APL-2017-00001 New York County Clerk’s Index No. 653199/11 Court of Appeals STATE OF NEW YORK GILBANE BUILDING CO./TDX CONSTRUCTION CORP., A JOINT VENTURE; GILBANE BUILDING COMPANY; TDX CONSTRUCTION CORPORATION, Plaintiffs-Appellants, against ST. PAUL FIRE AND MARINE INSURANCE COMPANY; FIDELITY AND GUARANTY INSURANCE COMPANY; UNITED STATES FIDELITY AND GUARANTY COMPANY; SELECT INSURANCE COMPANY; ZURICH AMERICAN INSURANCE COMPANY; ROYAL SURPLUS LINES INSURANCE COMPANY; ARROWOOD SURPLUS LINES INSURANCE COMPANY; NEW HAMPSHIRE INSURANCE COMPANY; PACIFIC EMPLOYERS INSUR- ANCE COMPANY; ILLINOIS UNION INSURANCE COMPANY; GREAT AMERICAN INSURANCE COMPANY; WESTCHESTER FIRE INSURANCE COMPANY; GREENWICH INSURANCE COMPANY; UNITED NATIONAL CASUALTY INSURANCE COMPANY; LIBERTY MUTUAL INSURANCE COMPANY; WESTPORT INSURANCE CORPORATION; NATIONAL CASUALTY COMPANY; AMERICAN HOME ASSURANCE COMPANY; INSURANCE COMPANY OF THE STATE OF PA; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; HAYWARD BAKER INC.; SAMSON CONSTRUCTION INC.; PILE FOUNDATION CONSTRUCTION CO.; PERKINS EASTMAN ARCHITECTS P.C.; IRON & STEEL CO., INC.; CRUM & FORSTER SPECIALTY COMPANY; ROADWAY CONTRACTING, INC.; SOIL SOLUTIONS, INC.; CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.; and SPX CORPORATION, Defendants, and LIBERTY INSURANCE UNDERWRITERS, Defendant-Respondent. >> >> BRIEF FOR PLAINTIFFS-APPELLANTS SAXE DOERNBERGER & VITA, P.C. Attorneys for Plaintiffs-Appellants 35 Nutmeg Drive, Suite 140 Trumbull, Connecticut 06611 203-287-2100 Of Counsel: Richard W. Brown Date Completed: February 28, 2017 To Be Argued By: Richard W. Brown Time Requested: 30 Minutes DISCLOSURE STATEMENT PURSUANT TO§ SOO.HF) Pursuant to § 500.1(£) of the Rules of the Court of Appeals, Plaintiff- Appellants Gilbane Building Co./TDX Construction Corp., a Joint Venture, and its individual members, Gilbane Building Company and TDX Construction Corporation (hereinafter "Gilbane/TDX"), by and through its attorneys, Saxe Doemberger & Vita P.C., advises the Court as follows: The Gilbane Building Company is owned by parent corporation Gilbane, Inc., and is privately held. TDX Construction Corp. has no parent, subsidiaries or affiliate entities and is privately held. Gilbane Building Company and TDX Construction Corp. are the member entities of the Joint Venture and that this party has no other parents, subsidiaries or affiliates. TABLE OF CONTENTS Page TABLE OF AUTHORITIES ............................................................................... iii QUESTION PRESENTED FOR REVIEW ........................................................ 1 STATEMENT OF JURISDICTION ................................................................... 2 PRELIMINARY STATEMENT .......................................................................... 4 STATEMENT OF FACTS AND PROCEDURAL HISTORY ......................... 6 Procedural History ............................................................................................. 7 STANDARD OF REVIEW ................................................................................... 9 ARGUMENT ....................................................................................................... 11 I. THE DECISION CONFLICTS WITH THE PLAIN MEANING OF THE LIBERTY ENDORSEMENT, WELL-SETTLED RULES OF POLICY INTERPRETATION AND THE PARTIES'_REASONABLE EXPECTATIONS ........................................................................................ 11 A. The Decision Conflicts with the Plain Meaning of the Liberty Endorsement and Well-Settled Rules ofPolicy Interpretation ............. 12 B. Relevant Decisions Support Appellants' Position That the Liberty Endorsement Does Not Require a Direct Contract Between the Named Insured and Purported Additional Insured ............................... 16 C. The Decision Conflicts with the Parties' Reasonable Expectations ..... 25 II. THE LIBERTY ENDORSEMENT IS SUSCEPTIBLE TO MORE THAN ONE REASONABLE INTERPRETATION, AND THEREFORE AMBIGUOUS AND MUST BE CONSTRUED AGAINST LIBERTY AND IN FAVOR OF COVERAGE .................... 27 CONCLUSION .................................................................................................... 31 11 iii TABLE OF AUTHORITIES Cases AB Green Gansevoort, LLC v. Peter Scalamandre & Sons, Inc., 102 A.D.3d 425 (1st Dep’t. 2013) ......................................... 16, 17, 18, 22, 25, 30 Ace Wire & Cable Co., Inc. v. Aetna Cas. & Sur. Co., 60 N.Y.2d 390 (1983) ...........................................................................................26 American Home Assur. Co. v Zurich Ins. Co., 26 Misc. 3d 1223(A), 2010 NY Slip Op 50237(U) (Sup. Ct., Kings County 2010) .............................................. 17, 21, 22, 25, 27, 29 Best Buy Co., Inc. v. Sage Elec. Contracting, Inc., No. 600781/2006, 2009 N.Y. Misc. LEXIS 4125 (N.Y. Sup. Ct. Jan. 23, 2009) ....................................... 23, 24, 25, 30 Brad H. v. City of New York, 17 N.Y.3d 180 (2011) .............................................28 Breed v. Insurance Co. of N. Am., 46 N.Y.2d 351, 413 N.Y.S.2d 352 (1978) .......28 Cragg v. All State Indemnity, 17 N.Y.3d 118, 926 N.Y.S.2d 867 ..........................26 Federal Ins. Co. v International Bus. Machs. Corp., 18 N.Y.S.3d 642, 942 N.Y.S.2d 432 (2012) .........................................................10 Gilbane Bldg. Co./TDX Constr. Corp. v. St. Paul Fire & Mar. Ins. Co., 2016 NY Slip Op 06052, 2016 N.Y. App. Div. LEXIS 5930 (1st Dep’t 2016) ................................................................................. 8 Hartford Acc. & Indem. Co. v Wesolowski, 33 N.Y.S.2d 169, 350 N.Y.S.2d 895 ......................................................... 9, 10, 30 Liberty Mut. Fire Ins. Co. v. Zurich Am. Ins. Co., 2016 U.S. Dist. LEXIS 13604; 2016 WL 452157 (No. 42 Civ. 1:14 07568) (S.D.N.Y. Feb. 4, 2016) ............... 19, 20, 21, 29, 27, 29 Linarello v. City Univ. of N.Y., 6 A.D.3d 192 (1st Dep’t 2004) ........................................ 16, 18, 21, 22, 24, 25, 30 iv Murnane Bldg. Contractors, Inc. v. Zurich American Ins. Co., 09-16699, 33 Misc.3d 1215(A) (N.Y. Sup. Ct. Oct. 5, 2011), rev’d on other grounds, 107 A.D.3d 674 (2nd Dep’t 2013) .................... 24, 25, 30 Plaza Construction Corp. v. Zurich Am. Ins. Co., 2011 N.Y. Misc. LEXIS 1234, at *8-9 (N.Y. Sup. Ct. 2011) .............................................................. 20, 21, 22, 25, 27, 29 Selective Ins. Co. of Am. v County of Rensselaer, 26 N.Y.S.3d 649, 27 N.Y.S.3d 92, 2016 N.Y. LEXIS 133, 2016 NY Slip Op 01001 (2016) .....................................10 Sperling v. Great American Indem. Co., 7 N.Y.2d 442, 199 N.Y.S.2d 465 (1960) ................................................. 