PAMELA K. CHEN, District Judge.
While excavating at a construction site leased by Plaintiff Avis Budget Car Rental, LLC ("Plaintiff," "Avis," or "Avis Budget") and operated by Third-Party Defendant Port Authority of New York and New Jersey (the "Port Authority" or "PANJNY") at John F. Kennedy International Airport ("JFK"), Defendant Gemstar Construction Corporation ("Gemstar"), a subcontractor for Defendant JD2 Environmental, Inc. ("JD2"), struck and damaged an underground sewer line, causing complaints about a sewage backup from other JFK tenants.
To recover the cost of the repair, Avis filed the instant action against JD2, Gemstar, and Geotrack asserting claims for breach of contract, breach of express warranty, contractual indemnification, negligence, and common law indemnification. In turn, JD2 cross-claimed against Gemstar for contribution and indemnification, contractual indemnification, and a failure to procure insurance, and against Geotrack for indemnification; and brought a third-party claim against the Port Authority and Geotrack for negligence. Likewise, Gemstar filed a counterclaim against Avis for negligence; cross-claims against JD2 for negligence, contractual indemnification, equitable indemnification, and breach of contract; and third-party claims against the Port Authority and Geotrack for negligence and indemnification. Lastly, the Port Authority filed cross-claims against Geotrack under various theories, including negligence, indemnification, and breach of contract.
This matter is now before the Court on Avis's, JD2's, and the Port Authority's separate motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure ("FRCP"). The Port Authority has also moved to dismiss for lack of jurisdiction. For the reasons stated below, Avis's motion for summary judgment is denied; JD2's motion for summary judgment is granted in part and denied in part; and the Port Authority's motion to dismiss is granted.
This case dates back to 2008, when Avis first began to explore the replacement of certain piping located underground at its JFK facility (the "Project"). (Avis 56.1 ¶ 1.) For the Project, Avis retained JD2, an engineering consulting firm, which designs and oversees underground storage tank installations. (Id. ¶ 2-3.) After several years of negotiations, Avis and JD2 entered into an agreement dated December 21, 2011 governing the Project. (Dkt. 98-23 at 3 (the "Agreement" or "Agr.").
As part of the Project, the Port Authority required JD2 to submit a Tenant Alteration Application ("TAA") for approval. (Id. ¶ 24.) This allowed the Port Authority's Tenant Liaison Office and Tenant Review Office to review JD2's drawings, and required JD2's compliance with applicable codes and regulations. (Id.) On October 6, 2009, JD2 submitted its first set of Project drawings to the Port Authority. (Id. ¶ 29.) After review, the Port Authority conditionally approved JD2's TAA submission on November 9, 2009. (PANJNY 56.1 ¶ 121.) It did, however, attach Rider A, which required JD2 to "show all existing underground utilities" and "[p]rovide a note that prior to excavation, the contractor [i.e., Gemstar] shall notify `One Call'
JD2 responded to the Port Authority with updated drawings on April 27, 2010. (Id. ¶ 128.) But, because JD2 "didn't know where the underground utilities were located," (Hart Tr. 79:17-21)
On December 7, 2011, Port Authority, Gemstar, and JD2 representatives attended a preconstruction meeting with the Port Authority. (Avis 56.1 ¶¶ 52, 55.) The agenda, which was read aloud at the meeting, included the requirements "that prior to any underground work the One Call Center would be notified, that there would be a positive response from each service provider, and that work could only proceed after each utility shown on the contract documents was clearly marked in the field." (Id. ¶ 57.) The agenda also provided that either Gemstar or JD2 could consult utility drawings available at the JFK Tenant Liaison Office. (Id. ¶ 58.)
On November 28, 2011, Gemstar, as part of its "responsibility" as an excavator, contacted One Call to mark out the Avis Project site, (JD2 56.1 ¶ 61; Avis 56.1 ¶ 71), including the "entire Avis Rent-A-Car parking lot." (JD2 56.1 ¶ 64.) For the Avis Project, Geotrack performed two mark-outs: one performed by Steve Westby and another by David Bowline.
Prior to Westby's mark-out of the Avis Project site on December 2, 2011, he called Gemstar and left a message. (Avis 56.1 ¶ 72) Because Westby did not hear back from Gemstar, he was "unaware where any excavation would be taking place." (See id. ¶ 73.) Westby's map utilized during the mark-out "showed a sewer line in the area," so he accordingly opened a sewer manhole and "noted that the manhole was very deep, and it was going towards the highway, which was not on Port Authority property." (Id. ¶ 74.) Westby, however, did not mark out the sewer line at the Avis Project site. (Avis 56.1 ¶ 74; PANJNY 56.1 ¶ 141.) He has no explanation for this failure. (Avis 56.1 ¶ 74.)
