| Western Bldg. Restoration Co., Inc. v Lovell Safety Mgt. Co.,LLC |
| 2009 NY Slip Op 02520 [61 AD3d 1095] |
| April 2, 2009 |
| Appellate Division, Third Department |
| Western Building Restoration Company, Inc.,Respondent-Appellant, v Lovell Safety Management Company, LLC,Appellant-Respondent. |
—[*1] Couch White, L.L.P., Albany (Jeremy M. Smith of counsel), forrespondent-appellant.
McCarthy, J. Cross appeals from an order of the Supreme Court (Lynch, J.), enteredSeptember 2, 2008 in Albany County, which, among other things, partially denied defendant'smotion for summary judgment.
Plaintiff, a wholly owned subsidiary of a Massachusetts corporation, is a constructioncompany with an office in New York. In December 1989, it purchased a workers' compensationand employers' liability policy through the State Insurance Fund (hereinafter Fund) and fouryears later became a member of a safety group consisting of like construction companies(see 12 NYCRR 451.1, 451.2, 451.7). Defendant was that safety group's manager(see 12 NYCRR 451.5).
In early 2002, plaintiff began work on a project in Massachusetts. During the course of thisproject, plaintiff obtained, through defendant, a certificate of workers' compensation insurance.Plaintiff was named as the policyholder on the certificate and another New York [*2]company, the general contractor on the project, was named as the"certificate holder."[FN1]When defendant issued the certificate, it was not made aware that the project was located inMassachusetts.
According to plaintiff's office manager, during the fall of 2002, she contacted one ofdefendant's underwriters and inquired if employees hired from a Massachusetts trade union forthe Massachusetts project were covered under the workers' compensation policy. According tothe office manager, during their brief conversation, which she did not document in anysubstantive fashion, she was told that such employees were covered.[FN2]In December 2002, a renewal certificate of insurance was issued for the project. Like the first,this certificate also clearly states that plaintiff had workers' compensation insurance through theFund with respect to all operations in New York.
In April 2003, a Massachusetts resident hired to work on the project was injured. Defendantrefused to process his claim for workers' compensation coverage on the ground that plaintiff'sworkers' compensation policy did not cover out-of-state employees. Plaintiff then commencedthis action against defendant alleging eight claims, including breach of contract, negligence,estoppel, negligent misrepresentation, fraud and a violation of General Business Law §349. Defendant's motion for summary judgment dismissing all eight causes of action waspartially denied by Supreme Court, prompting this appeal by defendant. Plaintiff cross-appeals,arguing that the court improperly dismissed its General Business Law § 349 claim. Weagree with defendant's contention that the complaint should have been dismissed in its entirety.
First, plaintiff has not provided prima facie evidence of a contract between these partiessufficient to sustain the first cause of action (alleging breach of contract) or the second cause ofaction (alleging breach of implied covenant of good faith and fair dealing). With respect to thebreach of contract claim, plaintiff alleges in the complaint that, "[i]n exchange for valuableconsideration from [it]," defendant agreed to provide a certificate of insurance and/or insurancepolicy that would provide workers' compensation coverage for employees on the Massachusettsproject (no other contract is alleged in the complaint and no contract is identified in plaintiff'sresponse to defendant's interrogatories). To the extent that plaintiff is relying on either thecertificate of insurance and/or insurance policy to support the first two causes of action, we findthat neither of these documents gave rise to a contractual relationship between plaintiff anddefendant. Fundamentally, the insurance policy, procured long before plaintiff became a memberof defendant and renewed annually without defendant's input, is clearly a contract between [*3]plaintiff and the Fund only (see generally Matter of Covert,97 NY2d 68, 76 [2001]; see also 1 Couch on Insurance 3d § 1:6; 68A NY Jur 2d,Insurance §§ 516, 582). A certificate of insurance is merely evidence ofinsurance—here, for the sake of the "certificate holder"—and is not itself a contract(see Bucon, Inc. v Pennsylvania Mfg. Assn. Ins. Co., 151 AD2d 207, 210 [1989];Blue Cross of Northeastern N. Y. v Ayotte, 35 AD2d 258, 260 [1970]; see also 3Couch on Insurance 3d § 40:30; 68A NY Jur 2d, Insurance § 683). In the absence ofa contract between these parties, the first two causes of action should have been dismissed.
