The Burlington Insurance Company, Appellant,v.NYC Transit Authority, et al., Respondents.BriefN.Y.April 26, 2017State of New York Court of Appeals BRIEF FOR DEFENDANTS-RESPONDENTS DICK BAILEY SERVICE, Inc. · 1-800-531-2028 · dickbailey.com [REPRODUCED ON RECYCLED PAPER] THE BURLINGTON INSURANCE COMPANY, Plaintiff-Appellant, -against- NYC TRANSIT AUTHORITY and MTA NEW YORK CITY TRANSIT, Defendants-Respondents. TO BE ARGUED BY: CHARLES R. STRUGATZ, ESQ. TIME REQUESTED: 30 MINUTES APL-2016-00096 Supreme Court, New York County, Index No. 102774/11 SHEIN & ASSOCIATES, P.C. 575 Underhill Boulevard, Suite 112 Syosset, New York 11791 Tel: (516) 922-6626 Fax: (516) 922-2797 Attorneys for Defendants-Respondents Dated: August 16, 2016 Of Counsel: CHARLES R. STRUGATZ, ESQ. i STATUS OF RELATED LITIGATION No related litigation currently exists. ii TABLE OF CONTENTS Page STATUS OF RELATED LITIGATION, IF ANY ..................................................... i TABLE OF CONTENTS .......................................................................................... ii TABLE OF CASES AND AUTHORITIES ............................................................. iv COUNTERSTATEMENT OF QUESTIONS PRESENTED FOR REVIEW .......... 1 PRELIMINARY STATEMENT ............................................................................... 4 COUNTERSTATEMENT OF FACTS ................................................................... 13 ARGUMENT ........................................................................................................... 31 POINT I THE ANTI-SUBROGATION RULE BARS AN INSURER, AS SUBROGEE OF THE CITY OF NEW YORK, FROM SEEKING CONTRACTUAL INDEMNITY FROM THE NEW YORK CITY TRANSIT AUTHORITY, FOR THE AMOUNTS THE INSURER PAID TO SETTLE AND DEFEND THE UNDERLYING ACTION ON BEHALF OF THE SUBROGOR, WHERE THE NEW YORK CITY TRANSIT AUTHORITY, AND BOTH THE METROPOLITAN TRANSPORTATION AUTHORITY AND THE CITY OF NEW YORK, WERE AFFORDED COVERAGE BY THAT INSURER’S ENDORSEMENT AS ADDITIONAL INSUREDS FOR LIABILITY FOR BODILY INJURY, CAUSED, IN WHOLE OR IN PART, BY THE NAMED INSURED’S ACTS OR OMISSIONS IN THE PERFORMANCE OF THE NAMED INSURED’S ONGOING OPERATIONS, AND WHERE THE NAMED INSURED’S EMPLOYEE’S OPERATION OF HIS EMPLOYER’S MACHINE RESULTED IN AN iii ELECTRICAL EXPLOSION THAT PROVIDED THE REQUISITE FACTUSAL NEXUS TO THE INJURY IN THE UNDERLYING ACTION ................................. 31 POINT II ASSUMING, ARGUENDO, THAT THE ANTI- SUBROGATION RULE DOES NOT BAR THE CONTRACTUAL INDEMNITY CLAIM, THE INSURER CANNOT SUBROGATE BASED ON PAYMENTS IT VOLUNTARILY MADE AS PART OF ITS IMPROPER CLAIMS HANDLING PRACTICES INTENDED TO SHIFT LIABILITY TO THE NEW YORK CITY TRANSIT AUTHORITY .................................................................................... 62 CONCLUSION ....................................................................................................... 70 CORPORATE DISCLOSURE STATEMENT ...................................................... 71 SIGNING REQUIREMENT OF 22 N.Y.C.R.R. § 130-1.1a .................................. 73 PRINTING CERTIFICATION STATEMENT ....................................................... 74 iv TABLE OF AUTHORITIES Page CASES Aetna Cas. & Surety Co. v. Liberty Mut. Insd. Co., 91 A.D.2d 317 [4th Dep’t.1983] .................................................................... 58 American Guar. & Liab. Ins. Co. v. CNA Reins. Co., 16 A.D.2d 154 (1st Dep’t. 2005) .................................................................... 58 Argentina v. Emery World Wide Delivery Corp. 93 N.Y.2d 554 at 561 n.2 (1999) ............................................................. 46, 47 Barnan Assoc. v 196 Owners Corp., 56 A.D.3d 309, 311 [1st Dep’t. 2008] ............................................................ 68 Bermuda Trust Co. v. Ameropan Oil Corp., 266 A.D.2d 251 [2nd Dep’t. 1999] ............................................................... 63 Blake v. Neighborhood Hous. Servs. of New York City, Inc., 1 N.Y.3d 280, 287-288 [2003] .................................................................. 7, 45 Bolanowski v. Trustees of Columbia University in City of New York, 21 A.D.3d 340 [2nd Dep’t., 2005] ................................................................. 62 Broadway Huston Mack Dev., LLC v. Kohl, 71 A.D.3d 937 [2nd Dep’t. 2010]…………………………………….63, 67 Brown v. Two Exchange Plaza, 76 N.Y.2d 172 at 178 [1990] .................................................................. 10, 48 Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 135 [1st Dep’t. 2015] ........... 5, 6, 8, 15, 16, 32, 33, 34, 35, 36, 37, 38, 39, 40, 50, 51, 56, 57, 58, 59 Chelsea Assocs. LLC v. Laquila-Pinnacle, 21 A.D.3d 739 [1st Dep’t., 2005], lv. Den., 6 N.Y.3d 742 [2005] ................ 9 Chubb Natl. Ins. Co. v. Platinum Customcraft Corp., 38 A.D.3d 244 [1st Dep’t. 2007] ................................................................... 63 v Cohen v. Rothman-Goodman Mgt. Corp., 155 A.D.2d 579 [2nd Dep’t. 1989] ................................................................ 63 Consolidated Coal Co., Inc. v. Liberty Mut. Ins. Co., 406 F. Supp. 1292, 1300-01 [W.D. Pa. 1976] ............................................... 45 Cragg v. Allstate Indem. Corp., 17 N.Y.3d 118, 122 [2011] ............................................................................ 42 Crespo v. City of New York, 303 A.D.2d 166 [1st Dep’t. 2005] .................................................................. 57 Dayton Beach Park No. 1 Corp v. National Union Fire Ins. Co., 175 A.D.2d 854 [2nd Dep’t. 1991] ................................................................. 46 Dillon v U-A Columbia Cablevision of Westchester 100 N.Y.2d 525, 526 [2003] .......................................................................... 68 East Asiatic Co. v. Corash, 34 A.D. 432 [1st Dep’t. 1970] ..................................... 62 Engasser Construction Corporation v. Dryden Mutual Insurance Company, 134 A.D.3d 1516 [4th Dep’t., 2015] .................................................. 8, 51, 59 Engineering & Construction Innovations, Inc. v. L.H. Bolduc Co., 825 N.W.2d 695 [Minn. 2013] ...................................................................... 60 G.K. Alan Assoc., Inc. v. Lazzari, 44 A.D.3d 95 [2nd Dep’t., 2007] ................................................................... 62 Gilbane Building Company v. Admiral Ins. Co., 664 F.3d 589 [5th Cir. 2011] .......................................................................... 42 HBE Corporation v. Harleysville Group, Inc., 2015 WL 5750114 [U.S.D.C., N.D.N.Y., 2015] ........................................... 51 Kassis v. Ohio Cas. Ins. Co., 12 N.Y.3d 595 at 599, 600 [2009] ................................................................. 64 Kel-Mar Designs, Inc. v Harleysville Ins. Co. of N.Y., 127 A.D.3d 662 [1st Dep’t. 2015] .................................................................. 55 vi Liberty Mut. Ins. Co. v Zurich Am. Ins. Co., 2014 WL 1303595, (U.S.D.C., S.D.N.Y., 2014) ........................................... 56 Maroney v. New York Cent. Mut. Fire Ins. Co., 5 N.Y.3d 467 at 472 (2005) ........................................................................... 52 McIntosh v. Scottsdale Ins. Co., 992 F.2d 251, 254-255 [10th Cir., 1993] .................................................. 46, 60 Merchants Insurance Company of New Hampshire, Inc. v. United States Fidelity & Guaranty Co., 143 F.3d 5 [1st Cir. 1998]......................................................................... 46, 60 N. Star Reins. Corp. v. Cont’l Ins. Co., 82 N.Y.2d 281, 284 [1993] ........................................................................ 9, 27 National Union Fire Ins. Co. of Pittsburgh, PA v Greenwich Ins. Co., 103 A.D.3d 473 [1st Dep’t. 2013] .................................................................. 55 Nomura Holding Am., Inc. v. Fed. Ins. Co., 45 F. Supp.3d 354, 367 [S.D.N.Y. 2014] ...................................................... 44 Norman v. Ferrara, 107 A.D.2d 739 [2nd Dep’t. 1985] ................................................................ 62 Olin Corp. v. Am. Home Assur. Co. 704 F.3d 89, 98 [2nd Cir. 2012] ...................................................................... 43 Pearson Capital Partners LLC v. James River Insurance Company, 151 F. Supp.3d 392 [U.S.D.C., S.D.N.Y., 2015] .......................................... 51 Pecker Iron Works of N.Y. v Traveler’s Ins. Co., 99 N.Y.2d 391, 393 [2003] ............................................................................ 64 Pro Con Inc. v. Interstate Fire & Cas. Co., 794 F. Supp. 2d 242 [D. Me. 2011] ............................................................... 45 Raven v. Universal Straping Corp. 131 A.D.3d 595 [2nd Dep’t. 2015] ................................................................. 50 vii Red Ball Motor Freight, Inc. v. Employer’s Mut. Liability Ins. Co., 189 F.2d 374, 378 [5th Cir. 1951] .................................................................. 41 Regal Constr. Corp. v. National Union Fire Ins. Co. of Pittsburgh, PA, 15 N.Y.3d 34 [2010] .................................................................................. 7, 54 Rodrigues v. N&S Bldg. Contrs., Inc., 5 N.Y.3d 427 [2005] ...................................................................................... 47 Ross v. Louise Weise Services, Inc., 58 A.D.3d 978 [3rd Dep’t. 2009] ................................................................... 67 Schwartz v. Merola Bros. Construction Corp., 290 N.Y. 145 [1943] ...................................................................................... 41 Shannon v. B.L. England Generating Station, 2013 U.S. Dist. LEXIS 168715 [D.N.J. Nov. 27, 2013] ......................... 42, 60 Stewart v. Federated Dep’t. Stores, 662 A.2d 753 [Conn. 1995] ........................................................................... 46 Strauss Painting, Inc. v Mt. Hawley Ins. Co., 105 A.D.3d 512 [1st Dep’t. 2013] mod on other grounds 24 N.Y.3d 578 (2014) .................................................................................... 55 Union Carbide Corp. v. Affiliated FM Ins. Co., 68 A.D.3d 534, 535-536 [1st Dep’t. 2009] .................................................... 44 Utica Nat’l Ins. Co. of Texas v. Am. Indem. Co., 141 S.W.3d 198 [Tex. 2004] ......................................................................... 42 W & W Glass Sys., Inc. v Admiral Ins. Co., 91 A.D.3d 530 [1st Dept. 2012] ............................................................... 45, 55 Westview Assocs. v. Guar. Nat’l Ins. Co., 95 N.Y.2d 334, 339 [2000] ............................................................................ 43 Worth Constr. Co., Inc. v. Admiral Insurance Co., 10 N.Y.3d 411 [2008] .......................................................................... 7, 46, 53 viii Zurich American Insurance Company v. Harleysville Insurance Co., 2016 WL 3766394 [U.S.D.C., S.D.N.Y., 2016] ............................................ 51 STATUTES CPLR § 105(u) ......................................................................................................... 26 CPLR § 2106 ............................................................................................................ 73 CPLR § 3025(b) ....................................................................................................... 61 GOL § 5-322.1(1 and 2) ............................................................................... 42, 47, 48 Ins. Law § 3420(d) ................................................................................................... 27 Labor Law § 240 ...................................................................................... 7, 27, 28, 45 Vehicle and Traffic Law § 388 (1) .......................................................................... 47 W.C.L. § 11 .............................................................................................................. 47 REGULATIONS 22 N.Y.C.R.R. § 500.1(f) ......................................................................................... 71 22 N.Y.C.R.R. § 500.13 (c) (1 and 3) ...................................................................... 74 29 C.F.R. 1926.956 (c) (1) ................................................................................. 24, 25 Rules of the Chief Administrator § 130-1.1(c) ........................................................ 73 MISELLANEOUS AUTHORITY 3 Weinstein-Korn-Miller, NY Civ Prac, par 3025.23 ............................................. 62 23 NY Jur 2d, Contribution, Indemnity and Subrogation, §§ 31, 32 ...................... 63 Couch on Insurance, 3d Ed., Vol. 16, § 223:28 ....................................................... 