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. >> >> 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: March 21, 2016 To Be Argued By: Richard J. Lambert Time Requested: 15 Minutes DISCLOSURE STATEMENT PURSUANT TO RULE 500.1(f) Plaintiff-Appellant Extell West 57th Street LLC has an affiliated company named Extell Limited. There are no subsidiary or parent entities. Dated: New York, New York March 21,2016 Respectfully Submitted, GREENBERG, TRAGER HERBST, LLP Attorneys for Plaintiff-Appellant Extell 767 Third Avenue, 12th Floor New York, NY 10017 212-688-1900 By: --:...~_S\.---_._. _ Richard J. Lambert, Esq. TABLE OF CONTENTS TABLE OF AUTHORITIES i STATEMENT OF JURISDICTION 1 OVERVIEW OF APPEAL 1 PROCEDURAL HISTORy 4 STATEMENT OF THE CASE 5 QUESTIONS PRESENTED 12 ARGUMENT I. THE ORDER BELOW SHOULD BE REVERSED AND SUMMARY JUDGMENT GRANTED TO EXTELL ON THE ISSUE OF COVERAGE 13 II. THE TOWER CRANE IS A "TEMPORARY STRUCTURE" WITHIN THE MEANING OF THE TEMPORARY WORKS COVERAGE PROVISION 15 III. THE TOWER CRANE IS "INCIDENTAL TO THE PROJECT"........22 IV. THE VALUE OF THE TOWER CRANE WAS INCLUDED IN THE TOTAL PROJECT VALUE OF THE INSURED PROJECT 31 V. THE POLICY EXCLUSION FOR TOOLS AND EQUIPMENT IS NOT APPLICABLE TO THE TOWER CRANE 36 VI. WHETHER OR NOT THERE IS OTHER INSURANCE IS IRRELEVANT TO THE INTERPRETATION OF THE POLICY 45 VII. THIS COURT SHOULD GRANT EXTELL'S MOTION FOR SUMMARY JUDGMENT ON THE ISSUE OF LIABILITY .46 CONCLUSION 48 TABLE OF AUTHORITIES Ace Wire & Cable Co. v. Aetna Cas. & Sur. Co., 60 N.Y.2d 390, 469 N.Y.S.2d 655 (1983) 13,36 Belt Painting Corp. v. TIG Ins. Co., 100 N.Y.2d 377,763 N.Y.S.2d 790 (2003) 13 Breed v. Insurance Co. ofN. Am., 46 N.Y.2d 351, 413 N.Y.S.2d 352 (1978) .45 Caddy v. Interborough R. T Co., 195 N.Y. 415 (1909) 18 Cetta v. Robinson, 145 A.D.2d 820, 535 N.Y.S.2d 805 (3d Dept. 1988) 30 City ofNew York v. Evanston Ins. Co., 39 A.D.3d 153, 830 N.Y.S.2d 299 (2d Dept. 2007) 14 Connors v. Hartford Fire Insurance Company, 138 A.D.2d 877,526 N.Y.S.2d 254 (3d Dept. 1988) 23 Consolidated Edison Company ofNew York, Inc. v. Allstate Insurance Company, 98 N.Y.2d 208,746 N.Y.S.2d 622 (2002) ...... 19,27,42,43 Continental Casualty Co. v. Rapid-American Corporation, 80 N.Y.2d 640, 593 N.Y.S.2d 966 (1993) 36, 45 Cornacchione v. Clark Concrete Co., Inc., 278 A.D.2d 800,723 N.Y.S.2d 572 (4th Dept. 2000) 16 Cragg v. Allstate Indemnity Corporation, 17 N.Y.3d 118,926 N.Y.S.2d 867 (2011) .44 Cun-En Lin v. Holy Family Monuments, 18 A.D.3d 800, 796 N.Y.S.2d 684 (2d Dept. 2005) 16 Dean v. Tower Insurance Company ofNew York, 19 N.Y.3d 704,955 N.Y.S.2d 817 (2012) 13,36,44 DRK, LLC v. The Burlington Insurance Company, 74 A.D.3d 693,905 N.Y.S.2d 58 (1st Dept. 2010), appeal denied, 16 N.Y.3d 702 (2011) .40 Executive Risk Indem., Inc. v. Starwood Hotels & Resorts Worldwide, Inc., 98 A.D.3d 878, 951 N.Y.S.2d 13 (1st Dept. 2012) 13 Federal Insurance Company v. Empire Mutual Insurance Company, 181 A.D.2d 568,581 N.Y.S.2d 56 (1st Dept. 1992) 46 Glacier Construction Company v. Travelers Property Casualty Company ofAmerica, 2011 U.S. Dist. LEXIS 156452 (U.S.D.C. Colo. 2011) 17 Glacier Construction Company v. Travelers Property Casualty Company of America, 569 Fed. Appx. 582 (10th Cir. 2014) 18 Green Harbour Homeowners' Association, Inc. v. G.H. Development and Construction, Inc., 14 A.D.3d 963, 789 N.Y.S.2d 319 (3d Dept. 2005) .40 Handelsman v. Sea Insurance Company, Ltd., 85 N.Y.2d 96,623 N.Y.S.2d 750 (1994) .44 Harris v. Allstate Insurance Co., 309 N.Y. 72, 1955 N.Y. LEXIS 933 (1955) 23 Jahier v. Liberty Mutual Group, 64 A.D.3d 683, 883 N.Y.S.2d 283 (2d Dept. 2009) 46 Japour v. Ed Ryan & Sons Agency, 215 A.D.2d 817, 625 N.Y.S.2d 750 (3d Dept. 1995) .46 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) 30 Landry v. G. C. Constructors, 514 Fed. Appx. 432, 2013 U.S. App. LEXIS 3597 (5th Cir. 2013), cert. denied, 134 S. Ct. 212 (2013) 17 Matter ofRiefberg, 58 N.Y.2d 134, 459 N.Y.S.2d 739 (1983) 19 11 McCoy v. Abigail Kirsch at Tappan Hill, Inc., 99 A.D.3d 13,951 N.Y.S.2d 32 (2d Dept. 2012) 17 Miller v. Continental Insurance Company, 40 N.Y.2d 675, 389 N.Y.S.2d 565 (1976) 23,27,36 Mostow v. State Farm Insurance Companies, 88 N.Y.2d 321, 645 N.Y.S.2d 421 (1996) 30 Muzak Corporation v. Hotel Taft Corporation, 1 N.Y.2d 42, 150 N.Y.S.2d 171 (1956) 27,40,42 North River Insurance Company v. United National Insurance Company, 152 A.D.2d 500, 544 N.Y.S.2d 122 (1 st Dept. 1989), rev'd on other grounds, 81 N.Y.2d 812 (1993) 39 Persky v. Bank ofAmerica National Association, 261 N.Y. 212, 1933 N.Y. LEXIS 1275 (1933) .47 Pioneer Tower Owners Association v. State Farm Fire & Casualty Company, 12 N.Y.3d 302, 880 N.Y.S.2d 885 (2009) 45 Primavera v. Rose & Kiernan, 248 A.D.2d 842,670 N.Y.S.2d 223 (3d Dept. 1998) 14 Ragins v. Hosp. Ins. Co., Inc., 22 N.Y.3d 1019,981 N.Y.S.2d 640 (2013) 14 Randolph v. Nationwide Mutual Fire Insurance Company, 242 A.D.2d 889, 662 N.Y.S.2d 650 (4th Dept. 1997) .47 Raner v. Security Mutual Ins. Co., 102 A.D.3d 485,958 N.Y.S.2d 342 (1st Dept. 2013) 14 Rocon Manufacturing, Inc. v. Ferraro, 199 A.D.2d 999,605 N.Y.S.2d 591 (4th Dept. 1993) .41 Saks v. Nicosia Contracting Corporation, 215 A.D.2d 832,625 N.Y.S.2d 758 (3d Dept. 1995) .46 III Salvano v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 85 N.Y.2d 173,623 N.Y.S.2d 790 (1995) 29 Seaboard Sur. Co. v Gillette Co., 64 N.Y.2d 304, 486 N.Y.S.2d 873 (1984) 36 Selective Insurance Company ofAmerica v. County of Rensselaer, -- N.Y.3d --, 2016 NY Slip Op 01001 (Feb. 11,2016) 30 S.G.B. Steel Scaffolding & Shoring Co., Inc. v. United States, 82 Cust. Ct. 197 (Cust. Ct. 1979) 20 South Carolina Supply and Equipment Company v. James Stewart and Company, Inc., 238 S.C. 106, 119 S.E.2d 517 (1961) 39 Thompson v. National Steel and Shipbuilding Company, 391 Fed. Appx. 608,2010 U.S. App. LEXIS 16616 (9th Cir. 2010) 39 United States Fidelity & Guarantee Co. v. Annunziata, 67 N.Y.2d 229,501 N.Y.S.2d 790 (1986) 14 Wade v. Atlantic Cooling Tower Services, 56 A.D.3d 547, 867 N.Y.S.2d 489 (2d Dept. 2008) 25 Westview Assoc. v. Guaranty Nat 'I Ins. Co., 95 N.Y.2d 334,717 N.Y.S.2d 75 (2000) 14 White v. Continental Casualty Company, 9 N.Y.3d 264, 848 N.Y.S.2d 603 (2007) 1,46 Wright v. Evanston Insurance Company, 14 A.D.3d 505,788 N.Y.S.2d 416 (2d Dept. 2005) .43 STATUTES, TREATISES, DICTIONARIES CPLR § 5513 1 CPLR § 5601(a) 1 N.Y. Compo Codes R. & Regs. Tit. 12, § 23-1.4 20 IV Code of Federal Regulations, 29 C.F.R. § 1926.700 20 Code of Federal Regulations, 29 C.F.R. § 1926.1401. 17 Black's Law Dictionary, 5th Edition (1979) 24 West's Encyclopedia of American Law, 2nd Ed., Vol. 13, Dictionary and Indexes (2004) 25 www.dictionaryofconstruction.com 20 v STATEMENT OF JURISDICTION This Court has jurisdiction of this appeal pursuant to CPLR § 5601(a). The order of the Appellate Division, First Department (Mazzarrelli, J.P., Sweeney, Andrias, Saxe and Richter, 11.) finally determined the action by granting summary judgment to Defendant Insurers on the law and declaring that Defendant Insurers had no obligation to provide coverage under the insurance policy at issue (R. 833- 871). Two justices (Mazzarelli and Richter, 11) dissented on the questions of law at issue on this appeal, i.e., the interpretation of the policy. See White v. Continental Casualty Company, 9 N.Y.3d 264, 267, 848 N.Y.S.2d 603 (2007) (the interpretation of an insurance policy presents a question oflaw). Plaintiff-Appellant Extell West 57th Street LLC ("Extell") timely appealed to this Court from the order of the Appellate Division. Extell was served with notice of entry of the Appellate Division's order on December 28, 2015. Pursuant to CPLR § 5513, Extell timely served and filed its notice of appeal on January 7, 2016 (R. 829-830). OVERVIEW OF APPEAL On October 29,2012, Super-Storm Sandy made landfall in New York City. At that time Extell was constructing a building at 157 West 57th Street, New York, New York ("Building" or "Project"). A tower crane that had been temporarily erected for purposes of construction ("Tower Crane") was severely damaged by the 1 storm. A portion of the Tower Crane hung precariously off the side of the Building; parts of the Crane fell to the street and the broken boom was thrown about by the high winds causing further damage to the Crane and the Building. (See photographs, R. 482-485). Extell suffered millions of dollars in damages as a result of the partial destruction of the Tower Crane, as well as the resulting delays to the Project. To cover exactly this type of loss, Extell had purchased a Builder's Risk Insurance Policy from the Defendant Insurers for the construction phase of the Project. Since