Turning to the negligence causes of action, the issue of duty is dispositive. To this end, wenote that existence and scope of an alleged tortfeasor's duty is a decision for the court (seePalka v Servicemaster Mgt. Servs. Corp., 83 NY2d 579, 585 [1994]). Here, plaintiff allegesin the complaint that defendant had a duty to provide it with a certificate of insurance and/or apolicy providing workers' compensation coverage for its employees on the subject project (thirdcause of action) and a duty to inform that it never actually provided same (fourth cause ofaction). These duties are premised on the notion that defendant served in the capacity asplaintiff's insurance agent and/or broker.
We note, however, that the duties of defendant, as a safety group manager, are defined byregulation and nothing within the regulatory scheme assigns safety group managers with theresponsibility of procuring workers' compensation coverage or providing advice or counsel withrespect to the adequacy or limits of coverage (see 12 NYCRR 451.5 [c]). In short, theregulatory scheme does not remotely establish that safety group managers assume the role or aresomehow akin to an insurance broker or agent.
In addition to the well-defined and circumscribed role of safety group managers outlinedunder the regulations, plaintiff failed to submit any proof establishing that defendant, in anyevent, went beyond these regulatory duties by assuming a role akin to that of insurance broker oragent. While plaintiff's corporate safety director opined that he considered defendant to be theequivalent of an "insurance broker," he pointed to no duty or task performed by defendant overthe years to adequately establish that it actually served in this capacity. To the contrary, hetestified that defendant provided guidance on claims management and safety issues (dutiesentirely consistent with those outlined under the regulation). Moreover, none of defendant'sessential duties as described by plaintiff's office manager suggested an agent or brokerrelationship. In fact, according to the office manager, the alleged telephone conversation withdefendant's underwriter concerning the scope of coverage on the subject policy was an anomaly,that is, it was the only such call that she ever placed in her over two decades of service withplaintiff.
In addition, the corporate safety director candidly acknowledged that defendant played norole in plaintiff's decision to secure the subject policy or to renew it annually. Rather, thesedecisions were made by plaintiff's parent company. Notably, annual renewal decisions weremade by the parent company with the assistance of a Massachusetts insurance broker.[FN3]Because defendant did not serve in the capacity of plaintiff's insurance agent or broker (cf.Kyes v Northbrook Prop. & Cas. Ins. Co., 278 AD2d 736, 737 [2000]), it had no legallycognizable duty to provide plaintiff with workers' compensation coverage or to inform plaintiffabout the [*4]adequacy or limits of such coverage. Moreover, thealleged misrepresentation in the sole telephone call about coverage does not create a duty wherenone otherwise existed and is thus insufficient to impose liability under these circumstances.Accordingly, the third and fourth causes of action sounding in negligence should have beendismissed.
Next, we find that the absence of an insurance agent/broker relationship between theseparties completely negates a legally cognizable claim of reasonable and foreseeable reliance onthe alleged misrepresentation that there was coverage such that plaintiff's fifth, sixth and seventhcauses of action—the negligent misrepresentation, estoppel and fraudclaims—should have been dismissed (see e.g. Hoffend & Sons, Inc. v Rose & Kiernan, Inc., 19 AD3d1056, 1058 [2005], affd 7NY3d 152 [2006]; H & R Project Assoc. v City of Syracuse, 289 AD2d 967, 969[2001]; Ambrosino v Exchange Ins. Co., 265 AD2d 627, 628 [1999]). In any event, therelationship between these parties—safety group member and safety groupmanager—also falls well short of the threshold required to be deemed a "specialrelationship" (Kimmell v Schaefer, 89 NY2d 257, 260 [1996]) for the purpose ofestablishing the negligence and negligent misrepresentation claims (see Hoffend & Sons, Inc.v Rose & Kiernan, Inc., 7 NY3d 152, 158 [2006]; Murphy v Kuhn, 90 NY2d 266,270-271 [1997]; Ambrosino v Exchange Ins. Co., 265 AD2d at 628; M & E Mfg. Co.v Frank H. Reis, Inc., 258 AD2d 9, 11 [1999]).