67 N.Y. Pattern Jury Instructions PJI § 2.70 ................................................................ 46 Restatement of Restitution § 162, comment b ......................................................... 63 W. Prosser & W. Keeton, Torts [5th Ed. 1984] § 41 ............................................... 46 COUNTERSTATEMENT OF QUESTIONS PRESENTED FOR REVIEW 1. Whether the anti-subrogation rule applies to bar an insurer, as subrogee of the City of New York, from seeking contractual indemnity from the New York City Transit Authority, for the amounts the insurer paid to settle and defend the underlying action on behalf of the subrogor, where the New York City Transit Authority, and both the Metropolitan Transportation Authority and the City of New York, were afforded coverage by that insurer’s endorsement as additional insureds for liability for bodily injury, caused, in whole or in part, by the named insured’s acts or omissions in the performance of the named insured’s ongoing operations, and where the named insured’s employee’s operation of his employer’s machine resulted in an electrical explosion that provided the requisite factual causal nexus to the personal injury in the underlying action? ANSWER: Yes. The Appellate Division, First Department, held that the New York City Transit Authority and the Metropolitan Transit Authority were additional insureds, entitled to the benefit of the anti- subrogation rule, because the endorsements (one endorsement 2 benefitting the New York City Transit Authority, only; the other endorsement benefitting the New York City Transit Authority, the Metropolitan Transportation Authority and the City of New York) provided additional insured coverage, given that the loss was caused in whole or part by the act or omission of the named insured, even though the named insured was not negligent. The Appellate Division, First Department, held that the named insured’s employees operated their employer’s machine and triggered an explosion that led to the fall of the plaintiff in the underlying action, which satisfied the requisite factual causal nexus required by the endorsement. The endorsement did not exclude coverage if the named insured was not negligent, or if the named insured’s negligence was not a proximate cause of the injury. The endorsement did not exclude coverage if the additional insured was solely negligent. The plain language of the endorsement controlled, not the subjective intent of the draftsman. 2. Assuming, arguendo, that the anti-subrogation rule does not bar the contractual indemnity claim, then, whether the insurer can subrogate based on payments it voluntarily made, as part 3 of its improper claims handling practices intended to shift liability to the New York City Transit Authority? ANSWER: No. The Appellate Division, First Department, noted the Court below had rejected the voluntary payment argument, but that appellate court did not base its holding on the voluntary payment argument. The Appellate Division, First Department, did not address Burlington’s pattern of unfair claims handling practices, described below, that warrants the preclusion of subrogation. 4 PRELIMINARY STATEMENT This Brief is submitted on behalf of Defendants-Respondents, The New York City Transit Authority, sued herein as NYC Transit Authority [hereinafter referred to as the “Transit Authority”], and The MTA New York City Transit [hereinafter referred to as the “MTA”, and hereinafter collectively referred to as the “Authorities”], in opposition to the appeal (1539, 1540)1 of the Plaintiff-Appellant, The Burlington Insurance Company [hereinafter referred to as “Burlington”], of the Judgment of the Supreme Court, New York County entered on January 8, 2016 (1563-1568, 1569-1571, 1572-1585). 2 That Judgment is predicated, in part, on the Order of the Appellate Division, First Department, entered on August 11, 2015 (1541-1561, and 1572-1585). The Judgment is also predicated, in part, on a So-Ordered Stipulation, dated January 8, 2016 (1569-1571). 1 The numbers in parenthesis refer to pages in the Record on Appeal. 2 Burlington’s earlier motion, designated motion number 2016-15 by this Court, seeking leave to appeal the Order of the Appellate Division, First Judicial Department, entered on August 11, 2015, was dismissed on May 5, 2016, upon the ground that the order sought to be appealed from does not finally determine the action within the meaning of the Constitution, the same date this Court granted leave to appeal the Judgment of the Supreme Court, New York County entered on January 8, 2016. 5 The Decision and Order of the Appellate Division, First Department (1541-1561, and 1572-1585), reversed 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, and the order of the same court and Justice, entered December 19, 2013. The Appellate Division, First Department, held that the Authorities were additional insureds under the subject policy of insurance relative to a loss that was caused, in whole or in part, by an act or omission of the named insured, without regard to whether the named insured’s actions or omissions constituted negligence or were otherwise actionable, Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 135 [1st Dep’t. 2015]). Accordingly, the Appellate Division, First Department, held the anti-subrogation rule bars Burlington from recovering, as the subrogee of the City of New York, contractual indemnification from the Transit Authority under a written lease, dated 1953, for amounts expended in the settlement and defense of the underlying Kenny action, Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 138 [1st Dep’t. 2015]). 6 The policy term, caused in part, has been satisfied; the named insured’s employee, while using his employer’s equipment, triggered an explosion that caused, in part, the fall at issue. The plain language of the endorsement provides coverage to the additional insured where the loss was caused in whole or in part by the act or omission of the named insured, without any requirement that the named insured have been negligent or that its actionable wrong have been a proximate cause of the loss. Burlington’s policy endorsement makes the Authorities additional insureds with respect to liability for bodily injury caused, in whole or in part, by the named insured’s acts or omissions. Burlington’s policy endorsements do not restrict additional insured coverage to only those scenarios in which the named insured’s acts or omissions were negligent or otherwise actionable, or in which the named insured’s acts or omissions were either the sole proximate cause or a proximate cause of the underlying occurrence. The “but for” standard was never adopted, Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 [1st Dep’t. 2015]). The phrase “in whole or in part” has not been rendered superfluous and without meaning. Without the phrase “in whole or in 7 part”, the endorsement would, arguably, provide an additional insured coverage, only if the named insured’s acts or omissions were the only, or sole, cause of the loss; without that phrase, coverage would, arguably, exist sufficient to trigger the duty to defend, but would provide only an illusion of indemnity; accordingly, the phrase “in whole or in part” is necessary to avoid an illogical result. Also, liability predicated on a violation of Labor Law §240 does not require any proof of negligence, Blake v. Neighborhood Hous. Servs. of New York City, Inc., 1 N.Y.3d 280, 287-288 [2003]. The plain language of the endorsement precludes speculation that the draftsman’s subjective intent, manifested years before the parties contracted, was contrary to the plain meaning of the language used, and improperly seeks to modify unambiguous language. Assuming, arguendo, that the endorsement at issue is ambiguous, any such ambiguity must be construed against Burlington. The Appellate Division, First Department, reached a result that is consistent with this Court’s precedent in Worth Constr. Co., Inc. v. Admiral Insurance Co., 10 N.Y.3d 411 [2008] and Regal Constr. Corp. v. National Union Fire Ins. Co. of Pittsburgh, PA, 15 N.Y.3d 34 [2010]. 8 The Appellate Division, First Department, reached a result that is consistent with decisions from the Appellate Division, First and Fourth Departments. Burlington neglects to address Engasser Construction Corporation v. Dryden Mutual Insurance Company, 134 A.D.3d 1516 [4th Dep’t., 2015), wherein the Appellate Division, Fourth Department, cited Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 135 [1st Dep’t. 2015]) with approval, and neglects to address other case law authority that follows, or cites with approval, Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 135 [1st Dep’t. 2015]). Burlington’s relies on case authority determined under the laws of other States; Burlington impliedly advocates that this Court should adopt case authority from other jurisdictions, merely to achieve uniformity, to the detriment of New York domiciled additional named insureds, who relied on a policy of insurance issued to a New York domiciled named insured to cover a construction project in New York. The plain meaning of the phrase “liability for bodily injury, caused, in whole or in part, by the named insured’s acts or omissions in 9 the performance of the named insured’s ongoing operations”, and the phrase “arising out of”, are functional equivalents. 3 A causal link between the named insured’s acts or omissions and the injury, without regard to negligence or fault of the named insured being the proximate cause, or a proximate cause, is sufficient to trigger application of the additional insured endorsement. Herein, an employee of the named insured was operating construction equipment owned by the named insured when that equipment made contact with an energized electrical circuit, causing, in part, an electrical explosion and injury to the plaintiff in the underlying personal injury action. Accordingly, the requisite factual nexus existed sufficient to trigger application of additional insured coverage. 3 Despite the contention by Burlington that the New York City Transit Authority did not advance the policy interpretation argument adopted by the Appellate Division, First Department, that argument was raised: “In the alternative, if the City is an Additional Insured because the requirement of General Endorsement, numbered IFG-I-0160 (11/00) that each Additional Insured’s liability must have been caused, in whole or part, by the Named Insured has been satisfied (despite Burlington’s contention that the Transit Authority solely caused the accident), treating “liability caused in whole or in part” as the equivalent of “arising under”, then the Defendants-Appellants, the Authorities, must similarly benefit, providing them coverage, see: Chelsea Assocs. LLC v. Laquila-Pinnacle, 21 A.D.3d 739 [1st Dep’t., 2005], lv. Den., 6 N.Y.3d 742 [2005]. Maintenance of this action would therefore violate the anti-subrogation rule, which bars an insurer’s right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered, N. Star Reins. Corp. v. Cont’l Ins. Co., 82 N.Y.2d 281, 284 (1993).” [pages 42 and 43 of Brief of Defendants-Appellants submitted to the Appellate Division, First Department] 10 Burlington seeks to require insurance contracts, a type of indemnity contract, to limit coverage to an additional insured only when the named insured’s acts or omissions were negligent or actionable, despite the absence of language requiring same, yet Burlington fails to offer any reason why, in a non-insurance context, contractual indemnity is enforceable against a non-negligent indemnitor, Brown v. Two Exchange Plaza, 76 N.Y.2d 172 at 178 [1990]. Assuming, arguendo, that the additional insureds were not entitled to coverage, then the payment on behalf of the City of New York was voluntary, as part of a pattern of unfair claims handling practices, and cannot support a subrogation claim. The New York City Transit Authority had notified the named insured that outstanding and future payments would be withheld unless the insurer agreed to indemnify the City of New York, and, subsequently the insurer explained by affidavit that it had withdrawn its reservation of rights against the City of New York as an accommodation for its named insured; however, the appellate court below did not address: (i) the prior written admission by the insurer that it withdrew its reservation of rights against the City of New York in 11 order to pass the liability of the City of New York to the New York Transit Authority; (ii) the insurer improperly afforded disparate treatment to different additional insureds, providing indemnity to the City of New