10, 13, 18 State of New York v. Home Indem, Co., 66 N.Y.2d 669, 495 N.Y.S.2d 969 (1985) ..................................................... 28, 31 White v Continental Cas. Co., 9 N.Y.S.3d 264, 848 N.Y.S.2d 603 (2007) .......................................................9, 13 Zoological Soc’y of Buffalo, Inc. v. Carvedrock, LLC, Case No. 10-CV-35-A, 2014 U.S. Dist. LEXIS 103800 (W.D.N.Y July 29,2014) .................................... 21, 23, 25, 27, 29 Other Authorities Fowler’s Modern English Usage 465 (Ernest Gowers, ed., 2d ed. 1965). ....... 14, 15 Rules N.Y. C.P.L.R. § 5501(b) ............................................................................................ 9 QUESTION PRESENTED FOR REVIEW 1. Whether an insurance policy endorsement that includes as an insured "any person or organization with whom you have agreed to add as an additional insured by written contract," requires a direct written contract between the Named Insured and party seeking coverage as an additional insured? ANSWER: No. The trial court correctly held that a plain reading of the endorsement language does not require a direct contract between the Named Insured and purported additional insured. The Appellate Division erred in reversing the trial court because its interpretation of the endorsement is inconsistent with the plain meaning and intent of the language, conflicts with prior decisions of this Court, and is contrary to the interpretation provided by courts nationwide construing the same, or similar, language. 1 STATEMENT OF JURISDICTION By Order dated December 22, 2016 the Appellate Division, First Department granted Appellants' motion for leave to appeal the Order and Decision of the Appellate Division, First Department dated September 15, 2016 (the "Decision") to the Court of Appeals pursuant to CPLR 5602 (a)(l). The Court of Appeals has jurisdiction with respect to this appeal pursuant to CPLR 5602(a)(l)(i) as the Decision was a full and final Order of the Appellate Division. Gilbane Building Co. and TDX Construction Corp., individually and as members of a Joint Venture ("Gilbane/TDX") hereby appeal the Decision, which reversed the May 30, 2014 Order of Hon. Anil Singh, J., and declared that Appellants were not entitled to coverage as additional insureds on a general liability insurance policy issued by Liberty Insurance Underwriters ("Liberty") to its named insured, Samson Construction Co. ("Samson"), on the basis that Gilbane/TDX did not enter into a direct written contract with Samson, despite the policy requiring only that the named insured agree in writing to add a party as an additional insured in order to confer such status. This case presents a question of insurance policy interpretation of a standard form additional insured endorsement found in many commercial general liability insurance policies, particularly within the construction industry. Additional insured coverage is a widely utilized means of managing and transferring risk in 2 the construction industry. The obligation to provide additional insured coverage is commonly found in construction contracts and subcontracts, which typically require a downstream subcontractor to procure general liability insurance naming certain upstream parties, such as an Owner or Construction Manager, as additional insureds on such insurance. It is the scope of conditions required to qualify as an additional insured that is the issue before the Court. 3 PRELIMINARY STATEMENT By its express terms, the additional insured endorsement at issue (the "Liberty Endorsement") requires only that the named insured agreed in writing to add a party as an additional insured in order to confer such status. (R. 274) It is undisputed that these conditions were satisfied by the terms of the contract Samson, the named insured, entered into with the Dormitory Authority of the State ofNew York ("DASNY") (the "DASNY-Samson Contract") under which Samson agreed to procure commercial general liability insurance and name Gilbane/TDX as additional insureds on such insurance. (R. 639, 878, 912-913). Despite the lack of an express requirement of direct contractual privity between Gilbane/TDX and the named insured, the named insured's clear intent to add Gilbane/TDX as an additional insured under the DASNY/Samson Contract, and the Appellate Division's own prior decision wherein it recognized that nearly identical endorsements did not require such a direct contractual relationship, the Appellate Division held that the language of the Liberty Endorsement clearly and unambiguously requires a party to be in a direct contract with the named insured to qualify as an additional insured, The underlying facts and policy language at issue present an opportunity for this Court to address a growing conflict among the courts of the State ofNew York and other jurisdictions, and provide necessary guidance regarding the scope and 4 limitations of additional insured coverage. The Appellate Division's interpretation of the Liberty Endorsement is contrary to its plain meaning and well-settled rules of policy interpretation, as further demonstrated by other cases construing the same or similar policy language and the reasonable expectations of the parties. For all of these reasons, Plaintiff-Appellants submit that the Decision of the Appellate Division should be reversed, and the Underlying Order declaring Gilbane/TDX additional insureds on the Liberty Policy reinstated. 5 STATEMENT OF FACTS AND PROCEDURAL HISTORY This appeal involves a dispute over liability insurance coverage for a third- party action brought against Gilbane/ TDX, claiming property damage during the construction of a forensic biology laboratory located adjacent to Bellevue Hospital's Building D in August 2003 (the "Project"). (R. 922, 934-938). Liberty issued the general liability insurance policy at issue to Samson for the period ofNovember 12, 2002 through November 12, 2003 (the "Liberty Policy"). (R. 715-820, 217-278). DASNY, the Project Owner, contracted with Gilbane/TDX to act as construction manager on the Project. (the "DASNY-Gilbane Contract") (R. 667- 714). The DASNY-Gilbane Contract stated that each Prime Contractor on the Project was required to name Gilbane/TDX, as Construction Manager on the Project, as additional insureds on all liability policies furnished by the Prime Contractors. (R. 673). Samson was retained under the DASNY-Samson Contract to serve as Prime Contractor for all foundation and excavation work on the Project, pursuant to which Samson agreed to procure commercial general liability insurance with an endorsement naming the following as additional insureds: (R. 639). Dormitory Authority of the State of New York, The State of New York, the Construction Manager (if applicable) and other entities specified on the sample Certificate of Insurance provided by the Owner. Gilbane/TDX was the Construction Manager on the Project. The 6 sample Certificate of Insurance further specified: The following are Additional Insureds under General Liability as respects this Project: City of New York City of New York Health & Hospital Corporation Forensic Biology Laboratory Dormitory Authority-State of New York Gilbane/ TDX Construction Joint Venture (emphasis added) (R. 911-913) Procedural History DASNY commenced an action against Samson and Perkins Eastman, P.C. ("Perkins") in 2006 (the "Underlying Action"), alleging that Samson damaged the excavation support system on or about August 26, 2003, by negligently removing a section of steel plating, which caused water and soil to rush into the excavation site causing the foundation ofBuilding D to abruptly settle several inches. (R. 117-119, 936-938). Nearly five years after the Underlying Action was originally filed by DASNY, Perkins commenced a third-party action against Gilbane/TDX in December, 2010, (the "Third-Party Action"). (R. 112-138). Gilbane/TDX provided notice to Liberty by letter dated April 25, 2011, seeking defense and indemnity under the Liberty Policy for the Third-Party Action. (R. 925). Liberty denied Gilbane/TDX's request for coverage by letter dated July 20, 2011, and Gilbane/TDX commenced the present action in September 2012. (R. 926-929, 32-111). 7 On October 11, 2013, Liberty moved for summary judgment asserting that 1) Gilbane/TDX did not qualify as an additional insured on the Liberty Policy; and 2) Gilbane/TDX failed to satisfy the notice of occurrence and notice of suit conditions of the Liberty Policy. (R. 25-27). On March 30, 2014, the Supreme Court issued a decision and Order denying Liberty's motion for summary judgment (the "Underlying Order"), holding that Gilbane/TDX is, in fact, an additional insured on the Liberty Policy. 1 (R. 1 0-22). Liberty appealed the Underlying Order to the Appellate Division, First Department on July 10, 2015. The Appellate Division reversed the Underlying Order and granted summary judgment to Liberty on September 15, 2016. (R. 963-1010).2 Gilbane/TDX filed a timely motion for leave to appeal the Decision to the Court of Appeals, which was granted by Order of the First Department dated December 22, 2016. (R. 961-962). 1 The Underlying Order further held that questions of fact remained regarding Gilbane/TDX's satisfaction of the notice conditions of the Liberty Policy, thereby precluding an award of summary judgment in favor of Liberty. (R. 15-20). 2 The Appellate Division's decision is reported as Gilbane Bldg. Co./TDX Constr. Corp. v. St. ~::::._=-.;:;;:..;:;_:::;.::...;:;.;_==.:....;:;...:::..;..>. 2016 NY Slip Op 06052,2016 N.Y. App. Div. LEXIS 5930 (1st Dep't 2016). 8 STANDARD OF REVIEW Interpretation of an insurance policy, and whether a policy affords coverage in a particular case are questions of law subject to de novo review. N.Y. Const. Art. 6 § 3(a); N.Y. C.P.L.R. § 550l(b). On a summary judgment motion in a case involving the interpretation of an insurance contract or policy, this Court has instructed that, "[t]he objective in any question of the interpretation of a written contract, of course, is to determine what is the intention of the parties as derived from the language employed. At the same time the test on a motion for summary judgment is whether there are issues of fact properly to be resolved by a jury. HartfordAcc. & Indem. Co. v Wesolowski, 33 N.Y.S.2d 169, 171-172, 350 N.Y.S.2d 895 (1973) [citations and internal quotation marks omitted]. "[U]nambigous provisions of an insurance contract must be given their plain and ordinary meaning." White v Continental Cas. Co., 9 N.Y.S.3d 264, 267, 848 N.Y.S.2d 603 (2007). A contract is unambiguous if the language it uses has a definite and precise meaning, unattended by danger of misconception in the purport of the agreement itself, and concerning which there is no reasonable basis for a difference of opinion. Therefore, if a contract "on its face is reasonably susceptible of only one meaning, a court is not free to alter the contract to reflect its personal notions of fairness and equity." Selective Ins. Co. of Am. v County of Rensselaer, 26 N.Y.3d 649,27 N.Y.S.3d 92,2016 N.Y. LEXIS 133,2016 NY Slip 9 Op 01001 (20 16). (citations and internal quotation marks omitted). A reviewing court must decide whether ... there is a reasonable basis for a difference of opinion as to the meaning of the policy. If this is the case, the language at issue would be deemed to be ambiguous ... " Federal Ins. Co. v International Bus. Machs. Corp., 18 N.Y.3d 642, 646, 942 N.Y.S.2d 432 (2012). Ifthere is ambiguity in the terms of the policy, any doubt as to the existence of coverage must be resolved in favor of the insured and against the insurer, as drafter of the agreement. Sperling v. Great American Indem. Co., 7 N.Y.2d 442, 199 N.Y.S.2d 465 (1960). Where policy terms are ambiguous and "determination of the intent of the parties depends on the credibility of extrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsic evidence, then such determination is to be made by the jury. On the other hand, if the equivocality must be resolved wholly without reference to extrinsic evidence, the issue is to be determined as a question of law for the court." Wesolowski, 33 N.Y.2d 169, 171-172. 10 ARGUMENT I. THE DECISION CONFLICTS WITH THE PLAIN MEANING OF THE LIBERTY ENDORSEMENT, WELL-SETTLED RULES OF POLICY INTERPRETATION AND THE PARTIES' REASONABLE EXPECTATIONS In its Decision, the Appellate Division held that Gilbane/TDX failed to qualify as an additional insured under the Liberty Endorsement, which confers coverage to any party "with whom [Samson] agreed to add as an additional insured by written contract." (R. 981). The Appellate Division's holding that Gilbane/TDX is not an additional insured on the Liberty Policy is in error, as the plain meaning of the Liberty Endorsement requires only that Samson agree in writing to add Gilbane/TDX as an additional insured. This condition was satisfied by the terms of the DASNY -Samson Contract, and Gilbane/TDX therefore qualifies as an additional insured. Although there is no language expressly requiring direct contractual privity, the Appellate Division held that the Liberty Endorsement clearly and unambiguously required Gilbane/TDX to have a direct contract with Samson to qualify as additional insureds. (R. 972). Appellants respectfully submit that the Appellate Division's