On December 12, 2011, Bowline performed a second mark-out of the Avis Project site, using a different utility map than Westby. (Id. ¶ 75.) This map showed an "unverified" sewer line, (JD2 56.1 ¶ 73), "running right through" a fenced-in construction area at the site, (Bowline Tr. 38:17-39:7).
On December 15, 2011, Gemstar commenced construction on the Project by driving sheet piling,
On December 16, 2011, JD2's project manager Richard Hart arrived on site. (Avis 56.1 ¶ 119.) Geotrack's Westby had a utility map showing that there was an unverified 24-inch Vitrified Clay sewer pipe in the same area where Gemstar had encountered the obstruction. (JD2 56.1 ¶ 89.) JD2 and Gemstar then decided to attempt to install another sheet in the ground, but it hit what was assumed to be the same obstruction as the day before. (Hart Tr. 161:24-162:8.) To further investigate the obstruction, Gemstar kept digging and "eventually a piece of clay pipe was found." (PANJNY 56.1 ¶ 169.) Eventually, the Port Authority sent trucks to the site. It informed JD2 and Gemstar "that the sewage [from] the breached line was backing up to other catch basins, heading up to airline facilities." (Avis 56.1 ¶ 132.)
After the incident, the Port Authority informed JD2 and Gemstar "that it was [their] responsibility to repair the sewer line." (JD2 56.1 ¶ 93.) Avis had Gemstar repair the line, which was completed in March 2012. (Id. ¶ 94.)
Summary judgment is proper only where, construing the evidence in the light most favorable to the non-movant, "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Redd v. N.Y. Div. of Parole, 678 F.3d 166, 173-74 (2d Cir. 2012). A dispute is "genuine" when "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is material within the meaning of Rule 56 where it "might affect the outcome of the suit under the governing law." Id. In determining whether there are genuine disputes of material fact, the court must "resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003) (citation and quotation omitted).
This standard imposes the initial burden on the moving party to demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met this burden, the party opposing summary judgment must identify specific facts and affirmative evidence that contradict those offered by the moving party to demonstrate that there is a genuine issue for trial. Id. at 324; see also Anderson, 477 U.S. at 256-57. The nonmoving party "may not rely on mere conclusory allegations nor speculation, but instead must offer some hard evidence showing that [their] version of the events is not wholly fanciful." D'Amico v. City of N.Y., 132 F.3d 145, 149 (2d Cir. 1998) (collecting cases). "Summary judgment is appropriate only `[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party.'" Donnelly v. Greenburgh Cent. Sch. Dist. No. 7, 691 F.3d 134, 141 (2d Cir. 2012) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).)
The same standard of review applies when the Court is faced with cross-motions for summary judgment, as here. See Lauria v. Heffernan, 607 F.Supp.2d 403, 407 (E.D.N.Y. 2009) (internal citations omitted). When evaluating cross-motions for summary judgment, the Court reviews each party's motion on its own merits, and draws all reasonable inferences against the party whose motion is under consideration. Morales v. Quintel Entm't, Inc., 249 F.3d 115, 121 (2d Cir. 2001). The Court addresses each of the party's motions in turn.
Avis has asserted claims against JD2 for breach of contract, breach of express warranty, contractual indemnification, and negligence.
Avis and JD2 cross-move for summary judgment on Avis's breach of contract claim. To make out a viable breach of contract claim under New Jersey law, Plaintiff must show: "(1) a valid contract existed between plaintiff and defendant; (2) defendant breached this contract; (3) plaintiff performed under this contract; and (4) plaintiff was damaged as a result of defendant's breach." W. v. IDT Corp., No. CIV A 01-4372, 2008 WL 762459, at *3 (D.N.J. Mar. 19, 2008) (internal citations omitted).
According to the terms of the Agreement, JD2 had three tasks that are relevant to this dispute:
(Agr. 3.)
Avis argues that JD2 breached the Agreement by failing to: (i) show existing utilities on its design drawings; (ii) generally coordinate with the Port Authority; and (iii) properly oversee the Project. JD2 contends that it is entitled to summary judgment because its actions do not constitute a breach of the Agreement. Thus, whether or not JD2 breached the Agreement turns on how the Court interprets the Agreement's provisions.
