Lend Lease (US) Construction LMB Inc., et al., Appellants,v.Zurich American Insurance Company, et al., Respondents.

Brief

N.Y.January 11, 2017

To Be Argued By: Matthew J. Lodge Time Requested: 30 Minutes APL-2016-0016 New York County Clerk's Index No. 158438/13 (!Court of ~ppea15 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 PLAINTIFF-APPELLANT LEND LEASE (US) CONSTRUCTION LMB INC. CARROLL MCNULTY & KULL LLC Attorneys for Plaintiff-Appellant- Lend Lease (US) Construction LMB Inc. 570 Lexington Avenue, 8th Floor New York, New York 10022 212-252-0004 Of Counsel: Matthew J. Lodge Date Completed: March 21, 2016 RULE 500.1(0 DISCLOSURE STATEMENT Lend Lease Americas Holdings, Inc. is the parent company of Lend Lease Americas Inc. Lend Lease Americas Inc. is the parent company of Lend Lease (US) Construction Holdings Inc. Lend Lease (US) Construction Holdings Inc. is the parent company to Lend Lease (US) Construction Inc., Schal Bovis Inc., MIL Bovis Holdings, Ltd., Bovis Lend Lease Interiors, Inc., Bovis Lend Lease Trinidad & Tobago, Bovis Lend Lease SA de CY (Mexico) and Scrvicios Bovis Lend Lease, SA de CY (Mex). MIL Bovis Holdings, Ltd. is the parent company of Plaintiff-Appellant Lend Lease (US) Construction LMB Inc. Plaintiff-Appellant Lend Lease (US) Construction LMB Inc. is the parent company of Bovis International, Inc. (DE) and Lehrer McGovern Bovis SARL (France). Bovis International, Inc. is the parent company of WTW Bovis SDN BHD (Malaysia) and Bovis Lend Lease Japan, Inc. (Japan). Bovis Lend Lease Japan, Inc. (Japan) is the parent company of Bovis Lend Lease Telecoms Inc. (Japan). STATEMENT OF JURISDICTION The New York Court of Appeals has jurisdiction to entertain this appeal and to review the questions raised under CPLR §560 1(a). This matter originated in the Supreme Court of the State of New York, New York County. fR. 872-886]. By way of an Order dated December 22, 2015, three Justices of the Appellate Division, First Judicial Department, finally determined this action by granting summary judgment in favor of the Defendants-Appellees and declaring that the Defendants-Appellees have no obligation to afford coverage to the Plaintiff- Appellant under the relevant insurance policy as a matter of law. [R. 833-871]. In contrast with the majority decision, two Justices issued a dissent on questions of law related to the interpretation of the insurance policy at issue in favor of the Plaintiff-Appellant. [R. 833-871]. Plaintiff-Appellant Lend Lease (US) Construction LMB Inc. ("Lend Lease") filed a timely appeal with this Court from the Order of the First Department. Notice of entry of the First Department's Order was provided on December 28, 2015. Lend Lease served and filed its Notice of Appeal on January 22, 2016 in accordance with CPLR § 5513. 11 TABLE OF CONTENTS RULE SOO.l(f) DISCLOSURE STATEMENT i STATEMENT OF JURISDICTION .ii TABLE OF AUTHORITIES v I. PRELIMINARY STATEMENT 1 II. QUESTIONS PRESENTED S III. STATEMENT OF FACTS 7 A. THE UNDERLYING PROJECT AND TOWER CRANE 7 B. THE BUILDER'S RISK POLICY 10 C. SUPER STORM SANDY AND NOTICE OF THE LOSS TO THE INSURERS 16 D. THE DECLARATORY JUDGMENT ACTION 17 IV. ARGUMENT 20 POINT I: THE TOWER CRANE CONSTITUTES "TEMPORARY WORKS," AS DEFINED BY THE POLICy 20 A. THE TOWER CRANE IS A "TEMPORARY STRUCTURE" THAT IS "INCIDENTAL TO THE PROJECT" 22 1. The Tower Crane is a "Temporary Structure" 22 2. The Tower Crane Is "Incidental to the Project" 26 3. Ejusdem Generis Applies to the Definition of Temporary Works 29 B. THE TOWER CRANE IS INCLUDED IN THE "TOTAL PROJECT VALUE" OF THE INSURED PROJECT 31 111 POINT II: THE INSURERS CANNOT SATISFY THEIR BURDEN OF SHOWING THAT THE CONTRACTOR'S TOOLS EXCLUSION APPLIES 34 A. THE PLAIN LANGUAGE OF THE EXCLUSION DOES NOT ENCOMPASS THE TOWER CRANE 36 B. THE SPECIFIC DEFINITION OF 'TEMPORARY WORKS" CONTROLS OVER THE GENERAL EXCLUSION PROVISION 39 C. APPLICATION OF THE EXCLUSION PROVISION TO THE TOWER CRANE WOULD RENDER THE "TEMPORARY WORKS" PROVISION SUPERFLUOUS 43 D. THE TOWER CRANE DID NOT NEED TO BE ENDORSED TO THE POLICY BECAUSE IT IS A "TEMPORARY STRUCTURE" THAT IS ALREADY COVERED PROPERTY UNDER THE POLICY .44 POINT III: LEND LEASE HAS MET ITS BURDEN TO MERIT JUDGMENT AS A MATTER OF LAW ON THE ISSUE OF LIABILITy 45 V. CONCLUSION 48 IV TABLE OF AUTHORITIES CASES 242-44 East 77th St., LLC v. Greater N.Y.Mut. Ins. Co., 31 A.D.3d 100, 815 N.Y.S.2d 507 (1st Dept. 2006) 29 Alvarez v. Prospect Hospital, 68 N.Y.2d 320,324,508 N.Y.S.2d 923 (1986) ..... .46 American Home Assurance Company v. Port Authority of New York and New Jersey, 66 A.D.2d 269,412 N.Y.S.2d 605 (lst Dept. 1979) 35 B&W Heat Treating Co., Inc. v. Hartford Fire Ins. Co., 23 A.D.3d 1102,803 N.Y.S.2d 870 (4th Dep't 2005) 47 B.U.D. Sheetmetal, Inc. v. Massachusetts Bay Ins. Co., 248 A.D.2d 856, 670 N.Y.S.2d 228 (3d Dep't 199R) 47 Belt Painting Corp. v. TIG Ins. Co., 100 N.Y.2d 377, 763 N.Y.S.2d 790 (Ct. of App. 2003) 37 Bah v. Pan Am. Petroleum Corp., 128 F.2d 864 (5th Cir. 1942) 27 Cocchi v. National Union Fire Ins. Co. of Pittsburgh, Pa., 156 A.D.2d 535 N.Y.S.2d 804 (2d Dept. 1989) 23 Consolidated Edison Company of New York, Inc. v. Allstate Insurance Company, 98 N.Y.2d 208,746 N.Y.S.2d 622 (2002) 43 Continental Cas. Co. v. Rapid American Corp., 80 N.Y.2d 640 (Ct. of App. 1993) 35 Cornacchione v. Clark Concrete Co., Inc., 278 A.D.2d 800, 723 N.Y.S.2d 572 (4th Dept. 2000) 22 Cragg v. Allstate Indem. Corp., 17 N.Y.3d 118,926 N.Y.S.2d 867 (Ct. of App. 2011) 43 Cun-En Lin v. Holy Family Monuments, 18 A.D.3d 800,801,796 N.Y.S.2d 684 (2d Dept. 2005) 23 v Dean v. Tower Insurance Company of New York, 19 N.Y.3d 704,955 N.Y.S.2d 817 (2012) 35 DeForte v. Allstate Ins. Co., 81 A.D.2d 465,467,442 N.Y.S.2d 307 (4th Dept.1981) 37 Donadio v. Crouse Irving Memorial Hospital, Inc., 75 A.D.2d 715,427 N.Y.S.2d 118 (4th Dept. 1980) 46 DRK, LLC v. The Burlington Insurance Company, 74 A.D.3d 693, 905 N.Y.S.2d 58 (lst Dept. 2010), appeal denied, 16 N.Y.3d 702 (2011) 40 Garza v. Marine Transport Lines, Inc., 861 F.2d 23 (2d Cir.1988) 37 Glacier Construction Company v. Travelers Property Casualty Company of America, 2011 WL 9367470 (U.S.D.C. Colo. 2011) 24,25 Green Harbour Homeowners' Association, Inc. v. G.H. Development and Construction, Inc., 14 A.D.3d 963, 789 N.Y.S.2d 319 Od Dept. 2(05) .40 Hewett v. Marine Midland Bank, 86 A.D.2d 263, 449 N.Y.S.2d 745 (2d Dep't 1982) 46 Hooper Assoc. v AGS Computers, 74 NY2d 487,548 N.E.2d 903,549 N.Y.S.2d 365 (1989) 43 Landry v. G.C. Constructors, 514 Fed. Appx. 432 (5th Cir. 2013), cert. denied, 134 S. Ct. 212 (2013) 24 Loughman v. Unum Provident Corp., 536 F.Supp.2d 371 (S.D.N.Y. 2(08) .40 Matter of Rietberg, 58 N.Y.2d 134,446 N.E.2d 424 (Ct. of App. 1983) 29 McCoy v. Abigail Kirsch at Tappan Hill, Inc., 99 A.D.3d 13,951 N.Y.S.2d 32 (2d Dept. 2012) 23 McCoy v. Kirsch, 99 A.D.3d 13,951 N.Y.S.2d 32 (2d Dept. 2005) 23 VI Mount Vernon Fire Ins. Co. v. Creative Housing Ltd., 88 N.Y.2d 347, 645 N.Y.S.2d 433 (Ct. of App. 1996) .47 Muzak Corporation v. Hotel Taft Corporation, 1 N.Y.2d 42,150 N.Y.S.2d 171 (1956) 39,43 North River Insurance Company v. United National Insurance Company, 152 A.D.2d 500, 544 N.Y.S.2d 122 (lst Dept. 1989), rev'd on other grounds, 81 N.Y.2d 812 (1993) 41 Pizzi v. Bradlee's Div. of Stop & Shop, Inc., 172 A.D.2d 504,567 N.Y.S.2d 852, 855 (2d Dep't 1991) , .46 Rocon Manufacturing, Inc. v. Ferraro, 199 A.D.2d 999, 605 N.Y.S.2d 591 (4th Dept. 1993) 40 S.J. Capelin Assoc., Inc. v. Globe Manufacturing Corp., 34 N.Y.2d 338, 357 N.Y.S.2d 478 (1974) 46 Sea Ins. Co., Ltd. v. Westchester Fire Ins. Co., 51 F.3d 22 (2d Cir. 1995) 35 Senate Ins. Co. v. Tamarack American, 14 A.D.3d 922, 788 N.Y.S.2d 481 (3d Dep't 2005) 47 Show Car Speed Shop, Inc. v. United States Fidelity & Guaranty Co., 192 A.D.2d 1063,596 N.Y.S.2d 608,609 (4th Dept. 1993) 37 South Carolina Supply and Equipment Company v. James Stewart and Company, Inc., 238 S.C. 106, 119 S.E.2d 517 (1961 ) .41 Thompson v. National Steel and Shipbuilding Company, 391 Fed. Appx. 608 (9th Cir. 2010) 42 Throgs Neck Bagels, Inc. v. GA Ins. Co. of N.Y., 241 A.D.2d 66,671 N.Y.S.2d 66 (l st Dept. 1998) 37 Town of Harrison v. National Union Fire Ins. Co. of Pittsburgh, Pa., 89 N.Y.2d 308,653 N.Y.S.2d 75 (Ct. of App. 1996) .47 Vll United States Fire Ins. Co. v. General Reinsurance Corp., 949 F.2d 569 (2d Cir.1991) 37 Village of Sylvan Beach v. Travelers Indem. Co., 55 F.3d 114 (2d Cir. 1995) ..... 36 Winegrad v. New York University Medical Center, 64 N. Y.2d 851,487 N. Y.S.2d 316,317 (1985); 46 Wright v. Evanston Insurance Company, 14 A.D.3d 505, 788 N.Y.S.2d 416 (2d Dept. 2005) 44 York v. Sterling Ins. Co., 114 A.D.2d 665, 494 N.Y.S.2d 243 (3d Dept. 1985) .... 