the Tower Crane was Covered Property within the Temporary Works coverage provision of the Builder's Risk Policy, Extell immediately made a claim for its losses and damages. Defendant Insurers, by letter dated March 7, 2013, disclaimed coverage contending that the Tower Crane was not Covered Property under the Policy. Extell and Plaintiff-Appellant Lend Lease (US) Construction LMB Inc. ("Lend Lease"), the Construction Manager for the Project, subsequently filed an action in the Supreme Court, New York County seeking a declaration of liability, and contractual damages for breach of the Policy. On motions for summary judgment on the issue of liability, Supreme Court determined that there were issues of fact precluding summary judgment. On appeal and over the dissent of two justices, the First Department held that the 2 Tower Crane was not Covered Property under the Policy and granted summary judgment to Defendant Insurers. The Policy states that Covered Property includes: 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 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). Whether the Tower Crane is Covered Property under that provision requires a determination of three (3) issues: (1) Was the Tower Crane a "temporary structure"? (2) Was the Tower Crane "incidental to the project"? (3) Was the "value" of the Tower Crane included in the "Total Project Value of the Insured Project declared by the Named Insured [ExtellJ"? The answer to all three (3) questions is "yes", and thus the Tower Crane is Covered Property under the Policy (see Points II, III, and IV, below). The Policy excludes from coverage certain defined Property: 3. PROPERTY EXCLUDED *** 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. 3 As we explain below, the Tower Crane does not constitute "tools, machinery, plant and equipment" within the meaning of that provision. To the extent the Policy's coverage provision and the exclusion provision conflict or are ambiguous, any such conflict or ambiguity must be resolved, as a matter of law, in favor of Extell as the policy holder because (a) the Temporary Works provision is a specific provision which takes precedence over the general exclusion provision; (b) application of the exclusion provision to the Tower Crane, scaffolding and the other items in the Temporary Works provision would render the Temporary Works provision without force and effect; and (c) any ambiguities or conflicts created by the coverage and exclusion provisions in the Policy must be construed against Defendant Insurers and in favor of coverage (see Point V, below). PROCEDURAL HISTORY On September 16, 2013, Extell and Lend Lease commenced this action in Supreme Court, New York County (R. 50, 490-515). The amended complaint asserted causes of action for declaratory judgment as to coverage under the Policy and breach of contract for damages on behalf of both Extell and Lend Lease (R. 64-87). The Defendant Insurers answered and denied liability (R. 88-109). Thereafter, Extell and Lend Lease each moved for summary judgment, solely on the issue of liability under the Policy (R. 35-37, 714-716). Defendant Insurers cross-moved for summary judgment (R. 532-534, 728-729). 4 By orders dated January 15, 2015, and entered on January 20, 2015, Supreme Court denied the motions and cross-motions, finding that disputed issues of fact precluded summary judgment (R. 20-34). All parties appealed to the Appellate Division, First Department. By order dated and entered on December 22, 2015, the Appellate Division granted summary judgment to Defendant Insurers, on the law, holding that Defendant Insurers had no liability for any damages to Extell and Lend Lease under the Builder's Risk Policy. (R. 833-871). On January 7,2016, Extell and Lend Lease appealed as of right to this Court, based on the two-justice dissent on a question of law. STATEMENT OF THE CASE A. The Project and the Tower Crane In 2012, Extell was constructing a building on West 57th Street in Manhattan (R. 52). The Project, known as the One57 Building, involves the construction of a seventy-four (74) story mixed-use hotel and residential Building (R.52). Extell, as owner, contracted with Lend Lease to act as the Construction Manager for the Project (R. 58). As agent for Extell, Lend Lease contracted with Pinnacle Industries II, LLC ("Pinnacle") for the "Superstructure Concrete" work (R. 58; 110-298), which included the design, erection and disassembly of two (2) 5 tower cranes ("Crane 1" and "Crane 2") for use in the construction of the Project (R. 58-59; 184-185). Crane 2 is the Tower Crane at issue here (R. 58-59). In particular, Exhibit B to the Pinnacle Contract, entitled "Scope of Work", provides (R. 184-185; emphasis added): 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 ... second crane (Crane 2) will be located on the south west side of the project founded on the 20th floor 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 2 is to be supported by a reinforced slab on the 20th floor, included in this Contract, and associated supporting elements as required. Each design must be approved by the structural engineer ... 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. 6 The Pinnacle Contract further provides (R. 189-190, emphasis added): Once all other trade work is completed that requires the use of Crane 2, and upon notification by the Construction Manager, the Contractor shall jump down, dismantle, and remove the crane from the site. The Tower Crane was a 750-foot custom-designed and erected temporary structure for this Project, which was attached to the Building during construction via support beams embedded into the superstructure concrete (R. 57-63; 184-185; DaB-approved design and erection plans by Peter Stroh, P.E., R. 516-531; photographs of the Tower Crane, R. 482-485). The Tower Crane included a "Base" at the 20th floor of the Building, bolted to a large pad or foundation ("Pedestal") of reinforced concrete that supported both the massive size and weight of the entire structure as well as the loads that the Tower Crane would be picking up during construction (R. 60). As required by the Pinnacle Contract, the Base for the crane was strengthened and stabilized by adding beams permanently cast into the concrete floor slab on the 20th floor and plates cast into the shear walls and connected by threaded rods (R. 60). To provide increased stability to the Tower Crane, the Mast, comprised of over 50 individual sections, was erected and fastened by ties to the concrete floor slabs at regular intervals (every seven floors) (R. 60). The ties required additional steel reinforcement of the floor slabs where the ties were affixed (R. 60). 7 The upper part of the Tower Crane included the "turntable" or "rubella" which gave the Tower Crane a capability to rotate; the working arm or "Boom" used to lift and move various materials during the construction of the Building; counterweights; the winch pack; and a cab housing the controls to operate the Tower Crane (R.60). The Tower Crane was completely erected and operable on the day Super- Storm Sandy hit New York City (R. 61). B. The Policy Prior to construction, Extell purchased a Builder's Risk Policy ("Policy") in the amount of $700,000,000, the Project's total estimated construction cost (R. 53). The Policy consists of five (5) separate policies, each covering a certain percentage (quota share) of the $700,000,000 collective Policy: Defendant Zurich American Insurance Company, 50% ($350,000,000) (R. 327-359); Defendant Travelers Excess and Surplus Lines Company, 17.14% ($120,000,000) (R. 360- 395); Defendant Axis Surplus Insurance Company, 14.29% ($100,000,000) (R. 396-416); Defendant XL Insurance America, Inc., 14.28570/0 ($100,000,000) (R. 417-458); and Defendant Ace American Insurance Company, 4.2857% ($30,000,000) (R. 459-473) (collectively "Defendant Insurers"). The substantive provisions of each Defendant Insurer's Policy are identical. For purposes of this 8 brief, we cite the Lead Policy issued by Zurich American Insurance Company (R. 327-359). In the Declarations section, Extell is the "Named Insured", the "Policy Term" is August 1, 2010 to July 31, 2014, and the "Insured Project" is the Building (R. 330). The cost for the Policy was $2,030,000 per year (R. 333). The Declarations section further provides that "[t]he maximum amount the [Insurers] will pay for loss or damage in anyone OCCURRENCE... shall not exceed... $700,000,000 by the peril of NAMED STORM" (R. 331-332). The Policy defines a "Named Storm" as "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) ... " (R. 344-345). There is no dispute that Super-Storm Sandy