution. Burlington accepted tender of the defense of NYCTA and MTA as putative additional insureds under the policy issued to Breaking Solutions. As it had initially done with respect to the City's defense, Burlington assumed the defense of NYCTA and MTA subject to a reservation of the right to withdraw in the event it emerged that the loss did not fall within the scope of the additional insured coverage. Burlington never withdrew its reservation of rights with respect to NYCTA's and MTA's coverage.
In the course of discovery in the Kenny action, it emerged that, while the Breaking Solutions excavator had caused the explosion by disturbing the buried cable, there had not been any negligence or other fault on the part of the Breaking Solutions employee who operated the excavator. Rather, because NYCTA had failed to identify and mark or protect the cable in preparation for the work, the Breaking Solutions operator had
The evidence that Breaking Solutions had not been at fault for the explosion prompted Burlington to disclaim coverage of NYCTA and MTA by letter dated December 10, 2010. Burlington took the position that, because there was no evidence that the explosion had resulted from negligence or other fault on the part of Breaking Solutions, Kenny's injury had not been "caused, in whole or in part," by any "act or omission" of Breaking Solutions (the named insured), and that NYCTA and MTA therefore were not, for purposes of the Kenny action, additional insureds of Burlington under the relevant endorsements to Breaking Solutions' policy. Thereafter, in March 2011, Burlington commenced the present action in Supreme Court, New York County, asserting a single cause of action for a declaration that it does not owe NYCTA or MTA coverage with respect to the Kenny action under the Breaking Solutions policy.
In September 2011, the federal court granted a motion by the plaintiffs in the Kenny action to dismiss their own claims against Breaking Solutions with prejudice.
In June 2012, Burlington settled the Kenny action on behalf of the City, paying the plaintiffs $950,000. The following month, Burlington moved for leave to amend its complaint in this action to add a second cause of action, seeking to recover, as subrogee
In the first decision under review, which was first entered as an order on December 28, 2012, and then as a judgment on January 9, 2013, Supreme Court granted Burlington leave to amend the complaint to add a contractual indemnification claim against NYCTA (but not MTA, which is not a party to the 1953 lease) and summary judgment declaring that NYCTA and MTA were not covered by the Breaking Solutions policy for purposes of the Kenny action. The court also denied the cross motion by NYCTA and MTA for summary judgment in their favor on the coverage issue. The court first held that NYCTA and MTA were not additional insureds under the Breaking Solutions policy for purposes of the Kenny action, relying on this Court's decision in Crespo v City of New York (303 A.D.2d 166 [1st Dept 2003]) (more fully discussed below), which construed "acts and omissions" language in an additional insured endorsement. The court also rejected NYCTA's contention that Burlington could not be subrogated to the City's indemnification rights because, assuming the correctness of Burlington's position on the coverage issue (with which the court had agreed), Burlington's settlement of the Kenny action on the City's behalf would have been voluntary.
In the second decision and order under review, entered on December 19, 2013, the court, insofar as relevant to this appeal, granted Burlington's motion for partial summary judgment as to liability in its favor on its cause of action against NYCTA, as subrogee of the City, for contractual indemnification pursuant to the 1953 lease. The court directed entry of judgment in favor of Burlington in the amount of its $950,000 settlement payment, with 3% interest from June 2012. The court also granted Burlington summary judgment on its claim for indemnification for the City's defense costs, in an amount to be determined after further discovery.
As stated at the outset of this opinion, we reverse on the ground that, under this Court's recent precedents, and contrary to Supreme Court's view, NYCTA and MTA are additional insureds under the subject policy for purposes of a loss that was "caused, in whole or in part," by an "act[] or omission[]" of the named insured, even though the named insured's causal "act[]" was not negligent. It is undisputed that Kenny's injury was causally connected to an "act[]" of the named insured, specifically, the Breaking Solutions excavator's disturbance of the buried electrical cable, which triggered the explosion that led to Kenny's fall.
In at least three decisions issued within the three years before this appeal was argued (although not cited by the parties), this Court has held that, where a policy endorsement (like the ones here at issue) extends coverage to additional insureds for losses "caused by" the named insured's "acts or omissions" or "operations," the existence of coverage does not depend upon a showing that the named insured's causal conduct was negligent or otherwise at fault. In W & W Glass Sys., Inc. v Admiral Ins. Co. (91 A.D.3d 530 [1st Dept 2012]), for example, where the relevant endorsement provided that a general contractor was covered under its subcontractor's policy "`only with respect to liability caused by [the subcontractor's] ongoing operations performed for that [additional] insured'" (id. at 530 [emphasis added]), we held that "[t]he language in the additional insured endorsement granting coverage does not require a negligence trigger" (id. at 531 [emphasis added]).