23 Zuckerman v. City of New York, 49 N.Y.2d 557, 427 N.Y.S.2d 595 (1980) ....... .46 OTHER AUTHORITIES Physical Modelling in Geoteehnics, Ng, Zhang, & Wang (Eds.), 6th Ed. (2006) .. 26 Temporary Structures in Construction, Robert T. Ratay (Ed.), 3d Ed. (2012) 24, 26 RULES CPLR ~ 3212 45 Vlll I. PRELIMINARY STATEMENT In this insurance coverage action, Plaintiff-Appellant Lend Lease (US) Construction LMB Inc. ("Lend Lease") and Extell West 57th Street LLC ("Extell") are seeking coverage under a builder's risk policy (the "Builder's Risk Policy" or "Policy") issued by the Defendant insurance companies ("Insurers") for damages to a building located at 157 West 57th Street in New York City (the "Building" or "Project"). On October 29, 2012, the Building was under construction when Super Storm Sandy made landfall in New York. The storm caused a tower crane (the "Tower Crane"), which had been custom-built and integrated into the Building for purposes of the Project, to collapse resulting in damage to the Tower Crane and the Building. Lend Lease and Extell have pursued coverage from the Insurers for the damages sustained at the Project, but the Insurers have taken the unreasonable positions that: (i) the Tower Crane is not "Covered Property" within the meaning of the Builder's Risk Policy and (ii) the Policy's exclusion for "contractor's tools, machinery, plant and equipment" precludes coverage for the claims asserted by Lend Lease and Extell. On appeal to the Appellate Division, First Judicial Department, the resulting opinion in favor of the Insurers was a split decision, in which two of the five Justices wrote a well-reasoned dissent, finding that the Tower Crane is, in fact, "Covered Property" that is not subject to the exclusion upon which the Insurers 1 have relied. As noted by the dissent, and contrary to the First Department's majority decision, Lend Lease has established, as a matter of law, that its claims arising out of the collapse of the Tower Crane fall squarely within the coverage afforded by the Builder's Risk Policy. Although the Insurers have asserted that the Tower Crane does not constitute "Covered Property" under the Policy, the Builder's Risk Policy provides that "Covered Property" includes "Temporary Works," which, in turn, includes "temporary ... structures ... incidental to the project." As demonstrated herein, the Tower Crane is clearly a "temporary structure" that is "incidental" to the Project, similar to the other items listed in the "Temporary Works" definition, such as scaffolding and temporary buildings. By entering an order to the contrary, the First Department's decision applies a reduced scope of coverage under the Policy by relying on an exceedingly narrow reading of the defined term "Temporary Works" in order to find no coverage for a loss that is plainly covered under the Policy. The Builders Risk Policy also requires that any "Temporary Works" must be included within the Project's "Total Project Value." The Insurers have taken the untenable position that the cost of the erection and use of the Tower Crane was not included within the "Total Project Value," preventing it from being considered "Covered Property." Again, the Insurers are misguided in this position. The documents clearly demonstrate that the cost of erecting and using the Tower Crane 2 was included III the contract between Extell and Pinnacle Industries II, LLC ("Pinnacle"). Finally, the First Department has found that an exclusion regarding contractor's tools and equipment applies to bar coverage in the event that the Tower Crane is "Covered Property." In taking this position, however, the First Department has ignored the substantial nature of the Tower Crane, the manner in which it was integrated into the building and its purpose at the Project. The Pinnacle contract explicitly required that Pinnacle erect the Tower Crane ll1 a specified manner and location, and that it make the Tower Crane available for use by Lend Lease and various subcontractors. Thus, the Tower Crane cannot be considered a contractor's tool or equipment because the erection and maintenance of the Tower Crane was work for which Pinnacle was hired to perform at the Project, not simply a piece of equipment provided by Pinnacle. Moreover, as set forth in detail below, applying the First Department's interpretation of this exclusion to the present facts renders the "Temporary Works" definition superfluous as this general exclusion effectively swallows any coverage afforded for the specific items listed in the "Temporary Works" definition. These facts and others discussed herein make it clear, as a matter of law, that the contractor's tools exclusion does not apply. 3 For the foregoing reasons and as further explained below, the First Department erred in granting summary judgment on behalf of the Defendants. As such, Lend Lease respectfully requests that this Court reverse the First Department's decision and enter summary judgment in Lend Lease's favor. 4 II. QUESTIONS PRESENTED Question 1: Whether the damages sought by Plaintiff-Appellant Lend Lease trigger coverage under the relevant insurance policy as a matter of law, particularly with respect to whether the damaged Tower Crane meets the definition of "Temporary Works" such that it is "Covered Property." Response to Question 1: The Supreme Court did not provide an answer to this question. The First Department did not dispute that the Tower Crane is a "temporary structure" under the definition of "Temporary Works," but it found that the Tower Crane cannot be considered "Temporary Works" because it was not "incidental to the project." Contrary to this holding, the dissenting Justices specifically found that the Tower Crane is a "temporary... structure ... incidental to the project" that meets the definition of "Temporary Works" under the "Covered Property" provision. The dissenting Justices found, however, that there was a question of fact as to whether the Tower Crane was included in the "Total Project Value." Question 2: Whether the exclusion for contractor's "tools, machinery, plant and equipment including spare parts and accessories" applies to preclude coverage for the damages resulting from the collapse of the Tower Crane. Response to Question 2: The Supreme Court did not answer this question. The First Department found that, if the Tower Crane is "Covered Property," the 5 foregoing exclusion applies to preclude coverage. The dissenting Justices, however, found that this exclusion does not apply to the Tower Crane. 6 III. STATEMENT OF FACTS A. THE UNDERLYING PROJECT AND TOWER CRANE This matter involves the construction of a building located at 157 West 57th Street, New York, New York ("Project"). The Project, which is known as the One57 Building, includes the construction of a seventy-four floor mixed-use hotel and residential building (the "Building"). [R. 67J. Extell West 57th Street LLC ("Extell") is the owner of the Project, and Lend Lease (US) Construction LMB Inc. ("Lend Lease") is the Construction Manager for the Project pursuant to a contract entered between the two entities ("CM Agreement"). [R. 67]. According to the CM Agreement, Lend Lease is responsible for the construction of the Project in accordance with the applicable plans and specifications. [R. 67]. The CM Agreement also specifically required that Extell establish an insurance program "covering the Construction Manager and Subcontractors of every tier providing labor at the Project Site...." [R. 721]. Additionally, in connection with the Project, Lend Lease entered into a Trade Contract with the Pinnacle Industries II, LLC ("Pinnacle") (the "Pinnacle Contract") for the "Superstructure Concrete" work on the Project. [R. 110-298]. This Contract specifically included the construction of two tower cranes to be used in relation to the construction of the Building and also requires that, "[u]pon completion of concrete operations, and in addition to other time periods requested 7 by the Construction Manager, [Pinnacle] will make [the Tower Crane] available for use by other trades." [R. 306]. The Pinnacle Contract expressly describes the construction of "Crane 2" (the "Tower Crane"), which is the Crane that is the subject of this matter. In that regard, Pinnacle's "Scope of Work," which was incorporated into the Contract, states as follows, in relevant part: 2. The Work of this Contractor [Pinnacle] 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: ~ * * g) Diesel fuel tower cranes, all cherry pickers, any assist cranes, concrete pumps, and other heavy equipment required for the erection of the building. Crane locations, loads, pads etc. must be coordinated with the Construction Manager. 