Lend Lease (US) Construction LMB Inc., et al., Appellants,v.Zurich American Insurance Company, et al., Respondents.BriefN.Y.January 11, 2017APL-2016-00016 New York County Clerk’s Index No. 158438/13 Court of Appeals 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. >> >> REPLY BRIEF FOR PLAINTIFF-APPELLANT EXTELL WEST 57TH STREET LLC GREENBERG, TRAGER & HERBST, LLP Attorneys for Plaintiff-Appellant Extell West 57th Street LLC 767 Third Avenue, 12th Floor New York, New York 10017 212-688-1900 Of Counsel: Richard J. Lambert Date Completed: May 20, 2016 To Be Argued By: Richard J. Lambert Time Requested: 15 Minutes TABLE OF CONTENTS TABLE OF AUTHORITIES……………………………………………………i POINT I THE TOWER CRANE IS COVERED PROPERTY UNDER THE TEMPORARY WORKS PROVISION………………………..1 (A) THE TOWER CRANE IS A “TEMPORARY STRUCTURE”………………………………………..1 (B) THE TOWER CRANE IS “INCIDENTAL TO THE PROJECT”…………………………………8 (C) THE VALUE OF THE TOWER CRANE WAS INCLUDED IN THE TOTAL PROJECT VALUE OF THE INSURED PROJECT……………………………………….13 POINT II THE CONTRACTOR’S TOOLS, MACHINERY, PLANT AND EQUIPMENT EXCLUSION IS NOT APPLICABLE TO THE TOWER CRANE…………………………………………………..18 POINT III WHETHER THERE ARE, OR COULD HAVE BEEN, OTHER INSURANCE POLICIES OR ENDORSEMENTS APPLICABLE TO THE TOWER CRANE IS IRRELEVANT TO THE PRESENT CASE…23 CONCLUSION……………………………………………………………….24 i TABLE OF AUTHORITIES 166 Mamaroneck Avenue Corp. v. 151 East Post Road Corp., 78 N.Y.2d 88, 571 N.Y.S.2d 686 (1991)…………………………………………..9 Brooklyn City Railroad Company v. The Kings County Trust Company, 214 A.D. 506, 212 N.Y.S. 343 (2d Dept. 1925), aff’d, 242 N.Y. 531 (1926)……………………………………………………...4, 7 Caddy v. Interborough R.T. Co., 195 N.Y. 415, 88 N.E. 747 (1909)………………..……………………..3, 5, 6, 7, 9 Carlino v. Lumbermens Mutual Casualty Co., 74 N.Y.2d 350, 547 N.Y.S.2d 616 (1989)…………………………………………3 Cetta v. Robinson, 145 A.D.2d 820, 535 N.Y.S.2d 805 (3d Dept. 1988)……………………………..12 Connors v. Hartford Fire Insurance Company, 138 A.D.2d 877, 526 N.Y.S.2d 254 (3d Dept. 1988)…………………………....…3 Consolidated Edison Company of New York, Inc. v. Allstate Insurance Company, 98 N.Y.2d 208, 746 N.Y.S.2d 622 (2002)……………….6, 13 Continental Casualty Co. v. Rapid-American Corporation, 80 N.Y.2d 640, 593 N.Y.S.2d 966 (1993)………………………………………..23 Cornacchione v. Clark Concrete Co., Inc., 278 A.D.2d 800, 723 N.Y.S.2d 572 (4th Dept. 2000)……………………………..2 Cragg v. Allstate Indemnity Corporation, 17 N.Y.3d 118, 926 N.Y.S.2d 867 (2011)………………………………………..13 Handelsman v. Sea Insurance Company, Ltd., 85 N.Y.2d 96, 623 N.Y.S.2d 750 (1994)…………………………………………19 Johnson City Central School District v. Fidelity and Deposit Company of Maryland, 226 A.D.2d 990, 641 N.Y.S.2d 426 (3d Dept. 1996)…………………12 ii Miller v. Continental Insurance Company, 40 N.Y.2d 675, 389 N.Y.S.2d 565 (1976)…………………………………………3 Mostow v. State Farm Insurance Companies, 88 N.Y.2d 321, 645 N.Y.S.2d 421 (1996)………………………………………..12 Muzak Corporation v. Hotel Taft Corporation, 1 N.Y.2d 42, 150 N.Y.S.2d 171 (1956)…………………………………………..19 North River Insurance Company v. United National Insurance Company, 152 A.D.2d 500, 544 N.Y.S.2d 122 (1st Dept. 1989), rev’d on other grounds, 81 N.Y.2d 812 (1993)…………………………………..19 Rish v. Theo Bros. Constr. Co., Inc., 269 S.C. 226, 237 S.E.2d 61 (1977)………………………………………………21 Salvano v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 85 N.Y.2d 173, 623 N.Y.S.2d 790 (1995)……………………………………..9, 15 Selective Insurance Company of America v. County of Rensselaer, 26 N.Y.3d 649 (2016)……………………………………………………………12 Wade v. Atlantic Cooling Tower Services, 56 A.D.3d 547, 867 N.Y.S.2d 489 (2d Dept. 2008)……………………………..11 STATUTES, TREATISES, DICTIONARIES Code of Federal Regulations, 29 C.F.R. § 1926.1401……………………………2 Black’s Law Dictionary, 5th Edition (1979)…………………………………….10 Black’s Law Dictionary, 9th Edition (2009)……………………………………..2 New York City Administrative Code, Title 28, Chapter 33, Section 3307.3.2…………………………………………………….8 West’s Encyclopedia of American Law, 2nd Ed., Vol. 13, Dictionary and Indexes (2004)………………………………………………….11 1 POINT I THE TOWER CRANE IS COVERED PROPERTY UNDER THE TEMPORARY WORKS PROVISION The parties are in agreement that whether the Tower Crane is Covered Property under the Temporary Works provision requires a determination of three (3) distinct policy interpretations: (a) Is the Tower Crane a “temporary structure”? (b) Is the Tower Crane “incidental to the project”? (c) Was the “value” of the Tower Crane included in the “Total Project Value of the Insured Project declared by the Named Insured [Extell]”? (A) THE TOWER CRANE IS A “TEMPORARY STRUCTURE” In an ironic twist, the facts that Defendant Insurers and the Appellate Division use to support the erroneous finding that the Tower Crane is not incidental to the Project are the very same facts that establish the Tower Crane as a temporary structure. As the Record shows (R. 58-61; 184-185; 189-190; 482-485; 516-531), and as acknowledged by the Appellate Division (R. 842, 843) and Defendant Insurers (pp. 10-11, 33, 35-37), the 750-foot Tower Crane was a custom-engineer-designed and constructed conglomeration of many parts, including supports embedded into the concrete superstructure, which was erected at the Project site (on the 20th floor setback) to facilitate the construction of the Building, and then disassembled and removed at the end of construction. 