Lend Lease (US) Construction LMB Inc., et al., Appellants,v.Zurich American Insurance Company, et al., Respondents.BriefN.Y.January 11, 2017To be Argued by: PHILIP C. SILVERBERG (Time Requested: 20 Minutes) APL-2016-00016 New York County Clerk’s Index No. 158438/13 Court of Appeals of the State of New York LEND LEASE (US) CONSTRUCTION LMB INC. and EXTELL WEST 57TH STREET LLC, Plaintiffs-Appellants, – against – ZURICH AMERICAN INSURANCE COMPANY, ACE AMERICAN INSURANCE COMPANY, XL INSURANCE AMERICA, INC., TRAVELERS EXCESS AND SURPLUS LINES COMPANY and AXIS SURPLUS INSURANCE COMPANY, Defendants-Respondents. BRIEF FOR DEFENDANTS-RESPONDENTS MOUND COTTON WOLLAN & GREENGRASS LLP Attorneys for Defendants-Respondents One New York Plaza, 44th Floor New York, New York 10004 Tel.: (212) 804-4200 Fax: (212) 344-8066 Date Completed: May 5, 2016 RULE 500.1(f) DISCLOSURE STATEMENT Defendants-Respondents, by and through their attorneys Mound Cotton Wollan & Greengrass LLP, as and for their Disclosure Statement pursuant to 22 N.Y.C.R.R. 500.1(f), state: Zurich American Insurance Company, a New York corporation, is a wholly owned subsidiary of Zurich Holding Company of America, Inc., a Delaware corporation. Zurich Holding Company of America, Inc. is 99.8711% owned directly by Zurich Insurance Company Ltd., a Swiss corporation, with the remaining shares indirectly owned by Zurich Insurance Company Ltd. Zurich Insurance Company Ltd. is directly owned by Zurich Insurance Group Ltd., a Swiss corporation. Zurich Insurance Group Ltd. is the only publicly traded parent company, with a listing on the Swiss stock exchange, and a further trading of American Depositary Receipts. ACE American Insurance Company is a Pennsylvania corporation and a wholly owned subsidiary of INA Holdings Corporation, a Delaware corporation and holding company. INA Holdings Corporation is owned by INA Financial Corporation, an intermediate holding company of INA Corporation, a Pennsylvania entity. INA Corporation is directly or indirectly owned by Chubb Limited (formerly ACE Limited). Chubb Limited, the parent company of Chubb, is a Swiss domiciled entity publicly traded on the New York Stock Exchange. ii XL Insurance America, Inc. is a Delaware domiciled entity and an indirect wholly owned subsidiary of XLIT Ltd., a Cayman Islands domiciled company, which, in turn, is owned directly by XL Group plc, an Ireland domiciled company, and the ultimate controlling parent of the XL Group of companies of XL Group plc. XL Group plc is publicly traded on the New York Stock Exchange. Travelers Excess and Surplus Lines Company is a Connecticut domiciled entity and wholly owned subsidiary of Travelers Casualty and Surety Company, a Connecticut operating company, which is itself wholly owned by Travelers Property Casualty Corporation, a Connecticut domiciled intermediate holding corporation. Travelers Property Casualty Corporation is a subsidiary of The Travelers Companies, Inc., which is a Minnesota domiciled entity. The Travelers Companies, Inc. is publicly traded on the New York Stock Exchange. AXIS is an Illinois domiciled insurer that is wholly owned by AXIS Insurance Company, also an Illinois domiciled insurer, which in turn is wholly owned by AXIS Specialty U.S. Holdings, Inc., a Delaware domiciled holding company, which in turn is wholly owned by AXIS Specialty Global Holdings Limited, an Ireland domiciled holding company, which is wholly owned by AXIS Capital Holdings Limited, a Bermuda domiciled holding company that is publicly traded on the New York Stock Exchange. Dated: New York, New York May 6, 2016 MOUND COTION WOLLAN & GREENGRASS LLP By: MarkS. Katz Sanjit S. Shah One New York Plaza New York, New York 10004 (212) 804 4200 Attomeysfor Defendants-Respondents Ill iv TABLE OF CONTENTS RULE 500.1(f) DISCLOSURE STATEMENT.......................................................... i TABLE OF AUTHORITIES .................................................................................... vi QUESTIONS PRESENTED ...................................................................................... 1 PRELIMINARY STATEMENT ............................................................................... 2 STATEMENT OF FACTS ........................................................................................ 7 A. The Builders Risk Policy ....................................................................... 7 B. The Insured Project and the Tower Crane ............................................. 9 C. The Collapse of the Tower Crane Boom and the Insurance Claim ...................................................................... 12 D. The Proceedings in the Trial Court ..................................................... 13 E. The Decision of the Appellate Division and the Dissent ..................................................................... 14 ARGUMENT ........................................................................................................... 19 POINT I THE APPELLATE DIVISION CORRECTLY HELD THAT THE TOWER CRANE DOES NOT CONSTITUTE A TEMPORARY WORKS UNDER THE POLICY ....................................................................... 19 A. The Tower Crane Cannot Be Considered a “Temporary Structure” Within the Meaning of the Temporary Works Provision ........................................................................ 20 1. Application of Ejusdem Generis v Demonstrates that the Tower Crane Is Not a Temporary Structure Under the Temporary Works Provision ......................... 20 2. Cases Involving the Labor Law and Other Statutes and Contracts Are Not Relevant to Whether the Tower Crane Is a Temporary Structure Under the Temporary Works Provision .......................................... 27 B. The Purportedly Custom-Designed Tower Crane is not Incidental to the Project ............................ 32 C. The Value of the Tower Crane Was Not Included in the “Total Project Value” of the “Insured Project” ............................................................ 39 POINT II THE CONTRACTOR’S MACHINERY AND EQUIPMENT EXCLUSION PRECLUDES COVERAGE FOR THE TOWER CRANE ........................................ 43 A. The Tower Crane Falls Squarely within the Contractor’s Machinery and Equipment Exclusion ......................................................... 43 B. The Temporary Works Provision Does Not Control Over the Contractor’s Machinery and Equipment Exclusion ....................................... 46 C. Application of the Contractor’s Machinery and Equipment Exclusion to the Tower Crane Would Not Render the “Temporary Works” Provision Meaningless .............................................................. 49 D. The Tower Crane Was Not Endorsed to the Policy .................. 51 CONCLUSION ........................................................................................................ 53 vi TABLE OF AUTHORITIES Cases Consolidated Edison Co. of New York, Inc. v. Allstate Ins. Co., 98 N.Y.2d 208, 746 N.Y.S.2d 622 (2002) ......................................................... 19, 34 Cnty. of Columbia v. Cont'l Ins. Co., 83 N.Y.2d 618, 612 N.Y.S.2d 345 (1994) ............................................................... 51 DRK, LLC v. Burlington Ins. Co., 74 A.D.3d 693, 905 N.Y.S.2d 58 (1st Dep’t 2010) ........................................... 49-50 Duane Reade Inc. v. Cardtronics, LP, 54 A.D.3d 137, 863 N.Y.S.2d 14 (1st Dep’t 2008) ........................................... 22-23 Edwards v. Motor Vehicle Acc. Indem. Corp., 25 A.D.2d 420, 266 N.Y.S.2d 460 (1st Dep’t 1966) ............................................... 48 Glacier Construction Company v. Travelers Property Casualty Company of America, Civil Action No. 10-cv-01911, 2011 WL 9367470 (D. Colo. Sept. 22, 2011), aff’d, 569 F. Appx. 582 (10th Cir. June 20, 2014) ............................................ 30, 32 Hodges v. Boland’s Excavating & Topsoil, Inc., 24 A.D.3d 1089, 807 N.Y.S.2d 421 (3d Dep’t 2005) ........................................ 27, 28 J.P. Morgan Sec. Inc. v. Vigilant Ins. Co., 21 N.Y.3d 324, 970 N.Y.S.2d 733 (2013) ............................................................... 29 Landry v. G.C. Constructors, 514 F. Appx. 432, 2013 WL 632248 (5th Cir. Feb. 20, 2013) .................... 30, 31, 32 Lend Lease (U.S.) Construction LMB Inc. v. Zurich American Ins. Co., 136 A.D.3d 52, 22 N.Y.S.3d 24 (1st Dep’t 2015) (dissenting op.) ......................... 34 McCoy v. Abigail Kirsch, 99 A.D.3d 13, 951 N.Y.S.2d 32 (2d Dep’t 2012) .................................................... 27 vii Metropolitan Life Ins. Co. v. Noble Lowndes Int’l, Inc., 84 N.Y.2d 430, 618 N.Y.S.2d 882 (1994) ......................................................... 21 n.2 Muzak Corp. v. Hotel Taft Corp., 1 N.Y.2d 42, 150 N.Y.S.2d 171 (1956) ................................................................... 34 People v. Illardo, 48 N.Y.2d 408, 423 N.Y.S.2d 470 (1979) ......................................................... 21, 28 Rish v. Theo Bros. Constr. Co., Inc., 269 S.C. 226, 237 S.E.2d 61 (S.C. 1977) ................................................................ 50 Rocon Manufacturing, Inc. v. Ferraro, 199 A.D.2d 999, 605 N.Y.S.2d 591 (4th Dep’t 1993) ............................................. 47 SR Int’l Bus. Ins. Co., Ltd. v. World Trade Ctr. Props. LLC, No. 01 Civ. 9291, 2006 WL 3073220 (S.D.N.Y. Oct. 31, 2006) ............................ 48 Walters v. Great Am. Indem. Co., 12 N.Y.2d 967, 238 N.Y.S.2d 960 (1963) ............................................................... 51 White v. Continental Cas. Co., 9 N.Y.3d 264, 848 N.Y.S.2d 603 (2007) ........................................................... 29, 30 242-44 East 77th St., LLC v. Greater N.Y. Mutual Insurance Company, 31 A.D.3d 100, 815 N.Y.S.2d 507 (1st Dep’t 2006) ............................................... 21 QUESTIONS PRESENTED 1. Did the Appellate Division for the First Department correctly determine that the tower crane for which Plaintiffs-Appellants are seeking coverage does not constitute covered “Temporary Works” under the builders risk insurance policies issued by Defendants-Respondents with the result that it is not covered property under the policies? 2. Did the Appellate Division correctly determine that the tower crane constitutes contractor’s machinery or equipment such that it is excluded from coverage under the builders risk policies’ exclusion for contractor’s machinery and equipment? 