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 Hoor slab. Exact crane locations, layouts 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. The NYS PE, working directly for the Contractor, shall provide signed and sealed drawings and calculations required by 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 designed by this Contractor's NYS PE and furnished and installed by the foundation contractor. The Crane 2 is to be supported by a reinforced slab on the 20th Hoor, included in 8 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 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. 300-302]. Pursuant to the Pinnacle Contract, the Building was designed to incorporate the Tower Crane as a temporary part of the Building during construction, with several components remaining permanent. [R. 60-61, 302]. Specifically, the Tower Crane included a base, which was located on the 20th 1100r set-back of the Building and was bolted to a large foundation of reinforced concrete, known as the pedestal, to support the weight of the entire structure. [R. 60, 302]. The base was strengthened by beams that were permanently cast into the floor slab on the 20th floor and plates cast into shear walls connected by threaded rods. [R. 60, 302]. In order to strengthen the stability of the entire Tower Crane, the mast, which was comprised of over 50 individual sections, was fastened or tied to the structural floor slabs every seven floors. [R. 60]. These ties required the creation of openings through the Building's curtain wall and additional steel reinforcement of the floor slabs, which anchored the ties. [R. 60]. In addition to the foregoing components, the Tower Crane also includes (1) a "turntable" or "rubella," which 9 allowed the Crane to rotate; (2) the working arm or "boom," which was used to physically lift and move items; (3) counterweights; (4) the diesel driven winch pack; and (5) a cab, where the movements of the Tower Crane were controlled. [R. 60]. On the date of the damage, the Tower Crane was approximately 750 feet tall and rose from its base on the 20th floor, which is approximately 246 feet above the street. [R. 61]. Additionally, many of the design elements, which were designed by a structural engineer to incorporate the Tower Crane into the Building, will remain a permanent part of the Building, including the beams that were cast into the slab on the 20th t100r and the reinforcement of the floor slabs at the tic locations. [R. 61]. The Tower Crane was completely erected and operating on the date that Super Storm Sandy made landfall in New York. [R.6l]. B. THE BUILDER'S RISK POLICY For purposes of the construction, Extell obtained a Builder's Risk Policy with limits of $700,000,000 ("Builder's Risk Policy" or "Policy"), which is based on the estimated Project construction cost. The Builder's Risk Policy consists of five separate policies issued by the Defendant insurance companies, each covering a certain percentage of the collective Policy limits. Specifically, Zurich American Insurance Company ("Zurich") issued a policy with a 50% share ($350,000,000) of the available limits, Travelers Excess and Surplus Lines Company has 17.14% 10 share ($120,000,000), Axis Surplus Insurance Company has a 14.29% ($100,000,000), XL Insurance America, Inc. has a 14.2857% share ($100,000,000), and Ace American Insurance Company has a 4.2857% ($30,000,000) (collectively referred to as, "Insurers"). [R.327-473]. The Insurers have not disputed that these policies were issued or that they provide coverage for the Project. [R.89-90~ 94-95]. Additionally, because each of the individual policies issued by the Insurers includes identical provisions, we refer specifically to the lead policy issued by Zurich. According to the Declarations of the Builder's Risk Policy, the "Policy Term" is August 1, 2010 to July 31, 2014, and the "Insured Project" is the seventy- four floor mixed-use hotel and residential building located at 157 West 57th Street, ~ New York, New York. [R.330]. Although Extell is the "Named Insured" on the Policy, the Declarations state that Additional Named Insureds on the Policy include the following: B. ADDITIONAL NAMED INSURED(S) All owners, all contractors and subcontractors of every tier, and tenants at the project location, except as named in A. above, as required by any contract, subcontract or oral agreement for the INSURED PROJECT*, and then only as their respective interests may appear are recognized as Additional Named Insureds hereunder. ... 11 [R. 330]. As noted above, the CM Agreement specifically states that Extell would establish an insurance program covering Lend Lease in relation to the Project, and, therefore, Lend Lease is an Additional Named Insured on the Builder's Risk Policy pursuant to this provision. The Declarations further state, in relevant part: 7. LIMIT OF LIABILITY A. Policy Limit of Liability The Company shall not be liable for more than $700,000,000 in anyone OCCURRENCE* subject to the following Sublimits of Liability and Annual Aggregate Limits of Liability: * C. Annual Aggregate Limits of Liability The maximum amount the Company will pay for loss or damage in anyone OCCURRENCE*, and/or in the aggregate annually for loss or damage from all OCCURRENCES*, shall not exceed the following amounts: * * * (3) $700,000,000 by the peril of NAMED STORM*~ * * * 9. ESTIMATED TOTAL PROJECT VALUE* OF INSURED PROJECT* AT THE POLICY EFFECTIVE DATE The estimated TOTAL PROJECT VALUE* declared to the Company by the first Named Insured at the policy effective date: 12 A. $700,000,000 Total 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; plus D. $700,000,000 Estimated TOTAL PROJECT VALUE'" of the INSURED PROJECT'" at Policy effective date equal to sum of A., B. and C. above. [R. 331-332]. Moreover, the "Insuring Agreement" of the Builder's Risk Policy states as follows: 1. INSURING AGREEMENT A. Coverage This Policy, subject to the terms, exclusions, limitations and conditions contained herein or endorsed hereto, 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. * 2. COVERED PROPERTY * * Covered Property means the Insured's interest in the following, unless otherwise excluded A. PROPERTY UNDER CONSTRUCTION and B. TEMPORARY WORKS [R. 334]. 13 The Builder's Risk Policy further defines the following terms: 6. NAMED STORM Named Storm means wind, wind gusts, hail, rain, tornados, or cyclones caused by or resulting from a specific storm system that has been named by the National Hurricane Center (NHC) or the Central Pacific Hurricane Center (CPHC) or any comparable worldwide equivalent beginning when such organization issues a watch or warning and ending 72 hours ~ L L after the termination of the watch or warning; however, L- NAMED STORM* does not include loss or damage caused by FLOOD* related to or resulting from a NAMED STORM*. 7. OCCURRENCE With the exception of the perils of EARTHQUAKE*, FLOOD*, and NAMED STORM*, OCCURRENCE':: includes all losses or damages that are attributable directly or indirectly to one cause or a series of causes and includes all resultant or concomitant losses wherever located. All such loses or damages L- will be treated as one occurrence. * * * As respects the peril of NAMED STORM*, OCCURRENCE* shall mean all losses or damages arising during a continuous L- L- L- period of seventy-two (72) hours during the term of this Policy. The Insured may elect the moment when the seventy-two (72) hour period begins, but no two such periods shall overlap. Such NAMED STORM* shall be deemed to be a single OCCURRENCE* within the meaning of this policy. * 10. TEMPORARY WORKS * All scaffolding (including scaffolding erection costs), formwork, falsework, shoring, fences, and temporary buildings or structures, including office and job site trailers, all incidental 14 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. (Underline provided) I I . TOTAL PROJECT VALUE The total value of PROPERTY UNDER CONSTRUCTION*, TEMPORARY WORKS*, existing structures (when endorsed to the Policy) and LANDSCAPING MATERIALS*; plus labor costs that will be expended in the INSURED PROJECT*; plus site general conditions, construction management fees, and contractor's profit and overhead, all as stated in the Declarations. [R. 344-345]. Finally, the Builder's Risk Policy includes the following relevant 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]. As set forth above, the "Total Project Value" of $700,000,000 is based upon a declaration from Extell to the Insurers regarding the various costs of the construction. This submission included the cost of "Superstructure Concrete" in 15 the amount of $89,000,000, which included the cost of the work to be performed under the Pinnacle Contract. [R. 478-479]. C. SUPER STORM SANDY AND NOTICE OF THE LOSS TO THE INSURERS In preparation for Super Storm Sandy, both Extell and Lend Lease took precautions to protect the Project and the Tower Crane from