was a Named Storm. An "OCCURRENCE", as it relates to a Named Storm, is defined to mean "all losses or damages arising during a continuous period of seventy-two (72) hours during the term of this Policy ... Such NAMED STORM* shall be deemed to be a single OCCURRENCE* within the meaning of this policy" (R. 344-345) Section I of the Policy, captioned "Coverage and Exclusions", provides that 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* 9 and occurring during the Policy Term" (R. 334). "Covered Property" is defined to include "the Insured interest. .. unless otherwise excluded ... in Temporary Works." Section III of the Policy, Definitions and Examples, defines Temporary Works as "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, underline added). The Policy stated that the "estimated TOTAL PROJECT VALUE* declared to the [Insurers] by [Extell] at the policy effective date" was "$700,000,000" (R. 332) Section I of the Policy also contains an exclusion provision, stating that the Policy does not cover loss or damage to "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). In sum, the Policy covers damages to Temporary Works (e.g., scaffolding, formwork, and temporary structures such as the Tower Crane) and excludes coverage for contractor's tools and equipment (e.g., hand-tools, temporary heaters, 10 etc.). Under settled law, the coverage provision must be construed liberally in favor of the insured, while the exclusion must be construed narrowly against the insurers. C. Super-Storm Sandy On October 29, 2012, Super-Storm Sandy hit New York City. The high winds from the storm caused the Tower Crane to partially collapse. The Boom of the Crane flipped over and thrashed about in the high winds causing further damage to the Crane and Building. Some parts of the Tower Crane broke away and fell onto the street and damaged the glass facade of the Building. The Boom and other parts of the Tower Crane hung precariously from the Building during the storm (R. 62; R. 482-485, photographs). As a direct result of that storm, the Tower Crane was badly damaged and the Project was extensively delayed, resulting in millions of dollars of damage to Extell (R. 62, 80-81). When the storm ended, Lend Lease secured the Tower Crane and lowered the damaged Boom to the ground. Subsequently, a new Boom and other parts were obtained by Lend Lease for the Tower Crane, which was then repaired and rebuilt to continue construction of the Project. Nevertheless, the Tower Crane was not back in operation until May 2013, more than six (6) months after the storm (R. 62- 63). Thereafter, Extell provided timely written notice of its claim under the Policy for costs and losses caused by Super-Storm Sandy (R. 55-56). By letter 11 dated March 7, 2013, Defendant Insurers disclaimed coverage under the Policy for Extell 's damages (R. 486-489). QUESTIONS PRESENTED The questions of law presented for review on this appeal are: (1) Is the Tower Crane a "temporary structure" within the Temporary Works coverage provision of the Policy? Supreme Court did not answer this question. The Appellate Division did not directly determine this issue, but acknowledged that the Tower Crane is a temporary structure when it held that "the Tower Crane is not a structure that is incidental to the Project" (R. 842). The dissenting justices determined that the Tower Crane is a temporary structure under the Policy (R. 862, 865). (2) Is the Tower crane "incidental to the project"? Supreme Court did not answer this question. The Appellate Division held that since the Tower Crane was "integral and indispensable" to the Project, rather than "minor or subordinate", the Tower Crane cannot be considered "incidental to the project" (R. 837, 842). The dissenting justices disagreed finding that the Tower Crane was incidental to the Project since it was "appurtenant to", and "subordinate to something of greater importance", the construction of the Project (R. 863-865). (3) Was the "value" of the Tower Crane included in the "Total Project Value of the project"? 12 The lower courts did not answer this question. The dissenting justices determined that there was a question of fact on the issue. (4) Is the Tower Crane subject to the general exclusion provision of the Policy as "Contractor's tools, machinery, plant and equipment"? Supreme Court did not answer this question. The Appellate Division determined that the Tower Crane was Contractor's equipment and thus subject to the exclusion. The dissenting justices disagreed, finding that the exclusion provision was inapplicable. ARGUMENT I. THE ORDER BELOW SHOULD BE REVERSED AND SUMMARY JUDGMENT GRANTED TO EXTELL ON THE ISSUE OF COVERAGE A. The Governing Standard Requires All Ambiguities To Be Resolved In Favor Of Coverage "A court interpreting an insurance policy must give its words their plain and ordinary meaning," Executive Risk Indem., Inc. v. Starwood Hotels & Resorts Worldwide, Inc., 98 A.D.3d 878,880,951 N.Y.S.2d 13 (1st Dept. 2012) citing Ace Wire & Cable Co. v. Aetna Cas. & Sur. Co., 60 N.Y.2d 390, 398, 469 N.Y.S.2d 655 (1983), in light of "common speech and the reasonable expectations of a businessperson." Belt Painting Corp. v. TIG Ins. Co., 100 N.Y.2d 377, 383, 763 N.Y.S.2d 790 (2003). Under well-settled case law, "ambiguities in an insurance policy are to be construed against the insurer." Dean v. Tower Ins. Co. of New 13 York, 19 N.Y.3d 704,708,955 N.Y.S.2d 817 (2012); accord Ragins v. Hasp. Ins. Co., Inc., 22 N.Y.3d 1019, 1022, 981 N.Y.S.2d 640 (2013). Thus, "[i]f the language of the policy is doubtful or uncertain in its meaning, any ambiguity must be resolved in favor of the insured and against the insurer." Westview Assoc. v. Guaranty Nat 'I Ins. Co., 95 N.Y.2d 334,340,717 N.Y.S.2d 75 (2000). This rule of construction applies broadly to all issues of interpretation of an insurance policy's language. See United States Fidelity & Guarantee Co. v. Annunziata, 67 N.Y.2d 229, 232, 501 N.Y.S.2d 790 (1986) ("The policy must, of course, be construed in favor of the insured, and ambiguities, if any, are to be resolved in the insured's favor and against the insurer."). As a result, "[i]n order for the insurer to prevail [in a coverage action], it must demonstrate not only that its interpretation is reasonable but that it is the only fair interpretation." City of New York v. Evanston Ins. Co., 39 A.D.3d 153, 156, 830 N.Y.S.2d 299 (2d Dept. 2007) citing Primavera v. Rose & Kiernan, 248 A.D.2d 842, 843, 670 N.Y.S.2d 223 (3d Dept. 1998)); see also Raner v. Security Mutual Ins. Co., 102 A.D.3d 485, 486, 958 N.Y.S.2d 342 (1st Dept. 2013) (to defeat coverage, an insurance company must that "establish that its interpretation is the only reasonable interpretation [of the policy]"). Defendant Insurers cannot meet that burden here. To the contrary, the only reasonable construction of the Policy results in coverage for Extell' sloss. 14 B. The Appellate Division Ignored The Ordinary Meaning Of The Policy Language The Appellate Division's narrow construction of the Policy, essentially nullifying coverage for Temporary Works, cannot be squared with the plain language of the Policy's insuring clause or the rules governing the proper interpretation of any insurance policy. The Policy provides coverage for damage to "Temporary Works" (R. 334), defined to include "[a]ll scaffolding (including scaffolding erection costs), formwork, falsework, shoring, fences, and temporary buildings or structures, including office and job site trailers, all incidental to the project, the value of which has been included in the estimated TOTAL PROJECT VALUE of the INSURED PROJECT declared by the Named Insured" (underline provided) (R. 334-35). Using the most restrictive dictionary definition of "incidental," the Appellate Division concluded that "the Tower Crane is not a structure that is incidental to the project." (R. 842). The Appellate Division erred at each step of its analysis, as we now show. II. THE TOWER CRANE IS A "TEMPORARY STRUCTURE" WITHIN THE MEANING OF THE TEMPORARY WORKS COVERAGE PROVISION Instead of directly determining whether the Tower Crane is a "temporary structure", an undefined term in the Policy, the Appellate Division sidestepped the issue by stating: "The Policy defines a temporary structure as something that is 15 incidental to the project" (R. 841) and then concluded that "the Tower Crane is not a structure that is incidental to the project" (R. 842), apparently acknowledging that the Tower Crane is a structure. The dissenting justices determined that the Tower Crane is a temporary structure within the Temporary Works provision (R. 862, 865). The law and the facts make that clear. 