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Paris Suites Hotel, Inc. v. Seneca Ins. Co., Inc.

Supreme Court of the State of New York, Queens County
Dec 2, 2011
2011 N.Y. Slip Op. 52146 (N.Y. Sup. Ct. 2011)

Opinion

28184/09.

Decided December 2, 2011.

Ian Douglass Orr, Esq, White Plains, NY, Plaintiff.

Abrams, Gorelick, Friedman Jacobson, PC, New York, NY, Defendants-Seneca Insurance Co.

Miller, Makris, Plousadis Seiden, LLP, Woodbury, NY, Third Party Defendants-Mayer, Sommer, Banejere, Inc.

Harris Beach, PLLC, New York, NY, Third Party Defendants-Dad's Construction, Inc.

Pro Se, Masbeth, NY, Third Party Defendants-JR Builders, Inc.

Farley Kessler, PC, Jericho, NY, Third Party Defendants-AJ Sigman.


The following papers numbered 1 to 29 read on this motion by third-party defendant Dad's Construction, Inc. (Dad's Construction) pursuant to CPLR 3211(a)(3), (5) and (7) to dismiss the complaint asserted against it; this motion by third-party defendant A.J. Sigman pursuant to CPLR 3211(a)(5) and (7) to dismiss the third-party complaint asserted against him; this motion by third-party defendant Mayer, Sommer, Banerjee, Inc. (MSBI) pursuant to CPLR 3211 (a)(3), (5) and (7) to dismiss the third-party complaint asserted against it, and any and all claims which were asserted against MSBI or could have been brought against it with prejudice. Numbered

Papers Notices of Motion — Affidavits — Exhibits .................. 1-12 Answering Affidavits — Exhibits .................................. 13-22 Reply Affidavits ....................................................... 23-29

Upon the foregoing papers it is ordered that the motions numbered 16, 17 and 18 on the motion calendar for August 3, 2011 are joined together for determination as follows:

Plaintiffs commenced this action by filing the summons and complaint on October 20, 2009 to recover under a builder's risk insurance policy issued by defendant Seneca. In their complaint, plaintiffs allege that they own the real property located at 109-17 Horace Harding Expressway, Corona, New York (subject premises), and on or about October 27, 2007, they suffered water damage to the hotel building located there, including to its structure, fixtures and equipment. At the time, the hotel was being expanded, with two additional stories being erected atop the existing stories. Plaintiffs also allege that Seneca received notice of their loss and claim, but has refused to pay such claim under the policy, causing them to suffer damages. Defendant Seneca served an answer dated November 19, 2009, admitting the issuance of the policy to plaintiffs, and its being in effect on October 27, 2007, but otherwise denying the material allegations of the complaint. Defendant Seneca also asserted numerous affirmative defenses.

Thereafter, Seneca commenced the third-party action, by filing a copy of the third-party summons and complaint on March 8, 2011, against third-party defendants MSBI, the general contractor at the construction project at the subject premises, Dad's Construction, a subcontractor, and Sigman, the project's architect, grounded in subrogation for negligent performance of the work in connection with the renovation/construction project. The time for third-party defendants MSBI and Dad's Construction to answer or otherwise respond to the third-party complaint was extended by stipulations.

With respect to that branch of the respective motions by third-party defendants MSBI, Dad's Construction and Sigman to dismiss the third-party complaint for failure to state a cause of action, the third-party complaint is based upon Seneca's claim that it is subrogated to the rights of plaintiffs and that third-party defendants negligently caused plaintiffs to sustain property damage. Third-party defendants assert that because Seneca failed to allege in its third-party complaint that payment has been made by it on behalf of plaintiffs, Seneca has failed to state a cause of action against them. Third-party defendants MSBI and Dad's Construction also assert Seneca has no standing to prosecute a claim based upon subrogation because Seneca has failed to pay plaintiffs. In addition, third-party defendant Sigman asserts the third-party complaint fails to state a cause of action for professional malpractice against him.

"When determining a motion to dismiss pursuant to CPLR 3211(a)(7), the pleading must be afforded a liberal construction ( see CPLR 3026; Leon v Martinez, 84 NY2d 83, 87), the facts as alleged in the complaint are accepted as true, the plaintiff is accorded the benefit of every favorable inference, and the court must determine only whether the facts as alleged fit within any cognizable legal theory ( see Leon v Martinez, 84 NY2d at 87-88; Cayuga Partners v 150 Grand, 305 AD2d 527). In assessing a motion under CPLR 3211(a)(7). . . a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint,' and if the court does so, the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one' ( Leon v Martinez, 84 NY2d at 88 [internal quotations marks omitted])" ( Uzzle v Nunzie Court Homeowners Assn, Inc. , 70 AD3d 928 ).