the impending Storm. Despite those precautions, however, on October 29, 2012, the high winds during the Storm caused the Tower Crane to partially collapse and the boom to flip over, thrashing about and causing damage to the Crane itself as well as the Building. [R. 62,482-485]. Although some parts of the Tower Crane broke away and fell to the street, the majority of the Crane's components did not fully separate from the Building. [R. 62,482-485]. At the conclusion of the Storm, the Tower Crane and the glass fa~ade of the Building were damaged. [R. 62]. Lend Lease took action to secure the Tower Crane and lower the damaged Crane to the ground. [R. 62-63]. Thereafter, repairs were made to the Building and the Tower Crane, which was rebuilt in order to continue the construction. [R. 62-63]. The Tower Crane was not, however, back in operation until May 2013, approximately six months after the Storm. [R. 62- 63]. There is no dispute that, on October 30, 2012, Lend Lease provided prompt notice of its claim under the Builder's Risk Policy to the Insurers in connection 16 with the damages suffered during Super Storm Sandy. [R. 102-103]. By letter dated March 7, 2013, however, the Insurers disclaimed coverage under the Builder's Risk Policy for the losses incurred by Lend Lease. [R. 486-489]. As a result, Lend Lease filed this action, in conjunction with Extell, on September 16, 2013, seeking a declaratory judgment regarding coverage under the Builder's Risk Policy and damages for breach of contract. [R. 64-87]. D. THE DECLARATORY JUDGMENT ACTION Extell and Lend Lease originally filed the declaratory judgment complaint that is the subject of this appeal on September 16, 2013, which was later amended on October 15, 2013. [R. 490-515, 64-871. After certain initial discovery, several motions for summary judgment were filed, including the following: (1) Extell filed a motion for summary judgment on March 27, 2014; (2) Lend Lease filed its own motion for summary judgment on April 14, 2014; and (3) the Insurers filed cross- motions for summary judgment in response to both motions shortly thereafter. [35-825]. By way of an Order dated January 15, 2015, the Honorable Eileen A. Rakower, J.S.C. denied all of the pending motions for summary judgment on the basis that questions of fact remained, particularly with respect to whether the Tower Crane was intended to become a permanent part of the Project. [872-886]. Thereafter, each party filed an appeal with the Appellate Division, First Department, seeking reconsideration of the Supreme Court's January 15, 2015 17 Order. [R. 4-5, 10-11, 16-17]. The First Department issued a written opinion in response to those appeals on December 22, 2015, in which a majority, consisting of three Justices, reversed the underlying Order to grant summary judgment in favor of the Defendants and to deny summary judgment as to Extell and Lend Lease. [R. 833-871]. This decision was based on findings that (l) the Tower Crane was not "incidental to the project," as required by the "Temporary Works" definition for "Covered Property;" and (2) even if the Tower Crane is "Covered Property," the exclusion for contractor's tools, machinery, plant and equipment applies to preclude coverage for the Tower Crane. [R. 833-871]. The First Department's written opinion includes a dissent consisting of two Justices, who found that the Tower Crane does, in fact, meet the requirements of the definition of "Temporary Works," such that it is "Covered Property." [R. 850- 871]. Particularly, the dissent noted that the Tower Crane IS a "temporary ... structure ... incidental to the project" based on the application of certain rules of construction, described in more detail below. [R. 850-871]. The dissent further concluded that the exclusion upon which the Insurers rely is not applicable to the Tower Crane, and, therefore, does not preclude coverage for the damages sought by Lend Lease. [R. 850-871]. Despite these findings, the dissent noted that they would not grant summary judgment at this time only because of its 18 position that there are questions of fact regarding whether the Tower Crane was included in the "Total Project Value" submitted to the Insurers. [R. 850-871]. 19 IV. ARGUMENT This appeal concerns two primary issues: (1) whether the Tower Crane is "Covered Property" under the Policy; and (2) whether the Policy's exclusion for "[ c]ontractor' s tools machinery, plant and equipment" precludes coverage to the Tower Crane. As set forth in detail below, Lend Lease maintains that the Tower Crane falls directly within the definition of "Temporary Works," which constitutes "Covered Property" under the Policy, because it is a temporary structure that is incidental to the Project. Additionally, the plain language of the Contractor's Tools Exclusion, viewed in the context of the Policy's definition of "Temporary Works," requires a finding that the Exclusion does not apply to the Tower Crane. Any contrary conclusion would ignore the Policy's definition of "Temporary Works." In sum, there is no basis to deny coverage for the Tower Crane based on the language of the Policy. POINT I THE TOWER CRANE CONSTITUTES "TEMPORARY WORKS," AS DEFINED BY THE POLICY "Covered Property" is defined by the Builder's Risk Policy, in pertinent part, as follows: Covered Property means the Insured's interest in the following, unless otherwise excluded: A. PROPERTY UNDER CONSTRUCTION*, and 20 B. TEMPORARY WORKS* [R.334]. The Policy defines "PROPERTY UNDER CONSTRUCTION" as: All property, including materials, supplies, equipment, machinery, and other property of a similar nature, being property of the Insured or of others for which the insured may have assumed responsibility, that will become a permanent part of the INSURED PROJECT*, the value of which has been included in the estimated TOTAL PROJECT VALUE* declared by the first Named Insured, all when used or to be used in site preparation (including demolition of existing structures as required by the contract), fabrication or assembly, installation or erection, alteration, renovation or construction of the INSURED PROJECT*. [R. 345]. Further, "Temporary Works" is defined 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]. The Tower Crane is "Covered Property" because it satisfies the definition of "Temporary Works," i.e., a "temporary... structure .. .incidental to the project," for the reasons set forth in full below. 21 A. THE TOWER CRANE IS A "TEMPORARY STRUCTURE" THAT IS "INCIDENTAL TO THE PROJECT" Contrary to the First Department's majority decision, the Tower Crane expressly satisfies the definition of "Temporary Works" within the Policy because it is a "temporary ... structure" that is "incidental to the project." The position that the Tower Crane should not be considered a "temporary structure" or "incidental to the project," which was an issue first raised hy the Insurers on appeal, is based on a strained interpretation of those terms. Particularly, in finding that the Tower Crane docs not fall within the parameters of the "Temporary Works" definition, the First Department's majority decision has applied an exceptionally limited reading of the term "incidental" that ignores the definition of that term as set forth in multiple dictionaries as well as the other terms that expressly appear within the "Temporary Works" definition. As set forth more fully below, the Tower Crane meets the requirements necessary to be considered "Covered Property" under the Policy, requiring a reversal of the underlying decision. 1. The Tower Crane is a "Temporary Structure" New York courts have repeatedly found that cranes are "structures" in the context of a construction project. See Cornacchione v. Clark Concrete Co., Inc., 278 A.D.2d 800,801,723 N.Y.S.2d 572 (4th Dept. 2000) (holding that crane "falls squarely" within definition of structure because it is a "production or piece of work artificially built up or composed of parts joined together in some definite 22 manner.")