York while denying coverage to the New York City Transit Authority, even though its coverage defense, if valid, would apply equally to both; (iii) the insurer appointed, from its defense panel, counsel to represent the New York City Transit Authority and the Metropolitan Transportation Authority in the underlying action, which counsel never deposed the named insured’s two operating engineers who operated their employer’s two machines when one of those machines triggered the explosion, effectively precluding any attempt to prove negligence attributable to the named insured; (iv) the insurer appointed, from its defense panel, counsel to represent the New York City Transit Authority and the Metropolitan Transportation Authority in the underlying action, which counsel, as their attorney of record at that time, never objected to the dismissal of both Authorities’ 12 cross-claims against the named insured for failure to procure the additional insured coverage contractually promised; and, (v) the insurer appointed, from its defense panel, to represent the City of New York, the same counsel it had previously assigned to represent its named insured, and thereby advanced its own economic interests, to avoid paying for separate counsel for Breaking Solutions and the City. The Authorities did not waive, and are not estopped from asserting a voluntary payment defense. Burlington’s improper claims handling practices, including unreasonably delaying issuing a disclaimer, warrants it being estopped from denying coverage to the Authorities. Burlington cannot seek to amend its complaint or seek to assert a new pleading to allege a conventional subrogation claim because the “So-Ordered” Stipulation did not reserve the right, if any, to do so. 13 COUNTERSTATEMENT OF FACTS On or about October 23, 2008, Breaking Solutions, Inc. [hereinafter “Breaking Solutions”], entered in to Contract 09B9837/P.O. A2437 with the Transit Authority, to provide certain demolition work, which included a promise to procure liability insurance in favor of the Authorities and the City of New York, relative to a construction project at or near the Nostrand Avenue subway station of the #3 subway line in Kings County, City and State of New York (184-321). That written contract required Breaking Solutions to procure commercial general liability coverage in the amount of $2,000,000.00 (301) with an “additional Insured Endorsement” for the benefit of the Authorities (“New York City Transit Authority” and “the Metropolitan Transportation Authority”), and the City of New York (302), and required that “Additional Insured Endorsement” used be the: “latest I.S.O. Form CG 20 10 or equivalent approved by the Authority” (302). On or about April 7, 2009, Thomas P. Kenny and Patricia D. Kenney commenced an action against The City of New York [hereinafter the “City”] and Breaking Solutions for personal injury allegedly sustained on February 14, 2009 by Thomas P. Kenny, and for loss of consortium by Patricia D. Kenny, based on allegations that Thomas P. Kenny, an employee of the 14 Transit Authority, was injured while working at the construction project at or near the Nostrand Avenue subway station of the #3 subway line in Kings County, City and State of New York (322-336). That underlying action, Kenny v. City of New York, was commenced in the U.S.D.C., E.D.N.Y., 09- CV-1422 (RPM)(VVP) [hereinafter referred to as the “Underlying Action”]. The pleadings to the Underlying Action included: the Complaint (322-336); Answer of the City with Cross-Claim against Breaking Solutions (337-339); Answer of Breaking Solutions with Cross-Claim against the City (340-350); The Third-Party Complaint by the City against the Authorities (140-149); and, the Answer of the Authorities to the Third-Party Complaint, which Third-Party Answer (351-361) is dated April 16, 2010, interposed by counsel appointed by Burlington. The Third-Party Answer interposes, inter alia, a cross-claim against Breaking Solutions for breach of contract attributable to Breaking Solution’s failure to procure a liability policy of insurance providing coverage to the Authorities for claims such as were asserted against the Authorities in the Underlying Action (359). On February 14, 2009, Breaking Solutions had provided two Brokk machines at the construction project at issue: the machine that caused the electrical explosion, designated #7, its operating engineer, Artek Pelka a/k/a A. Wysocki, and its oiler, John Mulhere, Jr., (605, 606, 700, 707, 722, 749); 15 and the other Brokk machine, operated by Robert Czeres, and its oiler, John Amorosano, Jr. (685, 700). Just before Thomas Kenny allegedly fell and was injured, the metal breaking point of Breaking Solution’s Brokk machine #7 made contact with a buried, energized electrical cable, causing an electrical explosion and fire (605, 606). The attorneys assigned by the Burlington to represent the Authorities never caused either of the operating engineers employed by Breaking Solutions at the construction project, Artek Pelka a/k/a A. Wysocki or Robert Czeres, to be deposed, preventing any accumulation of proof to establish negligence by Breaking Solutions sufficient, even under Burlington’s interpretation of the endorsement, to trigger indemnity coverage to the Authorities. The Appellate Division, First Department, referenced deposition testimony of the plaintiff in the Underlying Action to support its conclusion that it was: “undisputed that Kenny’s injury was causally connected to an “act[]” of the named insured, specifically, the Breaking Solution’ excavator’s disturbance of the buried electrical cable, which triggered the explosion that led to Kenny’s fall. (footnote 5 omitted)” (1553) That deposition testimony is recited at footnote 5 of that appellate decision (1553), and the quoted testimony can be located in the Record on Appeal (630, 631, 636). 16 Burlington had issued a general liability policy of insurance, policy number HGL0019305 to its named insureds, New York Breaking Company, Inc., and Breaking Solutions, Inc., for the policy period July 17, 2008 through July 17, 2009 (362-445). Burlington provided a defense to the City of New York in the Underlying Litigation pursuant to General Endorsement numbered 1FG-1- 0160 1100 (452-453, and 454-456); that General Endorsement lists the “City of New York” and both of the Authorities as additional insureds on the very same schedule of additional insureds (454). However, General Endorsement numbered IFG-I-0160 1100 contains the following provision: “A. Section II - Who Is An Insured is amended to include as an additional insured the person or organization scheduled above for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect liability for “bodily injury”, “property damage” or “personal and advertising injury” caused, in whole or in part, by: 1. Your acts or omissions; or 2. The acts or omissions of those acting on your behalf; In the performance of your ongoing operations for the additional insured.” (454) Burlington, never offered any competent proof to establish that the General Endorsement numbered IFG-I-0160 1100 it relied upon to define the scope of additional insured coverage afforded to the Authorities and the 17 City (454), complied with the provision in Breaking Solution’s contract with the Defendant-Appellant, Transit Authority, that that “Additional Insured Endorsement” to be the “latest I.S.O. Form CG 20 10 or equivalent approved by the Authority” (302). The MTA tendered the defense and indemnity of the City as an Additional Insured relative to the Underlying Action to Burlington, by letter, dated May 7, 2009 (446-447). By letter dated May 20, 2009, the Burlington, requested the construction contract (448). By letter dated June 26, 2009, Burlington, confirmed that it had received and reviewed the construction contract, and accepted the tender of the defense and indemnity of the City as an Additional Insured, made on its behalf by the MTA, relative to the Underlying Action, subject to a Reservation of Rights that limited that insurance coverage to the City “to liability for bodily injury caused in whole by Breaking Solution’s acts or omissions (or acts or omissions of those acting on their behalf).” (450-451)” On June 26, 2009, Burlington nominated Camacho Mauro Mullholland, LLP, to represent the City (450-451), which defense counsel already appeared in the Underlying Litigation for Breaking Solutions pursuant to the initial assignment to that law firm by Burlington (340-350, 18 526-527). The City accepted that nomination of Camacho Mauro Mullholland, LLP, to represent it on June 9, 2010 (528-529), after the Plaintiff-Respondent, Burlington, withdrew its reservation of rights as against the City, described below. By letter dated December 10, 2009 (452-453), with enclosure, General Endorsement, numbered “IFG-I-0160 (11/00)” (454-456), to the Defendant- Appellant, MTA, the Plaintiff-Respondent, Burlington, sought to reassure the Defendant-Appellant, MTA, that the scope of Burlington’s insurance coverage being provided to the City was defined by General Endorsement numbered “IFG-I-0160 (11/00)” (454-456), without ever representing that said endorsement was in compliance with the contractual obligation of its named insured, Breaking Solutions, to provide an additional insured endorsement to be the: “latest I.S.O. Form CG 20 10 or equivalent approved by the Authority” (302). By letter (1168), dated December 3, 2009, from an Assistant General Counsel of the Transit Authority, to Breaking Solutions, advised Breaking Solutions that it was in breach of its contract because Breaking Solution had not yet agreed to indemnify the City both as an additional insured (301-302) and as a contract indemnitee (280-281), and that payment of contract retainage was being withheld because of same. This correspondence has to 19 be considered in context, including the contractual requirement that the additional insured endorsement be the “latest I.S.O. Form CG 20 10 or equivalent approved by the Authority” (302), and the failure of the Plaintiff- Respondent, Burlington, to ever offer any proof that the any additional insured endorsement relied upon by Burlington satisfied that requirement. On January 28, 2010, Breaking Solutions, by its counsel appointed by Burlington, the City and the Plaintiff stipulated in the Underlying litigation that the City had violated Labor Law §240(1) (460-461). The MTA, tendered the defense and indemnity of the Authorities, as Additional Insureds, relative to the third-party complaint in the Underlying Action (140-149) to Burlington, by letter, dated March 22, 2010 (462-463). The Group Claims Diary entry, dated April 9, 2010, of Burlington, states: “City of NY has impleaded NYC Transit & MTA NYC Transit, and Transit has in turn tendered it to TBIC based on a.i.” (additional insured) “status and contractual indem.” “After discussion with H/O”(Home Office of Burlington) “we have decided to offer a defense to Transit through one of our panel firms (WCM).Upon receipt of our acknowledgment letter, we’ll see if Transit accepts the defense, or if they will insist on counsel of their own choice. Will set up another claim line and assign WLC. “ 20 “We also decided to withdraw the reservation of rights issued to the City, and CCM” (the attorneys already assigned by Burlington to defend Breaking Solutions) “should be able to pick up the defense of the City. Liability against the City would likely be found only under the Labor Law as property owner, and City can pass its liability down to Transit.” (492) By letter to the MTA, dated April 9, 2010 (530-534), Burlington, accepted the defense of the Authorities, under a reservation of rights premised on the definition of additional insured limiting such coverage to liability caused in whole or in part by acts or omissions of Breaking Solutions or of those acting for Breaking Solutions, “CG 2026 (7/04)” (531) and IFG-I-0160 (11/00)” (531-532), or limiting such additional insured coverage to liability “arising out of” Breaking Solution’s work, “IFG-G- 0055 (6/01)” (532); however, “IFG-G-0055 (6/01)” is not contained within the policy issued (362-445). Burlington has never represented that any of the endorsements relied on in that purported reservation of rights, “CG 2026 (7/04)” (531), IFG-I- 0160 (11/00), IFG-G-0055 (6/01)” (531-532), complied with Breaking Solution’s contractual duty to procure additional insurance having an “Additional Insured Endorsement” to be the “latest I.S.O. Form CG 20 10 or equivalent approved by the Authority” (302). 