Meyer v. City of New York

Full title: KATHLEEN MEYER, Plaintiff, v. THE CITY OF NEW YORK, BRYANT PARK…

Court: Supreme Court of the State of New York, New York County

Date published: Jan 21, 2009

2009 N.Y. Slip Op. 30147 (N.Y. Sup. Ct. 2009)

Opinion

102921/2007.

January 21, 2009.

Sullivan Papain Block, McGrath Cannavo PC, By: Konstantinos Mallas, Esq., New York NY, For the Plaintiff.

Michael A. Cardozo, Esq., Corporation Counsel of City of NY, By: Pamela Horan, Esq., New York NY, For Defendant City.

Hoey, King, Toker Epstein, By: Richard C. Prezioso, New York NY, For Defendant BPRC.

DECISION AND ORDER

MATTHEW F. COOPER, J.

Papers and exhibits considered in review of the motion for leave to amend the answer and cross-motion for summary judgment:

Notice of Motion, Annexed Affirmation and Exhibits 1 Notice of Cross Motion, Annexed Affirmation and Exhibits 2 Reply Affirmation and Exhibits 3

In this personal injury case involving a fall in Manhattan's Bryant Park, the co-defendants have moved and cross-moved against one another. At issue are matters of contractual indemnification.

Procedural Background

Plaintiff commenced the instant action against defendants City of New York (hereinafter "City") and Bryant Park Restoration Corp., Bryant Park Management Corp., and 34^th Street Partnership, Inc., (hereinafter collectively referred to as "BPRC") for injuries she sustained on August 17, 2006, when she tripped and fell while descending two steps located inside Bryant Park. In its answer, the City asserted cross-claims against BPRC for contribution and indemnification. BPRC now moves to amend its answer pursuant to CPLR 3025(b) to assert cross-claims for contribution and indemnification against the City. In response, the City opposes BPRC's motion and cross-moves for summary judgment pursuant to CPLR 3212 on its cross-claim for indemnification. The City argues that the indemnification provision contained in the contractual agreements between BPRC and the City bars any cross-claims by BPRC and entitles the City to summary judgment. For the reasons that follow, BPRC's motion to amend is denied and the City's cross-motion for summary judgment is granted.

Statement of Facts

On or about July 29, 1985, the City simultaneously entered into two agreements with BPRC, one entitled "Management Agreement" and the other "Terrace Agreement." The Management Agreement is referred to and defined in the Terrace Agreement as the agreement between the parties "pursuant to which BPRC shall manage the Park." See Terrace Agreement (hereinafter "Terr.") § 1 (b)(viii). The Park is defined as

the block known as Bryant Park, bounded by Fifth Avenue, 42nd Street, Avenue of the Americas and 44^th Street, including structures, balustrades, fences, walkways and all other improvements in the Park, all to the extent the same are owned by the City, and including the Department's interest in the bordering sidewalks . . . [except that] for purposes of this Agreement the term "Park" shall neither include the Library Building (including appurtenances thereto) nor . . . the West Terrace.

See Management Agreement (hereinafter "Mgmt.") § 1(b)(ix); Terr. § 1(b)(xi). Conversely, the Terrace Agreement is referred to and defined in the Management Agreement as the lease agreement between the City and BPRC "pursuant to which the terrace at the rear of the Library Building will be leased to BPRC, including any extensions, modifications, renewals or replacements thereof or therefor." See Mgmt. § 1(b)(xii).

Both the Management Agreement and the Terrace Agreement contain indemnification clauses whereby BPRC agrees to indemnify the City from any claims "for damage or injury to persons or property, of whatever kind or nature, arising from the operation or use of the Park by BPRC," with respect to the Management Agreement, and "arising from the operation or use of premises," with respect to the Terrace Agreement. See Mgmt. § 19(a); Terr. § 12(a). "Premises" as the term is used in the Terrace Agreement refers to the area leased to BPRC pursuant to that agreement. See Terr. § 1(b)(xii). There is also a provision in both agreements whereby the City must indemnify BPRC for any claims by third parties "seeking to obtain affirmative relief against BPRC . . . including, e.g. actions to compel increased maintenance . . . but excluding claims for injuries or death to persons . . . ." See Mgmt. § 19(b); Terr. § 12(b), emphasis added. Additionally, both agreements contain an insurance clause requiring BPRC to secure and maintain comprehensive general public liability insurance covering injuries and death to persons and damage to property, as well as umbrella liability insurance covering all liabilities and risks covered by standard forms of such coverage. See Mgmt. § 19(c); Terr. § 12(c). The insurance provision further requires that BPRC include the City as a named insured on those policies. See Mgmt. § 19(c); Terr. § 12(c). Pursuant to the terms of both agreements, any indemnification payment required to be made by BPRC to the City "shall not . . . [be] in excess of the amount of insurance required to be maintained." See Mgmt. § 19(a); Terr. § 12(a).