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 this Court, 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. Similarly, in Cun-En Lin v. Holy Family Monuments, 18 A.D.3d 800, 801, 796 N.Y.S.2d 684 (2d Dept. 2005), the Appellate Division, again quoting this Court, held: Contrary to the defendants' contention, the crane from which the injured plaintiffs fell was a "structure" within the meaning of Labor Law § 240(1), as such equipment is viewed as "any production or piece of work artificially built up or composed of parts joined together in some definite manner" (Caddy v Interborough R. T Co., 195 NY 415, 420, 88 NE 747, 20 NY Ann Cas 198 [1909]; see Joblon v Solow, supra at 464; Lewis-Moors v Contel of N.Y, 78 NY2d 942, 578 NE2d 434,573 NYS2d 636 [1991]; Munoz v DJZ Realty, supra). (Underline provided). 16 See also McCoy v. Abigail Kirsch at Tappan Hill, Inc., 99 A.D.3d 13, 15-16,951 N.Y.S.2d 32 (2d Dept. 2012) ("a crane used for construction" is a "structure"); 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 Uib) in an elevated position." (Underline added; italics in original). In Landry v. G.c. Constructors, 514 Fed. Appx. 432, 434 (5th Cir. 2013), cert. denied, 134 S. Ct. 212 (2013), a contractor leased a mobile crane and affixed it to a barge for purposes of rebuilding the Biloxi Bay Bridge in the aftermath of Hurricane Katrina. The Court held that the crane was "a temporary structure" used by the independent contractor to perform its work. Id. at 438. Glacier Construction Company v. Travelers Property Casualty Company of America, 2011 U.S. Dist. LEXIS 156452 (D. Colo. 2011) is closely similar on its facts to this case. There, a contractor sought coverage under a builder's risk policy for damage to wells and dewatering pumps installed at the project site. The issue was whether the wells and dewatering pumps were "temporary structures" covered under the builder's risk policy. The insurer disclaimed coverage. The Court stated that the policy definition of "Covered Property" included "temporary structures" used in project site preparation. Id. at 2-3. The Court held: Travelers denied coverage contending that there was no loss of or damage to covered property because there was no physical damage to any structure or temporary structure and land is expressly excluded. Glacier contends that structure is not defined in the policy and a literal 17 meaning includes the wells and pumps installed at the site. These installations did not become a part of the building. They were installed only for the purpose of dewatering the site as a necessary step in site preparation prior to pouring the foundation. *** A reasonable construction of the policy is that the four dewatering wells and submersible pumps installed in May, 2009, were temporary structures constituting covered property. The Tenth Circuit "agree[d] with the district court that the original wells/pumps were temporary structures constituting covered property". Glacier Construction Company v. Travelers Property Casualty Company ofAmerica, 569 Fed. Appx. 582 (10th Cir. 2014). 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 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 R. T Co., 195 N.Y. 415, 420 (1909). As a matter of fact and law, the Tower Crane is a "temporary structure" within the Temporary Works coverage provision of the Policy. 18 A. The Rule of Ejusdem Generis Supports a Finding That the Tower Crane is a Temporary Structure In construing a contract, this Court has often invoked the principle of ejusdem generis, providing that "a series of specific words describing things or concepts of a particular sort are used to explain the meaning of a general one in the same series". Matter ofRiefberg, 58 N.Y.2d 134, 141, 459 N.Y.S.2d 739 (1983). In reaching its decision, the Appellate Division erred in its application of that principle here. Coverage under the Temporary Works extends to "[a]ll scaffolding (including scaffolding erection costs), formwork, falsework, shoring, fences, and temporary buildings or structures, including office and job site trailers." The term "temporary structures" is connected to all of the items in that list by the word "and" -- a word of inclusion. Thus, all of the items in that list are the "specific words describing things or concepts of a particular sort", which can be "used to explain the meaning of a general one [here, temporary buildings or structures] in the same series". Of course, "temporary structures" is also an independent term which must mean something in and of itself, different from the other listed items. See Consolidated Edison Company ofNew York, Inc. v. Allstate Insurance Company, 98 N.Y.2d 208,221-222,746 N.Y.S.2d 622 (2002): "We construe the policy in a 19 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." Examining the items in the Policy's coverage provision, "scaffolding" is defined as "[a] temporary structure for the support of deck forms, cartways, and/or workers, such as an elevated platform for supporting workers, tools, and materials. Adjustable metal scaffolding is frequently adapted for shoring in concrete work." www.dictionaryofconstruction.com. "[F]ormwork" means "the total system of support for freshly placed or partially cured concrete, including the mold or sheeting (form) that is in contact with the concrete as well as all supporting members including shores, reshores, hardware, braces, and related hardware." Code of Federal Regulations, 29 C.F.R. § 1926.700. "Falsework" is defined as a "temporary structure erected to support work in the process of construction". S.G.B. Steel Scaffolding & Shoring Co., Inc. v. United States, 82 Cust. Ct. 197,208 (Cust. Ct. 1979). "Shoring" is defined as "a system of temporary supports, either wood or metal, used to support the weight of forms and uncured concrete". N.Y. Compo Codes R. & Regs. Tit. 12, § 23-1.4. The Tower Crane lifts and supports heavy loads of construction materials used in the construction of the Project (R. 60). While all of the items in the Policy's definition of Temporary Works have a different function, the common thread is that all of them are temporarily erected or 20 assembled at the Project site, used by contractors during construction, and then disassembled and removed during or after construction. The Tower Crane fits within that same paradigm. In applying the principle of ejusdem generis, the Appellate Division erred in focusing on the phrase "including office and job site trailers" (R. 843): "The general term 'temporary buildings and structures,' is described by the specific term 'including office and job site trailers. '" This is a misapplication of ejusdem generis. Contrary to the Appellate Division, "including", in this context, after the serial list of previous items, is a word of expansion and enlargement, not a word of limitation. Since office and job site trailers may be pre-constructed and wheeled onto the site, as opposed to being constructed and assembled at the site like the other items in the Temporary Works provision, the word "including" is to expand Temporary Works so that office and job site trailers are covered property under the Policy in addition to all the previously-listed items. The Appellate Division also erred in its effort to distinguish "formwork, shoring and fences" (inexplicably leaving out "scaffolding"), by stating that the Tower Crane has "active participation in the construction work" without discussing or explaining this conclusory distinction. (R. 843-844). But it can just as easily be said that "scaffolding, formwork, falsework, shoring, [and] fences" are all items 21 actively used by the construction workers to construct the building. The dissenting justices appropriately rejected the majority's false dichotomy, focused on an imagined distinction between "active" and "passive" elements, to eliminate the Tower Crane from the Policy's definition of "Temporary Structure" CR. 