2 PRELIMINARY STATEMENT In this action, Plaintiffs-Appellants Extell West 57th Street LLC (“Extell”) and Lend Lease (US) Construction LMB Inc. (“Lend Lease”) seek coverage under first-party builders risk insurance policies (the “Policy”) issued by Defendants- Respondents for damage to a tower crane that was used for the construction of a high-rise building in Manhattan. The tower crane was damaged during Storm Sandy, and Extell and Lend Lease have alleged that they incurred covered losses from this damage. Defendants-Respondents denied coverage for these claimed losses because the tower crane is not covered property under the Policy, and because coverage for the tower crane is precluded by the contractor’s machinery and equipment exclusion. The trial court denied the parties’ cross-motions for summary judgment, holding that issues of fact existed. On appeal, a majority of three justices of a five- member panel of the Appellate Division for the First Department modified the judgment of the trial court by granting Defendants-Respondents’ cross-motion for summary judgment, and declaring that Defendants-Respondents have no obligation to provide coverage under the Policy. The Appellate Division properly held that the tower crane is not covered property under the Policy because it does not constitute a covered “Temporary Works,” which is defined as: 3 [a]ll scaffolding (including scaffolding erection costs), formwork, falsework, shoring, fences, and temporary buildings or structures, including office and job site trailers, all incidental to the project, the value of which has been included in the estimated TOTAL PROJECT VALUE* of the INSURED PROJECT* declared by the Named Insured. (Joint Record (“R.”) 345.) In this regard, the Court held that the tower crane cannot be considered a “temporary structure” within the meaning of the Temporary Works provision as Plaintiffs-Appellants argued. It is not one of the listed items nor is it a temporary building or structure such as an office or job site trailer. It also is not “incidental to the project,” inasmuch as the massive tower crane was integral to the construction of the building, which was specifically designed to incorporate the tower crane during the construction process. Thus, the Appellate Division recognized that the tower crane does not meet two essential criteria for it to be considered a covered “Temporary Works.” Additionally, the majority concluded that the tower crane is contractor’s machinery or equipment for which coverage is precluded by reason of the exclusion for “[c]ontractor’s tools, machinery, plant and equipment . . . .” (R.334.) While there is an exception to this exclusion for machinery or equipment that is specifically endorsed to the Policy, there is no dispute that the tower crane was not so endorsed. The two dissenting justices opined that the tower crane qualifies as a “temporary structure” as that term is used in the definition of Temporary Works, 4 because it is of the same “ilk” as the other items specifically listed, i.e., scaffolding, formwork, falsework, shoring, fences and temporary buildings including office and jobsite trailers. (R.862.) The dissenting justices also concluded that the tower crane, like scaffolding, formwork, falsework, shoring, fences and temporary buildings, is incidental to the project. Finally, the dissenting justices opined that the contractor’s machinery and equipment exclusion does not apply because it is too broad and could be interpreted to preclude coverage for the items that were specifically listed in the definition of Temporary Works. Nevertheless, the dissenting justices made clear that they would not have granted summary judgment to Extell and Lend Lease because they determined that a question of fact exists regarding the inclusion of the tower crane in the estimated Total Project Value of the Insured Project, a requirement for property to be considered a covered “Temporary Works.” The majority of the Appellate Division correctly determined that there is no coverage under the Policy for the tower crane. First, the majority properly held that the 750-foot tower crane, which has multiple moving parts and requires a licensed operator in a cab to run it, cannot be considered a “temporary structure” that is “incidental to the project.” Contrary to the dissenting opinion and the arguments made by Extell and Lend Lease, the enormous motorized tower crane is not of the same “ilk” as static and operator-less scaffolding, formwork, falsework, 5 shoring, fences and temporary buildings, including office and job site trailers. Rather, it was a custom-designed piece of heavy equipment used to lift and move various materials during the construction of the building, and included a turntable, which gave it the capability to rotate, counterweights, a winch pack and a cab housing the licensed operator and controls. For it to be covered by the Policy, it would need to be added as covered property by endorsement, which it was not. Nor could the tower crane be considered “incidental to the project.” It is undisputed that the tower crane was designed and constructed to be attached to the building, and the building itself was specifically designed to support the tower crane, during construction. Under these circumstances, no reasonable argument could be made that the tower crane was a “temporary structure” that was “incidental to the project” within the meaning of the Temporary Works provision. The dissent’s construction of the phrase “incidental to the project” to include everything other than the insured project itself would render that language superfluous. The Policy will automatically provide coverage for “incidental” temporary works, but not for significant pieces of heavy construction equipment without an endorsement. Second, the Appellate Division correctly determined that the exclusion for contractor’s machinery and equipment precludes coverage for the tower crane supplied by the concrete subcontractor and which itself was described as “heavy 6 equipment” in the contract governing the terms of its installation, use and removal at the construction site. It logically cannot be considered anything but contractor’s machinery and equipment such that it is excluded from coverage unless added by the available Scheduled Contractor’s Equipment endorsement. Although the dissenting justices properly rejected Extell’s and Lend Lease’s argument that the tower crane was too large and sophisticated to fall within the scope of the exclusion, they erroneously concluded that the exclusion would impermissibly “swallow the policy.” (R.867.) In fact, the exclusion does no such thing, and there is no evidence that the contractor’s machinery and equipment exclusion was ever, or could ever, be applied to exclude the items specifically listed under the Temporary Works provision. The tower crane, which is heavy equipment, is not one of those expressly enumerated items, and there is a Scheduled Contractor’s Equipment endorsement available to add coverage for contractor’s machinery and equipment such as a tower crane. Thus, this case does not present a situation in which the specific coverage provision controls over the general exclusion. For these reasons, the Judgment below should be affirmed. 7 STATEMENT OF FACTS A. The Builders Risk Policy Defendants-Respondents Zurich American Insurance Company, ACE American Insurance Company, XL Insurance America, Inc., Travelers Excess and Surplus Lines Company, and Axis Surplus Insurance Company (collectively the “Insurers”) issued to Extell the Policy, effective from August 1, 2010 through July 31, 2014, comprising builders risk insurance policies issued by each of the Insurers.1 (R.70 ¶ 34; R.94 ¶ 34.) The Policy lists the “Insured Project” as 157 West 57th Street in Manhattan (the “Building”), and has a limit of liability of $700,000,000. (R.330-R.331.) Extell, which is the owner of the Building (R.57 ¶ 4), is listed on the Builders Risk Policy as the Named Insured. (R.330.) The Insuring Agreement provides that the Policy -- subject to its terms, exclusions, limitations and conditions -- “insures against all risks of direct physical loss of or damage to Covered Property while at the location of the INSURED PROJECT* and occurring during the Policy Term.” (R.334 § I.1.A.) Under the Builders Risk Policy, the term “Covered Property” includes “Temporary Works,” which is defined as follows, and makes no mention of cranes of any kind: 1 Although each insurer issued its own policy, the material terms and conditions of each policy are the same for purposes of this dispute. 8 All scaffolding (including scaffolding erection costs), formwork, falsework, shoring, fences, and temporary buildings or structures, including office and job site trailers, all incidental to the project, the value of which has been included in the estimated TOTAL PROJECT VALUE* of the INSURED PROJECT* declared by the Named Insured. (R.334 § I.2.B; R.345 § III.10.) The term “Total Project Value” is listed under the Builders Risk Policy as $700,000,000, which includes the “[t]otal value of all Covered Property, LANDSCAPING MATERIALS*, all labor costs that will be expended in the INSURED PROJECT*, site general conditions, construction management fees, and contractor’s profit and overhead[.]” (R.332.) Among the property that is expressly excluded from coverage under the Policy is contractor’s machinery and equipment: 3. PROPERTY EXCLUDED This Policy does not insure against loss or damage to: * * * B. Contractor's tools, machinery, plant and equipment including spare parts and accessories, whether owned, loaned, borrowed, hired or leased, and property of a similar nature not destined to become a permanent part of the INSURED PROJECT*, unless specifically endorsed to the Policy. (R.334 § I.3.B.) 9 Although coverage can be provided for contractor’s tools, machinery, plant and equipment if “specifically endorsed to the Policy,” no such endorsement was issued for the tower crane. B. The Insured Project and the Tower Crane The Insured Project “is the construction of a seventy-four (74) floor mixed- use hotel and residential building with machine rooms and bulkheads located above the 74h floor . . . .” (R.58 ¶ 5.) Lend Lease is the construction manager for the Insured Project pursuant to a contract between Lend Lease and Extell. (R.58 ¶ 7.) In connection with the Insured Project, Lend Lease entered into a contract with a concrete contractor (the “Pinnacle Contract”), Pinnacle Industries II, LLC (“Pinnacle”), pursuant to which Pinnacle agreed to perform the superstructure concrete work for the Building. (R.110.) In order to perform the concrete work, Pinnacle agreed to furnish a tower crane, referred to as “Crane 2” in the Pinnacle Contract (the “Tower Crane”), and “other heavy equipment required for the erection of the building.” (R.184-R.185 ¶ 2.g.) The Tower Crane, which Pinnacle obtained from yet another company, Pinnacle Industries III LLC (“Pinnacle III”) (R.606 ¶¶ 17, 