21 Although the affidavit of the Regional Claim Manager of Burlington, John K. Keizer, dated August 17, 2012 (1169-1172), maintains that Burlington withdrew its reservation of rights to the City as an accommodation to Breaking Solutions, Burlington advanced its own economic interests. Instead of having to continue to compensate two different attorneys to represent Breaking Solutions and the City, the withdrawal of the reservation of rights against the City compelled the City to permit Burlington to control the defense of the City. Burlington’s designation of the same defense counsel for the City (450-451) as it had already assigned to represent Breaking Solutions (340-350, 526-527, 528- 529) enabled Burlington to compensate one defense attorney to fulfill its duty to defend both Breaking Solutions and the City, rather than to pay two defense counsel. As noted above, the City accepted that nomination of Camacho Mauro Mullholland, LLP, to represent it on June 9, 2010 (528- 529), after Burlington, withdrew its reservation of rights as against the City. The Camacho firm thereafter provided simultaneous representation to the City and Breaking Solutions, enabling Burlington, to fulfill its duty to defend two of its insureds by one, rather than two, defense counsel, thereby advancing Burlington’s own financial interests. 4 4 Burlington’s Bill of Particulars, served pursuant to the Order that was then the subject 22 Defense counsel assigned by Burlington, to represent the Authorities, reported to Burlington on July 23, 2010, that a Transit Authority memorandum exchanged during discovery “concluded that the Brokk operators were not negligently operating the machines at the time of the accident” (535-538, especially 538). Defense counsel assigned by Burlington, to represent the Authorities, reported to Burlington on September 23, 2010 (539-549), on the depositions conducted in the Underlying Litigation, including those of: both plaintiffs (539-545; corresponding transcripts at 620-677 and 768-818); non-party deposition of John Mulhere, formerly employed by Breaking Solutions (545- 546; corresponding transcript at 741-767); and deposition of Breaking Solutions by John Amorosano, Jr. (547-548; corresponding transcripts at 678-740). That counsel advised that the third-party pleading against the Authorities, violated the anti-subrogation rule (548). Defense counsel assigned by the Burlington, to represent the Authorities, reported to Burlington on depositions taken of three Transit Authority workers on October 6, 2010, and again advised that the third-party of the third appeal concurrently taken to the Appellate Division, First Department, asserted it was entitled to recoup from the Transit Authority 50% of defense costs attributable to legal fees and expenses generated by the Camacho firm during that period of dual representation, in a further attempt to advance its own financial interests, additional evidence that Burlington did not withdraw its reservation of rights against the City as an accommodation for Breaking Solutions. 23 pleading against the Defendants-Appellants, the Authorities, violated the anti-subrogation rule (548; corresponding transcripts at 819-850, 851-914, 915-1061). Defense counsel assigned by the Burlington, to represent the Authorities, reported to Burlington on October 6, 2010, they had advised the United States District Court of their intent to move to dismiss the third-party action as being in violation of the anti-subrogation rule (556-557), and reminded Burlington, on October 15, 2010 of their intent to so move (558- 559). Defense counsel assigned by the Burlington, to represent the Authorities, stipulated on October 6, 2010, not to call as a witness Robert Czeres, formerly an employee of Breaking Solutions (567-568), and never deposed Artek Pelka, forgoing any attempt to depose or produce the operator of either of the two machines present on the date of the occurrence, one of which triggered the electrical explosion, effectively abandoning any effort to establish Breaking Solutions was even 1% at fault, which would have, even under Burlington’s view, triggered coverage to the Authorities, as additional insureds. Even if Robert Czeres had relocated to Poland, he could have been questioned under oath, by letters rogatory, by commission, or by getting the 24 witness to appear in New York at Burlington’s expense in furtherance of its duty to defend the Authorities. The attorneys assigned by Burlington, to represent the Authorities never caused either of the operating engineers employed by Breaking Solutions at the construction project, Artek Pelka a/k/a A. Wysocki or Robert Czeres (605, 606, 685, 700, 707, 722, 749, 685, 700), to be deposed, preventing any accumulation of proof to establish negligence by Breaking Solutions sufficient, even under Burlington’s interpretation of the additional insured endorsement at issue, to trigger indemnity coverage to the Defendants-Appellants, the Authorities. Defense counsel assigned by Burlington to represent the Authorities, reported to Burlington on November 9, 2010, that the City’s Answers to Interrogatories contained no new information, and reported said Answers to Interrogatories maintained the Transit Authority was solely responsible, repeating its intent to move to dismiss the third-party action as being in violation of the anti-subrogation rule (560-561; corresponding Answers to Interrogatories at 594-604, 605-619). Said Answers to Interrogatories maintained the Defendants- Appellants, the Authorities, violated 29 C.F.R. 1926.956 (c) (1), which states: 25 During excavation or trenching, in order to prevent the exposure of employees to the hazards created by damage to dangerous underground facilities, efforts shall be made to determine the location of such facilities and work conducted in a manner designed to avoid damage. (597) Said Answers to Interrogatories maintained the Authorities, violated their own internal rules, including Safety Rules and Regulations for Maintenance of Way-2003 11.66 and 12.02, which state: 11.66 Do not leave equipment, tools, or other objects in the pathway or on the platform where employees are required to walk, or where these items will constitute an obstruction, tripping, or slipping hazard. (597) 12.02 No tools, materials or equipment must be stored that blocks a pathway an employee is required to walk or an emergency exit. (597) By letter addressed to the MTA, dated December 10, 2010, (457-459), but not to the Transit Authority, Burlington purported to disclaim coverage to the Authorities, because Burlington, contended the accident did not arise out of the operations of its named insured, Breaking Solutions, without any representation that General Endorsement numbered “IFG-I- 0160 (11/00)” (454-456) was or was not in compliance with the contractual obligation of its named insured, Breaking Solutions, to provide an additional 26 insured endorsement to be the: “latest I.S.O. Form CG 20 10 or equivalent approved by the Authority” (302). Defense counsel assigned by the Burlington to represent the Authorities reported to Burlington on December 17, 2010 (563-565) awareness of the disclaimer by the Burlington, as to the Authorities, and expressed their intent to transfer their file to the Transit Authority. On March 7, 2011, Burlington initiated the action by a complaint then asserting a single cause of action seeking a declaratory judgment discharging it of any duty to provide coverage to the Authorities, because the additional insured endorsement limited additional insured coverage to injury or damage caused in whole or part to the acts or omissions of the named insured, Breaking Solutions, or those working on its behalf (109-117). The verification is by counsel (117), not made by an individual having personal knowledge of the facts, and, accordingly, it may not be deemed an affidavit pursuant to CPLR § 105(u). On March 23, 2011, the Authorities joined issue relative to that declaratory judgment complaint, and raised affirmative defenses including, but not limited to laches and bad faith dealings (588-593). The Memorandum and Order issued by Hon. Roslynn R. Mauskopf, 27 U.S.D.C. Judge, dated September 26, 2011, found that the Plaintiff- Respondent, Burlington had: “accepted the claims tendered by all parties, including Transit, around the time the complaint was filed”; “supervised its insureds’ conduct of their litigation, including the conduct of discovery”; noted that the “City has conceded liability to plaintiffs for violating §240(1)”; concluded that the “post-discovery filing” of the impleader by the City “impacted Transit’s ability to conduct meaningful discovery for itself with respect to the main action”; observed that the City’s filing of the impleader “raises concerns as to the timeliness of Burlington’s disclaimer”, citing N.Y. Ins. Law §3420(d), which requires an insurer to notify its insured ‘as soon as reasonably possible’ of its intention to disclaim coverage; noted that the parties had “raised concerns about the propriety of the third-party complaint in light of the anti-subrogation rule”, that bars an insurer’s “right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered” citing N. Star Reins. Corp. v. Cont’l Ins. Co., 82 N.Y.2d 281, 284 (1993); 28 rejected the position of the Burlington that its disclaimer negated any application of the anti-subrogation rule, “as the anti-subrogation rule is triggered by the bringing of an action”; and, the federal Court dismissed the Third-Party Action; and, on application of the Plaintiffs, who already had obtained a so-ordered stipulation establishing the City had conceded liability by reason of its violation of Labor Law §240(1), without any opposition to that application, dismissed “all” claims against Breaking Solutions, with prejudice. (569-577, especially 577) The dismissal of all claims against Breaking Solutions, with prejudice (577) included a dismissal of the cross-claim by the Authorities against Breaking Solutions for its failure to procure commercial general liability coverage in the amount of $2,000,000.00 (301) providing additional insured coverage for the Authorities, in accordance with the “latest I.S.O. Form CG 20 10 or equivalent approved by the Authority” (302). The Authorities’ attorney of record, appointed by Burlington, made no objection. The defense counsel appointed by the Burlington to represent the Authorities stood silent as the Authorities’ claim against Breaking Solutions for breach of contract to procure additional insured coverage under the contract specified endorsement was dismissed, and Burlington later predicated its disclaimer 29 on the purported absence of additional insured coverage afforded to the Authorities. The Declaratory Judgment Action with a Federal Court venue was dismissed under the abstention doctrine, deferring to the above captioned litigation, by Order and Opinion issued by Hon. Allyne E. Ross, U.S.D.J., dated December 23, 2011 (578-587). The Authorities, partially based their opposition (1222-1273, 1274- 1275), to the motion of Burlington, for summary judgment, which motion became the basis of the Order that was the subject of the second concurrent appeal to the Appellate Division, First Department, on the need to conduct depositions of the Burlington, as to why it made patently improper claims handling practices that prejudiced the Authorities (1241, 1255-1256, 1274- 1275). That discovery was never provided. The unverified, amended complaint that added a second cause of action against the Transit Authority, only (118-128), as limited by the Order (42-65) that was the subject of the second concurrent appeal to the Appellate Division, First Department, asserts a cause of action based on equitable subrogation of the City’s contractual indemnity claim against the Transit Authority. That written contractual indemnity provision is found in the Record on Appeal (1131-1166, 1145). 30 The Transit Authority, joined issue as to the amended complaint (1379-1387). MTA, joined issue as to the amended complaint (1375-1378). Both raised the following affirmative defenses, among others: that Burlington had unclean hands (1381, 1376-1377); that Burlington engaged in bad faith claims handling procedures (1381, 1376-1377); that Burlington exercised its control over the defense of the Transit Authority in the Underlying Litigation to prejudice the Authorities (1382, 1376-1377); that Burlington could not seek defense costs, including attorneys’ fees, incurred to prosecute the third-party action in the Underlying action (1383, 1376- 1377) or incurred during dual representation of the City and Breaking Solutions (1382, 1376-1377); and laches (1384, 1376-1377). 