| Kassis v Ohio Cas. Ins. Co. |
| 2008 NY Slip Op 04157 [51 AD3d 1366] |
| May 2, 2008 |
| Appellate Division, Fourth Department |
| Joseph Kassis et al., Respondents, v The Ohio CasualtyInsurance Company, Appellant. |
—[*1] Green & Seifter, Attorneys, P.L.L.C., Syracuse (Lawrence M. Ordway, Jr., of counsel), forplaintiffs-respondents.
Appeal from a judgment (denominated order) of the Supreme Court, Onondaga County(Donald A. Greenwood, J.), entered February 16, 2007 in a declaratory judgment action. Thejudgment, inter alia, granted plaintiffs' motion for summary judgment and denied defendant'scross motion for summary judgment.
It is hereby ordered that the judgment so appealed from is reversed on the law without costs,the motion is denied in its entirety, the declaration is vacated, the cross motion is granted in partand judgment is granted in favor of defendant as follows:
"It is ADJUDGED and DECLARED that defendant is not obligated to defend or indemnifyplaintiff Joseph Kassis in the underlying action pursuant to its commercial general liabilitypolicy."
Memorandum: Plaintiffs, Joseph Kassis and Kassis Superior Sign Co., Inc. (Superior Sign),commenced this action seeking, inter alia, a declaration that defendant has a duty to defend andindemnify Kassis in the underlying action. According to plaintiffs, defendant is obligated todefend and indemnify Kassis under a commercial general liability (CGL) policy issued bydefendant to Superior Sign on the grounds that he was an additional insured under the policy'sblanket additional insured endorsement and that he was an intended third-party beneficiary underthe policy. We reject plaintiffs' contention on both grounds. The blanket additional insuredendorsement provides in relevant part that the term defining "who is an insured" "is amended toinclude as an insured any person or organization who you are required to name as an additionalinsured on this policy under a written contract or agreement." Pursuant to the property leaseexecuted by Kassis and Superior Sign, Superior Sign would procure CGL coverage for "themutual benefit of" Kassis and Superior Sign, but it does not require that Superior Sign nameKassis as an additional insured on Superior Sign's CGL policy issued by defendant. That policyexpressly and unambiguously provides that the written contract or agreement between SuperiorSign and Kassis must require that Kassis be named as an additional insured, and the lease inquestion does not do so (see generally Maurice Goldman & Sons v Hanover Ins. Co., 80NY2d [*2]986, 987 [1992]). If Kassis and Superior Sign hadintended the term "mutual benefit" in the lease to mean that Kassis would be named as anadditional insured, the lease could have so provided. Indeed, we note that it is in fact of "mutualbenefit" to Kassis and Superior Sign that Superior Sign has coverage for the risk of loss createdby Superior Sign's use and occupancy of the leased property, particularly in light of the leaseprovision requiring Superior Sign to indemnify Kassis for loss or damage to third parties.
We further conclude that Kassis is not an intended third-party beneficiary under the policybetween defendant and Superior Sign. "While it is well settled that the identity of a third-partybeneficiary need not specifically be set forth in the contract . . . , it must bedemonstrated that the parties to the insurance policy intended to insure the interest for which thethird-party beneficiary seeks coverage . . . Put another way, where the insurancecontract does not name, describe, or otherwise refer to the entity or individual seeking the benefitthereof as an insured, there is no obligation to defend or indemnify" (State of New York vAmerican Mfrs. Mut. Ins. Co., 188 AD2d 152, 155 [1993]). Here, plaintiffs rely on policylanguage setting forth that the exclusion for contractual liability, pursuant to which the insured isobligated to pay damages based on the assumption of such liability in a contract, does not applyto liability for damages "[a]ssumed in a contract . . . that is an 'insured contract.' "Although it is undisputed that the lease between Kassis and Superior Sign is an insured contractwithin the meaning of the policy, the provision upon which plaintiffs rely simply affordscoverage to Superior Sign with respect to its duty to provide contractual indemnification. Thereis no suggestion of an intent thereby to extend direct coverage to Kassis (see generallyJefferson v Sinclair Ref. Co., 10 NY2d 422, 426-427 [1961]). Thus, Kassis is at best "merelyan incidental beneficiary," not an intended third-party beneficiary (Cole v Metropolitan LifeIns. Co., 273 AD2d 832, 833 [2000]; see American Mfrs. Mut. Ins. Co., 188 AD2d at155-156).
Finally, we note that no declaratory relief has been granted with respect to Superior Signinasmuch as it is not a party to the underlying action.
All concur except Smith and Centra, JJ., who dissent and vote to affirm in the followingmemorandum.
Smith and Centra, JJ. (dissenting). We respectfully dissent, and would affirm the judgment.We disagree with the majority that plaintiff Kassis Superior Sign Co., Inc. (Superior Sign) wasnot required to name plaintiff Joseph Kassis as an additional insured under the commercialgeneral liability (CGL) policy at issue. Pursuant to the terms of defendant's CGL policy, "anyperson or organization who [Superior Sign is] required to name as an additional insured on thispolicy under a written contract or agreement" will be covered as an additional insured. The clauseat issue in the lease executed by Kassis and Superior Sign requires that Superior Sign procureCGL coverage "at its sole cost and expense and for the mutual benefit of" Superior Sign andKassis, with a combined single limit of $1 million per occurrence and an annual aggregate of $2million, plus an excess liability policy with additional coverage in the amount of $1 million. Theparagraph in the lease preceding that clause requires that Kassis maintain fire insurance for thebenefit of both parties, which "may be written either under separate policies in Landlord's nameor combined with other coverages acquired by Tenant," and the clause following the one at issuestates that Superior Sign may maintain additional coverage for its own benefit on anyimprovements that it has placed on the premises and for any business losses that it may sustain.Based upon the placement of the clause at issue, along with the inclusion of the specific amountsof the coverage that was required, and based on our interpretation of the three clauses as a wholeto give effect to the intent of the parties as expressed therein (see Insurance Corp. of N.Y. v Central Mut. Ins. Co., 47 AD3d 469,471 [2008]; Hook Superx v Ciampa N.Co., 2 AD3d 587, 589 [2003]; see generally Empire Props. Corp. v ManufacturersTrust Co., 288 NY 242, 248 [1942]), we conclude that the clause at issue requires that Kassisbe named as an additional insured on Superior's CGL policy, bringing him within defendant'spolicy.[*3]
Finally, we note that it is mere speculation for themajority to state that "it is in fact of 'mutual benefit' to Kassis and Superior Sign that SuperiorSign has coverage for the risk of loss created by Superior Sign's use and occupancy of the leasedproperty, particularly in light of the lease provision requiring Superior Sign to indemnify Kassisfor loss or damage to third parties." While it may eventually inure to the benefit of Kassis forSuperior Sign to have such coverage, the coverage presently does not directly benefit Kassisunless Kassis is required to be named as an additional insured under the CGL policy.Present—Scudder, P.J., Hurlbutt, Smith, Centra and Pine, JJ.