18), was to be “located on the south west side of the project founded on the 20th floor slab.” (R.185 ¶ 2.g.) According to Charles Loskant, Extell’s Senior Vice President for Construction Management, the “Building was specifically designed to incorporate the Tower 10 Crane during construction.” (R.61 ¶ 20.) Put another way, the Tower Crane was “integrated into the Building structure for purposes of construction of the Project.” (R.61 ¶ 21.) For example, the base of the Tower Crane was “strengthened and stabilized by adding beams, and enlarging and/or reinforcing existing beams, that were permanently cast into the floor slab on the 20th floor setback and plates cast into shear walls connected by threaded rods.” (R.60 ¶ 15.) The mast of the Tower Crane was connected to the Building’s structural floor slabs by ties, which “required the creation of openings through the Building’s curtain wall and additional steel reinforcement of the floor slabs in the locations where the ties were affixed to the floor slabs.” (R.60 ¶¶ 16, 17.) Although the crane itself will be completely removed from the project when no longer needed (R.189-R.190 ¶ 3), both the additional beams cast into the slab on the 20th floor, and the reinforcement of the floor slabs at the tie locations, “will permanently remain part of the Building following the completion of construction . . . .” (R.61 ¶ 20.) Under the Pinnacle Contract between Lend Lease and Pinnacle, Pinnacle was obligated to “secure, pay for, and maintain Property Insurance necessary for protection against loss” of the Tower Crane. (R.136 ¶ 7.) The Pinnacle Contract includes the rental value of the Tower Crane, which was $77,000 per month. (R.211 ¶ 9.) Once work involving the Tower Crane was completed, Pinnacle was 11 required to “jump down, dismantle and remove the crane from the site.” (R.189- R.190 ¶ 3.) After removal of the Tower Crane, Pinnacle was obligated to “come back and fill in temporary openings with framed concrete, including rebar, splices and/or special connection details, keyways, etc.” (R.185 ¶ 2.g.) Thus, although integral for construction, the Tower Crane was not going to be part of the finished Building and no trace of it would remain after its removal by Pinnacle. On or about September 13, 2012, Pinnacle III entered into a “Sublease of Equipment and Indemnification” (the “Sublease”) with another contractor working at the project, Post Road Iron Works, Inc. (“Post Road”), pursuant to which Pinnacle III subleased the Tower Crane to Post Road for $77,000 per month. (R.602.) Thus, both Pinnacle and Post Road were able to use the Tower Crane that was owned by Pinnacle III. Pursuant to the Sublease, Post Road assumed “responsibility to safeguard, prevent damage, and to return equipment[,]” i.e., the Tower Crane, to Pinnacle III “in the same condition as it was when subleased.” (R.602 ¶ 3.) Moreover, Post Road was obligated to maintain insurance “coverage for the contractual liability created by this sublease agreement . . . .” (R.602 ¶ 4.) 12 C. The Collapse of the Tower Crane Boom and the Insurance Claim On October 29, 2012 Sandy made landfall in the Mid-Atlantic United States. According to Plaintiffs-Appellants, the Tower Crane’s “[b]oom was caused partially to collapse” and although it “remained attached to the Tower Crane . . . the partially-collapsed [b]oom was whipped furiously about by [Sandy] which in turn resulted in additional catastrophic damage” to parts of the Tower Crane and the Building. (R.79 ¶ 52.) On October 30, 2012, Extell and Lend Lease provided a notice of loss to the Insurers relating to the collapse of the Tower Crane. (R.80 ¶ 56; R.97 ¶ 56.) On August 9, 2013, Extell submitted a claim in the amount of $6,494,723.01 to the Insurers relating to the collapse of the Tower Crane. (R.81 ¶ 60.) The Insurers disclaimed coverage for such alleged losses, on the grounds that the Tower Crane did not constitute Covered Property and/or was Excluded Property under the Builders Risk Policy, and this lawsuit ensued. In their amended complaint, Extell and Lend Lease sought a declaration, inter alia, that Extell was entitled to reimbursement from the Insurers for damage to the Tower Crane and the Building, as well as compensatory damages “with respect to the costs and expense incurred in addressing the damage caused to Covered Property . . . .” (R.85.) 13 D. The Proceedings in the Trial Court After the Insurers answered the amended complaint, but before Extell and Lend Lease provided any discovery in response to the Insurers’ demands, Extell and Lend Lease moved for summary judgment, contending that the Tower Crane was Covered Property under the Policy on the ground that “the Tower Crane was a ‘temporary structure’ within the ‘TEMPORARY WORKS’ provision of the [Policy], and was included in the Total Project Value . . . declared by Extell” to the Insurers. (R.50 ¶ 38, R.719 ¶ 14.) Moreover, Extell and Lend Lease argued that the contractor’s machinery and equipment exclusion did not apply. (R.51 ¶ 39, R.720 ¶ 15.) The Insurers opposed Extell’s and Lend Lease’s motions, and cross-moved for summary judgment on the grounds that the Tower Crane was excluded property under the contractor’s machinery and equipment exclusion of the Policy and was not Covered Property because it did not meet the requirements to be considered a “Temporary Works.” (R.532-R.547, R.728-R.743.) In the alternative, the Insurers argued that Extell’s summary judgment motion should be denied pursuant to CPLR 3212(f) to allow them to take discovery on whether the value of the Tower Crane was, in fact, included in the “Total Project Value” declared to the Insurers. (R.540 ¶ 30, R.741 ¶ 59.) 14 By Order dated January 15, 2015, the trial court (Eileen A. Rakower, J.) denied all parties’ motions for summary judgment. (R.20-R.34.) Specifically, the trial court held that “[a]mong other issues of fact is whether the Tower Crane was intended to become a permanent part of the Project, which is relevant to the applicability of the Contractor’s machinery and equipment exclusion.” (R.33- R.34.) The trial court also held that the Insurers were entitled to take the discovery that Extell and Lend Lease cut off by filing motions for summary judgment before providing any documents in response to Insurers’ demands. (R.34.) E. The Decision of the Appellate Division and the Dissent On appeal, the Appellate Division held that the judgment of the trial court “should be modified, on the law, to grant [the Insurers’] cross motions for summary judgment and declare that [the Insurers] have no obligation to provide coverage under the builder’s risk policy . . . .” (R.849.) Specifically, the Court applied the principle of ejusdem generis, and held that the Tower Crane does not constitute a “Temporary Works” under the Policy because it cannot be considered a “temporary structure” within the meaning of the Temporary Works provision: The application of the rule of ejusdem generis would lead to the same conclusion. . . . The general term “temporary buildings and structures,” is described by the specific term “including office and job site trailers.” The 750- foot tower crane differs from office and job site trailers in many important ways. Unlike office and job site trailers, the tower crane (i) was furnished pursuant to a contract that included detailed instructions 15 for its placement, design, erection, support and approval; (ii) is a sophisticated mechanized device, whose mast consisted of over 50 individual sections, that could only be operated by a licensed operator; and (iii) intended to physically lift and move various items necessary to the construction of the tower. Indeed, even if the meaning of the word “structure” is to be determined in conjunction not only with office and job site trailers but also with formwork, falsework, shoring and fences, this active participation in the construction work distinguished the tower crane from those items, which provide access, support and protection for the facility under construction that is incidental to the project. (R.843-R.844 (underscoring added).) Citing an affidavit submitted by Extell’s Senior Vice President for Construction Management, and applying dictionary definitions of the word “incidental,” the Court held that the Tower Crane is not “incidental to the project”: Indeed, rather than ensuing by chance or minor consequence, as Extell’s Senior Vice President for Construction Management acknowledged, the “[b]uilding was specifically designed to incorporate the Tower Crane during construction” and the crane’s design and erection involved an “in-depth process” that had to be approved by a structural engineer. Moreover, once it was integrated into the structure of the building, the custom designed tower crane, rather than serving a minor or subordinate role, was used to lift items such as concrete slabs, structural steel and equipment, was integral and indispensable, not incidental, to the construction of the 74-story high-rise, which could not have been built without it. Accordingly, the tower crane does not fall within the policy’s definition of Temporary Works. (R.842-R.843.) The Appellate Division disagreed with the dissenting justices’ interpretation of the word “incidental” as being so “overly broad” that it encompassed “virtually 16 anything that pertains to the project . . . .” (R.848.) The Court also noted that “the dissent’s interpretation, which in essence views every item assembled at the project that will not remain a permanent part of the building as a temporary structure incidental to the project, rewrites the plain language of the policy to include coverage that was never intended.” (R.845.) Recognizing that “exclusions by their nature modify the scope of coverage provided in an insurance policy” (R.847), the Appellate Division held that even if the Tower Crane can be considered a Temporary Works, it would not be covered under the Policy by reason of the contractor’s machinery and equipment exclusion. (R.845.) The Court disputed the dissent’s conclusion that the exclusion rendered the policy illusory, observing that “coverage for the tower crane, or any item qualifying as Temporary Works, could have been endorsed onto the policy, and the clause does not in and of itself deprive an insured from coverage for the damages he reasonably thought himself insured.” (R.848.) Moreover, the Court pointed out the flaw in the dissenting justices’ reasoning that the specific Temporary Works provision controlled over the general exclusion: Insofar as the dissent believes that the exclusion does not apply to the tower crane because it is a general provision that conflicts with the specific Temporary Works provision, I note that the tower crane is not