The right of an insurer to be subrogated to the rights of its insured may be based upon conventional subrogation, i.e. subrogation by agreement between the insurer and the insured, or upon the principle of equitable subrogation, i.e. subrogation by operation of law upon payment for a loss ( see Teichman by Teichman v Community Hosp. of Western Suffolk, 87 NY2d 514; Winkelmann v Excelsior Ins. Co., 85 NY2d 577; North Star Reinsurance Corp. v Continental Ins. Co., 82 NY2d 281; 71 NY Jur 2d Insurance § 2347). A claim of equitable subrogation is premised on the concept "that the party who causes injury or damage should be required to bear the loss by reimbursing the insurer for payments made on behalf of the injured party" ( Fasso v Doerr , 12 NY3d 80 , 86-87; NYP Holdings, Inc. v McClier Corp. , 65 AD3d 186 ), and may be asserted by an insurer who pays for losses sustained by its insured that were occasioned by a wrongdoer ( see Fasso v Doerr , 12 NY3d 80 , 86-87, supra). Nevertheless, an insurer's subrogation rights do not accrue until payment of the loss ( see Winkelmann v Excelsior Ins. Co., 85 NY2d 577, 582; Allstate Ins. Co. v Stein , 1 NY3d 416 , 421; Liberty Mut. Ins. Co. v Clark, 296 AD2d 442, 442-443). In this case, Seneca makes no claim that it has paid plaintiffs, and thus, has failed to state a cause of action against third-party defendants grounded in equitable subroation and lacks standing to assert claims against third-party defendants as plaintiffs' equitable subrogee ( see Twin City Fire Ins. Co. v Sanitary Plumbing Heating Corp., 273 AD2d 16).

The third-party complaint, however, can be read to assert claims against third-party defendants by Seneca, as the contractual subrogee of plaintiffs, and Seneca has requisite standing in such capacity to pursue those claims, notwithstanding Seneca's lack of any payment to plaintiffs. The insurance policy between plaintiffs and Seneca includes a contractual right to subrogation insofar as, in relevant part, it provides: "If any person or organization to or for whom we make payment under this Coverage Part has rights to recover damages from another, those rights are transferred to us to the extent of our payment" (Policy No. CIM 31-016-84, at "COMMERCIAL INLAND MARINE CONDITIONS," p 2 (of 3) at "J" [Exhibit "E" annexed to affirmation of Stanley Goos, Esq., Counsel for third-party defendant Dad's Construction, dated June 7, 2011]). Contrary to the argument of third-party defendants, this provision does not preclude suit by Seneca prior to payment to plaintiffs ( see Consolidated Edison Co. of NY v Royal Indem. Co., 41AD2d 37 [1973]; see also Cassell Vacation Homes, Inc. v Commercial Union Ins. Companies, 121 AD2d 674). Furthermore, third-party defendants have failed to point to any other policy provision to support their assertion that Seneca's contractual right to sue a third party is limited to those instances where the claim has been paid in full or part ( see Krause v American Guar. Liab. Ins. Co., 22 NY2d 147, 156; Cassell Vacation Homes, Inc. v Commercial Union Ins. Companies, 121 AD2d 674, supra).

To the extent third-party defendant Sigman asserts the third-party complaint fails to state a cause of action against him for architectural malpractice, it is not required to meet any heightened level of particularity in its allegations ( cf. CPLR 3016). Seneca alleges that Sigman, an architect, negligently and recklessly caused plaintiffs to suffer property damages. Taking such allegation as true, and according Seneca the benefit of every possible favorable inference, this court finds the third-party complaint states a legally cognizable cause of action to recover damages for alleged architectural malpractice ( see Leon v Martinez, 84 NY2d 83, 87; see also Malik v Beal , 54 AD3d 910 ).