2 In Cornacchione v. Clark Concrete Co., Inc., 278 A.D.2d 800, 801, 723 N.Y.S.2d 572 (4th Dept. 2000), the Appellate Division, quoting the Court of Appeals, stated: A structure includes “any production or piece of work artificially built up or composed of parts joined together in some definite manner” (Lewis-Moors v Contel of N.Y., 78 NY2d 942, 943; see Joblon v Solow, 91 NY2d 457, 464). The crane fits squarely within that definition. (Underline provided). See Code of Federal Regulations, 29 C.F.R. § 1926.1401 (Definitions): “Tower crane is a type of lifting structure which utilizes a vertical mast or tower to support a working boom (jib) in an elevated position” (underline provided). Black’s Law Dictionary, 9th Edition (2009), defines structure as “[a]ny construction, production, or piece of work artificially built up or composed of parts purposely joined together”. The Tower Crane fits squarely within the Court of Appeals’ and Black’s Law Dictionary’s definition of structure. Defendant Insurers do not cite any law or authority to the contrary and do not offer any alternative definition of structure. Defendant Insurers attempt to distinguish the Court of Appeals’ definition of structure by stating that the cases cited by Extell were decided under the Labor Law, which is liberally construed by the Courts in favor of those to be protected. However, Defendant Insurers’ argument ignores the definition of structure in Black’s Law Dictionary and the Court of Appeals’ cases that hold that insurance 3 policies must “be liberally construed in favor of the insured.” Miller v. Continental Insurance Company, 40 N.Y.2d 675, 678, 389 N.Y.S.2d 565 (1976); Carlino v. Lumbermens Mutual Casualty Co., 74 N.Y.2d 350, 357, 547 N.Y.S.2d 616 (1989); see also Connors v. Hartford Fire Insurance Company, 138 A.D.2d 877, 879, 526 N.Y.S.2d 254 (3d Dept. 1988): The terms of an “insurance policy should be construed liberally in favor of the insured in full recognition of the underlying objective to provide coverage, not exclude it”. Thus, whether it’s the interpretation of an insurance policy or the Labor Law, the term structure is to be “liberally construed” by the courts in favor of those to be protected, i.e., the definition of a structure is the same for both. Since the Tower Crane was a custom-engineer-designed and erected conglomeration of many parts, some of which were embedded into the concrete superstructure, the Tower Crane constitutes a structure, i.e., a “production or piece of work artificially built up or composed of parts joined together in some definite manner”. Caddy v. Interborough Rapid Transit Company, 195 N.Y. 415, 420, 88 N.E. 747 (1909). Defendant Insurers, like the Appellate Division, use a contorted and erroneous application of ejusdem generis to argue that the Tower Crane is not a temporary structure. Since it is clear from the undisputed facts, and the definition of structure enunciated by the Court of Appeals and in Black’s Law Dictionary, that the Tower Crane is a temporary structure, ejusdem generis cannot be used to 4 independently establish the contrary. See Brooklyn City Railroad Company v. The Kings County Trust Company, 214 A.D. 506, 511, 212 N.Y.S. 343 (2d Dept. 1925), aff’d, 242 N.Y. 531 (1926): The rule of ejusdem generis is not in and of itself a rule of interpretation, but merely an aid to interpretation when the intention is not otherwise apparent. It never controls where it clearly appears from the instrument that no such limitation was intended. As discussed by Extel in its main brief, ejusdem generis, as an aid, supports the determination that the Tower Crane is a temporary structure, because, when compared to all of the listed items in the Temporary Works provision, the common thread is that all of them are temporarily erected or assembled at the Project site, used by contractors during construction, and then disassembled and removed during or after construction. Defendant Insurers, like the Appellate Division, clearly misapply ejusdem generis