| Spectra Audio Research, Inc. v Chon |
| 2009 NY Slip Op 04000 [62 AD3d 561] |
| May 21, 2009 |
| Appellate Division, First Department |
| Spectra Audio Research, Inc., Appellant, v Steve S. Chonet al., Defendants, and Tiffany Nails at Madison Corp., Respondent. |
—[*1] Thomas Torto, New York for respondent.
Order, Supreme Court, New York County (Debra A. James, J.), entered March 14, 2008,brought up for review pursuant to CPLR 5517 (b), the appeal from the prior order, same courtand judge, entered December 17, 2007, which granted reargument and adhered to the prior orderthat had granted, inter alia, the cross motion of defendant Tiffany Nails at Madison Corp. forsummary judgment dismissing the complaint, unanimously reversed, on the law, with costs, thecross motion denied and the complaint reinstated as against that defendant.
Spectra Audio Research, Inc. (Spectra),[FN*]executed a lease dated February 7, 1997 with Madison & 72nd Street Corporation (Madison) tolease the first floor of 903 Madison Avenue. On February 28, 2001, Tiffany Nails at MadisonCorp. (Tiffany) leased space on the second floor of that building and hired defendants NovaPlumbing and Heating, Inc. (Nova) and Chon Engineering, P.C. (Chon) to install an auxiliarywater line. On January 12, 2004, the line burst causing water to leak into Spectra's first-floorspace.
Spectra's insurer, Hanover Insurance Company (Hanover), paid $376,066 to Spectra insatisfaction of its $540,195 insurance claim for the damages sustained as a result of the leak. OnApril 8, 2004 and January 14, 2005, Michael Goodrich, Spectra's president, executedsubrogation receipts evidencing payment by Hanover in the amounts of $246,714 and $129,352respectively. The receipts stated: "In consideration of and to the extent of said payment [Spectra]hereby subrogates [Hanover], to all of the rights, claims and interest which [Spectra] may haveagainst any person or corporation liable for the loss mentioned above, and authorizes [Hanover]to sue, compromise or settle in [Spectra's] name . . . all such claims."[*2]
Spectra served a summons and complaint on February 7,2006 against each of the defendants individually, Madison, Tiffany, Nova, and Chon, allegingnegligence and damages in the amount of $561,230. The complaint specifically listed claims bySpectra against Madison, Spectra against Chon, Hanover against Nova, and Hanover againstTiffany.
On March 6, 2006, Madison answered the complaint and then, on January 24, 2007, movedfor summary judgment to dismiss on the grounds that Spectra had not shown that Madison wasnegligent and hence, by the terms of its lease, Spectra waived liability for damages covered byinsurance. In addition, Madison asserted that Spectra waived Hanover's subrogation rightsagainst it in the antisubrogation clause of its lease. On May 15, 2006, Tiffany answered thecomplaint and, on February 7, 2007, cross-moved for partial summary judgment on the basis thatthe claim amount was speculative and unsupported.
A hearing was held on July 17, 2007 and in a decision on December 17, 2007, the motioncourt granted summary judgment severing the action as against Madison and Tiffany anddismissing the complaint against them stating that Spectra could not establish losses beyond$68,036. On January 3, 2008, Spectra moved to reargue the December 17 order to the extent thecourt dismissed the complaint as against Tiffany, emphasizing that Hanover was the partybringing the suit pursuant to CPLR 1004. It asserted that it was seeking its subrogated interestsas well as Spectra's uninsured loss. Following the reargument hearing on March 11, 2008, thecourt issued an order granting reargument and adhering to its December 17, 2007 decision andorder.
On appeal, Spectra argues that the motion court erred in concluding that Hanover may notbring a suit for Spectra's uninsured loss as well as compensation for the subrogated propertydamage claims.
The doctrine of subrogation " 'allows an insurer to stand in the shoes of its insured and seekindemnification from third parties whose wrongdoing has caused a loss for which the insurer isbound to reimburse' " (Duane Reade vReva Holding Corp., 30 AD3d 229, 232 [2006], quoting Kaf-Kaf, Inc. v RodlessDecorations, 90 NY2d 654, 660 [1997]). Further, CPLR 1004 authorizes Hanover to sue inSpectra's name as an exception to the "real party in interest" rule (CNA Ins. Co. v CacioppoElec. Contrs., 206 AD2d 399, 400 [1994], citing Point Tennis Co. v Irvin Indus.Corp., 63 AD2d 967 [1978]; see McGuigan v Carillo, 165 AD2d 811, 812 [1990]).The policy reason behind allowing an insurer to bring the case in the insured's name is to prevent"the prejudicial effect . . . which often results when it is disclosed to the jury thatthe loss was covered by insurance" (CNA Ins. Co., 206 AD2d at 400, citing PointTennis Co. v Irvin Indus. Corp., 63 AD2d at 967; see Krieger v Insurance Co. of N.Am., 66 AD2d 1025, 1026 [1978]).