(internal citations omitted); see also Cun-En Lin v. Holy Family Monuments, 18 A.D.3d 800,801,796 N.Y.S.2d 684 (2d Dept. 2005) ("Contrary to the defendants' contention, the crane from which the injured plaintiffs fell was a 'structure' ... ")(internal citations omitted); McCoy v. Abigail Kirsch at Tappan Hill, Inc., 99 A.D. 3d 13, 15-16,951 N.Y.S.2d 32 (2d Dept. 2012) (finding that "a crane used for construction" is a structure). Although the foregoing cases involve the application of New York Labor Law, they also evaluate the meaning of the term "structure" in a broader sense. See McCoy v. Kirsch, 99 A.D.3d 13, 951 N.Y.S.2d 32 (2d Dept. 2005) ("A structure may include constructs that are less substantial and perhaps more transitory than buildings ... ") Even to the extent that the evaluation of the term is in the context of New York Labor Law, however, the meaning of the word "structure" as it is used in New York Labor Law 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." York v. Sterling Ins. Co., 114 A.D.2d 665, 494 N.Y.S.2d 243 (3d Dept. 1985); see also Cocchi v. National Union Fire Ins. Co. of Pittsburgh, Pa., 156 A.D.2d 535, 548 N.Y.S.2d 804 (2d Dept. 1989) (same). Thus, not only do these cases help to discern the meaning of the word "structure" in a 23 landscape that provides limited insight into that definition, but they also apply the same standard that is applied in interpreting an insurance policy. The Tower Crane also fits the definition of a "temporary structure" within the meaning of the term as it is used in the BLlilder's Risk Policy. See Temporary Structures in Construction, Robert T. Ratay (Editor), 3d Ed., (2012) (defining "temporary structures in construction" as "those structures that are erected and used to aid in the construction of permanent projects ....They are either dismantled and removed when the permanent works become self-supporting or completed, or they are incorporated into the finished work.") By its very nature "construction is a temporary condition, a fact that makes construction cranes temporary installations by definition." ld. at 20.10. In that regard, New York courts have found that cranes similar to the one used in the construction of the Building are indeed "temporary structures" as defined by the Builder's Risk Policy. See Landry v. G.C. Constructors, 514 Fed. Appx. 432, 434 (5th Cir. 2013), cc11. denied, 134 S. Ct. 212 (2013) (finding that a mobile crane affixed to barge was "a temporary structure" used by the independent contractor to perform its work); see also Glacier Construction Company v. Travelers Property Casualty Company of America, 2011 WL 9367470 (U.S.D.C. Colo. 2011). Although the court in Glacier was not addressing a crane specifically, its decision is instructive, as it found that wells and pumps that were installed at a 24 construction site must be considered "temporary structures" because they were installed for the purpose of dewatering the site as a necessary step in preparation for pouring the foundation. Glacier, 2011 WL 9367470 at *1 (evaluating policy affording coverage, in part, to "[b]uildings or structures including temporary structures while being constructed, erected or fabricated at the 'job site ... "'). Similarly, the Tower Crane was erected and fabricated at the Project as a "temporary structure" that was necessary for the construction of the Building. Finally, the Pinnacle Contract sets forth a detailed process to engineer and erect the Tower Crane, noting that it would be supported by a concrete slab on the 20th noor set-back and requiring that all plans regarding the design of the Crane were to be approved by the structural engineer. [R. 301-302]. The Pinnacle Contract further articulates the need for the Tower Crane to be "structurally sound" and that "reinforcing" of the structure may be necessary. [R. 185, 189]. The use of these descriptions indicates the extensive nature of the Tower Crane and the need for it to be integrated into the Building as a "temporary structure." Moreover, while the Pinnacle Contract discusses the need for the Tower Crane to be dismantled, that Contract also indicates that scaffolding, which is expressly listed in the "Temporary Works" definition of the Policy, will be dismantled at the completion of the Project. [R. 205]("Contractor shall furnish labor, materials and 25 equipment to erect, dismantle and transport any scaffold and rigging to complete his Work.") Despite the Insurers' attempts to circumvent coverage by denying that the Tower Crane is a "temporary structure," the weight of the authorities establishing that the Tower Crane does fall within the definition of "Temporary Works" is undeniable. The Tower Crane was integrated into and temporarily made a part of the Building, with extensive supports that were anchored through several Hoors of the Building. [R. 60, 302]. A review of the Project drawings for the Tower Crane illustrates that it was not a piece of equipment, but rather a "temporary structure" built into the Building for purposes of construction. [R. 520-531]. This is supported not only by case law, but by the regulations discussed above and scholarly articles regarding the use of tower cranes. See, e.g., "Dynamic Response of Tower Crane With Pile Foundation," Physical Modelling in Geotechnics, Ng, Zhang, & Wang (Eds.), 6th Ed. (2006) ("The tower crane is a temporary structurc ... "); see also Tcmporary Structures in Construction, Robert T. Ratay (Ed.), 3d Ed. (2012). As such, the Tower Crane expressly falls within the definition of "Temporary Works" as a temporary structure. 2. The Tower Crane Is "Incidental to the Project" Despite the underlying majority's restricted interpretation of the term "incidental" to mean something that is "subordinate to" or having a "minor 26 consequence," there are numerous other common definitions of that term are more natural and expansive, including: • "Depending upon or appertaining to something else as primary; something necessary, appertaining to, or depending upon another which is termed the principal; something incidental to the main purpose." Black's Law Dictionary, 5th Edition (1979); • "happening in connection with," and "related to" MacMillanDictionary.com, http://www.macmillandictionary.com/dictionary/british/incidental_l (last visited April 29, 20 IS); • "likely to happen or naturally appertammg (usually followed by to)" Dictionary.com, http://dictionary.reference.com/browse/incidental'?s=t (last visited April 29, 2015); • "Liable to happen as a consequence of (an activity)" Oxforddictionaries.com, http://www.oxforddictionaries.com/us/definition/american_english/incidenta I ((last visited April 29, 2015). Courts interpreting the meaning of "incidental" have similarly found it to mean "connected with or related to." See Boh v. Pan Am. Petroleum Corp., 128 F.2d 864 (5th Cir. I942)(holding that the use of the term "incidental" in lease was meant to include activities "connected with or related to" the principal business on the property). Based upon the foregoing definitions, the term "incidental" does not apply simply to something that is minor, but rather, it extends anything that is related to or the result of something else; or is the consequence of an activity. Lend Lease does not dispute that the erection and use of the Tower Crane involved an 27 extensive process at the Project. That process, however, does not prevent the Tower Crane from being "incidental" to the Project because the erection and use of the Tower Crane is a direct result of that constmction. In other words, but for the construction of the Building, the Tower Crane would not have been used. Therefore, the Tower Crane directly satisfies the meaning of the term "incidental" within the "Temporary Works" definition. The dissent in the First Department's decision has agreed with this interpretation, adopting a definition of "incidental" meaning "appurtenant to something else that is primary, but still necessary to that primary thing." [R. 863]. Applying this definition, the dissent agreed with Lend Lease, finding that the primary object in this case is the Project and that the Towcr Cranc is an "ancillary yet substantial element of the constmction," similar to scaffolding and shoring, which are discussed in further detail below. [R. 863-8641. As notcd by the dissent, given the magnitude of the Project, nothing included in the "Temporary Works" definition can be considered a "minor consequence" of the constmction, including any "temporary structures." [R. 864]. As such, the Tower Crane is truly "incidental to the project" regardless of its substantial nature, satisfying the "Temporary Works" definition. 28 3. Ejusdem Generis Applies to the Definition of "Temporary Works" In addition to the fact that the Tower Crane is plainly included in the definition of "Temporary Works" as a "temporary ... structure .. .incidental to the project," the surrounding words of the "Temporary Works" definition further illustrate that the Tower Crane is "Covered Property." The principle of ejusdem generis requires that "the meaning of a word in a series of words is determined 'by the company it keeps.'" 