to the Temporary Works provision by focusing on the after-phrase “including office and job site trailers”. The Appellate Division states (R. 843): “The general term ‘temporary buildings and structures,’ is described by the specific term ‘including office and job site trailers.’” This statement ignores the full Policy phrase in question: 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…(underline provided) 5 The dual use of the word “all” clearly indicates that if one is applying ejusdem generis to the term temporary structures, all of the items listed must be taken into consideration, not just “office and job site trailers”. In addition, the use of the word “including” indicates that office and job site trailers may be somewhat outside the scope of the preceding terms, since, unlike all the preceding items, they may not be constructed at the job site, i.e., “including”, in this context, after the serial list of previous items, is a word of expansion and enlargement, not a word of limitation. Thus, “office and job site trailers” cannot be used under the guise of ejusdem generis to limit the definition and interpretation of temporary structures. The Appellate Division’s and Defendant Insurers’ argument that ejusdem generis limits temporary structures to office and job site trailers was expressly rejected by the Court of Appeals in Caddy v. Interborough Rapid Transit Company, 195 N.Y. 415, 418-420 (1909). In Caddy, supra, 195 N.Y. at 418, the Court was faced with the interpretation of the phrase: “erection, repairing, altering or painting of a house, building or structure”. The defendant, invoking ejusdem generis, argued that the “general word ‘structure’ must be limited by and comprehended within the specific terms ‘house’ and ‘building’ and when thus construed it necessarily excludes all structures which do not fall within the generic description of houses and buildings”. Id. at 419. The plaintiff argued that the word “structure” was used to 6 “enlarge to the fullest extent the list of artificial physical objects”. Id. at 419-420. The Court held that “the rule of ejusdem generis does not apply”, the term structure was not limited by house and building, and that the word structure “includes any production or piece of work artificially built up or composed of parts joined together in some definite manner”. Id. at 420. As in Caddy, supra, where the Court of Appeals rejected the ejusdem generis argument that “structure” was limited by the co-terms “house” and “building”, this same Court should reject the Defendant Insurers’ ejusdem generis argument, and the Appellate Division’s ruling, that “temporary structures” is limited by the terms “office and job site trailers”. Furthermore, as a matter of law, temporary structures must mean something other and different than office and job site trailers. See Consolidated Edison Company of New York, Inc. v. Allstate Insurance Company, 98 N.Y.2d 208, 221- 222, 746 N.Y.S.2d 622 (2002) (each term in the Policy must be given force and effect). Otherwise, contrary to law, the term temporary structures would have no meaning or use within the Policy. This Court should likewise reject the Appellate Division’s conclusion that the Tower Crane’s “active participation in the construction work distinguishes the tower crane” from the other Temporary Works’ items, citing “formwork, falsework, shoring and fences” (leaving out scaffolding) (R. 844). This argument is 7 but another misuse of ejusdem generis, since all the items in the Temporary Works provision are in fact active, i.e., they are all actively used by construction workers to construct the building. In any event, the “active” nature of the items in the Temporary Works provision is irrelevant to the question of whether or not the Tower Crane is temporary structure. As stated by the Dissenting Justices (R. 863): Additionally, I disagree with the majority’s fallback position, which posits that, even if the more expansive approach is correct, the crane can be differentiated by its “active” nature. The critical characteristic of the crane, as far as the policy is concerned, was its integration into the building as the building was constructed, making it a “temporary structure” and thus a covered “temporary work.” In the present case, the Tower Crane is a “temporary structure” because it is a custom-engineer-designed and erected conglomeration of parts temporarily assembled at the Project site to facilitate the construction of the Building, to be disassembled and removed at the end of construction. The Tower Crane fits squarely within Black’s Law Dictionary’s definition of structure and this Court’s 100-year-old definition of structure: “any production or piece of work artificially built up or composed of parts joined together in some definite manner.” Caddy v. Interborough Rapid Transit Co., 195 N.Y. 415, 420 (1909). Misapplication of ejusdem generis cannot be used to establish the contrary. Brooklyn City Railroad Company, supra. As a matter of fact and law, the Tower Crane is a “temporary structure” within the Temporary Works coverage provision of the Policy. 