31 ARGUMENT I THE ANTI-SUBROGATION RULE BARS AN INSURER, AS SUBROGEE OF THE CITY OF NEW YORK, FROM SEEKING CONTRACTUAL INDEMNITY FROM THE NEW YORK CITY TRANSIT AUTHORITY, FOR THE AMOUNTS THE INSURER PAID TO SETTLE AND DEFEND THE UNDERLYING ACTION ON BEHALF OF THE SUBROGOR, WHERE THE NEW YORK CITY TRANSIT AUTHORITY, AND BOTH THE METROPOLITAN TRANSPORTATION AUTHORITY AND THE CITY OF NEW YORK, WERE AFFORDED COVERAGE BY THAT INSURER’S ENDORSEMENT AS ADDITIONAL INSUREDS FOR LIABILITY FOR BODILY INJURY, CAUSED, IN WHOLE OR IN PART, BY THE NAMED INSURED’S ACTS OR OMISSIONS IN THE PERFORMANCE OF THE NAMED INSURED’S ONGOING OPERATIONS, WHERE THE NAMED INSURED’S EMPLOYEE’S OPERATION OF HIS EMPLOYER’S MACHINE RESULTED IN AN ELECTRICAL EXPLOSION THAT PROVIDED THE REQUISITE FACTUSAL NEXUS TO THE INJURY IN THE UNDERLYING ACTION The Decision of the Appellate Division, First Department, is consistent with the plain meaning of the additional insured endorsement 32 and principles of contract interpretation, and as such the absence of ambiguity renders the purported intent of the draftsman immaterial. The Decision of the Appellate Division, First Department, cogently reasoned that the Authorities were additional insureds under the liability insurance policy issued by Burlington to Breaking Solutions, safeguarded by the anti-subrogation rule: 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 Burlington Insurance Company (Burlington) for the subject loss under policy endorsements making defendants additional insureds, in pertinent part, "only with respect to liability for bodily injury,' . . . caused, in whole or in part, by [the named insured's] acts or omissions . . . [i]n the performance of [the named insured's] ongoing operations[.]" The record establishes that the injury to the plaintiff in the underlying action (who was not an employee of the named insured) was caused by an "act" of the named insured in its ongoing operations on behalf of defendants, even though the record also establishes that the named insured was not at fault for causing the accident. This Court's most recent precedents have construed additional insured endorsements containing substantially the same "acts and omissions" language as do the endorsements at issue here as providing additional insured coverage where there is a causal link between the named insured's conduct and the injury, regardless of whether the named insured was negligent or otherwise at fault for causing the 33 accident. Adhering to these precedents, we hold that defendants were entitled to coverage as additional insureds in the underlying action under the subject insurance policy. Given that the policy covers defendants for this loss, the anti- subrogation rule bars Burlington from recovering, as subrogee of the City of New York, contractual indemnification from defendant NYCTA, under the lease agreement between the City and NYCTA, for the amounts Burlington has paid to defend and settle the underlying action on behalf of the City.” (Exhibit “A”, annexed to Burlington’s Notice of Motion; Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 128, 129 [1st Dep’t. 2015]) The Decision of the Appellate Division, First Department, identified the policy language at issue: 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.”[FN1] (Exhibit “A”, annexed to Burlington’s Notice of 34 Motion; Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 129 [1st Dep’t. 2015]). Footnote 1: Two separate endorsements to the Burlington policy are in play, although the scope of coverage under each is not materially different for purposes of this appeal. The first, on ISO form CG 20 26 07 04, captioned "Additional Insured — Designated Person or Organization," designates NYCTA, but not MTA or the City, as an additional insured, and provides coverage in pertinent part "only with respect to liability for bodily injury,' . . . caused, in whole or in part, by your [i.e., Breaking Solutions'] acts or omissions or acts or omissions of those acting on your behalf: A. In the performance of your ongoing operations[.] "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 "only with respect to liability for bodily injury,' . . . caused, in whole or in part, by: 1. Your acts or omissions; or 2. The acts or omissions of those acting on your behalf; in the performance of your ongoing operations for the additional insured." (Exhibit “A”, annexed to Burlington’s Notice of Motion; Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 139 [1st Dep’t. 2015]). The Decision of the Appellate Division, First Department, cogently reasoned that the Authorities were additional insureds under the liability insurance policy issued by Burlington to Breaking Solutions, even in the absence of negligence by that named insured: As stated at the outset of this opinion, we reverse on the ground that, under this Court's recent 35 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 [FN5]. While it is true that, because NYCTA had not warned the Breaking Solutions' operator of the cable's presence, Breaking Solutions' "act[]" did not constitute negligence, this does not change the fact that the act of triggering the explosion, faultless though it was on Breaking Solutions' part, was a cause of Kenny's injury. The language of the relevant endorsement, on its face, defines the additional insured coverage afforded in terms of whether the loss was "caused by" the named insured's "acts or omissions," without regard to whether those "acts or omissions" constituted negligence or were otherwise actionable.” (Exhibit “A”, annexed to Burlington’s Notice of Motion; Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 134, 135 [1st Dep’t. 2015]). Footnote 5: Although Burlington has argued vigorously throughout this action that Breaking Solutions did not act negligently, nowhere in the record or in its appellate brief do we understand Burlington to have argued that there was no causal connection between the explosion triggered by the Breaking Solutions excavator and Kenny's fall. Kenny's deposition testimony certainly supports the view that the explosion was a direct cause of his fall. Kenny testified that, while he was working on the elevated platform 36 (called a "bench wall") in the subway tunnel, he sensed "a foam of heat, like a flash of light occurred with a big explosion. That's when I felt the heat come from like the ceiling behind me and I lost my balance and I landed on the invert [the foundation of the tunnel] heels first." He also testified that, when he arrived at the hospital, he told the triage nurse that "I was just in an explosion and I fell from a bench wall." Similarly, he testified that he told the track supervisor that, "[a]t the time of the explosion, it caused me to lose my balance and fall off the wall, off the bench wall." (Exhibit “A”, annexed to Burlington’s Notice of Motion; Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 139 [1st Dep’t. 2015]). The Decision of the Appellate Division, First Department, cogently applied case precedent for the rule of law that a policy endorsement extending coverage to additional insureds for losses “caused by” the named insured’s “acts or omissions” or “operations” is not dependent on any proof of negligence or other fault attributable to the named insured in order for the additional insured to be entitled to coverage: 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 37 or otherwise at fault. In W & W Glass Sys., Inc. v Admiral Ins. Co. (91 AD3d 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])[FN6]. Similarly, in National Union Fire Ins. Co. of Pittsburgh, PA v Greenwich Ins. Co. (103 AD3d 473 [1st Dept 2013]), where the additional insured endorsement applied to "bodily injury caused, in whole or in part, by [the named insured's] acts or omissions or the acts or omissions of those acting on the [named insured's] behalf" (id. at 474), in holding the additional insured covered for the loss in question, we expressed the view that the phrase "caused by" "does not materially differ" from the phrase, arising out of'" (id. [internal quotation marks omitted]), necessarily excluding any requirement of a negligence trigger for coverage. Finally, in Strauss Painting, Inc. v Mt. Hawley Ins. Co. (105 AD3d 512 [1st Dept 2013], mod on other grounds 24 NY3d 578 [2014]), we expressly held that a finding of negligence against the named insured was not required to support additional insured coverage where “[t]he additional insured endorsement speaks in terms of acts or omissions,' not negligence. Thus, in the unlikely event that it would be found that some non-negligent act by plaintiff [the named insured] caused the accident, the Met [the additional insured] would still be entitled to coverage under the additional insured endorsement" (id. at 513).[FN7] Notably, last year, in Liberty Mut. Ins. Co. v Zurich Am. Ins. 38 Co. (2014 WL 1303595, 2014 US Dist LEXIS 42471 [SD NY, March 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 AD3d 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: 39 “The loss at issue in the underlying action — a personal injury suffered by an . . . employee [of the named insured, Arcadia] when he lost his footing on a stairway while working on a construction project — resulted, at least in part, from the acts or omissions' of the Arcadia employee while performing his work (i.e., his loss of footing while on the stairway), regardless of whether the Arcadia employee was negligent or otherwise at fault for his mishap" (id., citing Strauss Painting and W & W Glass). 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." (Exhibit “A”, annexed to Burlington’s Notice of Motion; Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 135-137 [1st Dep’t. 2015]). “Footnote 6: Notably, while the endorsement in W & W Glass “further provided that it does not apply to liability caused by the sole negligence of the person or organization [named as an additional insured]” (91 AD3d at 530), Breaking Solution’s Burlington policy contains no such limitation on additional insured coverage." (Exhibit “A”, annexed to Burlington’s Notice of Motion; Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 139 [1st Dep’t. 2015]). “Footnote 7: The Strauss Painting record shows that the additional insured endorsement in that case afforded coverage, in pertinent part, “only 40 with respect to liability for bodily injury,’…caused, in whole or in part, by…[the named insured’s] acts or omissions[.]” This is essentially the same language at issue here. As indicated, the Court of Appeals’ modification of our decision in Strauss Painting was on a different issue, and the Court of Appeals did not discuss this aspect of our Strauss Painting decision." (Exhibit “A”, annexed to Burlington’s Notice of Motion; Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 139 [1st Dep’t. 2015]). The contention by Burlington that the Decision of the Appellate Division, First Department, is inconsistent with the plain language of the endorsement is inaccurate. The endorsement does not condition coverage upon a finding that the named insured’s acts or omissions were negligent or otherwise actionable, or that such negligent or otherwise actionable acts or omissions of the named insured have been either the only proximate cause or a proximate cause of the injury. Burlington does not cite any New York authority to support its contention that “caused by” requires a showing of proximate causation. The phrase “in whole or in part” has not been rendered superfluous and without meaning. Without the phrase “in whole or in part”, the endorsement would, arguably, provide an additional insured coverage, only if the named insured’s acts or omissions were the only, or sole, cause of the loss; without that phrase, coverage would, 41 arguably, exist sufficient to trigger the duty to defend, but would provide only an illusion of indemnity; accordingly, the phrase “in whole or in part” is necessary to avoid an illogical result. Burlington’s reliance upon Schwartz v. Merola Bros. Construction Corp., 290 N.Y. 145 [1943] is misplaced. Therein, this Court held an owner would be entitled to contractual indemnity from the contractor unless the owner had been affirmatively negligent, a limitation of indemnity inapplicable to an insurance contract of indemnity. Therein, the indemnity provision provided: “Indemnification: (1) The Contractor [Merola] agrees to indemnify and save harmless the Owner against loss * * * by reason of the liability imposed by law upon the Owner for damages because of bodily injuries * * * accidentally sustained by any person or persons and/or on account of damage to property, due to any act or omission of the Contractor, his employees or agents, arising out of the work of the Contractor as contemplated under this Agreement * * *.”