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." III. THE TOWER CRANE IS "INCIDENTAL TO THE PROJECT". The Appellate Division concluded that the Tower Crane was not "incidental to the project," which became the majority's main justification for their holding. That conclusion was wrong as a matter of law, because it ignored the ordinary meaning of the term "incidental" as well as the specific construction context defining the reasonable expectations of the parties, while at the same time invoking the most restrictive and least applicable dictionary definitions and ignoring far more pertinent dictionary definitions. A. The Construction Context Shows that the Tower Crane Was '''Incidental to the project" The Appellate Division erred, most basically, by ignoring the specific context that defined the reasonable expectations of the parties, and especially 22 Extell as the insured party, in construing the Policy. As this Court held in Harris v. Allstate Insurance Co., 309 N.Y. 72, 75-76 (1955): The question for decision is, of course, the meaning of the policy terms ... In approaching that inquiry, account must be taken of "the reasonable expectation and purpose of the ordinary business man" in making the contract. (Bird v. St. Paul Fire & Marine Ins. Co., 224 N. Y. 47, 51.) The words of the policy are to be read in context, the language construed fairly and reasonably, with an eye to the object and purpose sought to be accomplished by the writing. Wise is the caution that courts are "not to make a fortress out of the dictionary" (Cabell v. Markham, 148 F. 2d 737,739), for, to cull from an opinion of Mr. Justice HOLMES, itA word is not a crystal, transparent and unchanged, it is the skin of a living thought and may vary greatly in color and content" according to the circumstances in which it is used. (Tmvne v. Eisner, 245 U.S. 4] 8,425.) As a matter of public policy, 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". Connors v. Hartford Fire Insurance Company, 138 A.D.2d 877, 879, 526 N.Y.S.2d 254 (3d Dept. 1988); see also Miller v. Continental Insurance Company, 40 N.Y.2d 675, 678, 389 N.Y.S.2d 565 (1976) (Policies of insurance "are to be liberally construed in favor of the insured"). The objective and entire purpose of the Project was the construction of the Building, not the installation and later disassembly of the Tower Crane any more than it was the installation and later disassembly of the "scaffolding .,. formwork, falsework, shoring, fences and temporary buildings or structures" used during construction. Like each of those items used during construction, the Tower Crane 23 was "incidental to the project" in exactly the same way: a necessary step during construction to achieve completion of the Building. The Appellate Division labored mightily to brush aside that obvious reality. Yet that is the context which defines "the reasonable expectation and purpose of the ordinary business man" in Extell's position in purchasing this Policy. Extell's reasonable understanding is that "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 (a) related to, associated with, and appurtenant to the construction of the Building, just like scaffolding and all of the other items listed in the Temporary Works provision and (b) subordinate, necessary and connected to the construction of the Building. That understanding of the phrase "incidental to the project" is supported by far more pertinent dictionary definitions than those cited by the Appellate Division. Black's Law Dictionary, 5th Edition (1979), defines "incidental" as follows: 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 mam purpose. Black's Law Dictionary, 5th Edition, defines "appertain" as follows: Appertain. To belong to; to have a relation to; to be appurtenant to. 24 West's Encyclopedia of American Law, 2nd Ed., Vol. 13, Dictionary and Indexes (2004), defines "incidental" as: 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. Consistent with those definitions, the New York courts have given the term "incidental," when used with respect to a construction project, a meaning appropriate for that context. See, e.g., 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." Instead of taking into account the specific context in which this Policy was issued, and Extell's reasonable expectations, the Appellate Division relied on dictionary definitions less apposite to the construction context and then construed them in the narrowest way possible against Extell (R. 841-842): Although the term incidental is not defined, "it is common practice for the courts of this State to refer to the dictionary to determine the plain and ordinary meaning of words to a contract" [citations omitted]. Black's Law Dictionary defines the term "incidental" as "[s]ubordinate to something of greater importance; having a minor role" (lOth ed 2014]). The American Heritage Dictionary defines incidental as "[o]f a minor, casual, or subordinate nature" (5th ed 2011]). The Merriam- Webster Online Dictionary defines the term "incidental" as "being likely to ensue as a chance or minor consequence" (lith ed 2003). 25 Applying these definitions, the Appellate Division ruled that "the custom designed tower crane, rather than serving a minor or subordinate role ...was integral and indispensable, not incidental, to the construction of the 74-story high- rise, which could not have been built without it" CR. 842). Yet that Court's quoted definition of "incidental" could just as easily have been interpreted in favor of coverage, i. e., the Tower Crane is "subordinate to something of greater importance", the construction of the 74-story Building which was the objective and entire purpose of the Project. In short, the Tower Crane is "incidental to the project" in exactly the same way as "scaffolding ... formwork, falsework, shoring, fences and temporary buildings or structures". Once again, the dissenting justices pointed out the majority's error CR. 863- 864): Further, contrary to defendants' argument, the crane was "incidental" to the project, notwithstanding its critical role in erecting the structure. I accept plaintiffs' definition of the term "incidental," meaning appurtenant to something else that is primary, but still necessary to that primary thing. Here, the primary thing is the project itself Cessentially the "property under construction" that is specifically insured under the policy), and the crane is an ancillary yet substantial element of the construction, much as scaffolding, shoring and the other items enumerated in the "temporary works" definition are not intended to be part of the finished building, but are critical to its completion. 26 B. The Appellate Division's Reading Renders The Temporary Works Coverage Provision Illusory The Appellate Division's interpretation of "incidental" effectively negates any coverage for Temporary Works. That Court's reasoning would apply equally to the "scaffolding ... formwork, falsework, shoring, fences and temporary buildings or structures" expressly listed in the Policy's language, and by judicial fiat, would exclude coverage for all of them as "integral and indispensable, not incidental, to the construction of the 74-story high-rise, which could not have been built without it" (R. 842). In doing so, the Appellate Division completely lost sight of the governing rules applicable to the interpretation of any insurance policy, which must always "be liberally construed in favor of the insured." Miller v. Continental Insurance Company, 40 N.Y.2d at 678. Because the Appellate Division's reading of the phrase "incidental to the project" would eliminate coverage for all Temporary Works under the Policy, making the entire Temporary Works coverage provision illusory, it must be rejected on that ground alone. Muzak Corporation v. Hotel Taft Corporation, 1 N.Y.2d 42, 46, 150 N.Y.S.2d 171 (1956); Consolidated Edison Company ofNew York, Inc. v. Allstate Insurance Company, 98 N.Y.2d 208,221- 222, 746 N.Y.S.2d 622 (2002). 27 C. The Appellate Division Effectively Re-Wrote The Policy To Eliminate Coverage for Temporary Works In construing the Policy, the Appellate Division improperly interpreted the word "incidental" to impose an arbitrary test of coverage, i. e., whether the items in the Temporary Works provision are "major" or "minor", or "integral" or "not integral", to the construction of the Project. But there is nothing in the Policy concerning how to go about deciding whether "scaffolding... formwork, falsework, shoring, fences and temporary buildings or structures" are "major" or "minor", "integral" or "not integral", to the construction of the Project for coverage purposes. The only test suggested by the Appellate Division, whether "the 74-story high-rise ... could not have been built without it", would render all of them "integral," thus precluding coverage for any of them. The Appellate Division erred in improperly reading the phrase "incidental to the project" to insert its own terms, conditions and tests into the Policy, resulting in an arbitrary test flatly contradicting the obvious intent of the coverage provision that the Appellate Division was purporting to interpret. In doing so, the Appellate Division ignored another cardinal principle governing the interpretation of any insurance 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". 