8 (B) THE TOWER CRANE IS “INCIDENTAL TO THE PROJECT” The Temporary Works provision in question states in relevant part: 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… (underline provided). Defendant Insurers’ argument, which quotes the Appellate Division, is that the Tower Crane is not incidental to the Project because “rather than serving a minor or subordinate role”, the Tower Crane “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; underline provided). Using the Appellate Division’s “could not have been built without it” test, every single item listed in the Temporary Works coverage provision is necessary and indispensable to the Project. The Building cannot be constructed without scaffolding. It is impossible to construct the concrete foundation and the concrete superstructure without formwork and shoring. Even fencing is essential to the construction of the Building. See New York City Administrative Code, Title 28, Chapter 33, Section 3307.3.2, which requires fencing for all new construction. Furthermore, how does one determine whether any particular item in the Temporary Works provision is “minor or subordinate”, as opposed to “integral and indispensable”, to the construction of the Project? There are no provisions, terms or parameters whatsoever in the Policy for this type of test. 9 The problem is illustrated in Caddy v. Interborough Rapid Transit Co., 195 N.Y. 415, 422-423 (1909), wherein the Court stated that a scaffold is “a temporary structure of timber, boards, etc., for various purposes”, but while “that is admitted we may still differ as to the height and other dimensions which mark the difference between a scaffold and a platform or staging”. The Court concluded that it is impossible to fix “an arbitrary point at which a thing ceases to be a mere platform and becomes a scaffold”. Id. at 423. The Appellate Division’s interpretation of “incidental” to impose an arbitrary “minor or subordinate” or “integral and indispensable” test, is not in the Policy or supported by the Policy and would cause confusion and indefiniteness as to what is and is not covered property under the Temporary Works provision. In addition to violating the contractual doctrine of definiteness, 166 Mamaroneck Avenue Corp. v. 151 East Post Road Corp., 78 N.Y.2d 88, 91, 571 N.Y.S.2d 686 (1991), the Appellate Division’s arbitrary test violates a cardinal principle governing the interpretation of the Policy: “The court's role is limited to interpretation and enforcement of the terms agreed to by the parties; it does not include the rewriting of their contract and the imposition of additional terms”. Salvano v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 85 N.Y.2d 173, 182, 623 N.Y.S.2d 790 (1995). 10 It also makes no sense that Temporary Works which are minor and insignificant to the construction of the Project would be covered property, while Temporary Works which are necessary and integral to the construction of the Project would be excluded from coverage. In contrast to the Appellate Division’s and Defendant Insurers’ interpretation of “incidental”, Extell has proffered a more reasonable alternate definition and interpretation, i.e., “all incidental to the project” means (a) “relating to”, “associated with”, or “appurtenant to” the construction of the Project and/or (b) something subordinate, necessary, and connected to the main purpose, i.e., the construction of the Building. The Tower Crane is “incidental to the Project” because the Tower Crane is a temporary structure related to, associated with, and appurtenant to the construction of the Building, and is also subordinate, necessary and connected to the main purpose, the construction of the Building, just like scaffolding and all of the other items listed in the Temporary Works provision when used in connection with the construction of the Building. Extell’s definition and interpretation of the phrase “incidental to the project” is supported by Black’s Law Dictionary, 5th Edition (1979), Incidental. 