The Parties' Contentions

BPRC contends that its motion to amend its answer should be granted because pursuant to CPLR 3025(b) "leave [to amend pleadings] shall be freely given." BPRC further contends that the relief it seeks would not substantially prejudice the rights of any party. The City submits that the indemnification provision contained in the agreements entered into between it and BPRC bars BPRC from asserting any cross-claims against it and further entitles it to summary judgment on its claim for indemnification from BPRC. In reply, BPRC argues that the City's motion for summary judgment must be denied on three grounds. One ground is that the City has failed to establish that the agreement's indemnification provision applies to plaintiff's alleged accident location. Second, BPRC submits that there are questions of fact as to whether the indemnification clause at issue here violates New York's General Obligations Law. Finally, BPRC argues that the City's motion is premature given that the parties have not had an opportunity to conduct discovery. Plaintiff takes no position on either the motion or cross-motion.

Analysis and Conclusions of Law

BPRC is correct in its assertion that leave to amend pleadings shall be freely given. However, in light of the City's contention that the agreement between the parties not only entitles it to judgment but also bars the very cross-claims BPRC seeks leave to assert, the court will first address the cross-motion for summary judgment.

The proponent of a motion for summary judgment has the burden in the first instance of submitting admissible evidence establishing its entitlement to judgment as a matter of law. CPLR 3212(b); GTF Mtkg, Inc. v. Colonial Aluminum Sales, Inc., 66 NY2d 965, 967 (1985). Once this burden is met, the burden shifts to the opposing party to submit proof in admissible form which raises an issue of fact requiring a trial. Kosson v. Algaze, 84 NY2d 1019 (1995).

Annexed to BPRC's moving papers is a copy of the Management Agreement which pertains to certain areas of the Park, excluding the Library and the West Terrace. According to plaintiff's Notice of Claim, the incident occurred inside Bryant Park, "approximately 79 feet 11 inches south of the southern curb of 42^nd Street and 30 feet 3 inches west of the property wall of Bryant Park Grill." See Exhibit A to Cross-Mot. BPRC contends that the City has failed to establish that the plaintiff's accident occurred in the "Park," as such term is defined in the Management Agreement, and not within one the areas excluded by that agreement such as the terrace. BPRC submits that "conspicuously missing from the City's motion papers is the 'Exhibit F' to the [Management] Agreement, which describes the excluded area referred to as the West Terrace,' and the 'Terrace Agreement,' which governs parties' rights and obligations vis-a-vis the terrace area." See Reply Aff. at para 47. At oral argument, counsel for the City provided copies of the Terrace Agreement.

The Terrace Agreement, which is the contract between the parties covering the lease of the terrace by the City to BPRC, contains indemnification and insurance clauses identical to those in the Management Agreement. Accordingly, irrespective of whether plaintiff fell in an area covered by the Management Agreement or the Terrace Agreement, the fact remains that plaintiff fell within an area governed by one of the agreements and thus the indemnification clause, which is identical in both agreements, is applicable. Here, because plaintiff's accident occurred in what is defined in the agreements as the terrace area, the parties' rights and obligations are governed specifically by the Terrace Agreement.

BPRC argues that the indemnification provision at issue here violates New York's General Obligations Law and is thus unenforceable. Section 5-321 of the General Obligations Law was enacted in "response to 'the widespread use in New York City of . . . contracts resulting in unequal bargaining power between lessor and lessee.'" Hogeland v. Sibley, Lindsay Curr Co., 42 NY2d 153, 160 (1977). This section prohibits a lessor from exempting itself of liability to a lessee for damages sustained as a result of the lessor's own negligence. Id. at 160-161. Section 5-321 of the General Obligations Law, the provision specifically applicable to leases of real property, provides:

Every covenant, agreement or understanding in or in connection with or collateral to any lease of real property exempting the lessor from liability for damages to person or property caused by or resulting from the negligence of the lessor, his agents, servants or employees, in the operation or maintenance of the demised premises or the real property containing the demised premises shall be deemed to be void as against public policy and wholly unenforceable.