Furthermore, even assuming defendant acted as plaintiff's insurance agent and thatdefendant's underwriter misrepresented the scope of coverage, plaintiff's claims are defeated bythe clear and unequivocal limits of the workers' compensation provisions of the policy to"workplaces in the state of New York"—a limit of which, we note, plaintiff isconclusively presumed to have knowledge and to have assented (see Catskill Mtn. Mech., LLC v Marshall& Sterling Upstate, Inc., 51 AD3d 1182, 1184-1185 [2008]; Laconte v BashwingerIns. Agency, 305 AD2d 845, 846 [2003]; Catalanotto v Commercial Mut. Ins. Co.,285 AD2d 788, 790-791 [2001], lv denied 97 NY2d 604 [2001]; Ambrosino vExchange Ins. Co., 265 AD2d at 628-629; M & E Mfg. Co. v Frank H. Reis, Inc.,258 AD2d at 12; Madhvani v Sheehan, 234 AD2d 652, 654-655 [1996]).[FN4]The four-page document states on page one, "THIS IS YOUR POLICY. PLEASE READ IT."Under the first section, entitled "GENERAL SECTION," there is a paragraph denominated"Locations" which clearly states in its entirety that "[t]his policy covers all of your workplacesin the state of New York, except as excluded by endorsement" (emphasis added). PartOne of the policy governs workers' compensation insurance and contains no exclusions. PartTwo of the policy governs employers' liability insurance and does contain exclusions.[FN5][*5]
Plaintiff argues that issues of fact regarding theinterpretation of the policy have been raised because the phrase "regular New York employees"(see n 5, supra) is ambiguous and open to interpretation. To this end, plaintiffclaims that it "reasonably interpreted the [p]olicy as covering workers . . . workingon out of state projects." For a variety of reasons, these claims do not withstand close scrutinyand are thus insufficient to avoid dismissal of the action.
First and foremost, the subject policy is a workers' compensation and employers'liability contract (see generallyPreserver Ins. Co. v Ryba, 10 NY3d 635 [2008]; Continental Ins. Co. v State ofNew York, 99 NY2d 196 [2002]).[FN6]The phrase "regular New York employees" is contained only within Part Two, governingemployers' liability coverage (see Preserver Ins. Co. v Ryba, 10 NY3d at 643;compare Continental Ins. Co. v State of New York, 99 NY2d at 200-201). Significantly,this dispute centers on plaintiff's workers' compensation coverage, which was limited to"workplaces" in New York and provided coverage under the New York State Workers'Compensation Law only. Notably, plaintiff makes no claim that any aspect of Part One of thepolicy is unclear or ambiguous. Moreover, the project "workplace" here was clearly locatedoutside of New York.[FN7]
Putting aside the legal nuance between these two sections of the policy, we next point outthat plaintiff submitted no evidence in opposition to defendant's summary judgment motion thatanyone within its employ, or the employ of its parent company, actually read the policy at anytime before the subject incident and thus interpreted the phrase "regular New York employees"in the manner now espoused. To the contrary, plaintiff's corporate safety director since1991 candidly acknowledged that he never saw or read the policy until after the subjectaccident. While he indeed believed that the subject policy covered out-of-state operations, hisbasis for this belief did not come from the policy language itself but rather fromplaintiff's "history" of conducting out-of-state operations, obtaining certificates of insurance andpaying payroll premiums without ever being advised that it did not have coverage in suchinstances. Thus, while plaintiff now claims that the phrase "regular New Yorkemployees" is ambiguous [*6]and open tointerpretation,[FN8]the asserted ambiguity and now-espoused interpretation clearly did not guide its actions, orinactions, over the years.