interpretation of the Liberty Endorsement conflicts with its plain meaning, well-settled rules of policy interpretation and the parties' 11 reasonable expectations, and should therefore be reversed. A. The Decision Conflicts with the Plain Meaning of the Liberty Endorsement and Well-Settled Rules of Policy Interpretation The Liberty Endorsement states, in relevant part: Who is an Insured (Section II) is amended to include as an insured any person or organization with whom you have agreed to add as an additional insured by written contract. .. (R. 274). As recognized by the trial court, the plain meaning of the Liberty Endorsement requires only that Samson agreed in writing to add Gilbane/TDX as an additional insured to confer such coverage because there is no language expressly requiring a direct contract between the Named Insured and purported additional insured. This condition was satisfied by the terms of the DASNY- Samson Contract, and Gilbane/TDX therefore qualifies as an additional insured on the Liberty Policy. (R. 639, 878, 912-913). The Appellate Division held that the Liberty Endorsement "clearly and unambiguously requires that the named insured execute a contract with the party seeking coverage as an additional insured." (R. 972). The language of the Liberty Endorsement does not, however, include any express condition of direct contractual privity between the Named Insured and purported additional insured, and these terms cannot be read into the Liberty Policy as the Appellate Division has done. "[U]nambigous provisions of an insurance contract must be given their plain 12 and ordinary meaning." White, 9 N.Y.3d at 267. This Court has consistently recognized, however, that: [W]here express terms do not appear in a writing, they cannot be supplied by the courts under the guise of construction or interpretation, their power being limited to giving effect only to the parties' expressed intent. [The Court] concern[ s] [itself] with what the parties intended, but only to the extent that they evidenced what they intended by what they wrote. The above rule is particularly applicable to a contract of insurance, since it was written by the insurer and any ambiguity is to be resolved against it. Sperling, 7 N.Y.2d at 450. In holding that the Liberty Endorsement clearly and unambiguously requires a direct contract between the Named Insured and purported additional insured, the Appellate Division reasoned that the interpretation asserted by Gilbane/TDX "place[s] undue emphasis on the phrase 'by written contract' and completely ignores the inclusion of the words 'with whom' as the object of the verb phrase 'you agree.' ... , [and that] "when 'whom' is used as the object of a verb or preposition, it refers back to the person mentioned previously." (R. 975). Contrary to the reasoning of the Appellate Division, inclusion of the words "with whom" as the object of the verb phrase "you agree", does not create an express requirement that a party seeking additional insured coverage enter into a direct contract with the Named Insured. For example, the language of the Liberty Endorsement does not state "any person or organization with whom you have agreed by written contract", or "by written contract with such person or 13 organization." In holding that contractual privity is a condition of additional insured coverage, the Appellate Division, in error, reformed the scope of coverage afforded under the Liberty Policy by reading such restrictive language into the Liberty Endorsement. Sperling, 7 N.Y.2d at 450. By analyzing the language in the context of the Liberty Endorsement as a whole, it is evident that the conditional language "by written contract" applies to Samson alone, not the party seeking coverage. The Liberty Endorsement again provides: Who is an Insured (Section II) is amended to include as an insured any person or organization with whom you [Samson] have agreed to add as an additional insured by written contract... (emphasis added) (R. 274). The Appellate Division's Decision relies upon an improper and unsupported construction pursuant to which the phrase "with whom you have agreed" is read as being modified by the remote and detached prepositional phrase ''by written contract". The language of the Liberty Endorsement does not, however, operate in this manner as a result of Liberty's remote placement of the phrase "by written contract" at the end of the provision. The phrase "by written contract" operates either adverbially, describing a verb's action3, or adjectivally, describing a noun.4 3 For example, in the sentence "Jerry purchased the horse by mail" the phrase "by mail" tells us how Jerry purchased the horse. 4 For example, when we refer to a case as being "at law" or "at equity", those phrases describe the noun "case." 14 The issue is that the conditional phrase "by written contract" is placed at the very end of the sentence, distant from the verb phrase that Liberty argues it was intended to modifY. The grammatical rule at issue relates to the position or placement of adverbs. 5 The phrase "by written contract", if it is to modifY "agreed" should have been placed between "agreed" and "to add."6 This is the "natural arrangement" when an adverbial phrase modifies a copula ("agreed") and its complement ("to add"). For the Liberty Endorsement to be construed as the Appellate Division held, it would have stated: Who is an insured is amended to include as an additional insured any person or organization with whom you have agreed by written contract to add as an additional insured. The Appellate Division's interpretation of the Liberty Endorsement ignores the fact that "by written contract" appears at the very end of the sentence, remote from any phrase that it could logically modifY. In terms of syntax, it seems to modifY "to add" as it is closer to that verb than it is to "agreed". As explained in Justice Kahn's dissenting opinion, Liberty's "additional insured" endorsement on its face is poorly drafted in terms of its syntax (defining "additional insured" as "any person or organization with whom you have agreed to add as 5 See Fowler's Modem English Usage 465 (Ernest Gowers, ed., 2d ed. 1965). 