Defendant Sigman asserts that his work was satisfactory, and did not include construction management or supervision of construction work, and offers an affidavit of Moshe Bensaul in support of such assertion. Such assertion and offering, being made for the first time in the reply, were improper ( see CPLR 2214; Voytek Technology, Inc. v. Rapid Access Consulting, Inc., 279 AD2d 470 [2001]; see also Dannasch v Bifulco, 184 AD2d 415 [1992]). Therefore, they cannot be considered at this pre-answer juncture on the question of whether Seneca actually has a cause of action for architectural malpractice against third-party defendant Sigman ( cf. Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]; Steve Elliot, LLC v Teplitsky , 59 AD3d 523 , 524 [2009]; Fishberger v Voss , 51 AD3d 627 , 628 [2007]).

With respect to the branch of the respective motions by third-party defendants to dismiss the third-party complaint asserted against them based upon the expiration of the applicable statute of limitations, Seneca's subrogation action is governed by the statute of limitations applicable to the claims which plaintiffs could have asserted against third-party defendants. "That is consistent with the principles that a subrogation claim is derivative of the underlying claim and that the subrogee possesses only such rights as the subrogor possessed, with no enlargement or diminution (citations omitted). It is likewise consistent with the principle that a defendant in a subrogation action has against the subrogee all defenses that he would have against the subrogor, including the same statute of limitations defense that could have been asserted against the subrogor (citations omitted)"( Walker v Stein, 305 AD2d 972, 974, affd sub nom Allstate Ins. Co. v Stein, 1 NY3d 416, 423).

Third-party defendants MSBI and Dad's Construction each assert that the claim asserted against them by Seneca is barred pursuant to CPLR 214(4), which establishes a three-year statute of limitations for an action to recover damages due to injury to property. Third-party defendant Sigman asserts that the claim of professional malpractice asserted against him by Seneca is barred by CPLR 214(6), which establishes a three-year statute of limitations for non-medical malpractice. In support of such assertions, they rely upon plaintiffs' allegation in the complaint that plaintiffs suffered property damages on October 27, 2007, the date of loss.

Seneca counters that discovery has yet to be completed, and therefore, it is premature to decide whether the statute of limitations has expired vis-a-vis its claims against third-party defendants. Seneca asserts that under third-party defendant MSBI's contract with plaintiff Aggressive Realty Corp., MSBI was obligated to provide reasonable protection to prevent damage, injury or loss to property at the site, and remedy damage and loss caused by a contractor or subcontractor. Seneca also asserts that based upon the deposition testimony of Gregory Crapanzano, its senior claim representative, there was an ongoing, leaking water condition at the hotel as of May 27, 2008. Seneca further asserts, based upon a certificate of insurance and correspondence produced by plaintiffs, there is reason to believe a contract between MSBI and Dad's Construction also exists, whereby Dad's Construction agreed to perform similar duties and provided certain warranties which would inure to the benefit of plaintiffs, as third-party beneficiaries to such contract. Seneca additionally asserts that third-party defendant Sigman may have worked for plaintiffs under a written contract, and standard-form contracts commonly used in construction projects typically include a provision setting forth accrual dates for the causes of action pertaining to acts or omissions by contracting parties.

"A defendant who seeks dismissal of a complaint pursuant to CPLR 3211(a)(5) on the ground that it is barred by the statute of limitations bears the initial burden of proving, prima facie, that the time in which to sue has expired ( see Duran v Mendez, 277 AD2d 348; Savarese v Shatz, 273 AD2d 219, 220; Assad v City of New York, 238 AD2d 456; Siegel v Wank, 183 AD2d 158, 159)" ( Gravel v Cicola, 297 AD2d 620, 620-621). It is well established that in any action to recover property damages for negligence, a plaintiff's claim accrues upon the date of injury ( see Brooklyn Union Gas Co. v. Hunter Turbo Corp., 241 AD2d 505, 506). However, a claim for property damages which is grounded in negligent performance of work under a construction contract, is governed by a six-year statute of limitations (CPLR 213; see Cabrini Medical Center v Desina, 64 NY2d 1059 ; Felice v American A.W.S., Corp. , 46 AD3d 505 ). A cause of action against a contractor for defects in construction generally accrues upon completion of the actual physical work ( see Cabrini Medical Center v Desina, 64 NY2d 1059). Claims of non-medical malpractice, including claims of professional malpractice committed by architects, are subject to the three-year statute of limitations found in CPLR 214(6) ( see 17 Vista Fee Assocs. v Teachers Ins. and Annuity Assn. of America, 259 AD2d 75; see also Town of Wawarsing v Camp, Dresser McKee, Inc. , 49 AD3d 1100 ). "A cause of action to recover damages for professional malpractice against an architect for defective design or construction accrues upon the actual completion of the work to be performed and the consequent termination of the professional relationship ( see Brushton-Moira Cent. School Dist. v Thomas Assoc., 91 NY2d 256, 261; County of Rockland v Kaeyer, Garment Davidson Architects, 309 AD2d 891; IFD Constr. Corp. v Corddry Carpenter Dietz Zack, 253 AD2d 89, 92; Board of Mgrs. of Yardarm Beach Condominium v Vector Yardarm Corp., 109 AD2d 684, 686; N. R. S. Constr. Corp. v Board of Educ., Cent. School Dist. No. 2, Towns of Yorktown, New Castle Cortlandt, 82 AD2d 876)" ( Frank v Mazs Group, LLC , 30 AD3d 369 ). Recovery of monetary damages for property damage, regardless of whether it is based upon negligence or breach of contract is limited by CPLR 214 (4) to any alleged damage that occurred within three years of the commencement of the action ( see King v 870 Riverside Dr. Hous. Dev. Fund Corp. , 74 AD3d 494; Kaymakcian v Board of Mgrs. of Charles House Condominium , 49 AD3d 407 ).