"In a contract interpretation action, summary judgment is appropriate only where the contractual language is unambiguous." Mylan Inc. v. SmithKline Beecham Corp., 723 F.3d 413, 418-19 (3d Cir. 2013); see also Fantozzi v. Axsys Techs., Inc., No. 07-cv-02667, 2008 WL 4866054, at *6 (S.D.N.Y. Nov. 6, 2008) (denying summary judgment because "genuine questions of material fact remain[ed]" where contract language was ambiguous); Reed Elsevier, Inc. v. Inherent.com, Inc., No. CIV A 05-4048, 2006 WL 3827414, at *5 (D.N.J. Dec. 27, 2006) ("It is hornbook law that if the relevant terms in a contract are ambiguous, the issue must go to a jury."). Accordingly, "[a]lthough the interpretation of a written contract usually presents a question of law for the trial judge to resolve, when there is uncertainty, ambiguity or the need for parol evidence in aid of interpretation, then the doubtful provision should be left to the jury." W. v. IDT Corp., 2008 WL 762459, at *7 (internal citations and quotations omitted). "To determine whether an ambiguity exists, the court must consider the contract language, the meanings suggested by counsel, and the extrinsic evidence offered in support of each interpretation." Societe Generale v. New Jersey Tpk. Auth., No. 03-cv-2071, 2005 WL 1630838, at *5 (D.N.J. July 11, 2005) (internal citations and quotations omitted). Because the Court finds that the Agreement's terms are ambiguous, both Avis's and JD2's motions for summary judgment are denied.
First, Avis argues that JD2 breached Task 1 of the Agreement by failing to indicate any underground utilities on its design drawing. JD2 narrowly interprets this provision, contending that the provision did not require JD2 to "conduct a mark out of the utilities . . . or to show utilities on plans." (Dkt. 110 at 11.) By contrast, Avis reads Task 1 broadly, claiming that the task of designing a replacement UST system had to involve showing underground utilities as part of the overall design. (Dkt. 98-33 at 12.)
To support their positions, both parties submit evidence of their intent when entering into the Agreement. Avis relies on the deposition testimony of David Piercey, Vice President of JD2, in which Piercey states that JD2 would generally ask a property owner about its underground utilities during the design phase. (Piercey Tr.
(Piercey Tr. 53:21-54:19 (emphasis added).)
Furthermore, Article 8 of the Agreement creates more ambiguity. It provides:
(Agr. 9 (emphasis added).) Although this provision only obligates Avis to provide information on utility locations "when applicable and if available and known" to Avis, a reasonable juror could conclude that it suggests that Avis—not JD2—was responsible for guaranteeing that all utilities were properly marked on the design plans. Accordingly, considering the deposition testimony, extrinsic evidence presented, and the text of the provision itself, the Court finds that there are genuine issues of material fact as to whether the Agreement obligated JD2 to indicate underground utilities on the design drawing.
Second, Avis contends that JD2's failure to indicate underground utilities breached Task 2 of the Agreement to "coordinate" with the Port Authority. According to Avis, the duty to "coordinate" with the Port Authority required them to follow the Port Authority's instructions, which allegedly included directions to "show all existing underground utilities" on its diagram. (Dkt. 98-33 at 13-15.) The Court disagrees. The term "coordinate," which is not ambiguous, standing alone, cannot reasonably be interpreted to impose or imply a duty to "comply" with rules or requirements set by the party to be coordinated with. See Societe Generale, 2005 WL 1630838, at *5 ("When the `terms of a contract are clear and unambiguous there is no room for interpretation or construction and the courts must enforce those terms as written."). Nor does Avis present any extrinsic evidence to suggest that the term "coordinate" with the Port Authority was intended to mean that JD2 had to indicate all underground utilities on its design plans.
Third, Avis's argument that JD2 breached Task 3 of the Agreement because it improperly oversaw the Avis Project by recommencing construction after Gemstar's employees hit an obstruction and by failing to be present at the site daily is similarly unavailing.
Thus, Avis's motion for summary judgment on its breach of contract claim against JD2 is denied, and the only aspect of that claim that survives JD2's cross-motion is whether JD2 breached its obligations under Task 1 of the Agreement.
Assuming that the evidence was sufficient to establish that JD2 breached the Agreement, Avis's summary judgment would still have to be denied because there exists a material factual dispute as to whether JD2's breach proximately caused Avis's damages. Proof that JD2's alleged breach caused Avis's damages is critical to Avis's breach of contract claim. Merchants Ins. Co. of New Hampshire v. 3R Painting & Contracting Co., No. CIV. 06-1602, 2009 WL 3030126, at *3 (D.N.J. Sept. 16, 2009) ("Under New Jersey law, a plaintiff must prove that defendant's breach of contract was both a but for cause as well as a proximate cause of the damages, that is, that defendant's breach was a substantial factor in causing the damages") (internal citations and quotations omitted). "Where different reasonable and legally sufficient inferences of proximate cause are possible, the question is for the jury." Shop Vac Corp. v. BCL Magnetics Ltd., No. 04cv-262, 2005 WL 2739161, at *7 (N.D.N.Y. Oct. 24, 2005).