242-44 East 77th St., LLC v. Greater N.Y. Mut. Ins. Co., 31 A.D. 3d 100, 815 N.Y.S.2d 507 (lst Dept. 20(6). In applying this rule, courts utilize "a series of specific words describing things or concepts of a particular sort. .. to explain the meaning of a general one in the same series." Matter of Rietberg, 58 N.Y.2d 134, 446 N.E.2d 424 (Ct. of App. 1983). Here, a review of the specific list of items that is included within the "Temporary Works" definition (i.e., scaffolding, formwork, falsework, etc.) in conjunction with the more general terms (i.e., temporary buildings or structures, including office and job trailers, all incidental to the project) indicates that each of these terms, including "temporary structure," is meant to encompass items that are temporarily built at the worksite to facilitate the construction of the Project. The Tower Crane fits squarely within that category. In applying this rule to the definition of "Temporary Works," the term "temporary structures" must not be considered in a vacuum, with its sole 29 companson to "office and job trailers." Rather, the general terms "temporary buildings or structures, including office and job site trailers, all incidental to the project" reference unidentified items that may fall within the definition of "Temporary Works" that were not otherwise enumerated. Those general terms must be considered in connection with each or the specific items of the definition, including, among other things, scaffolding, rormwork, and falsework. Each of the specific terms included within the "Temporary Works" definition is part of a common theme representing items that are temporarily erected and assembled at the Project to provide assistance in the construction of the Building. Like scaffolding, formwork, falsework, and temporary trailers, the Tower Crane was assembled for the same purpose and served a very similar function. Although the First Department's majority decision differentiates the Tower Crane from the other items on the basis that it is actively involved in the construction, that distinction ignores the common thread that links each of these items - their temporary integration into the building to assist with the construction of the Building followed by dismantling and removal. In that regard, to the extent that the Insurers have asserted that the substantial nature of the Tower Crane prevents it from being categorized with the other items mentioned in the "Temporary Works" definition, that position is belied by examples of projects in which items such as scaffolding are of great magnitude. 30 For instance, the current renovations at our nation's Capital Building, the tallest in the District of Columbia, illustrates just how extensive scaffolding may be at any particular project. Indeed, the dissent in the First Department decision noted that scaffolding, shoring and formwork are "hardly minor" and that it "makes no attempt to explain how such significant components of a construction project could be considered to be so." [R. 865]. Thus, because the Tower Crane constitutes an item that is temporarily erected as a substantial element to the construction of the Project, much like each of the specific items listed in the "Temporary Works" definition, the rule of ejusdem generis establishes that the definition should be interpreted to include the Tower Crane as "Covered Property." Contrary to the First Department's majority decision, this conclusion does not result in coverage for "all temporary buildings and structures of every ilk," but instead, is the result of a strict application of each of the terms within the "Temporary Works" definition to the facts of this case. As such, the Insurers should not be permitted to rewrite the plain language of the Policy that they issued in order to disclaim coverage. B. THE TOWER CRANE IS INCLUDED IN THE "TOTAL PROJECT VALUE" OF THE INSURED PROJECT As noted above, in order to be covered under the Policy, the value of the damaged property must have been included within the "Total Project Value" that was reported to the Insurers. In that regard, the value of the work to be performed 31 by Pinnacle was expressly set forth as part of the "Total Project Value" disclosed to the Insurers, and that value included the Tower Crane. [R. 478-479]. Although the Insurers have acknowledged that Extell included a line item for "Superstructure Concrete" in the amount of $89,000,000 in the "Total Project Value" of the Project, they have taken the unsupportable position that this amount does not include the erection and use of the Tower Crane. Their position, however, fails based upon a plain reading of the Pinnacle Contract. While the Scope of Work attachment to the Pinnacle Contract identifies the "trade" as "superstructure concrete," a review of that Contract illustrates that the Pinnacle's "scope of work" under that contract includes the design and erection of the Tower Crane for use on the Project. [R. 300-307]. In particular, several sections and subsections of the Pinnacle Contract are dedicated to a discussion of the details concerning the location of the Tower Crane and the manner in which it <.- should be erected. [R. 300-307]. Moreover, Pinnacle did not have complete control over its use of the Tower Crane as the terms of the Pinnacle Contract required it to make the Tower Crane available for use by the construction manager (Lend Lease) and other subcontractors. [R. 300-307]. Based upon these provisions, it is clear that Pinnacle contracted with Lend Lease to construct and facilitate the use of the Tower Crane, and the value of that contract was included within the "Total Project Value." 32 Furthermore, to the extent that the Insurers have taken the position that the value of the Tower Crane itself - rather than the value of its assembly and use to build the Project - must be included in the contract price to be a component of "Total Project Value," their position is misguided. The Insurers cannot deny that, under the Policy, scaffolding and job site trailers are intended to be covered as "Temporary Works." That said, the full value of scaffolding or trailers, as the case may be, is never included in contracts for those items. [R. 799-800]. Instead, only the cost to construct, maintain and use those items is included in the relevant price. [R. 799-800]. At the end of the project, the scaffolding contractor "typically returns to the job site and dismantles the scaffolding ... and keeps the various components of the scaffolding ... and reuses them on future jobs." [R. 799]. The same scenario applies with respect to the Tower Crane. These examples show that any argument by the insurers that "Total Project Value" in the context of the definition of "Temporary Works" must include the full value of those items (and not the cost to assemble and use them) would render the coverage for scaffolding and job trailers superf1uous. Such a construction of the Policy terms is impermissible. Based on the foregoing, the Insurers are unable to maintain that the Tower Crane, which was expressly made part of the Pinnacle Contract and listed as a line item in the "Total Project Value," is not "Covered Property." 33 POINT II THE INSURERS CANNOT SATISFY THEIR BURDEN OF SHOWING THAT THE CONTRACTOR'S TOOLS EXCLUSION APPLIES The Insurers have taken the position that the Tower Crane is not covered under the Builder's Risk Policy because it is subject to the following exclusion (hereinafter referred to as the "Contractor's Tools 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. 3341. Particularly, the Insurers maintain that the Tower Crane should be considered "[c]ontractor's tools, machinery, plant and equipment ... not destined to become a permanent part of the INSURED PROJECT... " and is thus excluded from coverage under the Policy. New York courts have repeatedly held that an insurance company is not permitted to avoid coverage until it satisfies "the burden which it bears of establishing that the exclusions or exemptions apply in the particular case, and that 34 they are subject to no other reasonable interpretation." Dean v. Tower Insurance Company of New York, 19 N.Y.3d 704, 708, 955 N.Y.S.2d 817 (2012). "To negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case." Sea Ins. Co., Ltd. v. Westchester Fire Ins. Co., 51 F.3d 22, 26 (2d Cir. 1995) (internal quotation omitted). When interpreting an exclusionary clause, "the carrier must establish that its construction or interpretation of the policy is the 011/Y construction that can fairly be placed thereon." American Home Assurance Company v. Port Authority of New York and New Jersey, 66 A.D.2d 269,276,412 N.Y.S.2d 605 (lst Dept. 1979) (emphasis in the original). The insurer "bears the heavy burden of showing that the exclusion applies in the particular case and is subject to no other reasonable interpretation." Id. (quoting Continental Cas. Co. v. Rapid American Corp., 80 N.Y.2d 640, 654 (Cl. of App. 1993)). The Insurers are unable to meet their burden of establishing that the foregoing exclusionary provision applies to preclude coverage to the damaged Tower Crane. Their argument fails for the following reasons: (1) the plain language