28 Salvano v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 85 N.Y.2d 173, 182,623 N.Y.S.2d 790 (1995). In contrast to the "major, minor", "integral, not integral" test applied below, Extell offered an interpretation of the phrase "incidental to the project" that accorded with the ordinary meaning of the Policy's words without requiring a result plainly at odds with the purpose and intent of the Temporary Works coverage provision. "Incidental to the project" in this context means related to, appurtenant to, and subordinate to the construction of the Building. As explained above, Extell's reading of the Policy's language is supported by both the most pertinent dictionary definitions and the reasonable expectations of an insured in Extell's position given the construction context. D. The Appellate Division's Reading Showed, At Most, That The Temporary Works Provision Has More Than One Reasonable Interpretation. Even if the Appellate Division's interpretation of "all incidental to the project" were deemed reasonable, that would only show that there are two reasonable interpretations - one reading that effectively excludes coverage for Temporary Works, and another that provides for coverage for Temporary Works. On either reading, the Tower Crane is in exactly the same position as the "scaffolding ... formwork, falsework, shoring, fences and temporary buildings or structures" expressly listed in the Policy's language - there is no reasonable 29 distinction that would render the scaffolding and other items "incidental to the project," and thus covered, while excluding the Tower Crane as not "incidental to the project" and thus not covered. As a matter of law, when an Insurance policy is susceptible to two reasonable but different interpretations, the policy must be interpreted in favor of coverage for the insured. 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, -- N.Y.3d --, 2016 NY Slip Op 01001 (Feb. 11,2016). That rule has been stated and applied countless time by the New York courts. See, e.g. 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) ("It is equally well settled that if an insurance policy or clause therein is reasonably susceptible to two different interpretations, the one most favorable to the insured should be adopted"). In the present case, the Tower Crane is "incidental to the Project" because the Tower Crane is related to, associated with, and appurtenant to the construction of the Project. The Tower Crane also fits the definition of "incidental" used by the Appellate Division, since the Tower Crane is "subordinate to something of greater 30 importance", i. e., the construction of the Building which was the entire objective of the Project. IV. THE VALUE OF THE TOWER CRANE WAS INCLUDED IN THE TOTAL PROJECT VALUE OF THE INSURED PROJECT The Temporary Works prOVISIOn of the Policy applies 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). The lower courts did not determine whether the value of the Tower Crane was included in the Total Project Value. As we now show, there is no factual dispute that it was, and thus the order below should be reversed, and summary judgment granted to Extell on the issue of liability. The Policy defines Total Project Value as (R. 345): 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. Paragraph 9 of the Declarations of the Policy (R. 332) states: The estimated TOTAL PROJECT VALUE* declared to the Company by the first Named Insured at the policy effective date: 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 31 *** 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. The estimated Total Project Value declared by Extell to Defendant Insurers was used to determine the amount of the Policy ($700,000,000) and the premium for the Policy, which was $2,030,000 per year (R. 333). The Defendant Insurers required Extell to provide the required information about the Project's total construction costs prior to the issuance of the Policy. David Rothstein, Extell' s Executive Vice President of Construction, explained (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 Policy's definition of Total Project Value includes (a) "all labor costs that will be expended in the Insured Project" (R. 332), (b) "site general conditions, construction management fees, and contractor's profit and overhead" (R. 332), (c) all Temporary Works (R. 332) which are items used to construct the Building and includes "scaffolding erection costs" (R. 345). The Policy Definition of the Insured Project states (R. 344): 32 4. INSURED PROJECT Work which the Insured is contractually obligated to perform in accordance with the contract documents being more fully described and located as set forth in the Declarations. (Emphasis provided). All of these Policy-listed items are inherently Project construction costs. Thus, as required by Defendant Insurers and as understood by Extell, Extell declared the estimated Total Project Value to Defendant Insurers by submitting an estimate of the total construction costs for the Project, which consisted of a list of the estimated hard costs and soft costs for the Project (R. 53-55, 478-481). The costs of construction are listed in a table provided to the Defendant Insurers, at the bottom of which is stated: "Total Insured Value/Limit BR policy $638,801,866". (R. 481, top of page) Defendant Insurers accepted this summary list of construction costs as the Total Project Value. The Policy terms do not require, and Defendant Insurers never claimed that they requested, specific "values" for individual items of Covered Property, including the items in the Temporary Works provision. With regard to the Tower Crane, the record shows (R. 54): As part of the submission of the estimated total construction costs for the Project to the insurers (the Total Project Value), Extell provided a list of the estimated "Hard Costs" of construction. The list of estimated "Hard Costs" (R. 54-55, 479) included a specific line item for "Superstructure Concrete" in the amount of $89,000,000 (R. 479, line 10), 33 which was the cost estimate for the Pinnacle Contract. The term "Superstructure Concrete" was the heading used in the Pinnacle Contract under which the costs associated with the Tower Crane were set forth (R. 110). Defendant Insurers' answer to the amended complaint corroborates that the $89 million cost estimate for the Pinnacle Contract was included in the Total Project Value (R. 94): 33. Defendants ... admit upon information and belief that the documentation provided to the Defendants during the application and underwriting process with respect to the policies included $89 million for the work to be performed by Pinnacle. Defendants deny that the $89 million in value reported for the Pinnacle work, or any other values reported to the Defendants that were part of the Total Project Value, included the value of the crane that was damaged during Sandy. (Underline provided) While Defendant Insurers admitted that "the $89 million in value" reported for the Pinnacle work was part of the Total Project Value, they denied that this $89 million value included the value of the Tower Crane. Their conclusory denial is refuted by the documentary evidence. The $89 million Pinnacle Contract, which was indisputably part of the Total Project Value, expressly included the value (the cost) of the Tower Crane, i.e., the design, furnishing of parts, erection, and disassembly of the Tower Crane, all of which were to be provided by Pinnacle (R. 184-185,189-190). 