Avis argues that the Court should grant summary judgment because it is undisputed that JD2's breach of contract, coupled with Gemstar's actions after striking the pipe on the first day, was the proximate cause of the damages Avis suffered. (Dkt. 115 at 18.) JD2, however, credibly claims that Geotrack's "failure to mark out the sewer line . . . was the proximate cause" of any damages. (Dkt. 109-55 at 18.) Whether or not JD2's breach of the Agreement was the proximate cause of Avis's damages is a genuine issue of material fact that a jury must resolve. See Bank of New York Mellon Trust Co. v. Morgan Stanley Mortgage Capital, Inc., No. 11-cv-0505, 2011 WL 2610661, at *7 (S.D.N.Y. June 27, 2011) ("The answer to [whether a breach of contract was the proximate cause of damages" is appropriately left to the finder of fact.").
For instance, a reasonable juror might conclude that Geotrack's failure to mark out the utility was an intervening cause that insulates JD2 from liability. As explained by Geotrack's Westby:
(Westby Tr. 41:13-42:12.)
Another intervening act for the jury to consider is Gemstar's failure to request the proper mark-out from Geotrack. As Geotrack's Bowline stated:
(Bowline Tr. 44:14-45:19.)
These potential intervening causes create questions of fact for the jury to resolve at trial. Thus, whether JD2's breach of the Agreement was the proximate cause of Avis's damages is a question of material fact that must also be resolved by the jury.
Accordingly, because there are genuine issues of material fact with respect to both the obligations of Task 1 of the Agreement and whether JD2's alleged breach was the proximate cause of Avis's damages, Avis's and JD2's cross-motions for summary judgment on Avis's breach of contract claim are both denied.
Avis's negligence claim resembles its breach of contract claim against JD2 and is inappropriate for resolution at the summary judgment stage for similar reasons. "To prevail on a cause of action in negligence under New York law, the [p]laintiff must prove: (1) that the defendant owed a duty to him; (2) that the defendant breached this duty; and (3) that this breach was the proximate cause of the plaintiff's injury." Boria v. Port Auth. of New York & New Jersey, No. 95 CV 4912 (SJ), 1998 WL 34588, at *3 (E.D.N.Y. Jan. 29, 1998).
JD2 asserts that Avis's negligence claim fails because it "is based on breach of contract and there is no evidence that a legal duty independent of the contract has been breached." (Dkt. 110 at 22.) "It is a well-established principle that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated." Clark-Fitzpatrick, Inc. v. Long Island R. Co., 516 N.E.2d 190, 193 (N.Y. 1987). There are instances, however, where "New York courts have allowed parties to assert professional malpractice claims together with breach of contract claims." City of Kingston Water Dep't v. Charles A. Manganaro Consulting Engineers, P.C., No. 01-cv-1317, 2003 WL 355763, at *4 (N.D.N.Y. Feb. 13, 2003). In determining whether a party owes a duty independent of an underlying contract, courts look at factors, including whether a party possesses certain expertise, the injury is "typical of tort claims," and failure to perform the underlying contract could "result in catastrophic consequences." See State Farm Fire v. Advanced Chimney, No. 13-cv-4608, 2014 WL 4438899, at *7 (E.D.N.Y. Aug. 11, 2014), report and recommendation adopted, No. 13-cv-4608, 2014 WL 4439102 (E.D.N.Y. Sept. 8, 2014).
Here, the Court finds that JD2 owed a separate and independent duty to Avis apart from its underlying contractual duties. JD2 "specializes in the design and oversight of maintenance and installation of aboveground fuel storage tanks . . . and underground storage tanks," and accordingly possesses certain, relevant expertise. (JD2 56.1 ¶ 12.) Considering this expertise and the fact that Avis is alleging damages arising not from JD2's non-performance of the Agreement, but from its alleged negligence in failing to properly oversee a project within JD2's expertise, Avis's claim is more "typical of [a] tort claim" than a breach of contract claim. See State Farm, 2014 WL 4438899, at *8 (finding independent duty existed where plaintiff was "not seeking the benefit of the contractual bargain," but instead sought damages for his damaged property). Indeed, the damage that ensued when Gemstar hit the sewage line highlights the tort-like nature of this claim. When the sewer line was hit, "[t]he Port Authority informed JD2 and Gemstar that the sewage [from] the breached line was backing up to other catch basins, heading up to airline facilities. Trucks had to be mobilized [to] pump the catch basin and prevent sewage from overflowing into an airline kitchen." (Avis 56.1 ¶ 132 (internal citation omitted).) Accordingly, it is clear that JD2 owed a duty to Avis to exercise reasonable care that existed separately from its contractual obligations to Avis. See Crown Castle USA Inc. v. Fred A. Nudd Corp., No. 05-cv-6163T, 2008 WL 163685, at *10 (W.D.N.Y. Jan. 16, 2008) (holding that there was a more "generalized duty of care" where conduct of engineers caused party to incur expenses), modified on reconsideration on other grounds, No. 05-cv-6163T, 2008 WL 3841298 (W.D.N.Y. Aug. 13, 2008).