There are other parallel sections of New York's General Obligations Law which address indemnification clauses in contracts. These parallel provisions include the following sections of the New York General Obligations Law: 5-322 (agreements indemnifying caterers or catering establishments), 5-322.1 (construction agreements indemnifying owners and contractors), 5-323 (agreements exempting building service or maintenance contractors from liability), 5-324 (agreements indemnifying architects, engineers and surveyors), and 5-325 (agreements exempting from liability those persons who conduct or maintain for hire garages and parking places).

Notwithstanding these GOL provisions, leases and contracts are "no longer to be construed as not intending indemnification of a party for its own negligence unless that intention is set forth in specific and 'unequivocal terms.'" Hogeland, 42 NY2d at 158. In interpreting indemnification clauses, courts have consistently held that where the unmistakable intent of the parties is to provide indemnity for one's own negligence, the clause shall be enforceable. See, e.g., Great Northern Ins. Co. v. Interior Constr. Corp., 7 NY3d 412, 417 (2006) (Indemnification clause requiring lessee to indemnify lessor for "any accident, injury or damage whatsoever, unless caused solely by Landlord's negligence, occurring in, at or upon the Premises" found to "unambiguously evince an intent that [lessee] indemnify [lessor] for latter's own negligence, provided [lessor] was not 100% negligent."); Levine v. Shell Oil Co., 28 NY2d 205, 212 (1971) (Plain meaning of indemnification clause requiring gas station operator to indemnify gas station owner for "any and all claims, suits, loss, cost and liability on account of injury or death of persons or damage to property" found to include "liability for the active negligence" of the station owner.); see also Bradley v. Earl B. Feiden, Inc., 8 NY3d 265, 275 (2007) (Indemnification clause requiring supplier to indemnify manufacturer was "triggered by any 'claims based on strict or product liability'" irrespective of the actual fault of the parties); Matter of New York City Asbestos Litigation, 41 AD3d 299, 301 (1^st Dept 2007) (Indemnification provisions enforceable, despite negligence on behalf of indemnitee, where provisions contained broad language requiring indemnitor to indemnify indemnitee for "any and all liability.").

In Matter of New York City Asbestos Litigation, 41 AD3d 299 (1^st Dept 2007), there existed several contracts between defendant Treadwell Corporation, a contractor and plaintiff's employer, and defendant Con Edison, owner of the two sites where plaintiff worked. One of the contracts between the parties, the Astoria Unit 6 Steam Generating contract, required Treadwell to indemnify Con Edison "'from and against any and all liability for injury to person or property occasioned, . . . wholly or in part, by any act or omission of' Treadwell." Id. at 300. The trial court granted Con Edison's post-trial motion for judgment on its claim for contractual indemnification finding that "the language of the contract required Treadwell to indemnify Con Edison if the injury was occasioned, even in part, by an act or omission of Treadwell. Id. On appeal, Treadwell argued that the indemnification agreement lacked the necessary language evincing an unequivocal intent to have Treadwell indemnify Con Edison for its own negligence. Id. at 301. The Court of Appeals affirmed the trial court's decision and held that the language of the clause "was properly interpreted as broad enough to permit indemnification, even in the face of negligence on the part of Con Edison." Id.

The indemnification provision contained in the Terrace Agreement between BPRC and the City provides

BPRC shall indemnify and hold harmless . . . the City, the Commissioner, and employees and agents of the City from any and all claims, actions or judgments for damage or injury to persons or property, of whatever kind or nature, arising from the operation or use of the Premises by BPRC; provided that such indemnification shall not require the payment to the City of sums in excess of the amount of insurance required to be maintained under this Section 12.