34 In addition to the Tower Crane, the Pinnacle Contract included many other items listed in the Temporary Works provision. The term "Work" is defined in the Pinnacle Contract, in part, as follows (R. 112, Sec. 1.10): The term "Work" means ... the furnishing by Contractor of all equipment, supplies, plant, tools, scaffolding, transportation, superintendence, inspections and temporary construction of every nature. (Underline provided). The Pinnacle Contract also provided that Pinnacle was to furnish and install "all required forms, form work, form ties, shores, reshores, bracing, scaffolding, etc. for the complete installation of the all concrete work" [R. 183 (para. 2.a)] (underline provided). Thus, the $89 million value (cost) of the Pinnacle Contract, which was part of the Total Project Value, included the value (cost) of all Temporary Works which were part of the Pinnacle Contract, including the Tower Crane. Whether the Tower Crane parts, or any of the parts or materials needed for Temporary Works, were owned, rented, leased or borrowed is irrelevant to the Total Project Value issue, because the Policy does not make it an issue or preclude coverage based on whether any of the items in the Temporary Works provision are owned, rented, leased or borrowed. The Total Project Value was the estimated total cost of construction submitted by Extell to Defendant Insurers. It is an established fact that the $89 million Pinnacle Contract, which included the value (cost) for the design, 35 furnishing of parts, erection, disassembly and removal of the Tower Crane, was included in the Total Project Value, thus establishing that the value of the Tower Crane was included in the Total Project Value. V. THE POLICY EXCLUSION FOR TOOLS AND EQUIPMENT IS NOT APPLICABLE TO THE TOWER CRANE In Dean v. Tower Insurance Company of New York, 19 N.Y.3d 704, 708, 955 N.Y.S.2d 817 (2012), this Court held: Before an insurance company is permitted to avoid policy coverage, it must satisfy the burden which it bears of establishing that the exclusions or exemptions apply in the particular case, and that they are subject to no other reasonable interpretation. Accord,Miller v Continental Ins. Co., 40 N.Y.2d at 678; Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 N.Y.2d 390, 398 (1983) (ambiguities are "to be construed against the insurer, particularly when found in an exclusionary clause"). "[W]henever an insurer wishes to exclude certain coverage from its policy obligations, it must do so 'in clear and unmistakable' language ...Any such exclusions or exceptions from policy coverage ... are not to be extended by interpretation or implication, but are to be accorded a strict and narrow construction." Seaboard Sur. Co. v Gillette Co., 64 N.Y.2d 304, 311 (1984). The insurer bears "the heavy burden of showing that the exclusion applies in the particular case and is subject to no other reasonable interpretation." Continental Cas. Co. v Rapid-American Corp., 80 N.Y.2d 640,654 (1993). 36 A. Extell Proffered A Reasonable Interpretation of the Exclusion Provision Under Which It is Inapplicable The Appellate Division erroneously determined that the Tower Crane is not Covered Property because it is excluded from coverage by the following provision (R. 845-846, R. 334): 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; In ordinary speech, however, no one would call the Tower Crane a "tool" or "equipment." Those words suggest something more limited and appropriate for some specific construction task, like a hammer is a tool used to drive a nail or a mixer is equipment used to prepare concrete for pouring. In contrast, the Tower Crane is a 750-foot custom-designed and erected temporary structure for this particular Project. It included a support system embedded into the concrete superstructure, i.e., the Tower Crane was specifically designed and constructed for this Project alone, and although some parts of the deconstructed Tower Crane will be reusable, other parts actually become a permanent part of the Project (R. 57-63; 184-185; 516-531). In ordinary parlance, the "tools" and "equipment" used to build something do not themselves become part of the resulting building. 37 The Pinnacle Contract itself distinguishes between "temporary construction" (e.g., the Tower Crane) and Pinnacle's "tools", "plant", and "equipment". The term "Work" is defined in the Pinnacle Contract, in part, as follows (R. 112, Sec. 1.10): The term "Work" means ... the furnishing by Contractor of all equipment, supplies, plant, tools, scaffolding, transportation, superintendence, inspections and temporary construction of every nature. (Underline provided). The Temporary Works provision and the exclusion prOVIsIOn can be reconciled by distinguishing between items that are temporarily erected and then disassembled at the construction site -- e.g., "scaffolding," "formwork," "falsework," and "temporary structures" including the Tower Crane, all of which are "Temporary Works" -- and items that are brought on and off the construction site as a whole -- e.g., hand tools, ladders, jackhammers, temporary heaters, backhoes, trucks, etc., all of which are "Contractor's tools, machinery, plant and equipment" . B. The Temporary Works Provision Controls Because It Is the More Specific Provision Even if the Tower Crane is deemed "Contractor's tools, machinery, plant and equipment", it is also a "temporary structure" under the Temporary Works provision (see Point II). As such, the exclusion provision does not apply to the Tower Crane because the specific coverage provision, Temporary Works, controls over the general exclusion provision as a matter of law. 38 ---- ---- If the Tower Crane is also deemed to be "Contractor's tools, machinery, plant and equipment" within the exclusion provision, there will be a direct conflict with the Temporary Works coverage provision especially since all the items listed in the Temporary Works coverage section can be deemed Contractors' equipment. As explained above, for example, Temporary Works includes "scaffolding" as Covered Property but scaffolding would also be included in the exclusion provision as "Contractor's tools, machinery, plant and 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); see also South Carolina Supply and Equipment Company v. James Stewart and Company, Inc., 238 S.C. 106, 113, 119 S.E.2d 517 (1961) ("scaffold equipment. ..must be classified as a part of the tools, appliances and equipment used by the contractor, and constitutes an item in his so-called plant"); Thompson v. National Steel and Shipbuilding Company, 391 Fed. Appx. 608, 610 (9th Cir. 2010) (scaffolding is contractor's "equipment"). In the present case, scaffolding, just like the Tower Crane (a "temporary structure"), is included in the Temporary Works coverage section of the Policy, but if the Appellate Division's reading were adopted, would also be included in the exclusion provision as "Contractor's tools, machinery, plant and equipment". 39 The Temporary Works coverage provision is a "specific provision" and the exclusion provision is a "general provision", because all the items in the Temporary Works coverage provision could be deemed to be included in the general exclusion prOVISIOn as "Contractor's tools, machinery, plant and equipment". In contrast to the Temporary Works provision, the exclusion provision is much more expansive and would include many more items than those listed in the Temporary Works provision (e.g., hand tools, ladders, jackhammers, temporary heaters, trucks, backhoes, etc.). The dissenting justices noted this anomaly in the majority's reasoning (R. 867): Further, 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. Accordingly, the doctrine that, in interpreting a contract, a clause addressing specific matters should be given greater weight than one addressing general matters that possibly implicate the specific clause, applies. As a matter of law, if there is an inconsistency between a specific provision and a general provision of a contract, the specific provision controls. Muzak Corporation v. Hotel Taft Corporation, 1 N.Y.2d 42,46,150 N.Y.S.2d 171 (1956); Green Harbour 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). In DRK, LLC v. The Burlington Insurance Company, 74 A.D.3d 693, 695, 905 N.Y.S.2d 58 (1 st Dept. 2010), appeal denied, 16 N.Y.3d 702 (2011), the First 40 Department held that a specific provision in an insurance policy controls over a general provision. See also Rocon Manufacturing, Inc. v. Ferraro, 199 A.D.2d 999, 1000,605 N.Y.S.2d 591 (4th Dept. 1993), wherein the Appellate Division, on a motion for summary judgment, held that a specific coverage provISIOn In an insurance policy controlled over a general exclusion provision: There is no merit to Nationwide's contention that there is no coverage for the further reason that section 5 (b) (10) of the endorsement excludes coverage ... Section 5 (b) (10) is a general boilerplate exclusion, whereas section 2 (g) covers a specific risk. Any 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" (Muzak Corp. v Hotel Taft Corp., 1 NY2d 42, 46; see also, 69 NY Jur 2d, Insurance, § 711). Therefore, section 2 (g), as the more specific provision, governs with respect to whether the loss is covered. In the present case, since the Tower Crane is a "temporary structure" under the specific Temporary Works coverage provision of the Policy, it is not subject to the general exclusion provision. c. The Exclusion Provision And The Temporary Works Provision Must Be Read So That Both Have Meaning And Effect. The Appellate Division held that even if the Tower Crane is a Temporary Works, it is excluded from coverage by the "Contractor's tools, machinery, plant and equipment" exclusion provision (R. 845). This holding renders the entire Temporary Works coverage provision without force