Because JD2 owed Avis a duty to exercise reasonable care, the next question is whether JD2 breached this duty. "Generally, once a duty is found, the question of breach of duty is one of fact for the trier of fact to resolve unless reasonable minds could not differ as to the conclusions to be drawn from the evidence." Boria, 1998 WL 34588, at *3. Here, for many of the same reasons discussed with respect to Plaintiff's breach of contract claim, reasonable minds could differ as to whether JD2 breached its duty to exercise reasonable care with respect to the Avis Project. For example, although Avis argues that "JD2 has conceded that its job . . . was to obtain utility drawings," JD2's own project manager, Richard Hart, testified that he believed that it was "not standard" for an overseeing contractor such as JD2, to "request drawings on underground facilities" because "typically a utility mark-out company has to be called prior to digging." (Hart Tr. 34:11-21.)
Assuming Avis can establish that JD2 failed to exercise reasonable care in its oversight of the Avis Project, the Court must determine whether Avis's damages can be attributed to such failure. Just like the issue of proximate cause for Avis's breach of contract claim, however, "[a]s a general rule, the question of proximate cause [in a negligence claim] is to be decided by the finder of fact." Boria, 1998 WL 34588, at *4 (internal citation omitted). This is because "the inquiry in each case" is "unique." Id. Although Plaintiff insists that "[t]here can be no question that [the] failures by JD2 were a proximate cause of the damage to the sewer pipe," (Dkt. 98-33 at 24), the Court declines to draw such a conclusion as a matter of law for the same reasons it could not conclude that Plaintiff established proximate cause on its breach of contract action.
Accordingly, the Court finds that there are genuine issues of material fact with respect to whether JD2 breached its duty of care for purposes of Avis's negligence claim, and, assuming that JD2 did, whether that breach is the proximate cause of Avis's damages. Avis's and JD2's crossmotions for summary judgment on Avis's negligence claim are therefore denied.
Avis and JD2 also cross-move for summary judgment on Avis's breach of express warranty claim, which is essentially another breach of contract claim. To state a breach of express warranty claim, Plaintiff must show: "(1) that Defendant made an affirmation, promise or description about the product; (2) that this affirmation, promise or description became part of the basis of the bargain for the product; and (3) that the product ultimately did not conform to the affirmation, promise or description." Rapid Models & Prototypes, Inc. v. Innovated Sols., No. CIV. 14-277, 2015 WL 4914477, at *4 (D.N.J. Aug. 18, 2015).
The warranty in the Agreement states the following:
(Agr. 11.)
Thus, the question at this stage of the case is whether the Court can determine, as a matter of law, if JD2 performed its services "with the usual thoroughness and competence of the consulting engineering profession." Naturally, this claim overlaps substantially with Avis's breach of contract and negligence claims, and for similar reasons, the Court finds that there are questions of fact for the jury to decide as to whether JD2 breached the warranty. The jury must determine whether JD2's actions were taken "with the usual thoroughness and competence of the consulting engineering profession." Therefore, Avis's and JD2's cross-motions for summary judgment on Avis's express warranty claim are denied.
Avis, relying on many of the same arguments it made in support of its breach of contract and warranty claims, also asserts a contractual indemnification claim.
Avis also moves for summary judgment on its negligence claim against Gemstar. As discussed above, "[t]o prevail on a cause of action in negligence under New York law, the plaintiff must prove: (1) that the defendant owed a duty to him; (2) that the defendant breached this duty; and (3) that this breach was the proximate cause of the plaintiff's injury." Boria, 1998 WL 34588, at *3; Gayle v. Nat'l R.R. Passenger Corp., 701 F.Supp.2d 556, 562 (S.D.N.Y. 2010). Because there are genuine issues of material fact with respect to whether Gemstar was negligent, Avis's motion for summary judgment is denied.
"Because a finding of negligence must be based on the breach of a duty, a threshold question in tort cases is whether the alleged tortfeasor owed a duty of care to the injured party." Aegis Ins. Servs., Inc. v. 7 World Trade Co., 737 F.3d 166, 177 (2d Cir. 2013) (internal citations and quotations omitted). "In general, the existence of a duty may arise either under common law principles or by statute." Medina v. Delta Air Lines, Inc., No. 09-cv-4018, 2011 WL 3625110, at *4 (E.D.N.Y. Aug. 16, 2011) (internal citations and quotations omitted). Here, Avis contends that Gemstar breached its duty of care under statute and common law principles.