specifically included in the Temporary Works provision and that plaintiffs rely on the principle of ejusdem generis to argue that the tower crane is a “temporary structure” within the meaning of that 17 provision. Moreover, “[a]n exclusion . . . serves the purpose of taking out persons or events otherwise included within the defined scope of coverage.” (R.848-R.849 (quoting Edwards v. Motor Vehicle Acc. Indem. Corp., 25 A.D.2d 420, 420, 266 N.Y.S.2d 460, 461 (1st Dep’t 1966).) The dissenting justices concluded that the Tower Crane is a “temporary structure” within the meaning of the Temporary Works provision because “[t]hat term is broad enough, and the crane was sufficiently substantial, to conclude that it was a structure for purposes of the policy.” (R.860.) Moreover, the dissent, without citing any authority, opined that the 750-foot Tower Crane, which the Building was specifically designed to accommodate (R.61 ¶ 20), is similar to the specifically listed items in the Temporary Works provision: These things (“scaffolding [including scaffolding erection costs], formwork, falsework, shoring, fences”) have one thing in common, which is that they are all put in place early in a construction project, remain for most or all of the duration of the project, and are significant features of the construction landscape. “[O]ffice and job site trailers” also fall into that category. The crane at issue here is of the same ilk as all of the other items in this category. The crane was, like those other things, a substantial and necessary element of the tower’s construction, and, like those things, was intended to remain on the site for a significant portion of the project, and be dismantled at the project’s end. Accordingly, it constituted a “temporary structure” within the specific context of the “temporary works” provision. (R.861-R.862.) 18 The dissent also adopted a definition of “incidental” that renders everything on the construction site, with the exception of the Insured Project itself, “incidental”: I accept plaintiffs’ definition of the term “incidental,” meaning appurtenant to something else that is primary, but still necessary to that primary thing. Here, the primary thing is the project itself (essentially the “property under construction” that is specifically insured under the policy), and the crane is an ancillary yet substantial element of the construction, much as scaffolding, shoring and the other items enumerated in the “temporary works” definition are not intended to be part of the finished building, but are critical to its completion. (R.863-R.864.) After concluding that the Tower Crane is a temporary structure incidental to the project, the dissent opined that enforcing the contractor’s machinery and equipment exclusion would render coverage for Temporary Works illusory. (R.867.) Nevertheless, the dissenting justices concluded that Extell and Lend Lease were not entitled to summary judgment because “there is an issue of fact whether the value of the crane was ‘included in the estimated total project value of the insured project declared by the named insured.’” (R.868.) 19 ARGUMENT POINT I THE APPELLATE DIVISION CORRECTLY HELD THAT THE TOWER CRANE DOES NOT CONSTITUTE A TEMPORARY WORKS UNDER THE POLICY In order for the Tower Crane to be covered under the Policy, it must constitute Covered Property, and must not be subject to any exclusions. Extell and Lend Lease have the burden of establishing that the Tower Crane is covered under the Policy. Consolidated Edison Co. of New York, Inc. v. Allstate Ins. Co., 98 N.Y.2d 208, 218, 746 N.Y.S.2d 622, 625 (2002) (“Generally, it is for the insured to establish coverage . . . .”). Under the Policy, “Covered Property” means the Insured’s interest in “Property Under Construction” and “Temporary Works,” unless otherwise excluded. Extell and Lend Lease contend that the Tower Crane is Covered Property because it is a “Temporary Works,” (R.334 § I.2), which is defined in the Policy as follows: All scaffolding (including scaffolding erection costs), formwork, falsework, shoring, fences, and temporary buildings or structures, including office and job site trailers, all incidental to the project, the value of which has been included in the estimated TOTAL PROJECT VALUE* of the INSURED PROJECT* declared by the Named Insured. (R.345 § III.10.) Thus, in order for property to be considered a covered “Temporary Works” under the Policy, it must: 1) be “scaffolding (including scaffolding erection costs), 20 formwork, falsework, shoring, fences, and temporary buildings or structures, including office and job site trailers”; 2) be “incidental to the project,” the project being the construction of a 74-story mixed use hotel/residential building at 157 West 57th Street; and 3) have had its value “included in the estimated TOTAL PROJECT VALUE* of the INSURED PROJECT* declared by the Named Insured.” (R.345 § III.10.) The Tower Crane meets none of these criteria. A. The Tower Crane Cannot Be Considered a “Temporary Structure” Within the Meaning of the Temporary Works Provision 1. Application of Ejusdem Generis Demonstrates that the Tower Crane Is Not a Temporary Structure Under the Temporary Works Provision At the outset, it should be noted that contrary to the claims of Extell and Lend Lease, the Appellate Division did not acknowledge that the Tower Crane is a “temporary structure” under the Temporary Works provision. (See Extell Brief, at 12 (“The Appellate Division did not directly determine this issue, but acknowledged that the Tower Crane is a temporary structure . . . .”) ; Lend Lease Brief, at 5 (“The First Department did not dispute that the Tower Crane is a ‘temporary structure’ under the definition of “Temporary Works’ . . . .”).) In fact, the Court strongly disputed Extell’s and Lend Lease’s notion that the Tower Crane can be considered a “temporary structure,” holding that under the principle of ejusdem generis, the Tower Crane is nothing like the office and job 21 site trailers that add context and meaning to the term “temporary structure” in the Temporary Works provision: Under the rule of ejusdem generis, the meaning of a word in a series of words is determined “by the company it keeps.” “[A] series of specific words describing things or concepts of a particular sort are used to explain the meaning of a general one in the same series.” The general term “temporary buildings and structures,” is described by the specific term “including office and job site trailers.” The 750- foot tower crane differs from office and job site trailers in many important ways. (R.843 (citations omitted).) The Appellate Division was right: the Tower Crane does indeed differ from office and job site trailers in many important ways, and therefore cannot -- under the principle of ejusdem generis or otherwise -- be considered a “temporary structure” within the meaning of the Temporary Works provision. 242-44 East 77th St., LLC v. Greater N.Y. Mutual Insurance Company, 31 A.D.3d 100, 103-04, 815 N.Y.S.2d 507, 510 (1st Dep’t 2006) (“Under the principles of ejusdem generis, a rule of construction, the meaning of a word in a series of words is determined ‘by the company it keeps.’”) (quoting People v. Illardo, 48 N.Y.2d 408, 416, 423 N.Y.S.2d 470, 474 (1979)).2 2 Ejusdem generis applies to contracts as well as to statutes. Metropolitan Life Ins. Co. v. Noble Lowndes Int’l, Inc., 84 N.Y.2d 430, 438, 618 N.Y.S.2d 882, 886 (1994) (“Under the interpretation tool of ejusdem generis applicable to contracts as well as statutes . . . .”). 22 As the Court correctly pointed out, static office and job site trailers, which are the examples given in the Policy as “temporary buildings or structures,” are nothing like the Tower Crane, which is heavy lifting equipment that needs a licensed operator and required additional, modified and reinforced beams to be permanently cast into the floor slab of the Building’s 20th floor set back, and caused floor slabs to be reinforced where the crane’s mast was tied to the Building (R.60-R.61 ¶¶ 15, 16, 20): Unlike office and job site trailers, the tower crane (i) was furnished pursuant to a contract that included detailed instructions for its placement, design, erection, support and approval; (ii) is a sophisticated mechanized device, whose mast consisted of over 50 individual sections, that could only be operated by a licensed operator; and (iii) intended to physically lift and move various items necessary to the construction of the tower. (R.843.) Moreover, the Appellate Division properly concluded that the meaning of the word “structure” should be determined with reference to “temporary buildings” and the words that describe it, i.e., office and job site trailers, rather than by reference to the more remotely appearing scaffolding, formwork, falsework, shoring, and fences. (R.843.) Under the last antecedent rule, “[r]elative or qualifying words or clauses . . . ordinarily are to be applied to words or phrases immediately preceding, and are not to be construed as extending to others more remote, unless the intent clearly indicates otherwise.” Duane Reade Inc. v. 23 Cardtronics, LP, 54 A.D.3d 137, 141, 863 N.Y.S.2d 14, 17 (1st Dep’t 2008). There is no “clear intent” in the Temporary Works provision for the meaning of the term “temporary structure” to be determined with reference to “scaffolding . . . formwork, falsework, shoring, [and] fences.” (R.345.) These are specifically enumerated items that it was agreed would constitute Temporary Works. In addition to those listed items, “temporary buildings or structures, including office and job site trailers” also would be considered Temporary Works. Accordingly, the list of specific items that are Temporary Works does not provide any context as to what might be a “temporary building or structure,” but “office and job site trailers” certainly does. Even if the meaning of the phrase “temporary structure” is to be determined in conjunction with scaffolding, formwork, falsework, shoring and fences in addition to office and job site trailers, the Tower Crane would not qualify as a Temporary Works, because it is not remotely like any of the items specifically listed in that provision, as the Appellate Division correctly held. (R.843-R.844.) In this regard, the definitions -- as given by Extell -- of the things that are specifically enumerated in the Temporary Works provision conclusively show that the Tower Crane cannot be considered a temporary structure under the Temporary Works provision: “[S]caffolding” is defined as “[a] temporary structure for the support 24 of deck forms, cartways, and/or workers, such as an elevated platform for supporting workers, tools, and materials. . . . “[F]ormwork” means “the total system of support for freshly placed or partially cured concrete, including the mold or sheeting (form) that is in contact with the concrete as well as all supporting members including shores, reshores, hardware, braces, and related hardware.” “Falsework” is defined as a “temporary structure erected to support work in the process of construction.” “Shoring” is defined as “a system of temporary supports, either wood or metal, used to support the weight of forms and uncured concrete.” (Extell Brief, at 20 (citations omitted).) Far from serving as a support for deck forms, cartways, workers, freshly placed or partially cured concrete, work in the process of construction, or uncured concrete like the specifically named items in the Temporary Works provision (other than fences), the Tower Crane was intended to physically lift and move items necessary for the construction of the Building, and had: among other things, the “turntable” or “rubella” which provide the [Tower Crane] with the capability to rotate as necessary; the working arm or “boom” (the “Boom”) used to physically lift and move various items necessary to the construction of the Building; various necessary counterweights; the diesel driven winch pack and a cab (the “Cab”) from where the necessary movements of the [Tower Crane] are controlled. In accordance with the Pinnacle Contract, Pinnacle used the Tower Crane . . . to perform work on the Building, including the construction of the concrete superstructure. (R.69-R.70 ¶¶ 29-30.) 