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; Appertain. To belong to; to have a relation to; to be appurtenant to; 11 and West’s Encyclopedia of American Law, 2nd Ed., Vol. 13, Dictionary and Indexes (2004): Incidental: Contingent upon or pertaining to something that is more important; that which is necessary, appertaining to, or depending upon another known as the principal. See also Wade v. Atlantic Cooling Tower Services, 56 A.D.3d 547, 549, 867 N.Y.S.2d 489 (2d Dept. 2008): “Demolition is defined as work incidental to or associated with the total or partial dismantling or razing of a building or other structure” (underline provided). Furthermore, the Tower Crane fits into the Black’s Law Dictionary definition of “incidental” cited by the Appellate Division (R. 842): Black's Law Dictionary defines the term "incidental" as "[s]ubordinate to something of greater importance; having a minor role" (10th ed 2014]). The Tower Crane, as all the items in the Temporary Works provision, is “subordinate to something of greater importance”, the construction of the Building, and, although essential to the construction, has a “minor role” when compared to the breadth and scope of the construction of the 74-Story Building. In contrast to the arbitrary “integral and indispensable” test of the Appellate Division, Extell’s interpretation of the phrase “all incidental to the project” to mean related to, associated with, and appurtenant to the construction of the Building is reasonable and is supported by case law and dictionary definitions. Defendant 12 Insurers’ brief and the Appellate Division do not dispute the legitimacy of Extell’s definition or interpretation of the term “incidental”. Even if the Appellate Division’s interpretation of “all incidental to the project” is reasonable, so is Extell’s interpretation. As a matter of law, when an insurance policy is susceptible to two reasonable but different interpretations, one which provides coverage and one which excludes coverage, the policy must be interpreted in favor of coverage for the insured (Extell). Mostow v. State Farm Insurance Companies, 88 N.Y.2d 321, 326, 645 N.Y.S.2d 421 (1996); Selective Insurance Company of America v. County of Rensselaer, 26 N.Y.3d 649, 657 (2016); Johnson City Central School District v. Fidelity and Deposit Company of Maryland, 226 A.D.2d 990, 992-993, 641 N.Y.S.2d 426 (3d Dept. 1996); Cetta v. Robinson, 145 A.D.2d 820, 821, 535 N.Y.S.2d 805 (3d Dept. 1988). Thus, as a matter of law, the Appellate Division should have adopted Extell’s interpretation of “all incidental to the project” and held that the Tower Crane is incidental to the Project, because it is (a) related to, associated with, and appurtenant to the construction of the Project, and (b) subordinate, necessary and connected to the main purpose, the construction of the Building. 13 (C) THE VALUE OF THE TOWER CRANE WAS INCLUDED IN THE TOTAL PROJECT VALUE OF THE INSURED PROJECT As stated by the Appellate Division (R. 840): In construing Policy provisions defining the scope of coverage, courts “first look to the language of the policy”, Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 N.Y.2d 208, 221 (2002), which is “interpreted according to common speech and consistent with the reasonable expectation of the average insured”, Cragg v Allstate Indem. Corp., 17 N.Y.3d 118, 122 (2011). As discussed in Extell’s main brief (pp. 31-33), the terms of the Policy define Total Project Value as the estimated total costs of construction submitted by Extell to Defendant Insurers. This is the reasonable expectation of Extell since the Policy required, and Defendant Insurers accepted, Extell’s submission of the estimated total costs of construction as the Total Project Value (R. 479-481). The uncontroverted Rothstein Affidavit states (R. 53): Prior to issuance of the Builder’s Risk Policy and as part of the underwriting process for the Policy, Extell was required to submit to the prospective insurers an estimate of the total construction costs for the Project, which would be the basis for the total amount of the Policy, i.e., the Total Project Value. The Temporary Works provision of the Policy provides coverage to “temporary…structures…the value of which has been included in the Total Project Value* of the Insured Project* declared by the Named Insured [Extell].” (R. 345). 