15 an additional insured by written contract"), in that the word "whom" is the object both of the preposition "with" and of the infinitive "to add." To make the parties' intent clear, the language should be read without the unnecessary preposition "with," i.e. "any ... organization ... whom you have agreed to add as an additional insured by written contract." Read in this manner, the Samson-Liberty policy would be understood to cover any party the policyholder agreed by written contract to cover. This reading appears to best reflect the intent of the parties ... (R. 992-993). Consequently, the conditional language "by written contract" applies only to "you", the Named Insured, not the person or organization seeking additional insured coverage, as was held by the Appellate Division. For these reasons, Gilbane/TDX respectfully submits that the Decision of the Appellate Division conflicts with the plain meaning of the Liberty Endorsement, and should therefore be reversed. B. Relevant Decisions Support Appellants' Position That the Liberty Endorsement Does Not Require a Direct Contract Between the Named Insured and Purported Additional Insured Gansevoort, LLC v. Peter Scalamandre & Sons, Inc., 102 A.D.3d 425,426 [1st Dep't 2013], and Linarello v. City Univ. ofN.Y., 6 A.D.3d 192 [1st Dep't 2004], despite recognizing that the policy language in those cases was different from the language at issue in the Liberty Policy. Like the present matter, the policy at issue in AB Green was issued by Liberty; however, in AB Green the policy used different language: "Any person or organization for whom you are performing 16 operations when you and such ... organization have agreed in writing in a contract or agreement that such ... organization be added as an additional insured on your policy ... (emphasis added) AB Green, 102 A.D.3d at 426 Unlike the Liberty Endorsement, the language "when you and such ... organization have agreed in writing," specifically refers back to the person or organization being included as an insured and expressly requires a direct contract between the named insured and that person or organization. As recognized by Justice Kahn, "when you and such ... organization have agreed in writing,' is not the language chosen by Liberty for use in its policy's 'additional insured' endorsement in this case ... and its chosen clause imposes no such requirement." (R. 995). Although the additional insured endorsement utilized by Liberty in AB Green was available at the time the Liberty Policy was issued, Liberty chose to employ clearly different language. The affirmative decision by Liberty to utilize language that is different from the endorsement language in AB Green demonstrates that Liberty did not intend that the Liberty Policy require that Gilbane/TDX enter into a direct contract with Samson in order to qualify as an additional insured. The Appellate Division recognized this distinction between the language of the Liberty Endorsement and the endorsement in AB Green, stating that, "policies containing broader language have been found to allow for an agreement naming an additional insured without an express contract between the parties," citing to the policy language at issue in American Home Assur. Co. v Zurich Ins. Co., 26 Misc. 17 3d 1223(A), 2010 NY Slip Op 50237(U) (Sup Ct, Kings County 2010) (construing "any person or organization with whom you have agreed in a written contract to provide insurance as is afforded under this policy" as not "limit[ing] coverage to only the person or organization with whom ... the named insured contracted"). AB Green, 102 A.D.3d at 426. In its Decision the Appellate Division now rejects the distinction previously recognized between the language of the Liberty Endorsement and the endorsements in AB Green and Linarello holding that "when restricted to its plain meaning, the substance of this language is indistinguishable from the substance of the language of the policies in Linarello and AB Green ... " The Appellate Division further attempts to justify the departure from its prior observations in AB Green by explaining that, "they were simply meant to compare and dismiss the cited non- binding authority as distinguishable on the facts." Contrary to the Decision of the Appellate Division, construing the Liberty Endorsement as indistinguishable from the endorsements in AB Green and Linarello is contrary to the plain meaning of the endorsement and requires reading restrictive language into the Liberty Policy that do not exist. This is in direct conflict with the precedent of this Court and well-settled rules of policy interpretation. Sperling, 7 N.Y.2d at 450. Despite its position in the present matter, Liberty recently argued that language nearly identical to that of the Liberty Endorsement did not require a direct 18 contract between the named insured and purported additional insured to confer coverage. In Liberty Mut. Fire Ins. Co. v. Zurich Am. Ins. Co., 2016 U.S. Dist. LEXIS 13604; 2016 WL 452157 (No. 42 Civ. 1:14 07568) (S.D.N.Y. Feb. 4, 2016), the United States District Court for the Southern District of New York considered language contained in a general liability policy issued to NASDI, LLC ("NASDI") (the "Zurich Policy") by Zurich American Insurance ("Zurich"). The policy included as an additional insured, "[a]ny person or organization with whom you have agreed, through written contract, agreement or permit, executed prior to the loss, to provide additional insured coverage." (emphasis added) Id. at *3. The factual scenario was similar, involving a contract between the City and Conti, under which Conti was to act as general contractor during construction on the St. George's Ferry Terminal in Staten Island. Conti agreed to name the City as an additional insured on its general liability policy issued by Liberty Mutual Fire Insurance Co. ("Liberty Mutual"). Conti, in tum, entered into a subcontract with NASDI, under which NASDI agreed to add Conti and the City as additional insureds on the Zurich Policy. An employee ofNASDI was injured during construction and filed suit against Conti and the City. Conti and the City tendered the defense of the claim to NASDI and Zurich. Zurich denied coverage to the City, and Liberty Mutual filed an action seeking a declaration that the City was an additional insured on the Zurich Policy, and that Zurich was obligated to defend and indemnifY the City in connection with the underlying claim. 