25 Thus, unlike all of the listed items that do not move and do not require an operator, the massive mechanized Tower Crane had engines and a cab from which the licensed operator could control the Tower Crane’s movements, and was “used to physically lift and move various items necessary to the construction of the Building.” (R.69 ¶ 29.) Thus the Tower Crane is decidedly not “of the same ilk as all of the other items” in the Temporary Works Provision. (R.862.) The dissent’s estimation that the items specifically listed in the Temporary Works provision and the Tower Crane “have one thing in common, which is that they are all put in place early in a construction project, remain for most or all of the duration of the project, and are significant features of the construction landscape” is misplaced. (R.862.) First, there is no authority supporting the dissent’s theory that all of the specifically enumerated items and tower cranes are put in place early in a project, remain for most or all of the project’s duration and are significant features of the construction landscape. Certainly, “formwork,” which according to Extell is “total system of support for freshly placed or partially cured concrete,” (Extell Brief, at 20) does not remain for most of the project’s duration and is not a “significant feature of the construction landscape.” Instead, it is removed as soon as the poured concrete hardens. Second, the Tower Crane itself was not “put in place early in [the] construction project.” (R.862.) Indeed, the Tower Crane was not required to be at 26 the construction site until the first twenty stories of the Building were constructed (R.185 ¶ 2.g), and the New York City Department of Buildings did not even designate a safety coordinator for the Tower Crane until September 2, 2011 (R.519), which was well after construction began, as evidenced by the August 1, 2010 inception date of the Policy. Finally, as the Appellate Division aptly observed, the dissent’s vague description of what constitutes covered Temporary Works under the Policy is so broad as to potentially include virtually anything as a “temporary structure,” thereby impermissibly rewriting the plain language of the Policy: Thus, the dissent’s interpretation, which in essence views every item assembled at the project that will not remain a permanent part of the building as a temporary structure incidental to the project, rewrites the plain language of the policy to include coverage that was never intended. (R.845.) Certainly, the Tower Crane, like scaffolding, formwork, falsework, shoring and fences, is an inanimate object. That sole similarity with the items that are specifically listed in the Temporary Works provision, however, does not make it a “temporary structure” within the meaning of that provision. To characterize the Tower Crane as similar to those specifically listed items would stretch the principle of ejusdem generis into the realm of the absurd where it would have no value in contract construction. 27 2. Cases Involving the Labor Law and Other Statutes and Contracts Are Not Relevant to Whether the Tower Crane Is a Temporary Structure Under the Temporary Works Provision In their attempt to establish that the Tower Crane is a “temporary structure” within the meaning of the Temporary Works provision of the Policy, Extell and Lend Lease cite cases involving the interpretation of New York’s Labor Law. (Extell Brief, at 16; Lend Lease Brief, at 22-23.) These cases, however, have no relevance in determining whether the Tower Crane is a “structure” under the Temporary Works provision, because this case does not involve an alleged violation of that statute. Under the Labor Law, a crane used in construction might under certain circumstances be considered a “structure” because “[c]ourts liberally construe the statute to effect its purpose of protecting workers.” Hodges v. Boland’s Excavating & Topsoil, Inc., 24 A.D.3d 1089, 1091, 807 N.Y.S.2d 421, 423 (3d Dep’t 2005). Indeed, “[o]ver a century ago, the Court of Appeals made clear that the meaning of the word ‘structure,’ as used in the Labor Law, is not limited to houses or buildings[,]” but “‘in its broadest sense includes any production or piece of work artificially built up or composed of parts joined together in some definite manner.’” McCoy v. Abigail Kirsch, 99 A.D.3d 13, 15-16, 951 N.Y.S.2d 32, 34- 35 (2d Dep’t 2012) (quoting Caddy v. Interborough R.T. Co., 195 N.Y. 415, 420 (1909)). 28 Thus, under the Labor Law, which again, is to be construed in its broadest sense for the purpose of protecting workers, power screens, telephone poles, trade show exhibit windows, dump trucks, utility poles, utility vans and cable lines, locomotives and airplanes may all be considered structures. Hodges, 24 A.D.3d at 1091, 807 N.Y.S.2d at 423 (collecting cases). This case does not involve the interpretation or application of the Labor Law, and it would therefore be inappropriate for the term “structure” to be construed in such an artificially broad manner. Although the word “structure” is capable of wide interpretation in various different contexts, it becomes limited in its effect by the words that surround it. People v. Illardo, 48 N.Y.2d at 416, 423 N.Y.S.2d at 474 (holding that under ejusdem generis, a phrase, “though susceptible of a wide interpretation, becomes one limited in its effect by the specific words which precede it . . . .”). Accordingly, Extell’s and Lend Lease’s reliance on Labor Law cases to support their arguments that a crane is a “structure” is wholly misplaced. Lend Lease attempts to analogize these inapposite Labor Law cases by arguing that the “meaning of the word ‘structure’ as it is used in New York Labor Law [sic] is construed liberally in favor of the protection of workers, which is similar to the long-standing principle that insurance policies ‘drawn as they ordinarily are by the insurer, are to be liberally construed in favor of the insured.’” 29 (Lend Lease Brief, at 23 (quoting York v. Sterling Ins. Co., 114 A.D.2d 665, 494 N.Y.S.2d 243 (3d Dep’t 1985).) Even putting aside this misguided comparison of the public policy of protecting workers from death or bodily injury to the principles of interpreting commercial insurance policies, Lend Lease’s argument completely distorts well-settled principles of contract construction. As this Court has held, “[f]reedom of contract ‘is deeply rooted in public policy.’ As a result, parties to an insurance arrangement may generally ‘contract as they wish and the courts will enforce their agreements without passing on the substance of them.’” J.P. Morgan Sec. Inc. v. Vigilant Ins. Co., 21 N.Y.3d 324, 334, 970 N.Y.S.2d 733, 738 (2013) (quoting New England Mut. Life Ins. Co. v. Caruso, 73 N.Y.2d 74, 81, 538 N.Y.S.2d 217, 221 (1989)). Accordingly, when an insurance policy is clear and unambiguous, as this one is, “a court is not free to alter the contract to reflect its personal notions of fairness and equity.” White v. Continental Cas. Co., 9 N.Y.3d 264, 267, 848 N.Y.S.2d 603, 605 (2007). Thus, while the Labor Law is to be liberally construed in favor of protecting workers, and to accomplish that objective the term “structure” has been given an expansive definition, there is no similar rationale for construing the term “temporary structure” in its “broadest sense” in the context of this clear and unambiguous insurance policy. To do so would run afoul of basic principles of contract interpretation as enunciated by this Court in J.P. Morgan Secs. Inc. and 30 White. It bears repeating here that the Tower Crane could have been, but was not, added as Covered Property through an available Scheduled Contractor’s Equipment endorsement. Also misplaced is Extell’s and Lend Lease’s reliance on two federal court decisions, Landry v. G.C. Constructors, 514 F. Appx. 432, 2013 WL 632248 (5th Cir. Feb. 20, 2013), and Glacier Construction Company v. Travelers Property Casualty Company of America, Civil Action No. 10-cv-01911, 2011 WL 9367470 (D. Colo. Sept. 22, 2011), aff’d, 569 F. Appx. 582 (10th Cir. June 20, 2014). As a preliminary matter, it should be noted that the dissent did not find these cases “particularly helpful, since what matters is only whether the crane is a temporary structure as that term is specifically defined in the policy at issue, and those cases did not address a policy with a definition for ‘temporary structure’ that was precisely the same.” (R.860-R.861.) In this regard, the dissent got it right. Glacier Construction is inapposite because the clause in which the phrase “temporary structures” appeared was much broader than the Temporary Works provision in the Policy. Glacier Constr. Co., 2011 WL 9367470, at *1 (“The policy defines ‘Builders Risk’ as . . . Buildings or structures including temporary structures while being constructed, erected or fabricated at the ‘job site . . . .’”). Thus, unlike the Temporary Works provision in the Policy, the relevant clause in Glacier Construction did not include a description 31 by example of what would constitute a “temporary structure,” and also did not contain a list of related words by which the meaning of a “temporary structure” could be discerned. Landry involved whether a crane on a barge