Next, and again assuming that the employers' liability provision of the policy has somerelevance here and further putting aside the fact that no one within plaintiff's employ could havebeen confused by language in a policy that was never read, we find the disputed phrase, whenread in complete context, is not ambiguous here. The complete sentence provides that the"exclusion does not apply to bodily injury sustained by your regular New York employeeswhile temporarily outside the state of New York" (emphasis added). Thus, this languageunambiguously extends employers' liability coverage if two conditions exist, namely, that aninjured worker is a "regular New York employee[ ]" and further that such employee is"temporarily" outside of New York. Plaintiff seemingly ignores this latter phrase in pursuing itsargument that the policy language is ambiguous. Here, the record firmly establishes that theinjured worker was a Massachusetts resident hired for this job "only" (i.e., no future employmentwith plaintiff was contemplated) and he had never previously worked for plaintiff. Thus, anyalleged ambiguity in the excised phrase "regular New York employees" is sophistry here becauseit cannot reasonably be claimed that the subject worker here was injured while temporarilyoutside of New York.
Finally, as to plaintiff's cross appeal, we find that Supreme Court properly dismissed theGeneral Business Law § 349 cause of action as plaintiff wholly failed to demonstrate thatdefendant's alleged deceptive business practices had a broad impact on consumers at large(see Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20,24-25 [1995]).
Cardona, P.J., Mercure, Malone Jr. and Kavanagh, JJ., concur. Ordered that the order ismodified, on the law, with costs to defendant, by reversing so much thereof as partially denieddefendant's motion; motion granted in its entirety, summary judgment awarded to defendant andcomplaint dismissed; and, as so modified, affirmed.
Footnote 1: The certificate of insuranceclearly states that plaintiff is insured with the Fund "COVERING THE ENTIRE OBLIGATIONOF [PLAINTIFF] FOR WORKERS' COMPENSATION UNDER THE NEW YORKWORKERS' COMPENSATION LAW WITH RESPECT TO ALL OPERATIONS IN THESTATE OF NEW YORK, EXCEPT AS INDICATED BELOW" (emphasis added). Norelevant exclusion was thereafter indicated.
Footnote 2: Defendant's underwriter deniedever having a conversation with plaintiff's office manager, or anyone else employed by plaintiff,in which he stated, in sum or substance, that the subject policy would provide coverage tonon-New York employees who suffer injury outside of New York.
Footnote 3: Of note, this broker was awarethat plaintiff conducted operations outside of New York.
Footnote 4: Significantly, it is undisputedthat plaintiff neither contacted defendant's underwriter for clarification of coverage afterreviewing its policy (cf. Kyes v Northbrook Prop. & Cas. Ins. Co., 278 AD2d at 736) normade a specific request for coverage, factors found particularly relevant by this Court in grantingsummary judgment to agents in like scenarios (see Catskill Mtn. Mech., LLC v Marshall &Sterling Upstate, Inc., 51 AD3d at 1184-1185; M & E Mfg. Co. v Frank H. Reis,Inc., 258 AD2d at 11-12; Madhvani v Sheehan, 234 AD2d at 654).
Footnote 5: As relevant here, the employers'liability insurance portion of the policy has the following exclusion: "This insurance does notcover . . . bodily injury occurring outside the state of New York. This exclusiondoes not apply to bodily injury sustained by your regular New York employees whiletemporarily outside the state of New York."
Footnote 6: Employers' liability in thecontext of policies issued by the Fund has been defined by this Court as "liability for damagesimposed on an employer by law, but excluding damages under the Workers' Compensation Law"(Oneida, Ltd. v Utica Mut. Ins. Co., 263 AD2d 825, 826 [1999]).
Footnote 7: Additionally, the injuredemployee never pursued a claim for workers' compensation coverage in New York or soughtbenefits under New York law; rather, he received coverage under the Massachusetts workers'compensation law. Nothing within the subject workers' compensation policy obligates the Funditself to cover damages to plaintiff stemming from the award of these out-of-state benefits (see Safespan Platform Sys., Inc. v StateIns. Fund, 21 AD3d 1373 [2005], affg 20 Misc 3d 1117[A], 2004 NY Slip Op51927[U] [2004]).
Footnote 8: According to plaintiff, becausethe injured Massachusetts worker faxed employment application documents to its New Yorkoffice and was paid directly by plaintiff from its checking account, this worker "wasprobably a 'regular New York employee' within the meaning of the policy" (emphasisadded).