19 In its cross-motion for summary judgment, Liberty argued that the Zurich Policy "does not require direct contractual Privity between the Named Insured and the additional insured for an entity to qualify as an additional insured." Reply Br. of Plaintiff at 1-8, Liberty Mutual Fire Ins. Co. v. Zurich Am. Ins. Co., 2016 U.S. Dist. LEXIS 13604; 2016 WL 452157 (No. 42 Civ. 1:14 07568) (S.D.N.Y. Feb. 4, 2016). Zurich contended, as Liberty now does, that in order for the City to be an additional insured on the Zurich Policy, NASDI [the Named Insured] must have a written agreement with the City in which NASDI agrees to provide additional insured coverage to the City. In finding that the City was an additional insured on the Zurich Policy, the District Court stated: The Court rejects [Zurich's] argument as an incorrectly cramped reading of the policy language. As to other New York courts interpreting functionally identical language in Zurich insurance policies have already held, the Zurich Policy's additional insured clause, by its plain language, "extends coverage to any person or organization with whom the insured [] agreed in a written contract to provide insurance for." (citing Am. Home Assur. Co. v. Zurich Ins. Co., 26 Misc.3d 1223[AJ, 907 N.Y.S.2d 435, 2010 NY Slip Op 50237[UJ, at *4 [N.Y. Sup. Ct. 2010]; see also Plaza Construction Com. v. Zurich Am. Ins. Co., 2011 N.Y. Misc. LEXIS 1234, at *8-9 (N.Y. Sup. Ct. 2011)). "Zurich's additional insured endorsement is not so restrictive as to limit coverage to only the person or organization with whom [NASDI], the named insured, contracted." Here, since NASDI promised to procure additional insurance coverage for both Conti and the City in its written contract with Conti, the City is covered as and additional insured on the Zurich Policy. Liberty Mutual Fire Ins. Co., 2016 U.S. Dist. LEXIS 13604 at *3. 20 The District Court further stated that, "[ w ]hile other courts have reached a contrary interpretation of similar policy language, the Court declines to follow them because they add a requirement of direct contractual privity between the named insured and the purported additional insured that does not exist in the policy language." (Emphasis added) Id.7 As discussed in Liberty Mutual Fire Ins. Co. v. Zurich Am. Ins. Co., the Courts in American Home Assur. Co., 26 Misc. 3d 1223(A), and Plaza Construction Com. v. Zurich Am. Ins. Co., 2011 NY Slip Op 30709(U) (Sup. Ct. New York Cty. Mar. 23, 2011), addressed the language found in the Liberty Policy in the present case. Both Courts specifically rejected the Appellate Division's interpretation, that the language of the Liberty Endorsement requires direct contractual privity between the Named Insured and the additional insured. In American Home the policy extended coverage to "any person or organization with whom you [the named insured] have agreed in a written contract to provide insurance as is afforded under this policy". American Home Assur. Co., 26 Misc. 3d 1223(A) at *9. The court held: [T]he language of the additional insured endorsement at issue in this case [Linarello] differs crucially from the language of the endorsement in the Zurich policy. The Linarello additional insured endorsement provided coverage for "any person or 7 Citing Murnane Bldg. Contractors, Inc. v. Zurich American Ins. Co., 09-16699, 33 Misc.3d 1215(A) (N.Y. Sup. Ct. Oct. 5, 2011); Zoological Soc'y ofBuffalo, Inc. v. Carvedrock, LLC, Case No. 10-CV-35-A, 2014 U.S. Dist. LEXIS 103800 (W.D.N.Y July 29,2014). 21 organization for whom you [the insured] are performing operations when you and such ... organization have agreed in writing in a contract ... that such [emphasis added] person or organization be added as an additional insured on your policy." The additional insured provision of the Zurich policy is less restrictive. It extends coverage to any person or organization with whom the insured Hatzel agreed in a written contract to provide insurance for. Thus, Zurich's additional insured endorsement is not so restrictive as to limit coverage to only the person or organization with whom Hatzel, the named insured, contracted. American Home, 907 N.Y.S.2d at 435. The court in American Home held that the policy language at issue did not restrict coverage only to a person or organization that entered into a direct contract with the named insured. Similarly, the Liberty Endorsement does not include any explicit requirement that a direct contractual relationship exist between the named insured and a party seeking coverage as an additional insured. In Plaza Construction Corp., 2011 NY Slip Op 30709(U) (Sup. Ct. New York Cty. Mar. 23, 2011 ), Linarello was again distinguished by the trial court, which held: The insurance policy by Zurich Insurance, which is significantly more broad, covers "any person or organization with whom you [O'Farrell] have agreed, through written contract, agreement or permit to provide primary additional insured coverage" ... Unlike the language in Linarello, which requires an additional insured party to have a physical, written contract with the named insured, the insurance policy at issue here, by its plain language, merely requires that the named insured party agreed in a written contract to provide coverage for any person or organization. Plaza Construction, 2011 NY Slip Op 30709(U) at *7. In addition to the AB Green and Linarello decisions, the Appellate Division relied on case law that is inapposite in that it addresses language, which is clearly 22 narrower and distinguishable from the present matter. In Zoological Soc'y of Buffalo, Inc. v. Carvedrock, LLC, Case No. 10-CV- 35-A, 2014 U.S. Dist. LEXIS 103800 (W.D.N.Y July 29,2014), the policy language granted additional insured status to: Any person or organization with whom [CarvedRock] ha[s] agreed, in a written contract, that such person or organization should be added as an insured on [CarverdRock's] policy, provided such written contract is fully executed prior to the "occurrence" in which coverage is sought under this policy. (Emphasis added.) The operative language in this provision is the phrase "such person or organization", which clearly require that only the parties to the contract qualify as additional insureds. Id. at *5. No such limiting language is included in the Liberty Endorsement. Similarly, m Best Buy Co., Inc. v. Sage Elec. Contracting, Inc., No. 600781/2006,2009 N.Y. Misc. LEXIS 4125, at *8 (N.Y. Sup. Ct. Jan. 23, 2009), the policy stated: Any person or organization with whom you have entered into a written contract, agreement or permit requiring you to provide insurance such as is afforded by the Commercial General Liability Coverage Form will be an additional insured. (Emphasis added.) The language at issue in Best Buy is narrower than in Zoological Soc. Of Buffalo, and clearly distinguishable from the present language, as it specifies, "with whom you have entered into a written contract." Id. Moreover, in Best Buy, there was no 23 contract under which the named insured subcontractor agreed to specifically provide additional insured coverage to best Buy Co., Inc. ("Best Buy"). The contract between the general contractor and subcontractor referenced the main contract but did not incorporate the insurance terms, and did not require the subcontractor to name Best Buy as an additional insured. Unlike Best Buy, it is undisputed in the