on which the plaintiff employee was injured was “part of the ship’s usual ‘gear’ or the ship itself.” Landry, 514 F. Appx. at 438, 2013 WL 632248, at *5. If the crane was determined to be affixed to the barge, Fifth Circuit precedent suggested that the employer, as the barge owner, had a duty to repair a hydraulic leak from the crane that allegedly caused the plaintiff employee to slip and fall. Id. The Landry Court concluded, however, that because Landry’s employer leased the crane for construction work, it was not an “appurtenance of the ship,” but rather a “temporary structure . . . used entirely by the independent contractor to perform its work.” Id. (citation and internal quotation marks omitted). Thus, in Landry, the Court held that a crane was a “temporary structure” only in the limited context of determining whether the employer had an obligation to repair a hydraulic leak from a crane that caused injury to the employee. Landry, therefore, does not support Plaintiffs’ argument that the Tower Crane is a “temporary structure” within the meaning of the Temporary Works provision of the Policy here. 32 The cases cited by Extell and Lend Lease involving the interpretation of the Labor Law, a policy with materially different terms (Glacier Construction), and the liability of a vessel-owner under the federal Longshore and Harbor Workers Compensation Act (Landry), therefore do not help them meet their burden to establish that the Tower Crane is a temporary structure within the meaning of the Temporary Works provision. B. The Purportedly Custom-Designed Tower Crane is not Incidental to the Project The Tower Crane must also be “incidental to the Project” in order to be a Temporary Works. Because the Policy does not define the term “incidental,” the Appellate Division referred to various dictionary definitions of the word, which is consistent with the “common practice for the courts of this State to refer to the dictionary to determine the plain and ordinary meaning of words to a contract.” (R.841 (quoting 2619 Realty v. Fidelity & Guar. Ins. Co., 303 A.D.2d 299, 301, 756 N.Y.S.2d 564, 566 (1st Dep’t 2003).) The Appellate Division reviewed the definition of “incidental” from three dictionaries, and correctly determined that the 750-foot Tower Crane is not incidental to the project: Black’s Law Dictionary defines the term “incidental” as “[s]ubordinate to something of greater importance; having a minor role” (10th ed 2014]). The American Heritage Dictionary, defines incidental as “[o]f a minor, casual, or subordinate nature” (5th ed 2011]). The Merriam-Webster Online Dictionary defines the term 33 “incidental” as “being likely to ensue as a chance or minor consequence” (11th ed 2003). Applying these definitions, the 750-foot tower crane is not a structure that is “incidental” to the project. (R.842.) The Court properly concluded that the Tower Crane is not incidental to the project given the undisputed evidence from Extell’s own Senior Vice President for Construction Management that “the Building was specifically designed to incorporate the Tower Crane during construction.” (R.61 ¶ 21.) As the Court observed, once the Tower Crane “was integrated into the structure of the building, the custom designed tower crane, rather than serving a minor or subordinate role, was used to lift items such as concrete slabs, structural steel and equipment, was integral and indispensable, not incidental, to the construction of the 74-story high- rise, which could not have been built without it.” (R.842.) Extell and Lend Lease, however, contend that the Appellate Division erroneously interpreted the word “incidental” in the “narrowest way possible” against them (Extell Brief, at 25), and point to other sources to support their argument that the proper definition of “incidental” in the construction context is “anything that is related to or the result of something else” or “something subordinate, necessary, and connected to the main purpose.” (Lend Lease Brief, at 27; Extell Brief, at 24.) Thus, Extell and Lend Lease argue that the dissent 34 properly determined that “incidental” means “appurtenant to something else that is primary, but still necessary to that primary thing.” (R.863.) The fundamental flaw with the arguments of Extell and Lend Lease, and the reasoning of the dissent, is that defining “incidental” so broadly as to include anything that is “appurtenant to something else that is primary, but still necessary to that primary thing,” renders that word superfluous in this context. This is because under the dissent’s definition, everything used in connection with the construction of the Building would be considered incidental, thereby making inclusion of the word “incidental” in the Temporary Works provision unnecessary. “It is a well established rule of interpretation that no contractual clause is to be construed as being superfluous.” Lend Lease (U.S.) Construction LMB Inc. v. Zurich American Ins. Co., 136 A.D.3d 52, 66, 22 N.Y.S.3d 24, 36 (1st Dep’t 2015) (dissenting op.); see also Consolidated Edison Co., 98 N.Y.2d at 221-22, 746 N.Y.S.2d at 628 (“We construe the policy in a way that ‘affords a fair meaning to all of the language employed by the parties in the contract and leaves no provision without force and effect.’”) (citation omitted); Muzak Corp. v. Hotel Taft Corp., 1 N.Y.2d 42, 46, 150 N.Y.S.2d 171, 174 (1956) (“The rules of construction of contracts require us to adopt an interpretation which gives meaning to every provision of a contract or, in the negative, no provision of a contract should be left without force and effect.”). 35 Here, the only way to construe the term “incidental” as it appears in the Temporary Works provision so as to afford it a “fair meaning” and avoid rendering it superfluous, is to ascribe to it the meaning consistent with the definitions found by the Appellate Division to apply: subordinate to something of greater importance; having a minor role; of a minor, casual, or subordinate nature; and being likely to ensue as a chance or minor consequence. (R.842.) When the provisions of the Pinnacle Contract concerning the installation and use of the Tower Crane are compared with the provisions concerning the installation and use of the items specifically listed in the Temporary Works provision, it is clear that no reasonable argument can be made that the Tower Crane is of a minor, casual or subordinate nature. For example, under the Pinnacle Contract, the location, lay out and structural supports for the Tower Crane were to be designed by a licensed professional engineer: The first crane (Crane 1) will be located on the south east side of the site near sidewalk grade and the second crane (Crane 2) will be located on the south west side of the project founded on the 20th floor slab. Exact crane locations, lay outs and structural supports required are to be designed by a licensed New York State professional engineer (NYS PE) to meet all NYC DOB, NYC DOT, OSHA and Construction Manager criteria. This NYS PE, working directly for the Contractor, shall provide signed and sealed drawings and calculations required by all governing authorities and must submit them to said governing authorities for approval and permitting. Contractor also includes all shoring, structural elements, tie beams and additional reinforcing required for a safe support system for each crane. The Crane 1 is to be supported on a crane pad on footings 36 designed by this Contractor’s NYS PE and furnished and installed by the foundation contractor. The Crane 2 [Tower Crane] is to be supported by a reinforced slab on the 20th floor, included in this Contract, and associated supporting elements as required. Each design must be approved by the structural engineer and any subsequent proposed modifications or additional loads shall be submitted to the structural engineer for approval within one week of award of the Contract to minimize the impact to the progress of the foundation work. Any modifications or changes must be accepted by the NYS PE and incorporated into the design. If any crane supplied requires additional modifications to the structure then Contractor shall include these costs in this Contract. (R.184-R.185 ¶ 2.g. (underscoring added).) By contrast, there is no comparable detail or specificity for the provision of property that is truly incidental, i.e., scaffolding, fences, office and job site trailers, etc., because none is needed: 2. The Work of this Contractor shall be to furnish and install all Superstructure Concrete work as required, and as indicated in the Contract Documents, including, but not limited to the following: a) All required forms, form work, form ties, shores, reshores, bracing, scaffolding, etc., for the complete installation of all concrete work. Two (2) sets of deck forms are to be in use at all times. Refer to Alternate No. 9 to utilize three (3) sets of forms in lieu of two (2) sets. (R.183 ¶ 2.a.) The best evidence that the Tower Crane is not of minor consequence, or even subordinate to the Insured Project, is the affidavit of Extell’s Senior Vice 37 President for Construction Management, who averred that the Building was designed to accommodate the Tower Crane: These design elements [i.e., the additional beams, and the modified reinforced beams, cast into the slab on the 20th floor and . . . the reinforcement of the floor slabs at the tie locations] would not have been part of the Building but for the installation and erection of the Tower Crane, i.e., the Building was specifically designed to incorporate the Tower Crane during construction. (R.61 ¶ 20.) The Appellate Division, therefore, correctly held that the massive mechanized Tower Crane is not “incidental to the project” and, accordingly, cannot be considered a Temporary Works for which coverage is provided as a matter of course. The dissent opined that the “phrase ‘temporary buildings or structures’ describes things that are, by their very name, incidental to a construction project.” (R.859-R.860.) Thus, according to the dissent, the “only sensible way to avoid reading the phrase ‘incidental to the project’ as superfluous is to interpret it as a catch-all phrase capturing any ‘temporary . . . structures’ not specifically enumerated in the definition.” (R.860.) This interpretation, if correct, acknowledges that there are temporary structures that are not incidental to the project, because if all temporary structures were incidental to the project, there would be no need to include “incidental to the project” as a “catch-all phrase capturing any ‘temporary . . . structures not specifically enumerated in the 38 definition.” (R.860.) Accordingly, the dissent’s conclusion regarding the scope of the phrase “incidental to the project” refutes its own opinion that the word “incidental” means “appurtenant to something else that is primary, but still necessary to that primary thing” (R.863), because -- as discussed above -- under that definition, all temporary structures would qualify as “incidental.” The dissent’s definition of “incidental,” therefore, directly conflicts with its interpretation of “incidental to the project” as a catch-all phrase capturing temporary structures not specifically listed in the Temporary Works provision. Contrary to Extell’s argument, the Appellate Division’s interpretation of the phrase “incidental to the project” does not eliminate coverage for the specifically enumerated items in the Temporary Works provision. (Extell Brief, at 28.) The Policy expressly characterizes “scaffolding . . . formwork, falsework, shoring, [and] fences” as incidental to the project; these things are covered Temporary Works if they are also “included in the estimated TOTAL PROJECT VALUE* of the INSURED PROJECT* declared by the Named Insured[,]” and not otherwise excluded. (R. 345 § III.10.) A “temporary structure” would be a Temporary Works if it were similar to the specifically named items (See Point I.A.1, infra), incidental to the project, and included in the estimated Total Project Value. That the Tower Crane does not meet any of these criteria does not result in the elimination of coverage for the expressly listed Temporary Works. 