of the Contractor's Tools Exclusion simply does not encompass a structure such as the Tower Crane; (2) the specific "Temporary Works" definition, which encompasses the Tower Crane, controls over the general exclusion as a 35 matter of law; and (3) allowing the exclusion to apply to the Tower Crane and other items in the "Temporary Works" definition would render the "Temporary Works" definition without force and effect, which would be directly contrary to established case law. A. THE PLAIN LANGUAGE OF THE EXCLUSION DOES NOT ENCOMPASS THE TOWER CRANE As noted above, the Contractor's Tools Exclusion bars coverage for "tools, machinery, plant and equipment including spare parts and accessories ... not destined to become a permanent part of the INSURED PROJECT*". While the Insurers have taken the position that this provision limits coverage to the Tower Crane in some way, the express language of this Exclusion indicates that it was not intended to encompass a structure such as the Tower Crane, which, according to the reasonable expectations of the insured, would not fall within a provision that applies to tools and similar machinery and equipment. Under New York law, a court must interpret an insurance policy so as to give effect to the intent of the parties as expressed by the clear language of the contract. Village of Sylvan Beach v. Travelers Indem. Co., 55 F.3d 114, 115 (2d Cir. 1995). "[T]he language of an insurance policy must be construed with reference to the risk, subject matter and purpose of the policy." Show Car Speed Shop, Inc. v. United States Fidelity & Guaranty Co., 192 A.D.2d 1063, 1064, 596 36 N.Y.S.2d 608, 609 (4th Dept. 1993) (citing DeForte v. Allstate Ins. Co., 81 A.D.2d 465, 467, 442 N.Y.S.2d 307, 309 (4th Dept.1981)). Moreover, "an insurance policy [must be read] in light of 'common speech' and the reasonable expectations of a businessperson." Belt Painting Corp. v. TIG Ins. Co., 100 N.Y.2d 377, 763 N.Y.S.2d 790 (Ct. of App. 20(3). The language of the Policy should be viewed as "a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business." United States Fire Ins. Co. v. General Reinsurance Corp., 949 F.2d 569, 572 (2d Cir.1991) (quoting Garza v. Marine Transport Lines, Inc., 861 F.2d 23, 27 (2d Cir.1988)). "The touchstone for interpreting insurance contracts, as with other contracts, is the reasonable expectation of the parties." Throgs Neck Bagels, Inc. v. GA Ins. Co. of N.Y., 241 A.D.2d 66,671 N.Y.S.2d 66 (lst Dept. 1998). Here, taken in the context of the Policy as a whole, the Insurers cannot validly argue that the parties intended an exclusionary provision that was meant to apply to tools and similar machinery or equipment to include a Tower Crane that is a custom-designed, custom-built structure for this Project, and was temporarily integrated into the Building during the construction period. [R. 60-61, 302]. As set forth above, the Tower Crane is of such magnitude and it is so firmly anchored 37 into the Building that it is by no means a contractor's "tool" or "equipment" according to the common meanmg of those terms. Pinnacle was not required merely to bring a piece of equipment to the Project, but rather, its scope of work included the obligation to design and erect the Tower Crane, in the manner and location specified in the Pinnacle Contract, and then to make the Tower Crane available to Lend Lease and various subcontractors. Belying its purported status as a "tool" or piece of "equipment," Pinnacle was required to integrate the Tower Crane into the building "as approved by the structural engineer." [R. 306]. Quite simply, the massive structure that was erected and made part of the Project, cannot be considered "contractor's equipment" that falls within an exclusion intended to encompass items that are brought to and from the construction site. Viewing the exclusionary language as a reasonable person who is aware of the contract as a whole and the customs of the industry prohibits any interpretation that the Contractor's Tools Exclusion encompasses the Tower Crane. Thus, because the Contractor's Tools Exclusion was never intended to apply to a multi-million dollar structure that was temporarily integrated into the Project for general use and expressly included within the "Total Project Value," the Insurers cannot avoid coverage by asserting that an exclusion that can have no application to the Tower Crane applies here. 38 B. THE SPECIFIC DEFINITION OF "TEMPORARY WORKS" CONTROLS OVER THE GENERAL EXCLUSION PROVISION The Contractor's Tools Exclusion does not apply because the specific terms of the definition of "Temporary Works" - which includes "temporary ... structures" and items that are analogous to tower cranes such as scaffolding - controls over the general terms of the Contractor's Tools exclusion. Particularly, as noted above, the definition of "Temporary Works" is 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. In contrast, the Contractor's Tools Exclusion applies generally to "[c]ontractor' s tools, machinery, plant and equipment.. .." Notably, if the Insurers' argument concerning the application of the Contractor's Tools Exclusion is accepted, each of the specific items included within the definition of "Temporary Works," such as scaffolding, would also fall under the general Exclusion, creating an inconsistency between what property may be considered covered or uncovered by the Policy. If there is an inconsistency between a specific provision and a general provision of a contract, the specific provision must control. Muzak Corporation v. Hotel Taft Corporation, 1 N.Y.2d 42,46,150 N.Y.S.2d 171 (1956); Green Harbour 39 Homeowners' Association, Inc. v. G.H. Development and Construction, Inc., 14 A.D.3d 963, 965, 789 N.Y.S.2d 319 (3d Dept. 2005); see also Loughman v. Unum Provident Corp., 536 F.Supp.2d 371 (S.D.N.Y. 2008) (stating that it is "a fundamental rule of contract construction that specific terms and exact terms are given greater weight than general language.") As a result, because the definition of "Temporary Works" is a specific provision and is in direct contrast with the general exclusionary provision, the specific provision must control here. In Rocon Manufacturing, Inc. v. Ferraro, 199 A.D.2d 999, 1000, 605 N. Y.S.2d 591 (4th Dept. 1993), held that a specific coverage provision in an insurance policy controlled over a general exclusion provision, rejecting the insurer's position that a general boilerplate exclusion should apply despite an applicable provision that specifically afforded coverage to the facts at hand. The court found that "[a]ny apparent inconsistency is governed by the rule that where 'there [is] an inconsistency between a specific provision and a general provision of a contract. .. the specific provision controls. '" Id.; see also DRK, LLC v. The Burlington Insurance Company, 74 A.D.3d 693, 695, 905 N.Y.S.2d 58 (lst Dept. 2010), appeal denied, 16 N.Y.3d 702 (2011) (holding that language of "cross- liability exclusion" controls because its terms applied specifically to the types of facts at issue, as opposed to "separation of insureds" provision, which applied generally in all situations). Id. 40 Here, as already established above, the Tower Crane is "Covered Property" within the "Temporary Works" provision of the Policy, but the Insurers are attempting to take the untenable position that, although the Tower Crane falls into a specific provision that expressly provides for its coverage, coverage must be precluded by a provision that is extremely general and may be applied to every item included in the definition of "Temporary Works." For example, items such as scaffolding, formwork, falsework and temporary buildings (job trailers), which are specifically identified as "Temporary Works" and therefore are "Covered Property," arguably fall under the general Contractor's Tools Exclusion as well. In particular, "scaffolding" is listed as a covered item within the "Temporary Works" definition. Under the insurers' interpretation of the Policy, scaffolding would also fall within the contractor's tools exclusion. In fact, courts have found that scaffolding is contractor's equipment in several instances. See North River Insurance Company v. United National Insurance Company, 152 A.D.2d 500,501, 544 N.Y.S.2d 122 (1st Dept. 1989), rev'd on other grounds, 81 N.Y.2d 812 (1993) (holding that scaffolding qualified as "Contractors' Equipment" in an insurance policy); South Carolina Supply and Equipment Company v. James Stewart and Company, Inc., 238 S.C. 106, 113, 119 S.E.2d 517 (1961) ("We are of the opinion that the scaffold equipment, while necessary to the prosecution of the contractor's work, must be classified as a part of the tools, appliances and equipment used by 41 the contractor, and