Regarding Gemstar's statutory duties, Avis refers to Part 753 of Title 16 of New York's Codes, Rules, and Regulations ("§ 753-3.10"), which governs the statutory duties of "excavators":
N.Y. Comp. Codes R. & Regs. tit. 16, § 753-3.10.
In addition, Avis asserts that Gemstar breached certain common law duties.
While Gemstar does not dispute that it owed JD2 certain duties, Avis and Gemstar dispute the scope of those duties. "The existence and scope of a duty is generally a matter of law for the court to decide." Painchault v. Target Corp., No. 09-cv-1831, 2011 WL 4344150, at *2 (E.D.N.Y. Sept. 14, 2011).
First, Avis contends that § 753-3.10's mandate that an excavator take "reasonable precautions" and comply with "reasonable directions or accepted engineering practices" required Gemstar to "request drawings from JD2 or the Port Authority after being provided a design drawing that showed no utilities whatsoever." (Dkt. 98-33 at 28.) Gemstar argues that the scope of the duty under § 753-3.10 is not so broad, asserting that "§ 753-3[.]10(a) addresses an excavator's improper use of excavating equipment within the vicinity of a properly marked underground facility, which results in damage to that facility." (Dkt. 99 at 23.) Based upon a plain text reading of the statute, the Court agrees with Gemstar.
As an initial matter, any statutory interpretation that attaches liability to an excavator for underground utility damage, of which it lacked knowledge, would stretch the statute beyond reason and comprehension. Thus, "reasonable precautions" cannot be interpreted as requiring an excavator to be aware of underground utilities that another company failed to identify after marking out, or purporting to mark out, the site.
Second, Avis alleges that Gemstar's duty under § 753-3.10(a) to "take all reasonable precautions to prevent contact or damage" required it to heed Geotrack's phone call, if made, informing "Gemstar that a sewer pipe ran through the excavation." (Dkt. 98-33 at 29.) The Court agrees. There can be no dispute about this reading of the statute.
Third, Avis asserts that § 753-3.10(b), which requires "the excavator [to] notify the operator of the facility" "[i]n the event of contact with or damage to an underground facility" obligated Gemstar to contact the Port Authority, One Call, or Geotrack upon encountering an underground, unidentified obstruction. (Dkt. 98-33 at 31-32.) The Court declines to read this duty so broadly. As noted by Gemstar, § 753-3.9 requires an excavator to notify an operator of a facility only upon discovery of the utility. N.Y. Comp. Codes R. & Regs. tit. 16, § 753-3.9 ("Where an undesignated or otherwise unknown underground facility is discovered within a work area, the excavator shall report such discovery"). Reading the two provisions together, the Court finds that Gemstar only had a duty to contact the Port Authority, One Call, or Geotrack if it knew that it had struck an underground utility.
Fourth, Avis refers to § 753-3.10(d) as prohibiting Gemstar from backfilling the excavation hole after it had hit an obstruction. Again, this provision falls in the same section as the previous regulation regulations, which govern "contact and damage to underground facilities." Thus, for the same reasons, the Court finds that the duty to not backfill only applies when an excavator is aware that it has hit an underground facility. The same reasoning applies to Avis's argument that Gemstar had a duty under § 753-3.10(c) to not recommence construction the day after hitting the obstruction. This duty only applies if Gemstar knew that it had hit an underground utility.
Having determined the specific statutory and common law duties owed by Gemstar to Avis, the Court must next decide whether these duties were breached.
First, Gemstar has presented evidence to create a triable issue of fact as to whether Gemstar ignored warnings from Geotrack that there was a utility under the excavation side, which, if established, would constitute a breach of its duty under § 753-3.10(a) to "take all reasonable precautions to prevent contact or damage." For example, while Geotrack's Westby testified that he left Gemstar a phone message about the existence of underground utilities at the Avis Project site, (Westby Tr. 29:12-19), other testimony indicates that Geotrack actually gave Gemstar an "all clear" to proceed with construction. (Saia Tr. 128:4-12.)
Second, because there is evidence that Gemstar's employees may not have known that they had hit an underground utility, there are genuine issues of material fact as to whether Gemstar violated its duties under §§ 753-3.10(b), (c), and (d). For example, there is testimony from which a reasonable juror could conclude that the employees did not know that the obstruction was an unverified utility. (Saia Tr. 225:3-21.) Specifically, according to Saia, Gemstar's Project Manager for the Avis Project, "[t]here was no reason to believe it was [an] unverified [utility], because the mark out had been completed." (Id. at 225:17-21.) On the other hand, Trastino, a Gemstar foreman on the Avis Project, stated that he stopped digging on December 15, 2011 because he "felt that there was something unaccounted for underground." (Trastino Tr. 100:3-12.) Again, a jury needs to determine whether Gemstar's employees knew that they had hit an underground utility, yet failed to contact the Port Authority, and instead backfilled the excavation hole and recommenced construction the following day.