See Terr. § 12(a). The clause, with its use of terms such as "any and all" and "of whatever kind or nature" and "arising from the operation or use of the Premises," is equally if not more broadly written than that contained in the agreement between Treadwell and Con Edison described above. As such, it covers all claims for personal injury arising from BPRC's use or operation of the Premises, notwithstanding negligence on behalf of the City and irrespective of whether BPRC's use or operation of the Premises is negligent. See Matter of New York City Asbestos Litigation, 41 AD3d at 302 (The reference to "any act or omission" in the indemnification provision did not specify whether the act or omission must have constituted negligence and thus indemnitor's duty to indemnitee was not contingent on a finding that indemnitor was negligent.).

Where an agreement to relieve a party from the consequences of its own negligence has been negotiated, as is the case here, at arm's length by two sophisticated parties [ See Great Northern Ins. Co., 7 NY3d at 419; Hogeland, 42 NY2d at 161; Levine, 28 NY2d at 213] and where there has been neither a showing that the agreement involved "a contract of adhesion or an unconscionable agreement," nor any evidence of "fraud or overreaching conduct" on the part of the indemnitee [ Levine, 28 NY2d at 213], the agreement shall be enforceable. This is particularly true in situations, such as this one, where the indemnification provision is coupled with an insurance procurement requirement. See, e.g., Great Northern Insurance Co., 7 NY3d at 419; Hogeland, 42 NY2d at 161. In holding that General Obligations Law section 5-321 did not preclude the landlord's indemnification claim, the Court of Appeals reasoned,

[the landlord-indemnitee] is not exempting itself from liability to the victim for its own negligence. Rather, the parties are allocating the risk of liability to third parties between themselves, essentially through the employment of insurance. Courts do not, as a general matter, look unfavorably on agreements which, by requiring parties to carry insurance, afford protection to the public.

Great Northern Insurance Co., 7 NY3d at 419, citing Hogeland, 42 NY2d at 161. The Court in Great Northern Insurance Company v. Interior Construction Corporation recognized that "[the indemnitor's] insurer- [and] not [the indemnitor] itself-would bear the ultimate responsibility for the indemnification payment, which is precisely the result contemplated by the parties when they entered into the lease." Great Northern Insurance Co., 7 NY3d at 419.

Having found that the indemnification provision is neither inapplicable to the site of the injury nor unenforceable by its terms, the court turns finally to BPRC's argument that the City's motion for summary judgment should be denied as premature because discovery has not yet been conducted. BPRC claims that discovery is necessary to explore its contractual relationship with the City and to determine the applicability of the Agreement and its indemnification provision. BPRC further submits that discovery is needed to ascertain whether the City had a role in the design and construction of the subject steps and thus, whether some negligence is attributable to the City. The argument is unpersuasive. It is well settled that in order to defeat a motion for summary judgment, a party must provide some evidentiary basis demonstrating that further discovery may lead to relevant evidence as mere speculation that discovery is needed will not suffice. See, e.g., Hariri v. Amper, 51 AD3d 146, 151 (1^st Dept 2008); Cioe v. Petrocelli Electric Co., Inc., 33 AD3d 377 (1^st Dept 2006). Here, BPRC has failed to make such a showing.

The court recognizes that there are situations where summary judgment is premature because of outstanding issues concerning the indemnitee's own negligence. See, e.g., Prenderville v. International Service Systems, 10 AD3d 334, 338 (1^st Dept 2004) (Indemnification claims cannot be resolved summarily until a determination is made as to indemnitee's negligence); Gomez v. National Center for Disability Services, Inc., 306 AD2d 103, 104 (1^st Dept 2003) (Summary resolution of indemnification claim premature where there remains a factual issue as to whether indemnitee was negligent). This case, however, does not present one of those situations. Where, as here, there is a broad indemnification clause indemnifying the indemnitee for its own negligence coupled with an insurance procurement provision, the indemnitee's motion for summary judgment should be granted. See Castano v. Zee-Jay Realty Co., 55 AD3d 770 (2^nd Dept 2008) (Appellate Division reversed motion court's decision denying defendant-landlord's motion for summary judgment on its cross-claim for contractual indemnification where indemnification clause was coupled with an insurance procurement requirement).

For the reasons stated above, the City's motion for summary judgment on its cross-claim for contractual indemnification must be granted and BPRC's motion to amend the complaint must be denied as academic. Accordingly, it is

ORDERED that the City's motion for summary judgment on its cross-claim for indemnification is granted; and it is further

ORDERED that BPRC's motion to amend its answer is denied.

This constitutes the decision and order of the court.