[290 N.Y. at 153] Burlington’s reliance upon Red Ball Motor Freight, Inc. v. Employer’s Mut. Liability Ins. Co., 189 F.2d 374, 378 [5th Cir. 1951] is misplaced. Therein, coverage was held to exist under an “arising out of use” trigger, not the “caused, in whole or part” language at issue in the instant appeal. 42 Burlington’s reliance upon Shannon v. B.L. England Generating Station, 2013 U.S. Dist. LEXIS 168715 [D.N.J. Nov. 27, 2013] is misplaced. Therein, New Jersey law was applied to an additional insured endorsement that expressly excluded coverage for the negligent acts or omissions of the additional insured (“The person or organization does not qualify as an additional insured with respect to the independent acts or omissions of such person or organization.”); in the endorsement at issue in the instant appeal, no such terms are present. Burlington’s reliance upon Utica Nat’l Ins. Co. of Texas v. Am. Indem. Co., 141 S.W.3d 198 [Tex. 2004] and upon Gilbane Building Company v. Admiral Ins. Co., 664 F.3d 589 [5th Cir. 2011] is misplaced. Texas law in both cases required fair notice of intent to indemnify for the indemnitee’s negligence; New York excludes insurance policies from the ambit of GOL §5-322.1(1 and 2). Ordinary contract principles do not support the claim that a proximate cause trigger was required. Burlington’s reliance upon Cragg v. Allstate Indem. Corp., 17 N.Y.3d 118, 122 [2011] is misplaced. Therein, this Court held an insurance policy exclusion negating coverage for an intra-family loss “whenever any benefit of this coverage would accrue directly or 43 indirectly to an insured” (17 N.Y.3d 122) was ambiguous, and construed that ambiguity against the insurer that drafted the language at issue. This Court held the provision referred to a benefit other than the coverage, itself, and that the wrongful death claim asserted, belonging to the distributee, not derivative to the deceased relative, was not excluded from coverage. Burlington’s reliance upon Westview Assocs. v. Guar. Nat’l Ins. Co., 95 N.Y.2d 334, 339 [2000] is misplaced. Therein, this Court held an insurer had a duty to defend its insured from a lead paint injury claim; the duty to indemnify was not before this Court. Therein, one of two parts of the excess policy expressly provided coverage for risks not covered by the primary policy, and that part did not specifically exclude lead paint exposure claims, expressly or by incorporation. Burlington’s reliance upon Olin Corp. v. Am. Home Assur. Co., 704 F.3d 89, 98 [2nd Cir. 2012] is misplaced. Therein, rules of contract construction were articulated, including: “words and phrases [in a contract] should be given their plain meaning”; words and phrases do not become ambiguous merely because parties urge different interpretations; and, even if ambiguity were to exist, New York adopts 44 the rule of contra proferentem, with any ambiguity resolved in favor of the insured. Herein, no ambiguity exists; assuming arguendo, that ambiguity exists, it should be resolved in favor of the additional insureds, including the Transit Authority. Burlington’s reliance upon Union Carbide Corp. v. Affiliated FM Ins. Co., 68 A.D.3d 534, 535-536 [1st Dep’t. 2009] is misplaced. Therein, no ambiguity existed in excess insurance policies’ aggregate limits of liability in a multi-year policy periods. Those monetary limits were not stated on an annual basis. Burlington’s reliance upon Nomura Holding Am., Inc. v. Fed. Ins. Co., 45 F. Supp.3d 354, 367 [S.D.N.Y. 2014] is misplaced. No policy language at issue therein is at issue herein. The phrase “in whole or in part” has not been rendered superfluous and without meaning. Without the phrase “in whole or in part”, the endorsement would, arguably, provide an additional insured coverage, only if the named insured’s acts or omissions were the only, or sole, cause of the loss; that coverage would exist sufficient to trigger the duty to defend, but would provide only an illusion of indemnity; 45 accordingly, the phrase “in whole or in part” is necessary to avoid an illogical result. Also, liability predicated on a violation of Labor Law §240 does not require any proof of negligence, Blake v. Neighborhood Hous. Servs. of New York City, Inc., 1 N.Y.3d 280, 287-288 [2003]. Burlington’s additional insured endorsement did not exclude coverage to the additional insured where the additional insured was solely negligent, as was worded in the policy of insurance in W & W Glass Sys., Inc. v Admiral Ins. Co., 91 A.D.3d 530 [1st Dept. 2012], and Burlington cannot claim the language used was an equivalent substitute. Although Pro Con Inc. v. Interstate Fire & Cas. Co., 794 F. Supp. 2d 242 [D. Me. 2011] is authority applying the law of Maine and Consolidated Coal Co., Inc. v. Liberty Mut. Ins. Co., 406 F. Supp. 1292, 1300-01 [W.D. Pa. 1976] is authority applying the law of Pennsylvania, contrary to the Decision of the Appellate Division, First Department, herein, Pro Con Inc. and Consolidated Coal Co., Inc. do not negate the cogent reasoning of the Appellate Division, First Department. If the insurer had intended to limit coverage under an additional insured endorsement to circumstances when the additional insured was vicariously liable, it could have done so, and having failed to do so, the 46 additional insured endorsement provides coverage for the negligence of the additional insured, Merchants Insurance Company of New Hampshire, Inc. v. United States Fidelity & Guaranty Co., 143 F.3d 5 [1st Cir. 1998]; McIntosh v. Scottsdale Ins. Co., 992 F.2d 251, 254-255 [10th Cir., 1993]; Dayton Beach Park No. 1 Corp v. National Union Fire Ins. Co., 175 A.D.2d 854 [2nd Dep’t. 1991]. Burlington’s contention that there would never be a situation where an act of the named insured would not satisfy a “but for” test ignores the fact that no “but for” test was adopted. Also, Burlington’s contention that the holding of the Appellate Division, First Department, equating “arising from” with “caused, in whole or in part” would impose limitless additional insured coverage is contradicted by this Court’s holding in Worth Constr. Co. v. Admiral Ins. Co., 10 N.Y.3d 411 [2008]. Burlington’s reliance on Stewart v. Federated Dep’t. Stores, 662 A.2d 753 [Conn. 1995], citing W. Prosser & W. Keeton, Torts [5th Ed. 1984] § 41, is misplaced. Stewart is not a coverage case. Burlington’s reliance upon Argentina v. Emery World Wide Delivery Corp. 93 N.Y.2d 554 at 561 n.2 (1999) and upon N.Y. Pattern Jury Instructions PJI § 2.70 is misplaced. No one disputes that more 47 than one proximate cause can co-exist; herein, the policy endorsement at issue does not require the existence of any proximate cause. In Argentina v. Emery World Wide Delivery Corp. 93 N.Y.2d 554 at 560 and 563 (1999), this Court answered the two certified questions: first, “a vehicle’s owner can be vicariously liable under section 388 (1) for injuries resulting from the permissive user’s negligent loading and unloading”; and, second, “for claims under section 388 (1) of the Vehicle and Traffic Law, the vehicle itself need not be a proximate cause of the injury.” Argentina militates against, not in favor, of Burlington’s contentions herein. Liability in the absence of proximate cause is permissible. Burlington’s reliance upon Rodrigues v. N&S Bldg. Contrs., Inc., 5 N.Y.3d 427 [2005] is misplaced. Therein this Court addressed whether a contract of indemnity satisfied the requirements of W.C.L. §11, and held that it did even though the writing did not specify any particular construction site. Therein this Court also held it was enforceable to the extent the indemnitor was not negligent. Therein, this Court implicitly recognized that G.O.L §5-322.1 prohibits enforcement of indemnity agreements that contemplate partial contractual indemnity to the extent that the indemnitee is negligent. However, therein this 48 Court was not adjudicating the enforceability of an insurance contract, and G.O.L §5-322.1 (1 and 2) expressly states: “provided that this section shall not affect the validity of any insurance contract, workers' compensation agreement or other agreement issued by an admitted insurer.” In Brown v. Two Exchange Plaza, 76 N.Y.2d 172 [1990], this Court held a contractual indemnity provision in a construction contract was enforceable against an indemnitor that was not negligent. Therein, the contract indemnitor was a subcontractor that employed the plaintiff, who fell from a scaffold that collapsed, but another subcontractor had erected the scaffold that collapsed. This Court held: Therefore, although there is no evidence of negligence on A & M's part, the indemnification agreement requires A & M to indemnify Fuller (see, Walsh v. Morse Diesel, 143 A.D.2d 653, 654–655, 533 N.Y.S.2d 80).” Brown v. Two Exchange Plaza, 76 N.Y.2d 172 at 178 [1990] In Brown v. Two Exchange Plaza, 76 N.Y.2d 172 at 178 (1990), this Court identified the construction contract terms that required indemnity to be provided in either of two circumstances: (1) “where a claim arose out of, in connection with or as a consequence of the performance of” the indemnitor’s work, or, (2) “where a claim arose out of the “acts or omission[s]” of the indemnitor. 49 Burlington seeks to require insurance contracts, a type of indemnity contract, to limit coverage to an additional insured only when the named insured’s acts or omissions were negligent or actionable, despite the absence of language requiring same, yet Burlington fails to offer any reason why, in a non-insurance context, contractual indemnity is enforceable against a non-negligent indemnitor. Burlington also seeks to limit its additional insured coverage to those claims arising from the work, so long as the additional insured is not the sole proximate cause of the accident, despite the absence of any insurance policy endorsement language so limiting additional insured coverage, without any reference to the record preserving that argument. The plain language of the endorsement ("only with respect to liability for bodily injury,' . . . caused, in whole or in part, by [the named insured's] acts or omissions . . . [i]n the performance of [the named insured's] ongoing operations [.]"), does not limit or exclude additional insured coverage depending on whether or not the named insured’s acts or omissions were negligent or otherwise actionable. Similarly, the plain language of the endorsement ("only with respect to liability for bodily injury,' . . . caused, in whole or in part, by [the named insured's] acts or omissions . . . [i]n the performance of [the named insured's] ongoing 50 operations [.]"), does not limit or exclude additional insured coverage depending on whether or not the additional insured’s acts or omissions were the sole proximate cause of the injury. Burlington’s reliance upon Raven v. Universal Straping Corp. 131 A.D.3d 595 [2nd Dep’t. 2015] is misplaced. Therein the tenant had no obligation to maintain the portion of the premises where the accident occurred, and the contractual indemnity provision limited the tenant’s duty to provide contractual indemnity to those claims “arising out of or in connection with any act or omission of tenant.” Burlington’s attempt to rely on extrinsic evidence of the intent of the draftsman is misplaced. As stated in the Decision of the Appellate Division, First Department: Although it may be that the insurance service institution that drafted the endorsement forms defining additional insured coverage in terms of "acts or omissions" intended that language to restrict coverage to liability arising, at least in part, from the fault of the named insured (see William Cary Wright and Clifford Shapiro, Construction Contract Indemnities, the "Insured Contract," and Additional Insured Coverage, in Construction Insurance: A Guide for Attorneys and Other Professionals, at 162-163, 175 n 94 [2011]), the fact remains that no words referring to the negligence or fault of the named insured were included in the endorsement itself. We construe only the actual language used in the 51 policy forms itself, without reference to extrinsic evidence of the subjective intentions of those who drafted the forms years before the parties contracted.” (Exhibit “A”, annexed to Burlington’s Notice of Motion; Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 138 [1st Dep’t. 2015]). The holding in Burlington Ins. Co. v. NYC Tr. Auth., 132 A.D.3d 127 [1st Dep’t. 2015]) has been followed in: Zurich American Insurance Company v. Harleysville Insurance Co., 2016 WL 3766394 [U.S.D.C., S.D.N.Y., 2016]; Pearson Capital Partners LLC v. James River Insurance Company, 151 F. Supp.3d 392 [U.S.D.C., S.D.N.Y., 2015]; Engasser Const. Corp. v. Dryden Mut. Ins. Co., 134 A.D.3d 1516 [4th Dep’t., 2015]; and HBE Corporation v. Harleysville Group, Inc., 2015 WL 5750114 [U.S.D.C., N.D.N.Y., 