39 C. The Value of the Tower Crane Was Not Included in the “Total Project Value” of the “Insured Project” Finally, in order for the Tower Crane to be considered a “Temporary Works” under the Builders Risk Policy, its “value” also must have “been included in the estimated TOTAL PROJECT VALUE* of the INSURED PROJECT* declared by the Named Insured.” (R.345 § III.10.) If this Court determines either that the Tower Crane is not a “temporary building[] or structure[], including office and job site trailers” or “incidental to the project,” it will not qualify as a Temporary Works. It then would not need to be decided whether the value of the Tower Crane was included in the “Total Project Value,” because all three conditions must be satisfied for the Tower Crane to be considered a covered “Temporary Works.” (R. 345 § III.10.) Extell and Lend Lease contend that because the $89 million superconcrete contract to be performed by Pinnacle was included in the “Total Project Value,” the value of the Tower Crane, which Pinnacle was obligated to furnish in connection with the performance of its work, was necessarily included in the “Total Project Value.” (Extell Brief, at 33-34; Lend Lease Brief, at 32.) This argument ignores both logic and the clear and unambiguous construction contracts in the Record. Although Pinnacle agreed as part of its contract to furnish the Tower Crane (R.183-R.184 ¶ 2.g), and the manner in which that obligation was factored into the 40 total contract price is not known, it is clear that the value of that multi-million dollar piece of construction equipment was not part of that contract price. Pinnacle did not sell the crane. At best, Pinnacle somehow factored into that total contract price its obligation to provide heavy equipment to the job site, which included the Tower Crane, for a finite period of time. Extell contends that the “$89 million Pinnacle Contract . . . expressly included the value (the cost) of the Tower Crane, i.e., the design, furnishing of parts, erection, and disassembly of the Tower Crane, all of which were to be provided by Pinnacle.” (Extell Brief, at 34.) It is undisputed, however, that Pinnacle, which was to perform the superconcrete work for the Building (R.110), did not own the Tower Crane; rather, a separate entity, Pinnacle III owned the Tower Crane and rented it to Pinnacle, Post Road and other contractors for the price of $77,000 per month. (R.211; R.602; R.606 ¶¶ 15, 17, 18.) Because Pinnacle neither purchased the Tower Crane in order to perform its superconcrete work nor sold the crane to Extell or Lend Lease as part of the contract price, the “value” of, or “cost” to purchase, that piece of “heavy equipment” (R.184 ¶ 2.g) could not have been included in the value of the superconcrete work. Significantly, there likely is other insurance providing insurance coverage for the Tower Crane, as demonstrated by the September 13, 2012 Sublease of Equipment and Indemnification between sublessor Pinnacle II and sublessee Post 41 Road, which shifts the risk of loss for the Tower Crane to the sublessee. (R.602 ¶ 3.) In addition, the Pinnacle Contract itself obligates Pinnacle -- not Extell or Lend Lease -- to obtain property insurance for the Tower Crane. (R.598 ¶ 7.) Accordingly, neither Extell nor Lend Lease was responsible for insuring the Tower Crane and neither could have a reasonable expectation that the Policy here would provide coverage for contractor’s equipment that they did not purchase, opted not to endorse onto the Policy, and for which the contractor expressly agreed to provide insurance coverage. At most, there is a question of fact as to whether the value of the Tower Crane was included in the superstructure concrete work, but there certainly is no reason to believe that it was. Finally, Lend Lease makes the speculative argument that any requirement that the value of the Tower Crane be included in the contract price in order for it to be insured would render coverage for scaffolding and job site trailers “superfluous.” (Lend Lease Brief, at 33.) Lend Lease’s claim is based on the affidavit of Paul Finamore, a senior vice president of Lend Lease, who stated that he could not “recall any instance . . . in which a contract price for either scaffolding or trailers included the actual value of the materials in question . . . .” (R.799 ¶ 16.) Mr. Finamore, however, is apparently unaware of the contract documents for the Insured Project, inasmuch as the schedule of project values provided to the 42 Insurers expressly provides an actual value for scaffolding. (R.479 (sidewalk bridge); R.821-R.822 ¶¶ 13, 14.) The value of job site trailers is included in the scheduled project values given for site safety and site security. (R.479.) The same cannot be said for the Tower Crane. Contrary to Lend Lease’s argument, therefore, requiring that the value of the Tower Crane -- not just a rental cost -- be included in the contract price in order for it to be insured would not render coverage for scaffolding and job site trailers illusory. Had Extell and Lend Lease wanted to include the Tower Crane in the “Total Project Value,” they could have done so by means of the available Scheduled Contractor’s Equipment endorsement. (R.825.) They did not, however, and because the Tower Crane is not incidental to the work, is not a temporary structure, and its value is not included in the “Total Project Value,” it cannot be considered a covered “Temporary Works.” The Judgment of the Appellate Division should therefore be affirmed. 43 POINT II THE CONTRACTOR’S MACHINERY AND EQUIPMENT EXCLUSION PRECLUDES COVERAGE FOR THE TOWER CRANE A. The Tower Crane Falls Squarely within the Contractor’s Machinery and Equipment Exclusion Even if the Tower Crane could be considered a covered “Temporary Works” under the Builders Risk Policy, and as explained in Point I, supra, it should not be, damage to the Tower Crane from Storm Sandy would not be covered by reason of the following contractor’s machinery and equipment exclusion: 3. PROPERTY EXCLUDED This Policy does not insure against loss or damage to: * * * B. Contractor's tools, machinery, plant and equipment including spare parts and accessories, whether owned, loaned, borrowed, hired or leased, and property of a similar nature not destined to become a permanent part of the INSURED PROJECT*, unless specifically endorsed to the Policy. (R.334 § I.3.B.) The Tower Crane is contractor’s equipment or machinery within the meaning of the exclusion. This cannot be seriously disputed. It belongs to Pinnacle III (R.606 ¶ 17), was provided by Pinnacle (R.606 ¶ 15), and is expressly referred to as “heavy equipment” in the Pinnacle Contract (R.184 ¶ 2.g). Moreover, the “Sublease of Equipment and Indemnification,” pursuant to which 44 the Tower Crane was leased by Pinnacle III expressly refers to the Favco Tower Crane as “equipment.” (R.602.) Nevertheless, Extell and Lend Lease raise a host of objections to the application of the contractor’s machinery and equipment exclusion to the Tower Crane, none of which has any merit. First, Extell and Lend Lease make an argument that was rejected by both the majority and dissenting justices of the Court below: that the Tower Crane cannot be considered machinery or equipment because it was “specifically designed and constructed for this Project alone . . . .” (Extell Brief, at 37; see also Lend Lease Brief, at 37.) Putting aside for the moment the gross factual inaccuracy of this statement, the dissent rejected this argument by Extell and Lend Lease: I am not convinced that the crane does not fall within the exclusion merely by dint of its size or sophistication. After all, the terms “machinery, plant and equipment” suggest that major elements of the project could be excluded from coverage. Further, I disagree with plaintiffs that the crane was “destined to become a permanent part of the insured project.” To be sure, it was necessary, as a practical matter, for plaintiffs to incorporate certain elements of the crane structure into the building. However, this does not diminish the nature of the crane itself as a tool by which contractors were able to construct the building. (R.866-R.867.) Thus, both the Appellate Division and the dissent recognized that the Tower Crane clearly qualifies as contractor’s machinery or equipment within the meaning of the exclusion. (R.846-R.847; R.866-R.867.) 