Lastly, for the same reasons, the Court finds that there are genuine issues of material fact with respect to whether Gemstar breached its common law duty of care to Avis or JD2. Cf. Schaub Equip. Rental, Inc. v. Marzec, 588 N.Y.S.2d 952 (N.Y. App. Div. 1992) (affirming summary judgment decision where defendant failed to even contact a company that would verify the utility lines); MCI Worldcom Network Servs., Inc. v. Glendale Excavation Corp., 224 F.Supp.2d 875, 880 (D.N.J. 2002) (granting plaintiff's motion for summary judgment on negligence claim under New Jersey law where there were two permanent markers indicating an underground cable at construction site and excavator still proceeded to dig). Avis has not pointed to any additional allegations, aside from those supporting its argument regarding Gemstar's statutory duties, that would lead the Court to a different conclusion with respect to Gemstar's common law duty of care to Avis.
Accordingly, because a reasonable fact finder could find that Gemstar breached its statutory and common law duties, Avis's negligence claim against Gemstar must go to a jury.
Even if the Court could find, as matter of law, that Gemstar violated its statutory and common law duties, Avis's motion for summary judgment on its negligence claim against Gemstar would still have to be denied because Avis cannot show the absence of disputed facts with respect to proximate cause. Avis alleges that because Gemstar violated certain regulations and backfilled the sinkhole, the damage to the underground utility was worse than it might have been otherwise. (Dkt. 98-33 at 38.) But, whether or not Gemstar's actions were the proximate cause of Avis's injury "are questions best left for a jury to decide." MCI, 2002 WL 31444940, at *1 (denying summary judgment on negligence claim because proximate cause was question for the jury where excavator was accused of negligently damaging underground utility). If a jury concludes that Gemstar was negligent, it must then determine whether such negligence was the proximate cause of Avis's damages. This is especially true here where Avis is arguing that both JD2's and Gemstar's actions were the proximate cause of the injury. This argument, in itself, suggests that a jury might find that there are many intervening or superseding causes that might insulate a specific party from liability.
Accordingly, because there are genuine of issues of material fact with respect to whether Gemstar breached any duty to Avis and, even if Gemstar did, whether such breach was the proximate cause of Avis's injury, Avis's motion for summary judgment on Gemstar's negligence claim is denied.
JD2 asks this Court for a conditional order of indemnity against Gemstar based on Article II(C) of the Subcontractor Terms and Conditions, entered into by Gemstar and JD2 on September 14, 2009 (the "2009 Subcontract"), which provides:
(Dkt. 109-53 at 2.)
Gemstar contends that JD2 is not entitled to an order of indemnity at the summary judgment stage because (1) the 2009 Subcontract does not apply to the Project and (2) its indemnity provision is void because JD2 cannot be indemnified for its own negligence, which Article II(C) purportedly does. (Dkt. 99 at 29-30.) The Court finds that while the 2009 Subcontract applies to the Project, it cannot determine whether JD2 is entitled to contractual indemnification because each party's liability remains to be determined.
First, the Court finds no factual support for Gemstar's argument that the 2009 Subcontract does not apply to the Project. (Id. at 24.) Under Paragraph 1 of the 2009 Subcontract, Gemstar "agree[d] to supply all labor, materials, equipment, tools, supervision, insurance and all items of expense necessary to perform `WORK' as described by [JD2] on various sites to be specified by [JD2] periodically as required by [JD2's] clients." (Dkt. 109-53 at 2.) There is no limiting language in this provision, or elsewhere in the 2009 Subcontract, that suggests that the agreement or the indemnity provision do not apply to the Avis Project, or that the 2009 Subcontract only applies to other sites.
Moreover, Gemstar's argument that the 2009 Subcontract had been cancelled by the time of the Avis Project similarly has no factual support. The 2009 Subcontract provides:
(Id. at 4.) Neither party has put forth any evidence of a written cancellation of the 2009 Subcontract. Accordingly, without any evidence to the contrary, the Court finds that the 2009 Subcontract applied to the Avis Project.
Second, Gemstar asserts that even if the indemnification provision applies to the Avis Project, it is void under New York law because it "is well-settled that full indemnification provisions are unenforceable as violative of § 5-322.1 of the General Obligations Law and New York public policy." (Dkt. 99 at 29.) Section 5-322.1 of New York's General Obligations Law ("GOL § 5-322.1") provides:
(Emphasis added.)