2015]. Courts afford the provisions and terms of an insurance policy their plain and ordinary meaning where, as the case herein, they are unambiguous. Burlington cannot unilaterally, retroactively redraft the plain, unambiguous and ordinary meaning of the endorsement at issue to escape application of the anti-subrogation rule. 52 Assuming, arguendo, that any ambiguity exists, it must be construed against the draftsman. Burlington’s contention that the Decision forming a partial basis of the Judgment is inconsistent with the parties’ reasonable expectations presumes to define the reasonable expectations of the additional insureds, who expected additional insured endorsement coverage would exist without regard to whether or not any negligence attributable to the named insured existed; the additional insureds, including the City of New York, as well as both the Transit Authority and the MTA, reasonably expected additional insured coverage would exist relative to the facts of this case under the terms of the additional insured endorsement at issue. The Decision of the Appellate Division, First Department, is consistent with decisions issued by this Court. Burlington’s reliance upon Maroney v. New York Cent. Mut. Fire Ins. Co., 5 N.Y.3d 467 at 472 (2005) is misplaced. Therein, the homeowner’s policy provided no coverage for a barn, where a commercial operation, a stable, was operated. The injury, occasioned by the kick of a horse, did not arise out of the insured premises. This Court 53 expressly limited its description of the significance of “arising out of” to uninsured motorist insurance. Burlington’s reliance upon Worth Constr. Co. v. Admiral Ins. Co., 10 N.Y.3d 411 [2008] is misplaced. Therein, the additional insured endorsement was limited to liability arising from the named insured’s operations, and, factually, did not apply because the defective condition was fireproofing applied by a different sub-contractor. Fireproofing was beyond the scope of the named insured’s contract scope of work. The additional insured was no longer on the construction site, and the accident occurred before it was obligated to return to the site to install handrails. Worth did not impose a requirement that the named insured have been negligent in order to afford insurance coverage to an additional insured. Herein, in contrast to the facts in Worth, the dangerous or defective condition arose, as a matter of law, out of the acts or omissions of Breaking Solutions, the named insured. The endorsement at issue herein does not limit additional insured coverage to circumstances where the named insured was negligent or otherwise at fault; accordingly, the additional insureds were entitled to insurance coverage under the additional insured endorsement at issue. 54 Burlington’s reliance upon Regal Constr. Corp. V. National Union Fire Ins. Co. of Pittsburgh, PA, 15 N.Y.3d 34 (2010) is misplaced. Therein, the facts in Worth were distinguished because the accident arose out of the named insured’s operations. This Court stated: We have interpreted the phrase “arising out of” in an additional insured clause to mean “originating from, incident to, or having connection with” (Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467, 472 [2005] [internal quotation marks and citations omitted]). It requires “only that there be some causal relationship between the injury and the risk for which coverage is provided” (id.). 15 N.Y.3d 34 at 38 Regal Constr. Corp. V. National Union Fire Ins. Co. of Pittsburgh, PA, 15 N.Y.3d 34 (2010) held that URS was an additional insured under the policy issued to Regal even though URS allegedly created the wet paint slippery condition, precisely because the accident arose from the named insured’s operations as construction manager. Similarly, herein, the Transit Authority was an additional insured despite the allegation that it negligently caused the accident, precisely because Mr. Kenny’s accident originated from, had a connection with, and had some causal connection with the risk for which coverage was provided, the on-going operations of the named insured, Breaking Solutions. 55 Herein, in contrast, the named insured’s machine, operated by an employee of the named insured, during the named insured’s on-going operations, made contact with an energized circuit, and that act caused, at least in part, an electrical explosion and the resulting injury; accordingly, the additional insured endorsement at issue herein applies. The Decision issued by the Appellate Division, First Department, is consistent with this earlier decisions of the Appellate Division. Case law decided by the Appellate Division, First Department, pre-dating the Decision of the Appellate Division, First Department, which Burlington appeals herein, interpreted additional insured endorsements having the same, or virtually, the same language as is at issue herein; all held that coverage for an additional insured is not dependent on whether or not the named insured was negligent: W & W Glass Sys., Inc. v Admiral Ins. Co., 91 A.D.3d 530 [1st Dep’t. 2012]; National Union Fire Ins. Co. of Pittsburgh, PA v Greenwich Ins. Co., 103 A.D.3d 473 [1st Dep’t. 2013]; Strauss Painting, Inc. v Mt. Hawley Ins. Co., 105 A.D.3d 512 [1st Dep’t. 2013], mod on other grounds 24 N.Y.3d 578 (2014); and, Kel-Mar Designs, Inc. v Harleysville Ins. Co. of N.Y., 127 A.D.3d 662 [1st Dep’t. 2015]. Also, in accord, is Liberty 56 Mut. Ins. Co. v Zurich Am. Ins. Co., 2014 WL 1303595, (U.S.D.C., S.D.N.Y., 2014). Each of these cases is described above, and the descriptions of these cases in Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 135-137 and 139 [1st Dep’t. 2015]) is incorporated herein as if set forth at length. As coverage of the additional insureds under the endorsement terms at issue renders the named insured’s negligent or other actionable acts or omissions immaterial; proximate causation linking the named insured’s acts or omissions to the injury is also immaterial. The plain language of the endorsement ("only with respect to liability for bodily injury, . . . caused, in whole or in part, by [the named insured's] acts or omissions . . . [i]n the performance of [the named insured's] ongoing operations [.]"), does not limit or exclude additional insured coverage depending on whether or not the named insured’s acts or omissions were negligent or otherwise actionable. Similarly, the plain language of the endorsement ("only with respect to liability for bodily injury, . . . caused, in whole or in part, by [the named insured's] acts or omissions . . . [i]n the performance of [the named insured's] ongoing operations[.]"), does not limit or exclude additional insured coverage 57 depending on whether or not the named insured’s acts or omissions were the sole proximate cause, or a proximate cause, of the injury. Burlington’s reliance upon Crespo v. City of New York, 303 A.D.2d 166 [1st Dep’t. 2005] is misplaced. The Decision of the Appellate Division, First Department, cogently distinguished Crespo v. City of New York, 303 A.D.2d 166 [1st Dep’t. 2005]: In reaching a contrary conclusion, Supreme Court relied on an older decision of this Court, Crespo v City of New York (303 AD2d 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.[FN8] Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 137 [1st Dep’t. 2015]) 58 Burlington’s reliance upon American Guar. & Liab. Ins. Co. v. CNA Reins. Co., 16 A.D.2d 154 (1st Dep’t. 2005) is misplaced. The Decision of the Appellate Division, First Department, cogently distinguished American Guar. & Liab. Ins. Co. v. CNA Reins. Co., 16 A.D.2d 154 (1st Dep’t. 2005): Footnote 8: Also distinguishable is American Guar. & Liab. Ins. Co. v CNA Reins. Co. (16 AD3d 154 [1st Dept 2005]), where we held that the putative additional insured, a landlord, was covered under its security contractor's liability policy "only for injuries arising from security guard negligence" (id. at 155). The plaintiff in the personal injury action underlying American Guarantee was a tenant who had been shot by intruders. To accept the landlord's position in American Guarantee would have been tantamount to treating the security contractor as the cause of any intrusion into the building its employees failed to prevent. In this case, NYCTA's and MTA's claim to additional insured coverage is based on an affirmative act by Burlington's named insured that triggered the loss, not on the named insured's failure to prevent wrongdoing by an unrelated third party.” Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 at 139 [1st Dep’t. 2015]) Burlington’s reliance upon Aetna Cas. & Surety Co. v. Liberty Mut. Insd. Co., 91 A.D.2d 317 [4th Dep’t.1983] is misplaced. Therein, a truck exploded due to improper loading of explosives. Although the Court noted therein that the term “arising out of” has broader 59 significance than the words “caused by”, this case does not address whether “caused by” requires proof of negligence or other actionable conduct, or whether “caused by” requires proof of proximate causation. Further, the term “caused by” is not the policy term herein; rather the endorsement at issue is: "only with respect to liability for bodily injury,' . . . caused, in whole or in part, by [the named insured's] acts or omissions . . . [i]n the performance of [the named insured's] ongoing operations [.]") It is noteworthy that of the one of the cases that have cited with approval and held in accordance with Burlington Ins. Co. v NYC Tr. Auth., 132 A.D.3d 127 [1st Dep’t. 2015]), was decided by the Appellate Division, Fourth Department, militating against any finding of conflict between various Departments of the Appellate Division: Engasser Const. Corp. v. Dryden Mut. Ins. Co., 134 A.D.3d 1516 [4th Dep’t., 2015]. Although Burlington suggests that cases decided under the laws of States other than New York are virtually uniform in reaching a conclusion opposite to that adopted by the Decision of the Appellate Division, First Department, at least some of the cases decided under Sister State law had additional insured endorsements that expressly 60 excluded coverage for the negligent acts or omissions of the additional insured (“The person or organization does not qualify as an additional insured with respect to the independent acts or omissions of such person or organization.”), Shannon v. B.L. England Generating Station, 2013 U.S. Dist. LEXIS 168715 [D.N.J. Nov. 27, 2013]; (expressly excluded additional insured coverage for liability for damages caused by independent acts or omissions of the additional insured) Engineering & Construction Innovations, Inc. v. L.H. Bolduc Co., 825 N.W.2d 695 [Minn. 2013]. The additional insured endorsement at issue had no comparable term that excluded coverage for the independent acts or omissions of the additional insured. Also, earlier cases, interpreting earlier additional insured endorsements, similarly observed that the failure of the policy terms to exclude coverage when the additional insured was vicariously liable, resulted in coverage being afforded to the additional insured for its own negligence, Merchants Insurance Company of New Hampshire, Inc. v. United States Fidelity & Guaranty Co., 143 F.3d 5 [1st Cir. 1998]; McIntosh v. Scottsdale Ins. Co., 992 F.2d 251, 254-255 [10th Cir., 1993]. The Courts of New York are under no obligation to seek uniformity with other jurisdictions as to how additional insured 61 endorsements should be interpreted, where a commercial liability policy was issued in New York to a New York named insured, identifying New York additional insureds. No cogent reasoning of the Decision of the Appellate Division, First Department, remains valid, without regard to how the courts of other jurisdictions interpret other policies of insurance. For all of the above reasons, the Authorities are entitled to additional insured coverage, and the benefit of the anti-subrogation rule. 62 II ASSUMING, ARGUENDO, THAT THE ANTI-SUBROGATION RULE DOES NOT BAR THE CONTRACTUAL INDEMNITY CLAIM, THE INSURER CANNOT SUBROGATE BASED ON PAYMENTS IT VOLUNTARILY MADE AS PART OF ITS IMPROPER CLAIMS HANDLING PRACTICES INTENDED TO SHIFT LIABILITY TO THE NEW YORK CITY TRANSIT AUTHORITY Assuming, arguendo, that the additional insureds were not entitled to coverage, then the payment on behalf of the City of New York was voluntary, as part of a pattern of unfair claims handling practices, and cannot support a subrogation claim. Burlington’s application for leave to amend its complaint, pursuant to CPLR § 3025(b), to assert a cause of action for contractual indemnification as the equitable subrogee of the City in its capacity as an additional insured of Burlington warranted denial because the proposed amendment was, as a matter of law, “palpably insufficient and patently devoid of merit”, East Asiatic Co. v. Corash, 34 A.D. 432 [1st Dep’t. 1970]; G.K. Alan Assoc., Inc. v. Lazzari, 44 A.D.3d 95 [2nd Dep’t., 2007]; Bolanowski v. Trustees of Columbia University in City of New York, 21 A.D.3d 340 [2nd Dep’t., 2005]; Norman v. Ferrara, 107 A.D.2d 739 [2nd Dep’t. 1985]; and, 3 Weinstein-Korn-Miller, NY Civ Prac, par 3025.23. 