45 Moreover, contrary to the assertion -- which is disingenuous at best -- that the Tower Crane is a “custom-designed, custom-built structure for this Project” (Lend Lease Brief, at 37), the Sublease between Pinnacle III and Post Road demonstrates that the Tower Crane, however large, ultimately is a movable piece of heavy equipment that was to be removed from this project when no longer needed and will be used on other projects within its useful life. (R.602.) It has a brand name, Favco, a model number, and a serial number (R.602 ¶ 1), all hallmarks of a mass-produced piece of machinery. Additionally, the Pinnacle Contract itself makes clear that the Tower Crane was to be removed from the site after its work was completed: Once all other trade work is completed that requires the use of [the Tower Crane], and upon notification by the Construction Manager, the Contractor shall jump down, dismantle and remove the crane from the site. (R.189-R.190 ¶3.) The Pinnacle Contract also demonstrates no part of the Tower Crane was to remain on the construction site or as part of the Building, when the Insured Project was completed: After removal of [the Tower Crane], Contractor shall come back and fill in temporary openings with framed concrete, including rebar, splices and/or special connection details, keyways, etc. (R.185 ¶ 2.g.) 46 That the “Building was specifically designed to incorporate the Tower Crane during construction” (R.61 ¶ 20), does not mean that parts of the Tower Crane “actually became a permanent part of the Project.” (Extell Brief, at 37.) To the extent that there is any merit to the argument that “‘tools’ and ‘equipment’ used to build something do not themselves become part of the resulting building” (Extell Brief, at 37), such an argument does not apply to the Tower Crane. In sum, as both the Court and the dissent recognized, the size and sophistication of the Tower Crane does not preclude it from being considered excluded contractor’s machinery or equipment. B. The Temporary Works Provision Does Not Control Over the Contractor’s Machinery and Equipment Exclusion Both Extell and Lend Lease argue that “the exclusion provision does not apply to the Tower Crane because the specific coverage provision, Temporary Works, controls over the general provision as a matter of law.” (Extell Brief, at 38; see also Lend Lease Brief, at 39-42.) In support of this theory, Extell contends that the “Temporary Works coverage provision is a ‘specific provision’ and the exclusion provision is a ‘general provision’, because all the items in the Temporary Works coverage provision could be deemed to be included in the general exclusion provision as ‘Contractor’s tools, machinery, plant and equipment’.” (Extell Brief, at 40; see also Lend Lease Brief, at 39.) 47 The fatal flaw with this argument is that the Tower Crane is not specifically included in the “Temporary Works” provision. Only scaffolding, formwork, falsework, shoring, fences, temporary buildings and structures, office and job site trailers are specifically included in the “Temporary Works” provision. (R.345 § III.10.) Indeed, Extell’s and Lend Lease’s reliance on the principle of ejusdem generis to argue that the Tower Crane is a “temporary structure” (Extell Brief, at 19-22; Lend Lease Brief, at 29-31), refutes their argument that the “Temporary Works” clause is a specific provision as it relates to the Tower Crane. Accordingly, Rocon Manufacturing, Inc. v. Ferraro, 199 A.D.2d 999, 605 N.Y.S.2d 591 (4th Dep’t 1993), the case relied upon by Extell and Lend Lease to argue that the “Temporary Works” provision controls over the contractor’s machinery and equipment exclusion, is inapposite. For the same reason, the dissent’s conclusion that “a clause addressing specific matters should be given greater weight than one addressing general matters that possibly implicates the specific clause” (R.868), has no application here. The Appellate Division plainly stated: Insofar as the dissent believes that the exclusion does not apply to the tower crane because it is a general provision that conflicts with the specific Temporary Works provision, I note that the tower crane is not specifically included in the Temporary Works provision and that plaintiffs rely on the principle of ejusdem generis to argue that the tower crane is a “temporary structure” within the meaning of that provision. 48 (R.848-R.849.) Moreover, the argument that the “Temporary Works” provision controls over the contractor’s machinery and equipment exclusion conveniently disregards the well-settled principle that an exclusion takes away coverage conferred by another provision. SR Int’l Bus. Ins. Co., Ltd. v. World Trade Ctr. Props. LLC, No. 01 Civ. 9291, 2006 WL 3073220, at *10 n.37 (S.D.N.Y. Oct. 31, 2006) (“It is clear, from examining the Insureds’ other cited cases, that the Insureds’ cited language merely states the obvious -- that exclusions take out what coverage puts in.”); Edwards, 25 A.D.2d at 420, 266 N.Y.S.2d at 461 (“An exclusion . . . serves the purpose of taking out persons or events otherwise included within the defined scope of coverage.”). The majority itself noted that “exclusions by their nature modify the scope of coverage provided in an insurance policy and ‘[a]n insurance policy is not illusory if it provides coverage for some acts; it is not illusory simply because of a potentially wide exclusion.’” (R.847-R.848 (quoted citation omitted).) Thus, as noted above, even if the Tower Crane could be considered a “temporary structure,” there would be no coverage for damage to it by reason of the contractor’s machinery and equipment exclusion. That exclusion cannot be deemed ineffective because it “conflicts” with a coverage provision. Exclusions 49 always “conflict” with coverage provisions because, by design, they take away coverage for something that otherwise would be covered. C. Application of the Contractor’s Machinery and Equipment Exclusion to the Tower Crane Would Not Render the “Temporary Works” Provision Meaningless The dissent opined that enforcement of the contractor’s machinery and equipment exclusion would render coverage for Temporary Works illusory. The dissent’s concern, which is based on Extell’s and Lend Lease’s argument that all of the items included in the Temporary Works provision could be considered contractor’s tools, machinery, plant or equipment and therefore, not covered, is unfounded. There is no evidence that the Insurers have ever denied, or would ever deny, coverage for any of the specifically listed items in the Temporary Works provision, i.e., scaffolding, formwork, falsework, shoring, fences, and temporary buildings, based on the contractor’s machinery and equipment exclusion. To the extent that there were a conflict between the specifically listed items of the Temporary Works provision and the contractor’s machinery and equipment exclusion, in that narrow -- and highly unlikely -- circumstance, the Temporary Works provision would control. DRK, LLC v. Burlington Ins. Co., 74 A.D.3d 693, 694, 905 N.Y.S.2d 58, 60 (1st Dep’t 2010) (“Furthermore, the separation of insureds provision is a general provision, while the cross liability exclusion is 50 specific, and therefore the latter would control to the extent there is a conflict.”) (underscoring added). Here, there is no conflict between the Temporary Works provision and the contractor’s machinery and equipment exclusion, because the Tower Crane, or every crane or other type of mechanized and/or heaving lifting equipment, is not specifically listed in the Temporary Works provision. In this case, therefore, the Temporary Works provision is not a specific provision that controls over the contractor’s machinery and equipment exclusion. Indeed, a determination that the Temporary Works provision controls over the exclusion in this case, in which the Tower Crane is not specifically listed as a Temporary Works, would render the exclusion illusory. This is because -- under the dissent’s theory -- any equipment or machinery that is “put in place early in a construction project, remain[s] for most or all of the duration of the project, and [is a] significant feature[] of the construction landscape” (R.862) would be considered a temporary structure under the Temporary Works provision. This overly broad definition of temporary structure would include such commonly used equipment as “bulldozers, tractors, graders, [and] trucks.” Rish v. Theo Bros. Constr. Co., Inc., 269 S.C. 226, 231, 237 S.E.2d 61, 63 (S.C. 1977). Refusing to enforce the contractor’s machinery and equipment exclusion with respect to such equipment because that equipment happens to meet the 51 dissent’s (and Extell’s and Lend Lease’s) definition of “temporary structure” would effectively nullify the exclusion. The same result would obtain by refusing to enforce the exclusion with respect to the Tower Crane. Such a result would run afoul of basic tenets of contract construction. Cnty. of Columbia v. Cont'l Ins. Co., 83 N.Y.2d 618, 628, 612 N.Y.S.2d 345, 349 (1994) (“An insurance contract should not be read so that some provisions are rendered meaningless.”); Walters v. Great Am. Indem. Co., 12 N.Y.2d 967, 969, 238 N.Y.S.2d 960, 962 (1963) (“Nothing in the insurance policy indicates that the industrial appliances used in the operation of the insured's business are not intended to come within the exception. To read such a limitation into the exception would write the exception out of the policy.”). The majority agreed that the contractor’s machinery and equipment exclusion “did not render the policy illusory, because the policy provided some benefit to the insured and the exclusion does not negate all possible coverage for Temporary Works.” (R.848.) Accordingly, the application put forth by the Insurers and adopted by the majority is the only acceptable reading of the exclusion. D. The Tower Crane Was Not Endorsed to the Policy As the Appellate Division recognized, “under the terms of the contractor’s tools, machinery, plant and equipment exclusion, coverage for the tower crane, or any item qualifying as Temporary Works, could have been endorsed onto the 52 policy and the clause does not in and of itself deprive an insured from coverage for the damages he reasonably thought himself insured.” (R.848.) A Scheduled Contractor’s Equipment Endorsement was available to Extell and Lend Lease. (R.825.) That endorsement provides space for a description of the equipment, including make, model and serial number. The Tower Crane at issue is identified in the contract documents as a Favco Tower Crane Model - 440- D - serial #998 – CD # 2830. (R.602.) Thus, it has a make, model and serial number, all of which could have been set forth on an endorsement had the parties intended for this Tower Crane to be covered by this Policy. (R.602.) Notably, had Extell elected to purchase the coverage provided by this endorsement, the Tower Crane would have been covered regardless of whether Extell (or Lend Lease) had purchased that equipment, or rented it. Having failed to obtain the additional coverage for the Tower Crane, Extell’s attempt to force coverage by misconstruing the clear and unambiguous Policy should not be countenanced. CONCLUSION For the foregoing reasons, the Judgment of the Appellate Division should be affirmed. Dated: New York, New York May 6, 2016 MOUND COTTON WOLLAN & GREENGRASS LLP By: Philip C. Silverberg MarkS. Katz Sanjit Shah Attorneys for Defendants-Respondents One New York Plaza, 441h Fl. New York, New York 10004 Phone: (212) 804-4200 Fax: (212) 344-8066 psilverberg@moundcotton.com mkatz@moundcotton.com sshah@ moundcotton.com 53