| Travelers Indem. Co. v Zeff Design |
| 2009 NY Slip Op 01703 [60 AD3d 453] |
| March 10, 2009 |
| Appellate Division, First Department |
| Travelers Indemnity Company, as Successor in Interest by Mergerto Gulf Insurance Company as Subrogee of Leibovitz Studio Inc., et al.,Respondents-Appellants, v Zeff Design et al., Defendants, Z One Design, LLC,Appellant, and Hage Engineering et al., Respondents. |
—[*1] Katz & Rychik, P.C., New York (Abe M. Rychik of counsel), for respondents-appellants. L'Abbate, Balkan, Colavita & Contini, L.L.P., Garden City (Douglas R. Halstrom ofcounsel), for respondents.
Order, Supreme Court, New York County (Barbara R. Kapnick, J.), entered November 27,2007, which, to the extent appealed from, granted the Hage defendants' motion for summaryjudgment dismissing the complaint against them, and granted defendant Z One's motion todismiss the complaint only to the extent of dismissing the cause of action against it forprofessional malpractice, unanimously affirmed, with costs.
There was no waiver of subrogation in the contract and rider at issue. The court correctlyfound the rider did not incorporate certain provisions in the American Institute of Architects(AIA) forms which provide for a waiver of subrogation. Specifically, the "contract documents"referred to in paragraph 3 (d) (ii) of the rider are not the contract and rider. Rather, thatparagraph undoubtedly referred to contracts Z One was to enter into with its subcontractors.Accordingly, Z One did not demonstrate that Leibovitz clearly and unequivocally waived anyclaim for subrogation.
Assuming without deciding that Z One can properly raise the argument, Travelers did notpay Leibovitz voluntarily or fail to invoke applicable exclusions in the subject policy.Accordingly, this subrogation action is not barred by Travelers' payment to its insured (cf.Employers Mut. Liab. Ins. Co. of Wis. v Di Cesare & Monaco Concrete Constr. Corp., 9AD2d 379, 382 [1959]; Travelers Ins. Co. v Nory Constr. Co., 184 Misc 2d 366 [2000],affd 281 AD2d 956 [2001]). Once Leibovitz demonstrated the existence of the all-riskpolicy and the loss, [*2]Travelers bore the burden of proving thatthe proximate cause of the loss came within one of the exclusions (Holiday Inns Inc. v AetnaIns. Co., 571 F Supp 1460, 1463 [SD NY 1983]). Indeed, to avoid coverage under suchcircumstances, "it is not sufficient for the all risk insurers' case for them to offer a reasonableinterpretation under which the loss is excluded; they must demonstrate that an interpretationfavoring them is the only reasonable reading of at least one of the relevant terms of exclusion"(Pan Am. World Airways, Inc. v Aetna Cas. & Sur. Co., 505 F2d 989, 1000 [2d Cir1974]). Therefore, it is not sufficient for Z One to suggest various policy exclusions that mayapply. Rather, it must demonstrate that its interpretation of a certain exclusion is the onlyreasonable reading of that exclusion, and that the proximate cause of the loss fell within thatexclusion. Z One has failed to meet that burden.
Z One does not set forth its theory of how the subject wall settled, nor does it offer definitiveproof that one of the policy exclusions applies to that event. In any event, as the motion courtfound, the "Earth Movement" and "Wear and tear" exclusions appear to be limited to shiftingcaused by the gradual effect of natural causes, not by the sudden effect of construction activities.Furthermore, the exclusion for defective work does not apply where the damage to the propertyresulted from a "Covered Cause of Loss," as was the case here. Finally, the note regarding thepayment to Leibovitz, which read "CELEBRITY INVOLVED AND ADJUSTMENT HASBEEN DIFFICULT AND MUST GET OUT PAYMENT TODAY," does not lead to theconclusion that Travelers paid Leibovitz as a volunteer or that it could have disclaimed coverageon the basis of an exclusion.
The court correctly dismissed the complaint as against the Hage defendants. The recordmakes clear that Hage had no obligations with regard to underpinning. Indeed, pursuant toHage's agreement with Z One, Hage was not contractually obligated to—and didnot—perform any services related to the installation of underpinning, shoring or bracing,or to other stability measures. That fact was further supported by various notations on Hage'sdrawings and specifications, which made clear that all underpinning, sheeting, shoring or othersimilar required construction would be the contractor's responsibility, that the contractor was toretain a licensed professional engineer to provide all necessary designs and required inspections,and that the contractor was to provide all measures and precautions necessary to prevent damageand settlement of existing or new construction. Furthermore, while Hage filed a technical reportform with the City, indicating that it would conduct controlled inspections of the shoring,structural stability and concrete, it did so only to expedite the filing process for obtaining aconstruction work permit. Z One was notified of that fact and was advised that beforeconstruction was commenced, performance of these inspections should be taken over by acontrolled inspection company engaged by someone other than Hage. In any event, as the motioncourt found, the record demonstrates that there is no evidence of negligence on Hage's part, sinceits specifications were not followed, and the settling happened only after there was a deviationfrom Hage's instructions.
Moreover, Travelers failed to include an expert's affidavit to support its conclusion that itwas Hage's design "first and foremost" that failed. A claim of malpractice against a professionalengineer requires expert testimony to establish a viable cause of action (see e.g. 530 E. 89Corp. v Unger, 43 NY2d 776 [1977]). "A claim of professional negligence requires proofthat there was a departure from accepted standards of practice and that the departure was aproximate cause of the injury" (D.D. Hamilton Textiles v Estate of Mate, 269 AD2d 214,215 [2000]). Travelers failed to provide such proof from an expert in opposition to Hage'smotion, and this also [*3]warranted dismissal of the complaint asagainst Hage.
Travelers further argues that the court erred in dismissing its causes of action for breach ofcontract and misrepresentation against Hage. An allegation that a party failed in the properperformance of services related primarily to its profession is a claim of professional malpractice(see e.g. Boslow Family Ltd.Partnership v Kaplan & Kaplan, PLLC, 52 AD3d 417 [2008], lv denied 11NY3d 707 [2008]). Accordingly, while Travelers casts claims in contract and negligence, thisdoes not mean that the allegations fall into those designated causes of action (see Matter of R.M. Kliment & FrancesHalsband, Architects [McKinsey & Co., Inc.], 3 NY3d 538 [2004]), and the issue iswhether the allegations set forth by the plaintiff amount to a cause of action for professionalnegligence.
In order to sustain the claim for misrepresentation, Travelers had to show that the damages itsustained as a result were different or supplementary to its damages sustained by reason ofalleged professional malpractice (see generally Simcuski v Saeli, 44 NY2d 442 [1978]).Here, the various causes of action against Hage are based on the same allegations of professionalmalpractice, and Travelers failed to demonstrate any difference between these two sets ofdamages. While they may be termed differently by Travelers, the claim for misrepresentation isin fact a cause of action for professional malpractice, and cannot be sustained.
We have considered the parties' remaining arguments for affirmative relief and find themunavailing. Concur—Tom, J.P., Friedman, Gonzalez, Sweeny and McGuire, JJ.