constitutes an item in his so-called plant."); see also Thompson v. National Steel and Shipbuilding Company, 391 Fed. Appx. 608, 610 (9th Cir. 2010) (finding that scaffolding was contractor's "equipment"). Notably, the Tower Crane is clearly a "temporary ... structure;" and its massive "mast" is akin to scaffolding. This point IS further illustrated by the majority optmon from the First Department. Particularly, the majority stated that the Contractor's Tools Exclusion applies, in large part, because "[tJhe tower crane is assembled when the project starts, disassembled and completely removed when the project is complete, and then moved to the next job." [R. 846J. This description applies equally to each of the items listed in the "Temporary Works" exclusion. As illustrated by the foregoing, the Insurers' position would impermissibly allow a general provision to apply to preclude coverage for a list of items specifically described in the Policy as "Temporary Works," which are "Covered Property." Accordingly, any inconsistencies between a general and specific provision must be resolved by enforcing the specific provision. Thus, to the extent that the Insurers attempt to argue that the Contractor's Tools Exclusion applies, this argument must be rejected in its entirety as a matter of law. 42 C. APPLICATION OF THE EXCLUSION PROVISION TO THE TOWER CRANE WOULD RENDER THE "TEMPORARY WORKS" PROVISION SUPERFLUOUS The "Temporary Works" definition of the Builder's Risk Policy would be rendered superfluous if the Contractor's Tools Exclusion is given effect to bar coverage in this matter, and, therefore, the Insurers' position must be rejected. In New York, courts have repeatedly found that "[t]hc 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." Muzak Corporation v. Hotel Taft Corporation, 1 N.Y.2d 42, 150 N. Y.S.2d 171 (1956). In this regard, insurance policies must be construed "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. '" Consolidated Edison Company of New York, Inc. v. Allstate Insurance Company, 98 N.Y.2d 208, 746 N.Y.S.2d 622 (2002) (citing Hooper Assoc. v AGS Computers, 74 NY2d 487, 493, 548 N.E.2d 903, 549 N.Y.S.2d 365 (1989)); see also Cragg v. Allstate Indem. Corp., 17 N.Y.3d ] 18, 926 N.Y.S.2d 867 (Ct. of App. 2011) (reversing lower court and finding that insured was entitled to coverage despite insurer's position that exclusion applied because interpretation upon which insurer relied did not give full force and effect to both clauses of the provision). New York courts must reject any interpretation of an insurance policy that would 43 render a coverage provision superfluous "a result which the public policy of this state cannot abide". Wright v. Evanston Insurance Company, 14 A.D.3d 505, 506, 788 N.Y.S.2d 416 (2d Dept. 2005). Based on the foregoing, this Court must interpret the proVIsIOns of the Builder's Risk Policy in a way that gives meaning to each provision. In order to do so here, the Tower Crane, which falls within the definition of "Temporary Works," cannot be subject to the Contractor's Tools Exclusion. To hold otherwise would lead to a result in which the coverage that is afforded to the specific items identified in the "Temporary Works" definition would be disregarded because of the application of the Contractor's Tools Exclusion, leaving the "Temporary Works" provision without force and effect. Ncw York law does not allow such a result, and, therefore, the Insurers' argument regarding the application of this Exclusion must be rejected. D. THE TOWER CRANE DID NOT NEED TO BE ENDORSED TO THE POLICY BECAUSE IT IS A "TEMPORARY STRUCTURE" THAT IS ALREADY COVERED PROPERTY UNDER THE POLICY The Insurers assertion that coverage is precluded based upon the fact that the Tower Crane was not specifically endorsed to the Policy relies upon the flawed argument that the Tower Crane is "equipment" that falls under the meaning of the Contractor's Tools Exclusion. This position should be rejected in its entirety. 44 Contrary to the Insurers' position, there was no requirement for the Tower Crane to be included by a separate endorsement because it is encompassed within the express coverage of the Builder's Risk Policy for all of the reasons set forth above. Moreover, the endorsement at issue is not part of the Policy. It is merely an independent form endorsement that the Insurers may add to the Policy. As such, the existence of this endorsement is irrelevant to this matter. Simply put, the Tower Crane is a "temporary structure" that falls under the definition of "Covered Property," and, therefore, there is no requirement that the Tower Crane be separately endorsed to a Policy under which it is already afforded coverage. POINT III LEND LEASE HAS MET ITS BURDEN TO MERIT JUDGMENT AS A MATTER OF LAW ON THE ISSUE OF LIABILITY Contrary to the First Department's Decision granting summary judgment in favor of the Insurers, Lend Lease has established that such a finding is without basis and that Lend Lease is entitled to judgment as a matter of law on the issue of liability. According to CPLR § 3212, a motion for summary judgment "shall be granted if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court, as a matter of law, directing judgment in favor of any party." See CPLR § 3212(b). The proponent of a summary judgment motion "must make a prima facie showing of entitlement to 45 judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case." See Winegrad v. New York University Medical Center, 64 N.Y.2d 851, 853,487 N.Y.S.2d 316, 317 (1985); see also Zuckerman v. City of New York, 49 N.Y.2d 557, 427 N.Y.S.2d 595 (1980). Once this showing has been made, the burden shifts to the party opposing the motion for summary judgment to produce admissible evidence sufficient to establish the existence of material issues of fact that require trial. See Alvarez v. Prospect Hospital, 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 925 (1986). Thus, "summary judgment is proper. .. when no issue of material fact is presented to justify trial between litigants." Donadio v. Crouse Irving Memorial Hospital, Inc., 75 A.D.2d 715,427 N.Y.S.2d 118 (4th Dept. 1980). The "shadowy semblance of an issue of fact is not adequate to defeat the motion." S.l. Capelin Assoc., Inc. v. Globe Manufacturing Corp., 34 N.Y.2d 338, 341,357 N.Y.S.2d 478 (1974); see also Pizzi v. Brad1ee's Div. of Stop & Shop, Inc., 172 A.D.2d 504, 567 N.Y.S.2d 852, 855 (2d Dep't 1991). Additionally, "mere speculation that some improbable or remote circumstances may exist should not defeat a motion for summary judgment." Hewett v. Marine Midland Bank, 86 A.D.2d 263, 268, 449 N.Y.S.2d 745 (2d Dep't 1982); see also Zuckerman, 49 N.Y.2d at 562 ("[MJere conclusions, expressions of hope or unsubstantiated allegations are insufficient to meet this burden.") 46 New York courts have repeatedly held that, where the terms of an insurance policy are clear and unambiguous, "interpretation of those terms is a matter of law for the court." B&W Heat Treating Co., Inc. v. Hartford Fire Ins. Co., 23 A.D.3d 1102,803 N.Y.S.2d 870 (4th Dep't 2005); see also Town of Harrison v. National Union Fire Ins. Co. of Pittsbum:h, Pa., 89 N.Y.2d 308, 316, 653 N.Y.S.2d 75 (CL of App. 1996): see also Senate Ins. Co. v. Tamarack American, 14 A.D.3d 922, 788 N.Y.S.2d 481 Od Dep't 2005); B.U.D. Sheetmetal, Inc. v. Massachusetts Bay Ins. Co., 248 A.D.2d 856, 670 N.Y.S.2d 228 (3d Dep't 1998). Moreover, the terms of an insurance policy are not ambiguous merely because the parties interpret them differently. Mount Vernon Fire Ins. Co. v. Creative Housing Ltd., 88 N.Y.2d 347, 645 N.Y.S.2d 433 (Ct. of App. 1996). Instead, a policy must be interpreted according to the plain and ordinary meaning of the language included therein. rd. As demonstrated above, a plain reading of the Builder's Risk Policy dictates that the damages incurred by Lend Lease as a result of Super Storm Sandy fall well within the coverage afforded by the Policy. Although the Insurers have attempted to rely upon the exclusion barring coverage for certain "contractor's tools," there is simply no basis to maintain that such an exclusion applies to the Tower Crane. Because the damages at issue in this litigation are covered under the Builder's Risk Policy, Lend Lease respectfully submits that the First Department erred in granting 47 the Insurers' Motion for Summary Judgment and denying its Motion for Summary Judgment. Lend Lease requests that this Court reverse that Decision. IV. CONCLUSION For the reasons set forth above, Lend Lease respectfully requests that the Court reverse the First Department's Decision and grant summary judgment in its favor; and for such other and further relief as this Court deems just and proper. Dated: New York, New York March 2],20]6 48