14 The word “value” is used twice in that provision and means the same in both places, i.e., “temporary…structures…the [construction cost] of which has been included in the Total Project [construction costs] declared by the Named Insured”. It is undisputed that the $89 million Pinnacle Contract was included in the total construction costs (Total Project Value) submitted by Extell to Defendant Insurers and that the construction cost (value) for the design, furnishing of parts, erection (labor), disassembly and removal of the Tower Crane, was included in the $89 million Pinnacle Contract. This establishes that the construction cost (value) of the Tower Crane was included in the estimated total costs of construction submitted by Extell to Defendant Insurers as the Total Project Value. Defendant Insurers’ entire argument on this issue is at pages 39-41 of their brief, and is summarized at p. 40: 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. Defendant Insurers’ “cost to purchase” interpretation of value, which is not supported by any term or provision in the Policy, ignores the fact that the construction cost for the Tower Crane, which was part of the total Pinnacle Contract price, included much more than the furnishing of the various parts for the Tower Crane, i.e., the $89 million Pinnacle Contract included the cost for the 15 design, parts, erection (labor), disassembly and removal of the Tower Crane (R. 184-185, 189-190), and also included the cost for the design, parts, erection (labor), disassembly and removal of scaffolding, formwork and shoring (other Temporary Works) to be provided by Pinnacle under the Contract [R. 112, Sec. 1.10; R. 183 (para. 2.a)]. The Pinnacle Contract was a package cost/value for all work, materials, equipment, and Temporary Works to be provided by Pinnacle. Whether the various parts of the Tower Crane, or any of the other items, or parts thereof, listed in the Temporary Works provision (scaffolding formwork, falsework, shoring, fences, and temporary buildings or structures, including office and job site trailers) are owned, rented, purchased or leased is not a condition for coverage, or a reason for exclusion of coverage, because the Policy is silent on the issue. As a matter of law, the Court may not insert terms and conditions into the Temporary Works coverage provision for coverage or exclusion purposes. Salvano v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 85 N.Y.2d 173, 182, 623 N.Y.S.2d 790 (1995). Furthermore, the estimated total construction costs submitted by Extell to Defendant Insurers as the Total Project Value (R. 478-481), which were accepted by the Defendant Insurers as the Total Project Value, do not delineate or detail any purchase costs, rental costs, lease costs, or ownership costs for any particular item 16 related to the construction of the Project, including the items in the Temporary Works provision. To accept Defendant Insurers’ interpretation of value to mean “purchase cost”, or even rental, lease or ownership cost, would render the entire Temporary Works provision illusory, because no item in the Temporary Works provision is specifically listed in the Total Project Value submission by Extell to Defendant Insurers, much less the purchase costs, rental costs, lease costs, or ownership costs of the items or parts thereof (R. 478-481). For instance, the first item on the estimated hard costs list for the Total Project Value is “Hoist, Sidewalk Bridge - $15,000,000” (R. 479), which, contrary to statements by Defendant Insurers, is not the “scaffolding” to be provided by Pinnacle and the other contractors for their on-site work, although Sidewalk Bridge is a form of scaffolding. There is no indication in the Total Project Value submission as to whether the various parts of the “Hoist – Sidewalk Bridge”, are rented, owned, leased, borrowed or purchased (R. 478-481). The value (estimated construction cost) of the Hoist – Sidewalk Bridge is included in the Total Project Value because there is $15,000,000 listed next to it (R. 479). The value of the Pinnacle Contract, the “Superstructure Concrete” work, is included in the Total Project Value because there is $89,000,000 next to it on the list of hard costs (R. 479, line 9). There is no purchase cost, rental cost, lease cost, or ownership cost in 17 the list of hard costs for any of the Temporary Works to be provided by Pinnacle or any other contractor, and no separate cost in the Pinnacle Contract for the design, furnishing of parts, erection (labor), disassembly and removal of the Tower Crane or any other Temporary Works to be provided by Pinnacle (scaffolding, formwork, shoring). The Total Project Value was the estimated total costs of construction submitted by Extell to Defendant Insurers. It is an undisputed fact that the $89 million Pinnacle Contract was included in the Total Project Value, and that the value (cost) for the design, furnishing of parts, erection, disassembly and removal of the Tower Crane was included within the Pinnacle Contract, thus establishing that the value of the Tower Crane was included in the Total Project Value. There is no question of fact on this issue, as stated by the Defendant Insurers and the Dissenting Justices (R. 35-37), because whether