63 Voluntary payments do not, as a matter of law, give rise to any right of equitable subrogation, Chubb Natl. Ins. Co. v. Platinum Customcraft Corp., 38 A.D.3d 244 [1st Dep’t. 2007]; Broadway Huston Mack Dev., LLC v. Kohl, 71 A.D.3d 937 [2nd Dep’t. 2010]; Bermuda Trust Co. v. Ameropan Oil Corp., 266 A.D.2d 251 [2nd Dep’t. 1999]; Cohen v. Rothman-Goodman Mgt. Corp., 155 A.D.2d 579 [2nd Dep’t. 1989]; Restatement of Restitution § 162, comment b; 23 NY Jur 2d, Contribution, Indemnity and Subrogation, §§ 31, 32. The same endorsement (454-456) relied on by Burlington to deny coverage to the Authorities also identified the City on the schedule of additional insureds, subject to the same terms, described in Point I, above. If no additional insured coverage existed for the Authorities, then no additional insured coverage existed for the City. If so, then Burlington’s payments were voluntary, and cannot serve as a predicate for a subrogation claim. Although Burlington maintains it provided coverage to the City as an accommodation to Breaking Solutions (1170) and that its payments on behalf of the City were involuntary, the Record on Appeal contains proof to the contrary. 64 Burlington’s purported accommodation defense is contradicted by its prior written admission that it withdrew its reservation of rights against the City in order to pass the liability of the City to the Transit Authority (492). Burlington’s purported accommodation defense is contradicted by its conduct of affording disparate treatment to different additional insureds, providing indemnity to the City while denying coverage to the Authority, even though its coverage defense, if valid, would apply equally to both. An insurer owes the same duties to protect its additional insureds as it owes to its named insured. ‘Additional insured’ is a recognized term in insurance contracts,” and “the well-understood meaning of the term is an entity enjoying the same protection as the named insured”, Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99 N.Y.2d 391, 393 [2003] , quoted from Kassis v. Ohio Cas. Ins. Co., 12 N.Y.3d 595 at 599, 600 [2009]; accordingly, an insurer owes the same duties to protect each of its additional insureds. Burlington breached that duty. The City, the Transit Authority and the MTA were each expressly named on the schedule of additional insureds, and regardless of how the additional insured endorsement terms are interpreted regarding the scope of coverage afforded therein to those additional insureds, each additional insured was entitled to receive equal, non-disparate treatment 65 from their insurer, Burlington. Instead, Burlington afforded disparate treatment to its additional insureds in order to gain improper advantages for itself. Burlington appointed, from its defense panel, counsel to represent the Authorities in the underlying action, which counsel never deposed the named insured’s operating engineer who operated his employer’s machine when that machine triggered the explosion, or the operator of the second machine, effectively precluding any attempt to prove negligence attributable to the named insured. The Authorities were unable to conduct discovery to establish Breaking Solution’s negligent acts or omissions sufficient to trigger coverage, assuming, arguendo, that such negligence was a requisite trigger. Burlington appointed, from its defense panel, to represent the City, the same counsel it had previously assigned to represent its named insured, and thereby advanced its own economic interests, to avoid paying for separate counsel for Breaking Solutions and the City. This fact demonstrates Burlington was not motivated to withdraw its reservation of rights to the City as an accommodation to Breaking Solutions. Burlington appointed, from its defense panel, counsel to represent the Authorities in the underlying action, which counsel, as their attorney of record at that time, never objected to the dismissal of both Authorities’ 66 cross-claims against the named insured for failure to procure the additional insured coverage contractually promised. Burlington’s counsel’s contention that the additional endorsement that was utilized conformed with Breaking Solution’s contractual obligation to use the latest ISO form is not supported by anything in the Record on Appeal. Burlington’s control of the Authorities defense in the underlying action prejudiced the Authorities relative to insurance coverage issues, including the loss of their cause of action for breach of contract to procure coverage. The Authorities did not waive the voluntary payment defense. The Authorities understood, as the Appellate Division, First Department, held, that the Authorities were entitled to additional insured coverage, under the endorsement at issue and the facts of this case. Assuming, arguendo, that additional insured coverage did not exist, the Authorities’ request that Burlington withdraw its reservation of rights against the City was made in good faith, and did not constitute authorization for Burlington to treat the City and the Authorities in a disparate manner. The request that Burlington indemnify the City did not constitute consent for Burlington to assert a reservation of rights against the Authorities and thereafter to assert a claim as subrogee of the City against the Authorities. 67 The Authorities did not waive, and are not estopped from asserting a voluntary payment defense. The Authorities are not estopped from asserting the voluntary payment defense. Burlington was not induced by fraud, misrepresentation or deception to withdraw its reservation of rights against the City (see: Ross v. Louise Weise Services, Inc., 58 A.D.3d 978 [3rd Dep’t. 2009]; rather, Burlington made a voluntary payment as part of its plan to engage in a pattern of unfair claims handling practices. Burlington’s payments were voluntary because the withdrawal of its reservation of rights against the City did not meet the requisite standard; it was not necessary to do so, even if it was helpful to advance some of Burlington’s interests: “not merely helpful but necessary to protect” Burlington’s “interests”, Broadway Houston Mack Development, LLC v. Kohl, 71 A.D.3d 937 [2nd Dep’t. 2010]. In determining whether, because of claimed duress, a payment is voluntary, the focus is on the sufficiency of duress exacted against the insurer: “The crux of the issue of these type cases is, of course, whether the insurer is deemed to have been under sufficient duress.”, Couch on Insurance, 3d Ed., Vol. 16, §223:28. Herein, Burlington was under no 68 duress when it determined to withdraw its reservation of rights against the City. The voluntary payment doctrine “bars recovery of payments voluntarily made with full knowledge of the facts, and in the absence of fraud or mistake of material fact or law”, Dillon v U-A Columbia Cablevision of Westchester, 100 N.Y.2d 525, 526 [2003]; see also: Barnan Assoc. v 196 Owners Corp., 56 A.D.3d 309, 311 [1st Dep’t. 2008]. Burlington’s withdrawal of its reservation of rights against the City, and any resulting payments made, were voluntarily made by Burlington. Burlington’s unfair claims handling practices constituted unclean hands, which precludes it from challenging the voluntariness of its withdrawal of its reservation of rights against the City and the payments made on behalf of the City. Burlington’s improper claims handling practices, including unreasonably delaying issuing a disclaimer, warrants it being estopped from denying coverage to the Authorities. Burlington cannot seek to amend its complaint or seek to assert a new pleading to allege a conventional subrogation claim because the “So-Ordered” Stipulation did not reserve the right, if any, to do so. That 69 “So-Ordered” Stipulation (1569-1571) limited the issues between them that could not be resolved. It preserved only the instant appeal, post- appellate costs, and a post-appellate action to recover attorney’s fees relative to the appeal. Burlington did not preserve the right to amend its complaint, or to bring a new action, to seek subrogation. Also, the unfair claims handling practices of Burlington preclude it from asserting a claim for conventional subrogation. CONCLUSION For the foregoing reasons, Defendant-Respondents, the Authorities, respectfully request that this Court affirm the Judgment of the Supreme Court, New York County entered on January 8, 2016. For the foregoing reasons, Defendant-Respondents, the Authorities, respectfully request that this Court affirm the Order of the Appellate Division, First Department, entered on August 11, 2015, or, in the alternative, hold (i) that Burlington's payments on behalf of the City of New York were voluntary, as part of a pattern of unfair claims handling practices, and cannot support a subrogation claim; and, (ii) that Burlington cannot seek to amend its complaint or seek to assert a new pleading to allege a conventional subrogation claim because the "So- Ordered" Stipulation did not reserve the right, if any, to do so. Dated: Syosset, New York August 16, 2016 Respectfully submitted, SHEIN & ASSOCIATES,P.C. By:~£~ CHARLES R. STRlJiTi 575 Underhill Boulevard-Suite 112 Syosset, New York 11791 ( 516) 922-6626 crstrugatzesq@ gmail.com Attorneys for Defendants-Respondents 70 71 CORPORATE DISCLOSURE STATEMENT Neither of the Defendants-Respondents is, upon information and belief, a corporation or business entity within the meaning of 22 N.Y.C.R.R. §500.1(f). The Metropolitan Transportation Authority is a public benefit corporation; no privately held shares of the Metropolitan Transportation Authority exist. The New York City Transit Authority is a public benefit corporation; no privately held shares of The New York City Transit Authority exist. The following public benefit corporations are subsidiaries of the Metropolitan Transportation Authority: The Long Island Rail Road Company; Metro-North Commuter Railroad Company; Staten Island Rapid Transit Operating Authority; MTA Bus Company; and, MTA Capital Construction Company. No privately held shares of any of the aforementioned subsidiaries of the Metropolitan Transportation Authority exist. The following public benefit corporations are affiliates of the Metropolitan Transportation Authority: Triborough Bridge and Tunnel Authority; and, New York City Transit Authority No privately held shares of any of the aforementioned affiliates of the Metropolitan Transportation Authority exist. The Manhattan and Bronx Surface Transit Operating Authority, a public benefit corporation, is a subsidiary of the New York City Transit Authority. No privately held shares of any of the Manhattan and Bronx Surface Transit Operating Authority exist.. Dated: Syosset, New York August 16, 2016 Respectfully submitted, SHEIN & ASSOCIATES, P.C. By: C/ut1z~ R._. ~J-.r CHARLES R. STRUGAT 575 Underhill Boulevard-Suite 112 Syosset, New York 11791 (516) 922-6626 crstrugatzesq@ gmail.com Attorneys for Defendants-Respondents 72 That I am an attorney duly admitted to practice law before the Courts of the State of New York, not being a party to the action, hereby affirms pursuant to CPLR Rule 2106, the following to be true, under the penalties of That your affiant hereby certifies that to the best of my knowledge, information and belief, which were formed after an inquiry reasonable under the circumstances, that the presentation of the paper and the contentions therein are not frivolous as defined in Rules of the Chief Administrator §130-1.1(c). Dated: Syosset, New York August 16, 2016 ~ ·:7) Q~_d_ ~~zL_.-/~~ CHARLES R. STRU A Z 73 PRINTING CERTIFICATION STATEMENT Pursuant to 22 N.Y.C.R.R. §500.13 (c) (1 and 3) The foregoing brief was prepared on a computer. A proportionally spaced typeface was used as follows: Name of Typeface: Times New Roman Point Size: 14 Line Spacing: Double The total number of words in the .Brief, inclusive of point headings and footnotes and exclusive of pages containing the status of related litigation, if any, table of contents, table of cases and authorities, counter- statement of questions presented, printing certification statement, corporate disclosure statement, signing requirement of 22 N.Y.C.R. § 130-1.1 (a), or proof of service, is 13,339. Dated: Syosset, New York August 16, 2016 u~:z~ ~.__JtfrUL~ Charles R. Strugatz 74