present case that Samson agreed to name Gilbane/TDX, and others, as additional insureds on the Liberty Policy. (R. 878, 912-917). Finally, the Appellate Division's reliance upon Murnane Bldg. Contractors, Inc. v. Zurich American Ins. Co., 09-16699,33 Misc.3d 1215(A) (N.Y. Sup. Ct. Oct. 5, 2011), rev'd on other grounds, 107 A.D.3d 674 (2nd Dep't 2013), is similarly misplaced as the trial court improperly relied upon Linarello to support its holding that a direct written contract was required between the parties. The language at issue in Murnane granted additional insured status to: [A]ny person or organization with whom you have agreed, through written contract, agreement or permit, executed prior to the loss to provide primary additional insured coverage. (emphasis added) The trial court reasoned that, "[i]n Linarello, the appellate court considered language in a policy endorsement which is identical to that set forth above in Zurich's Form 20 33 07 04 herein." Murnane Bldg. Contr., 33 Misc. 1215(A), at *5, 941 N.Y.S.2d 539, at *5. In Linarello, however, the Appellate Division interpreted the following language: 24 any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Linarello, 2003 WL 25669421 (Sup. Ct. New York Cty. March 20, 2003) (Emphasis added). The language of the additional insured endorsement in Murnane was different from the language construed by the Appellate Division in Linarello, and the Murnane court's reliance on Linarello was therefore wrong, and should not be followed. The language of the Liberty Endorsement is the same as the language does not contain the limiting language "when you and such person or organization have agreed in writing", which the Appellate Division construed in Linarello and AB Green. It does not contain the limiting language "that such person or organization", which the court addressed in Zoological Soc. of Buffalo. It does not contain the limiting language "with whom you have entered into a written contract", which the trial court addressed in Best Buy. The Liberty Endorsement only requires that the Named Insured agreed to add a party as an additional insured "by written contract", which does not require direct contractual privity between the Named Insured and purported additional insured. C. The Decision Conflicts with the Parties' Reasonable Expectations. The Appellate Division's interpretation of the Liberty Endorsement 1s inconsistent with the parties' reasonable expectations, and results in an inequity 25 under the circumstances of this case. Basic rules of contract interpretation require that contracts, including insurance policies, be interpreted in a manner consistent with the reasonable expectations of the parties. Cragg v. All State Indemnity, 17 N.Y.3d 118, 122, 926 N.Y.S.2d 867, 869 ("Insurance contracts must be interpreted according to common speech and consistent with the reasonable expectations of the average insured"); see also Ace Wire & Cable Co., Inc. v. Aetna Cas. & Sur. Co., 60 N.Y.2d 390, 398 (1983). The reasonable expectations of the parties in the present case were that Liberty would provide coverage to Gilbane/TDX as an additional insured on the Liberty Policy as evidenced by the DASNY-Samson Contract and the Sample Certificate of Insurance annexed to it identifying Gilbane/TDX as an additional insured, as well as the Samson Letter from Samson's chief executive officer to Gilbane/TDX forwarding the actual certificate of insurance confirmed such coverage. (R. 911-917). This evidence conclusively demonstrates that Samson clearly intended to add Gilbane/TDX as additional insureds on the Liberty Policy. The Appellate Division's construction of the Liberty Endorsement also conflicts with the established customs and practices and reasonable expectations of the construction industry and its insurers. As recognized by Justice Kahn in the dissent to the majority's opinion: Under the majority's view ... owners and their contractors will not be able to establish coverage for intended additional insured 26 partners in construction projects, such as construction managers, subcontractors and any other entities named by owners, despite their having been listed on the certificates of insurance issued by the agents of the carriers as contemplated in their trade contracts. And new burdens will be placed on general contractors to devise and execute separate side contracts with each party required by the owner to be named as an additional insured on the contractor's CGL policy, with the concurrence of the insurance carriers, notwithstanding the accepted course of dealing in the construction and insurance industries, the clear terms of the contract between the owner and the general contractor so providing, or the prior issuance of certificates of insurance on behalf of the carriers themselves acknowledging and naming such parties as additional insureds.8 (R. 1002). For the above reasons, this Court should reverse the Decision of the Appellate Division, construe the language of the Liberty Endorsement according to its plain meaning and the reasonable expectations of the parties, and declare that Gilbane/TDX is an additional insured on the Liberty Policy. II. THE LIBERTY ENDORSEMENT IS SUSCEPTIBLE TO MORE THAN ONE REASONABLE INTERPRETATION, AND THEREFORE AMBIGUOUS AND MUST BE CONSTRUED AGAINST LIBERTY AND IN. FAVOR OF COVERAGE 8 Justice Kahn cites to the contractual record in the present action, and others involving similar policy language, in support of the assertion that the Appellate Division's interpretation of the Liberty Endorsement is in conflict with the established customs and expectations of the construction industry. (see e.g. Liberty Mut. Fire Ins. Co. v Zurich Am. Ins. Co., 2016 WL 452157, at *1, 2016 US Dist LEXIS 13604, at *3; Zoological Socy. Of Buffalo, Inc. v CarvedRock, LLC, 2014 WL 3748545, at* 1, 2014 US Dist LEXIS 105359, at *3; Plaza Constr. Corp. v Zurich Am. Ins. Co., 2011 NY Slip Op 30709[U], at *4; American Home Assur. Co. v Zurich Ins. Co., 26 Mise 3d 1223[A], 2010 NY Slip Op 50237[U], at *4). 