the Tower Crane parts were owned, rented, purchased or leased is irrelevant to the issue of whether the “value” of the Tower Crane was included in the Total Project Value. It should be noted that the estimated costs (values) submitted by Extell to Defendant Insurers prior to the issuance of the Policy were for the purpose of determining a Total Project Value, which was used to determine the amount of the Policy ($700,000,000) and the premium for the Policy (R. 332-333), and not for determining the amount of any particular loss or damage that might occur during 18 the construction. There is a separate provision of the Policy, entitled Valuation, which sets forth “the basis of adjustment for a claim at the time of loss” (R. 376) (underline provided), which is independent of the estimated construction costs submitted by Extell for the Total Project Value prior to issuance of the Policy. POINT II THE CONTRACTOR’S TOOLS, MACHINERY, PLANT AND EQUIPMENT EXCLUSION IS NOT APPLICABLE TO THE TOWER CRANE With regard to application of the exclusion provision, there are two (2) terms at issue concerning the Tower Crane: (1) “temporary structures” in the Temporary Works coverage provision and (2) “contractor’s tools, machinery, plant and equipment” in the exclusion provision. As established in Point II of Extell’s main brief, and Point I(A) above, the Tower Crane is a “temporary structure” within the Temporary Works coverage provision. The Appellate Division’s failure to rule directly on the question and its statement that “the Tower Crane is not a structure that is incidental to the Project” (R. 842), together with the Dissenting Justices express finding that the Tower Crane is a temporary structure, further support such a determination by this Court. Defendant Insurers, and the Appellate Division, maintain that the Tower Crane is “contractor’s equipment” within the exclusion provision. However, the fact of the matter is that the Tower Crane can be both a “temporary structure” 19 (Temporary Works) and “contractor’s equipment”, the same way that scaffolding and formwork are Temporary Works and contractor’s equipment. 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) (scaffolding qualified as “Contractors’ Equipment” in an insurance policy). Thus, there is a conflict and ambiguity between the Temporary Works coverage provision and the exclusion provision. The issue before the Court is which provision of the Policy takes precedence. As a matter of law, the ambiguity and conflict created by the coverage and exclusion provisions in the Policy must be construed against Defendant Insurers and in favor of coverage to Extell. Handelsman v. Sea Insurance Company, Ltd., 85 N.Y.2d 96, 101, 623 N.Y.S.2d 750 (1994). In addition, the Temporary Works coverage provision is a specific provision which controls over the general exclusion provision. Muzak Corporation v. Hotel Taft Corporation, 1 N.Y.2d 42, 46, 150 N.Y.S.2d 171 (1956). The Temporary Works provisions lists specific items: scaffolding, formwork, falsework, shoring, fences, and temporary buildings or structures, including office and job site trailers. In contrast, the exclusion provision is completely general and generic: “Contractor’s tools, machinery, plant and equipment including spare parts and 20 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”. A comparison of the Temporary Works provision and the exclusion provision makes it clear, as determined by the Dissenting Justices, that “the items enumerated in the ‘temporary works’ definition are of a narrower and more precise scope than the broad category of items described in the ‘contractor’s tools’ exclusion” (R. 867-868). Every single item in the Temporary Works provision could be considered contractor’s equipment. However, the list of items fitting into the exclusion provision, and not the Temporary Works provision, is plethoric, e.g., bulldozers, tractors, graders, trucks, backhoes, hand tools (hammers, picks, shovels), wheelbarrows, forklifts, cement mixers, temporary heaters, jackhammers, ladders, etc. Defendant Insurers (p. 49) expressly agree with Extell that the Temporary Works coverage provision is a specific provision which controls over the general exclusion provision (except as to temporary structures): 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 is a conflict between the specifically listed items of the Temporary Works provision and the contractor’s 21 machinery and equipment exclusion, in that narrow – and highly unlikely – circumstance, the Temporary Works provision would control. It is inconsistent and incongruous for Defendant Insurers to argue that the Temporary Works provision is a specific