At this stage in the litigation, the Court cannot determine whether the 2009 Subcontract indemnity provision is void under GOL § 5-322.1 because the liability of the various parties cannot yet be determined. If a jury were to render a verdict finding JD2 and Gemstar negligent, then it is true that such an indemnification provision could not be used to indemnify JD2 for its own negligence.
JD2 also moves for summary judgment against Gemstar on the ground that Gemstar, in violation of its contractual duties, failed to procure insurance. "A party seeking summary judgment based on an alleged failure to procure insurance naming that party as an additional insured must demonstrate that a contract provision required that such insurance be procured and that the provision was not complied with." Ginter v. Flushing Terrace, LLC, 995 N.Y.S.2d 95, 100 (N.Y. App. Div. 2014).
Under the 2009 Subcontract, Gemstar agreed:
(Dkt. 109-53 at 2.)
Here, there is no dispute that the 2009 Subcontract required Gemstar to name JD2 as an additional insured.
JD2 further moves for summary judgment on Gemstar's negligence cross-claim. For the reasons discussed in section IIB, however, that motion is denied. As previously discussed, there exist disputed issues of material fact as to whether JD2 breached a duty to ensure that all underground utilities were marked out, or that Gemstar was provided with a properly marked-out design plan, for the Avis Project. Furthermore, even if JD2 did breach such duty, there would be disputed issues of fact as to whether that breach was the proximate cause of Gemstar's damage.
Additionally, JD2 moves for summary judgment on Gemstar's contractual indemnification cross-claim, arguing that the 2009 Subcontract "does not provide for contractual indemnity flowing from JD2 to Gemstar, but just the opposite, it provides for contractual indemnity flowing from Gemstar to JD2." (Dkt. 109-55 at 28.) The Court agrees. In the 2009 Subcontract, which JD2 maintains governs Gemstar's contractual indemnification cross-claim, Gemstar agreed "to save harmless and indemnify" JD2, not the other way around. (Dkt. 109-53 at 2.) Gemstar presents no evidence in response, which is insufficient at the summary judgment stage.
JD2 seeks summary judgment on Gemstar's equitable indemnification cross-claim. Equitable indemnification "avoids the unfairness of holding one party liable solely on account of the negligence of another." LNC Inv., Inc. v. First Fid. Bank, Nat. Ass'n, 935 F.Supp. 1333, 1352 (S.D.N.Y. 1996). JD2's only argument to support its position is that "Gemstar cannot show that JD2 was negligent." (Dkt. 109-55 at 28). Because the Court has already determined that whether JD2 was negligent is a question of fact for the jury to decide, JD2's motion for summary judgment on Gemstar's equitable indemnification cross-claim is denied.
Lastly, JD2 moves for summary judgment on Gemstar's breach of contract cross-claim, arguing that it is "without merit" and moot because any money owed by JD2 to Gemstar "has been paid by JD2." (Id. at 28.) JD2's assertion, however, is made without any citation to evidence or the record. "While the trial court has discretion to conduct an assiduous review of the record in an effort to weigh the propriety of granting a summary judgment motion, it is not required to consider what the parties fail to point out." Monahan v. New York City Dep't of Corrections, 214 F.3d 275, 292 (2d Cir. 2000) (quotations and citations omitted); see also 24/7 Records, Inc. v. Sony Music Entertainment, Inc., 429 F.3d 39, 46 (2d Cir. 2005). Accordingly, because JD2 fails to meet its burden, its motion for summary judgment on Gemstar's breach of contract cross-claim is denied. See Zalaski v. City of Bridgeport Police Dep't, 613 F.3d 336, 340 (2d Cir. 2010) (moving party has initial burden of "establishing the absence of any genuine issue of material fact").
The Port Authority moves to dismiss JD2's and Gemstar's third-party claims against it for contribution and/or indemnification, on the basis that JD2 and Gemstar failed to comply with New York's notice provisions.
Here, the parties dispute whether the notice of claim provision applies to this case because it is one that is solely for contribution and/or indemnification.
The Court relies on the reasoning in W&W Steel, and finds that Hartl-O'Leary is inconsistent with the Second Circuit's strict construction of this jurisdictional statute. Whether or not an action has accrued has no bearing on whether a party must file a notice of claim prior to commencing litigation, as Gemstar and JD2 have both done here, even though their claims for contribution and/or indemnification have not "accrued." Accordingly, Gemstar's and JD2's thirdparty claims against the Port Authority must be dismissed for non-compliance with the requirements of § 7107.
For the reasons stated above, Avis's motion for summary judgment is denied; JD2's motion for summary judgment is granted in part and denied in part; and the Port Authority's motion to dismiss is granted.
SO ORDERED.