and effect because all the items listed in the Temporary Works provision, e.g., scaffolding, formwork, 41 shoring, and temporary structures can be deemed to be "Contractor's tools, machinery, plant and equipment" and subject to the exclusion provision for the same reasons that the Appellate Division applied that provision to the Tower Crane. As shown above, there simply is no meaningful distinction between the scaffolding and other items listed in the Temporary Works provision and the Tower Crane for this purpose, and the Appellate Division offered none. Once again, the dissenting justices pointed out the flaw in the majority's reasoning (R. 867): Nevertheless, I agree with plaintiffs that to enforce the exclusion [against the Tower Crane] would be to render coverage for temporary works illusory. The exclusion is so broad that a plausible argument could be made that any of the items listed in the definition of temporary works constitutes a "contractor's tool[ ], machinery, plant [or] equipment." Because the Appellate Division's reading would effectively negate the coverage provided by the Temporary Works provision, it should be rejected for the reasons explained by this Court in Muzak Corporation v. Hotel Taft Corporation, 1 N.Y.2d 42, 150 N.Y.S.2d 171 (1956) and Consolidated Edison Company of New York, Inc. v. Allstate Insurance Co., 98 N.Y.2d 208,746 N.Y.S.2d 622 (2002). In Muzak Corporation, 1 N.Y.2d at 46, this Court held: The rules of construction of contracts require us to adopt an interpretation which gives meaning to every provision of a contract or, in the negative, no provision of a contract should be left without force and effect. 42 Similarly, in Consolidated Edison Company ofNew York, 98 N.Y.2d at 221- 222, this Court held: We construe the policy in a way that "affords a fair meaning to all of the language employed by the parties in the contract and leaves no provision without force and effect" (Hooper Assoc. v AGS Computers, 74 NY2d 487, 493,548 N.E.2d 903,549 N.Y.S.2d 365 [1989]). Stated another way, courts are bound to reject any interpretation of an insurance policy which would render a coverage provision "illusory, 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). Since courts are required, as a matter of law, to give effect to all provisions of the Policy, and not to leave any of its provisions without force and effect, this Court should reject the Appellate Division's holding and find that all items in the Temporary Works provision as well as the Tower Crane are Covered Property under the Policy and are not subject to the general exclusion as "Contractor's tools." D. Any Ambiguities Or Conflicts In the Policy Should Be Construed Against the Insurers and In Favor of Extell as the Insured The Tower Crane is a temporary structure within the Temporary Works coverage provision of the Policy (see Point II, above). The Appellate Division did not dispute this fact and indirectly ruled that the Tower Crane was a temporary structure when it held: "the Tower Crane is not a structure that is incidental to the 43 project" (R. 842). The Appellate Division also determined that the Tower Crane is "Contractor's tools, machinery, plant and equipment" within the exclusion proVISIOn. Thus, under the Appellate Division's reading, the Policy's provisions are in conflict and thus ambiguous since the Tower Crane is included in both the Temporary Works coverage provision as a temporary structure and in the exclusion provision as Contractors' equipment. As a matter of law, "ambiguities in an insurance policy are to be construed against the insurer". Dean v. Tower Insurance Company ofNew York, 19 N.Y.3d 704,708,955 N.Y.S.2d 817 (2012). And, as this Court has held, "[w]here there is ambiguity as to the existence of coverage, doubt is to be resolved in favor of the insured and against the insurer. " Handelsman v. Sea Insurance Company, Ltd., 85 N.Y.2d 96, 101, 623 N.Y.S.2d 750 (1994); see Cragg v. Allstate Indemnity Corporation, 17 N.Y.3d 118, 122,926 N.Y.S.2d 867 (2011) ("To the extent there is any ambiguity in an exclusionary clause, we construe the provision in favor of the insured"). That rule imposes a heavy burden on an insurer seeking to disclaim coverage based on an exclusion provision: "The law governing the interpretation of exclusionary clauses in insurance policies is highly favorable to insureds ... We have enforced policy exclusions only where we found them to have a definite and 44 precise meaning, unattended by danger of misconception ... and concerning which there is no reasonable basis for a difference of opinion." Pioneer Tower Owners Association v. State Farm Fire & Casualty Company, 12 N.Y.3d 302, 307, 880 N.Y.S.2d 885 (2009), quoting Breed v. Insurance Co. of N. Am., 46 N.Y.2d 351, 355 (1978). Extell proffered a reasonable construction that harmonizes both the Temporary Works provision and the "Contractor's Tools" exclusion, under which both provisions were given meaning and effect. The Appellate Division erred in rejecting that reading, when it adopted a doubtful construction that eliminated coverage entirely for Temporary Works despite the plain wording of the Policy's coverage prOViSions. VI. WHETHER OR NOT THERE IS OTHER INSURANCE IS IRRELEVANT TO THE INTERPRETATION OF THE POLICY The Appellate Division made reference to the possible existence of other insurance policies covering the Tower Crane or policies/endorsements which could have been obtained (R. 838, 848). 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 Builder's Risk Policy. As this Court noted 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 45 exists under the policy in issue. Even if there were other insurance, "the law is well settled that where different insurers provide coverage for the same interest and against the same risk, concurrent coverage exists". Federal Insurance Company v. Empire Mutual Insurance Company, 181 A.D.2d 568, 569, 581 N.Y.S.2d 56 (lst Dept. 1992). There is no provision in the Policy requiring Extell to obtain other insurance for any item of Covered Property. In short, whether there are, or could have been, other insurance policies or endorsements applicable to the Tower Crane is not relevant to the question on appeal: Whether the Tower Crane is Covered Property under the Temporary Works provision of the Policy in issue. VII. THIS COURT SHOULD GRANT EXTELL'S MOTION FOR SUMMARY JUDGMENT ON THE ISSUE OF LIABILITY The interpretation of the provisions and terms of an insurance policy presents a question of law for the Court. White v. Continental Casualty Company, 9 N.Y.3d 264, 267, 848 N.Y.S.2d 603 (2007). "Courts bear the responsibility of determining the rights or obligations of parties under insurance contracts based on the specific language of the policies". Jahier v. Liberty Mutual Group, 64 A.D.3d 683, 883 N.Y.S.2d 283 (2d Dept. 2009). Even where a Court determines that there are ambiguities within an insurance policy on the issue of coverage, resolution of the ambiguities is an issue 46 of law for the Court. Japour v. Ed Ryan & Sons Agency, 215 A.D.2d 817, 818, 625 N.Y.S.2d 750 (3d Dept. 1995); Saks v. Nicosia Contracting Corporation, 215 A.D.2d 832, 833, 625 N.Y.S.2d 758 (3d Dept. 1995); see Randolph v. Nationwide Mutual Fire Insurance Company, 242 A.D.2d 889, 662 N.Y.S.2d 650 (4th Dept. 1997) (affirming judgment on the issue of coverage under an insurance policy by rejecting the insurer's reliance on an exclusion provision and construing the ambiguities in the policy against the insurer and in favor of coverage). This Court may grant partial summary judgment to Extell on this appeal. See Persky v. Bank of America National Association, 261 N.Y. 212, 218 (1933). In that case, involving the appeal of an order on a summary judgment motion, this Court stated: "It was the duty of the judges to ascertain and declare the whole law upon the undisputed facts spread before them; and it is our duty now to give such judgment as they ought to have given." In the present case, the Policy was a standard form of insurance contract, not negotiated by the parties, but simply presented to Extell by the Defendant Insurers. The case turns on the interpretation of the Policy's words, construed in light of the principles applicable to the construction of any insurance policy. In short, summary judgment is appropriate here. 47 CONCLUSION For the reasons set forth above, 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 March 21,2016 Respectfully submitted, GREENBERG, TRAGER & HERBST, LLP Attorneys for Extell By: _r.._~_L- _ Richard J. Lambert, Esq. 767 Third Avenue - 12th Floor New York, NY 10017 212-688-1900 rlambert@gthny.com 48