27 If this Court were to find that the Appellate Division's interpretation of the Liberty Endorsement was reasonable, the Decision should be reversed, because the language is reasonably interpreted to require only that the Named Insured agreed in writing to add a party as an additional insured, and therefore ambiguous, and must be construed against Liberty. "Ambiguity is present if language was written so imperfectly that it is susceptible to more than one reasonable interpretation." Brad H. v. City of New York, 17 N.Y.3d 180, 186 [2011]. "Where the language of a policy of insurance is ambiguous and susceptible of more than one reasonable interpretation, the parties may submit extrinsic evidence as an aid in construction; but when extrinsic evidence will not resolve the equivocality of the language of the contract, the issue remains a question of law for the court." State ofNew York v. Home Indem, Co., 66 N.Y.2d 669, 671, 495 N.Y.S.2d 969 (1985). Under such circumstances, this Court has consistently construed ambiguous policy provisions in favor of coverage and against the insurer who drafted the policy. Breed v. Insurance Co. of N. Am., 46 N.Y.2d 351,353,413 N.Y.S.2d 352 (1978). The presence of such ambiguity in the Liberty Endorsement is evidenced by the imprecise structure of the language employed and the resulting uncertainty as to 28 whether the conditional language "by written contract" applies to the party seeking coverage or the Named Insured alone.9 Further evidence of such ambiguity is provided by the numerous conflicting decisions discussed herein, which have construed the same or similar language contained in the Liberty Endorsement, and found in many cases that a direct contract between the Named Insured and additional insured was not required, and in others, that direct contractual privity is required. (compare Liberty Mut. Fire Ins. Co. v Zurich Am. Ins. Co., 2016 WL 452157, *1, 2016 US Dist LEXIS 13604, *3 ["[a]ny person or organization with whom you have agreed, through written contract, agreement or permit, executed prior to the loss, to provide additional insured coverage"]; Plaza Constr. Corp., 2011 N.Y. Misc. LEXIS 1234,_2011 NY Slip Op 30709[U], *4 [Sup Ct, NY County 2011]. ["(a)ny person or organization with whom you (the named insured) have agreed, through written contract, agreement or permit to provide primary additional insured coverage"]; American Home, 26 Mise 3d 1223[A], 907 N.Y.S.2d 435,2010 NY Slip Op 50237[U], *4 [Sup Ct, Kings County 2010] ["any person or organization with whom you (the named insured ... ) have agreed in a written contract to provide insurance as is afforded under this policy"] [all interpreted as not imposing any requirement of privity of contract between the named and additional insureds]; with Zoological Socy. of Buffalo, 2014 WL 9 See Section LA., supra. 29 3748545, *1, 2014 US Dist. LEXIS 105359, *3 [WDNY, July 29,2014, No. 10-CV- 35-A(Sr) (RJA/HKS)] [policy language defining "additional insured" as "(a)ny person or organization with whom (the named insured) ha(s) agreed, in a written contract, that such person or organization should be added as an insured on (the named insured's) policy"]; AB Green, 102 A.D.3d at 426 ["when you and such ... organization have agreed in writing in a contract or agreement that such . . . organization be added as an additional insured on your policy"]; Linarello, 6 A.D.3d at 195; Murnane Bldg. Cants., Inc., 33 Mise 3d 1215[A], 941 N.Y.S.2d 539, 2011 NY Slip Op 51943[U], *3 [Sup Ct, Suffolk County 2011] ["(a)ny person or organization with whom you have agreed, through written contract, agreement or permit ... to provide primary additional insured coverage"], revd on other grounds 107 A.D.3d 674,966 N.Y.S.2d 486 [2d Dept 2013]; Best Buy Co., 2009 N.Y. Misc. LEXIS 4125, 2009 NY Slip Op 30208[U], *6 [Sup Ct, NY County 2009] "(a)ny person or organization with whom you have entered into a written contract, agreement or permit requiring you to provide insurance such as is afforded by this (CGL) Coverage Form will be an additional insured". These conflicting decisions demonstrate that the language of the Liberty Endorsement included in the Liberty Policy is "susceptible to more than one reasonable interpretation," and therefore ambiguous, and extrinsic evidence may be considered to further determine the parties' intent (see Wesolowski. 33 N.Y.2d at 30 171-172). If extrinsic evidence does not resolve the equivocality of the language of the contract, the issue remains a question of law for the court. State ofNew York v. Home Indem. Co., 66 N.Y.2d 669, 671, 495 N.Y.S.2d 969 (1985). Here, all extrinsic evidence available for consideration supports a finding that Gilbane/TDX is an additional insured under the Liberty Policy. The DASNY- Samson Contract and the Sample Certificate of Insurance annexed to it identify Gilbane/TDX as an additional insured. The DASNY-Gilbane Contract required Gilbane/TDX to obtain a certificate of insurance from each of the prime contractors on the Project, including Samson, to confinn its status as an additional insured, and the Samson Letter from Samson's chief executive officer to Gilbane/TDX forwarding the actual certificate of insurance confirmed such coverage. (R. 911- 917). This evidence demonstrates that Samson clearly intended to add Gilbane/TDX as an additional insured on the Liberty Policy. The Appellate Division's grant of summary judgment should be reversed and the Underlying Order declaring Gilbane/TDX an additional insured on the Liberty Policy reinstated. CONCLUSION For the foregoing reasons, Plaintiff-Appellants Gilbane/TDX respectfully request that this Court enter an order reversing the Appellate Division's Decision 31 dated September 15, 2016, so as to affirm the Underlying Order, and remand the action to the trial court for any further proceedings this Court deems necessary. Dated: February 28, 2017 Trumbull, Connecticut 32 Respectfully submitted, SAXE DOERNBERGER & VITA, P.C. By: __.!..12__;::,_,(..._..,C·i'--""""~::::..:..._t:-'--f,)..__W---'-""&.!.....><.\WVL_"'--L· ......._ _ 33 Richard W. Brown Attorneys for Plaintiffs-Appellants, Gilbane Building Company/TDX Construction Corp., a Joint Venture, Gilbane Building Company, and TDX Corporation 3 5 Nutmeg Drive, Suite 140 Trumbull, Connecticut 06611 (203) 287-2115 CERTIFICATE OF COMPLIANCE I hereby certify pursuant to 22 NYCRR § 500.13(c) that the foregoing brief was prepared on a computer. A proportionally spaced typeface was used, as follows: Name of typeface: Times New Roman Point size: 14 Line spacing: Double The total number of words in the brief, inclusive of point headings and footnotes and exclusive of the statement of the status of related litigation; the corporate disclosure statement; the table of contents, the table of cases and authorities and the statement of questions presented required by subsection (a) of this section; and any addendum containing material required by § 500.l(h) is 7,150. Dated: February 28, 2017 Respectfully submitted, .. · .. ! I / l. ,, 3 \(;:( o/u;..-~J Jv. L_ttvvn Richard W. Brown Attorneys for Plaintiffs-Appellants, Gilbane Building Company/TDX Construction Corp., a Joint Venture, Gilbane Building Company, and TDX Corporation 35 Nutmeg Drive, Suite 140 Trumbull, Connecticut 06611 (203) 287-2115