provision, which controls over the general exclusion provision, for every item listed in the Temporary Works provision except temporary structures, especially since it was Defendant Insurers who included temporary structures in the specific Temporary Works provision. In a desperate attempt to support application of the exclusion provision to the Tower Crane, Defendant Insurers argue that if the Tower Crane is determined to be covered property as a temporary structure, it “would render the exclusion illusory” because “this overly broad definition of temporary structure would include such commonly used equipment as ‘bulldozers, tractors, graders, [and] trucks’”, citing Rish v. Theo Bros. Constr. Co., Inc., 269 S.C. 226, 231, 237 S.E.2d 61, 63 (1977) (Defendant Insurers’ brief, p. 50). The term “temporary structures” or “structures” is nowhere mentioned in Rish, supra. The Court in Rish, supra, 269 S.C. at 229, defined the issue as follows: “The question is whether rented construction equipment [bulldozers, tractors, graders, trucks] is ‘materials’ under the [construction payment] bond”. The Rish Court held that the “equipment” was not “materials”. Id. Rish, supra, is not relevant to the present case and has been misrepresented by Defendant Insurers. 22 The Tower Crane is a custom-engineered-designed temporary structure, which was constructed at the Project site and attached to the Building during the construction process. The photographs of the Tower Crane (R. 482-485), together with the engineer’s design for the crane (R. 516-531), and the undisputed details of the Tower Crane cited by all parties and the Appellate Division, provide graphic evidence that the Tower Crane is a temporary structure, far different than bulldozers, tractors, graders, trucks, backhoes, hand tools, temporary heaters, jackhammers, ladders, etc., which are not constructed at the job site, cannot be considered temporary structures within the Temporary Works provision, and would be subject to the exclusion provision as contractor’s equipment. The exclusion provision is not rendered meaningless by the fact that the Tower Crane is a temporary structure, since the exclusion provision is extremely broad and encompasses far more construction-related items than the Temporary Works coverage provision. The Tower Crane is covered property under the Policy as a temporary structure within the Temporary Works provision and is not subject to the exclusion provision. 23 POINT III WHETHER THERE ARE, OR COULD HAVE BEEN, OTHER INSURANCE POLICIES OR ENDORSEMENTS APPLICABLE TO THE TOWER CRANE IS IRRELEVANT TO THE PRESENT CASE Defendant Insurers, throughout their brief (pp. 6, 9, 10, 11, 30, 40-41, 42, 51-52), like the Appellate Division (R. 838, 848), state that other entities were required to purchase insurance for the Tower Crane and/or that Extell could have purchased other insurance or an endorsement to the Policy for the Tower Crane, without providing any reason whatsoever why those statements are relevant to the present case. Since the Tower Crane is covered property under the Temporary Works provision of the Policy, there was no need for Extell to purchase an additional endorsement or a separate policy. Moreover, whether Extell, Lend Lease, Pinnacle, or anyone else had or could have had a separate insurance policy or endorsement covering the Tower Crane is irrelevant to the issue of whether the Tower Crane is covered property under the Policy before this Court. As stated in Continental Casualty Co. v. Rapid-American Corporation, 80 N.Y.2d 640, 652, 593 N.Y.S.2d 966 (1993), “other insurance” is “irrelevant” to whether coverage exists under the policy in issue. 24 CONCLUSION As a matter of law, any confusion, conflict or ambiguity created by the Policy terms and provisions, and all questions as to coverage, are to be resolved in favor of the insured, Extell. The Tower Crane is covered property under the Temporary Works provision of the Policy because it is a temporary structure, incidental to the Project, the value of which was included in the Total Project Value. As a Temporary Works, it is not subject to the exclusion provision. This Court should reverse the order of the Appellate Division, grant Extell’s motion for summary judgment on the issue of liability, and remand the case for further proceedings with respect to damages, together with such other and further relief to Extell as the Court deems just and proper. Dated: New York, New York May 20, 2016 Respectfully submitted, GREENBERG, TRAGER & HERBST, LLP Attorneys for Extell By: ______________________________ Richard J. Lambert, Esq. 767 Third Avenue - 12th Floor New York, NY 10017 212-688-1900 rlambert@gthny.com