Notably, last year, in Liberty Mut. Ins. Co. v Zurich Am. Ins. Co. (2014 WL 1303595, 2014 US Dist LEXIS 42471 [SD NY, Mar. 28, 2014, No. 11-Civ-9357 (ALC) (KNF)]), the Federal District Court considered the question of whether, under New York law, the negligence of the named insured is a prerequisite for additional insured coverage under an endorsement restricting coverage to losses "caused, in whole or in part, by . . . [the named insured's] acts or omissions; or . . . [t]he acts or omissions of those acting on [the named insured's] behalf; in the performance of [the named insured's] ongoing operations for the additional insured(s)" (2014 WL 1303595, *2, 2014 US Dist LEXIS 42471, *6 [internal quotation marks omitted]). The Liberty Mutual court concluded—expressly relying on our above-cited decisions in W & W Glass, National Union and Strauss Painting—that "[i]t is not necessary to determine that Schindler [the named insured] was somehow negligent as any act or omission by Schindler or someone acting on its behalf will suffice [to trigger additional insured coverage] if it was `in the performance of [Schindler's] ongoing operations for the additional insured'" (2014 WL 1303595 *5, 2014 US Dist LEXIS 42471, *14-15).
More recently, in Kel-Mar Designs, Inc. v Harleysville Ins. Co. of N.Y. (127 A.D.3d 662 [1st Dept 2015]), this Court reaffirmed that endorsement language predicating additional insured coverage on "liability caused, in whole or in part, by the acts or omissions of [the named insured]" (id. at 663 [internal quotation marks omitted]) does not require a showing of negligence on the part of the named insured. We explained:
While the loss in the present case does not involve an injury to an employee of the named insured (Breaking Solutions), given that a Breaking Solutions employee operated the machine that set off the explosion, here, no less than in Kel-Mar, the loss "resulted, at least in part, from the acts or omissions' of [Breaking Solutions, the named insured] . . ., regardless of whether [Breaking Solutions] was negligent or otherwise at fault for [the] mishap."
In reaching a contrary conclusion, Supreme Court relied on an older decision of this Court, Crespo v City of New York (303 A.D.2d 166 [1st Dept 2003], supra), where we held that the additional insured's right to indemnification could not be determined without first determining whether the loss "was caused by negligence by S & P [the named insured]" (id. at 167). In our view, Crespo, even without regard to the subsequent countervailing authority, is distinguishable. The additional insured endorsement in Crespo provided coverage "only to the extent that [the additional insured] is held liable for [S&P's] acts or omissions" (id. [emphasis added and internal quotation marks omitted]), language suggesting that the wrongful conduct of the named insured must provide the basis for the imposition of liability on the additional insured. In any event, to the extent Crespo conflicts with this Court's more recent authority, we are obliged to follow the latter.
For the reasons discussed above, Breaking Solutions' Burlington policy affords NYCTA coverage as an additional insured for liability arising from the injury to Kenny. It necessarily follows that the anti-subrogation rule bars Burlington from recovering, as the City's subrogee, contractual indemnification from NYCTA under the 1953 lease for amounts expended in the settlement and defense of the Kenny action on behalf of the City (see North Star Reins. Corp. v Continental Ins. Co., 82 N.Y.2d 281, 294 [1993] ["An insurer . . . has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered"]).
In view of the foregoing, we need not reach the remaining issues discussed by the parties.
Accordingly, the order and judgment (one paper) of the Supreme Court, New York County (Michael D. Stallman, J.), entered December 28, 2012 and January 9, 2013, which granted plaintiff Burlington summary judgment on its first cause of action declaring that Burlington owes defendants NYCTA and MTA no coverage in the underlying personal injury action, granted Burlington leave to amend its complaint to assert a second cause of action against NYCTA for contractual indemnification as equitable subrogee of the City of New York, and denied defendants' cross motion for summary judgment on the first cause of action, and the order of the same court and Justice, entered December 19, 2013, which, to the extent appealed from, granted Burlington's motion for summary judgment
Order and judgment (one paper), Supreme Court, New York County (Michael D. Stallman, J.), entered December 28, 2012 and January 9, 2013, and order, same court and Justice, entered December 19, 2013, reversed, on the law, with costs, Burlington's motions for summary judgment and to amend the complaint denied, and defendants' cross motion for summary judgment on the first cause of action granted to the extent of declaring that defendants were entitled to coverage in the underlying personal injury action as additional insured under Burlington's policy number HGL0019305 issued to Breaking Solutions, Inc. The Clerk is directed to enter judgment accordingly.
The other pertinent endorsement, on form IFG-I-0160 1100, designates NYCTA, MTA and the City as additional insureds and provides coverage in pertinent part