As a threshold matter, we note that the antisubrogation clause and the holding in DuaneReade relied upon by the motion court are only applicable to Spectra's subrogated claimsagainst Madison and not Spectra's claim against Tiffany because Tiffany is not a party to thelease between Madison and Spectra. Duane Reade involved a suit brought by a tenantagainst its landlord where the court held that the antisubrogation clause in the lease agreementbetween the two parties did not prevent "[the tenant] from suing the [landlord] to recover for aloss to the extent that such loss is not required by the parties' agreement to becovered—and, in fact, is not covered—by insurance" (Duane Reade v RevaHolding Corp., 30 AD3d at 233). Because there is no antisubrogation agreement betweenSpectra and Tiffany, Duane Reade does not preclude Spectra from seeking its uninsuredlosses from Tiffany for damages above those paid by Hanover.[*3]
Spectra does not appeal that portion of the order severingand dismissing the complaint against Madison; therefore, we do not address the issue ofDuane Reade's effect on Spectra's claim against Madison.
Despite the inordinate confusion apparent in the transcripts and order concerning the identityof the plaintiff, this is a subrogation claim properly brought by Hanover. Thus, the issue issimply whether Hanover may bring the claim for the total amount of damages including the$376,066 paid to Spectra and Spectra's uncompensated damages.
The subrogation receipts issued by Spectra to Hanover, clearly assign "all of the rights,claims and interest which the undersigned may have against any person or corporation liable forthe loss" and authorizes Hanover to "sue, compromise or settle in the undersigned's name." Thus,contrary to Tiffany's assertion, this receipt does not limit the assignment to the amount paid byHanover to Spectra.
Tiffany's reliance on Winkelmann v Hockins (204 AD2d 623 [1994]) is misplaced.In that case, the court concluded, as a matter of contract construction, that the insured had notassigned all of his claims to his insurer and therefore remained a real party in interest as to hisuncompensated damages (id. at 624 [stating that the insurer did "not have the authorityto settle those claims which had not been paid by it" because the plaintiffs "did not assign allof their claims against the defendant" (emphasis added)]). Here, however, Spectra did assignall of its claims to Hanover, and Hanover may seek all of the compensation to which Spectra isentitled.
Spectra also asserts that the motion court erred in dismissing Spectra's claim against Tiffanyon the grounds that Spectra did not produce sufficient proof that it was damaged above theamount it was paid by Hanover. We agree.
It is well settled that where there is a triable issue of fact, summary judgment should not begranted and the issue should be resolved at trial (Trupo v Preferred Mut. Ins. Co., 59 AD3d 1044, 1045 [2009][affirming that a triable issue of fact regarding damages precluded summary judgment]; seealso Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). Moreover, " '[w]hiledamages may not be determined by mere speculation or guess, evidence that, "as a matter of justand reasonable inference", shows their existence and the extent thereof will suffice, even thoughthe result is only an approximation' " (Hirschfeld v IC Sec., 132 AD2d 332, 336-337[1987], lv dismissed 72 NY2d 841 [1988], quoting Cristallina v Christie, Manson &Woods Intl., 117 AD2d 284, 295 [1986]).
There are three separate assessments of Spectra's damages. The motion court concluded thatthe plaintiff's experts had established losses of "only $68,036.43." However, the record revealsno explanation as to how the court arrived at that figure. Tiffany's accountant, Peter Kahn, whodid not inspect the Spectra site to view the damage, prepared an affidavit estimating Spectra'slosses at $95,003.
In opposition, Spectra submitted sworn affidavits assessing its losses as follows: PaulMazzola, a professional salvor, for damaged inventory in the amount of $254,351; John Conlon,a professional insurance adjuster, for business personal property at $6,107, tools and smallequipment at $1,030, computer equipment at $32,474, property of others at $10,249, emergencyrepairs at $14,965, debris removal at $3,210; and Joseph Balkunas, an accountant who calculatedthe loss of business income at $129,352. Spectra also produced the sworn testimony of MichaelGoodrich, its president, which indicates that the cost to rebuild the store was $80,000. Since[*4]these losses of $531,738 total well in excess of Tiffany'sestimate of only $95,003, Spectra has produced evidence in admissible form requiring trial on anissue of material fact (Zuckerman, 49 NY2d at 562). Concur—Andrias, J.P.,Friedman, Buckley, Catterson and Acosta, JJ.
Footnote *: Although Spectra subrogated itsclaims to its insurer, Hanover Insurance Company, Hanover, the real party in interest, is bringingthe claim in Spectra's name pursuant to CPLR 1004.