With respect to the claim by Seneca against third-party defendant MSBI, it is governed by a six-year statute of limitations ( see CPLR 213). Third-party defendant MSBI has failed to offer evidence as to the completion of the actual physical work required to be done under the contract with plaintiff Aggressive Holding Corp. ( see Cabrini Medical Center v Desina, 64 NY2d 1059, supra), or to establish that no property damage occurred during the three years before commencement of the third-party action (CPLR 214; see King v 870 Riverside Dr. Hous. Dev. Fund Corp. , 74 AD3d 494; Kaymakcian v Board of Mgrs. of Charles House Condominium , 49 AD3d 407 ). Third-party defendant MSBI, therefore, has failed to establish prima facie that the statute of limitations, in relation to the third-party claim asserted against it, has expired.

Third-party defendant Dad's Construction also has failed to establish its initial burden of showing, prima facie that Seneca's claim against it is untimely brought. Third-party defendant Dad's Construction has failed to show it has no contract with plaintiffs or MSBI to perform construction, or installation of a roof, at the subject premises, or that plaintiffs are not third-party beneficiaries of any contract with MSBI ( see Ralston Purina Co. v McKee Co., 158 AD2d 969; see also Town of Hempstead v Lizza Industries, Inc., 145 AD2d 628). Nor has third-party defendant Dad's Construction offered evidence as to the completion of the actual physical work required to be done under any contract with plaintiffs or MSBI ( see Cabrini Medical Center v Desina, 64 NY2d 1059, supra), or to establish that no property damage occurred during the three years before institution of the third-party action (CPLR 214; see King v 870 Riverside Dr. Hous. Dev. Fund Corp. , 74 AD3d 494, supra; Kaymakcian v Board of Mgrs. of Charles House Condominium , 49 AD3d 407 , supra).

Third-party defendant Sigman likewise has failed to establish his initial burden of proving, prima facie, the expiration of the statute of limitations. He has not demonstrated when the cause of action against him accrued in that he has failed to demonstrate when the work to be performed on behalf of plaintiffs was actually completed, and the professional relationship with plaintiffs ended. Notably, he fails to state that he had no written contract with plaintiffs. In addition, third-party defendant Sigman has failed to offer evidence which establishes that no property damage occurred during the three years before commencement of such action ( see Kaufman v Cohen, 307 AD2d 113, 118, supra; CPLR 214).

Under these circumstances, the motions by third-party defendants Dad's Construction, MSBI and Sigman are granted only to the extent of dismissing the portion of the third-party complaint asserted against them, which is grounded in equitable subrogation, for failure to state a cause of action.


Summaries of

Paris Suites Hotel, Inc. v. Seneca Ins. Co., Inc.

Supreme Court of the State of New York, Queens County
Dec 2, 2011
2011 N.Y. Slip Op. 52146 (N.Y. Sup. Ct. 2011)
Case details for

Paris Suites Hotel, Inc. v. Seneca Ins. Co., Inc.

Case Details

Full title:PARIS SUITES HOTEL, INC., Aggressive Realty Corp., Aggressive Holding…

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

Date published: Dec 2, 2011

Citations

2011 N.Y. Slip Op. 52146 (N.Y. Sup. Ct. 2011)