| Peerless Ins. Co. v Michael Beshara, Inc. |
| 2010 NY Slip Op 05850 [75 AD3d 733] |
| July 1, 2010 |
| Appellate Division, Third Department |
| Peerless Insurance Company, as Subrogee of Rainer's Gourmet,Inc., Respondent-Appellant, v Michael Beshara, Inc., et al.,Appellants-Respondents. |
—[*1] Taylor & Associates, Albany (Sean A. Tomko of counsel), forrespondent-appellant.
Peters, J.P. Cross appeals from an order of the Supreme Court (Williams, J.), entered April 6,2009 in Saratoga County, which, among other things, granted defendants' motion for summaryjudgment dismissing the complaint.
In September 1998, Rainer Mehalick, the owner of Rainer's Gourmet, Inc., leased propertyfrom defendant Michael Beshara consisting of a large restaurant and storage building in theVillage of South Glens Falls, Saratoga County. The lease provided that Beshara certified that theheating and air circulating systems "are working and in good repair" and that "[a]ll futuremaintenance and repair are [l]essee's responsibility." Rainer's Gourmet occupied the propertyuntil February 2004, when water pipes froze and burst, causing water to flood the premises.Following the flood, plaintiff paid an insurance claim to Rainer's Gourmet in the amount of$151,583.84.
Plaintiff, as subrogee of Rainer's Gourmet, thereafter commenced this action seeking to[*2]recover from defendants the sum it paid under the insurancepolicy. In particular, the complaint alleges that defendants failed to provide a heating system thatwas in good repair and that the frozen pipes were caused by a heating malfunction. Defendantsinterposed counterclaims against plaintiff for property damage, alleging that Mehalick wasresponsible for the heating system's maintenance and agreed to indemnify defendants for anyloss resulting from the bursting of pipes. Following joinder of issue, defendants moved andplaintiff cross-moved for summary judgment. Supreme Court granted defendants' motiondismissing the complaint and, finding that the allegations underlying defendants' counterclaimsonly provide the basis for an affirmative defense of comparative negligence, dismissed thecounterclaims as well. The parties cross-appeal.
Plaintiff contends that summary judgment dismissing the complaint was inappropriatebecause a question of fact exists as to whether Beshara provided a heating system that was"working and in good repair" at the commencement of the lease. Initially, we find thatdefendants made a prima facie showing of entitlement to judgment as a matter of law. In supportof the motion, defendants proffered deposition testimony establishing that Beshara sent a vendorto the property at the time the lease commenced to start up the heating units and ensure that theywere operational, and relied on the term of the lease agreement providing that Mehalick wasresponsible for all future maintenance and repair of the heating and air circulating systems.Further, Beshara testified that he never had problems with the heating system when he used theproperty as a restaurant and was not aware that there was a problem with the system until 2003.
In opposition, plaintiff raised a triable issue of fact. Mehalick testified that he experiencedproblems with the heating system "from day one" of the lease and throughout the entirety of thetenancy. Although he confirmed that Beshara had a vendor "fire the unit[s] up" and warrantedthat they worked properly at the time the lease commenced, Mehalick also testified that the unitsonly came on intermittently, as was the case during the entire time he leased the property.Plaintiff also provided the testimony of Paul White, a heating service technician who had workedon the heating system at the property for the past 25 to 30 years. White testified that he inspectedthe system within three months of the commencement of the lease and found it to be old, in poorcondition and unsafe. He explained that one half of one of the units was not functioning at alland that, even at the beginning of the lease, the units were not in good working order and weresimply too old to be repaired or restored. Viewing this evidence in a light most favorable toplaintiff and according it the benefit of every reasonable inference that can be drawn therefrom(see Ballou vRavena-Coeymans-Selkirk School Dist., 72 AD3d 1323, 1326 [2010]; Gadani v Dormitory Auth. of State ofN.Y., 43 AD3d 1218, 1219 [2007]), we find that plaintiff raised a genuine issue of factas to whether Beshara fulfilled his duty of providing a heating system that was "working and ingood repair" in the first instance (cf. Padovano v Vivian, 217 AD2d 868, 869-870[1995]).
Turning to defendants' cross appeal, we likewise find that outright dismissal of thecounterclaims was improper. It is well settled that "[a] subrogee acquires all rights, defenses andremedies of the subrogor and is subject to any claims or defenses which may be raised againstthe subrogor" (Servidori v Mahoney, 129 AD2d 944, 945 [1987]; see United StatesFid. & Guar. Co. v Smith Co., 46 NY2d 498, 504 [1979]; Solomon v ConsolidatedResistance Co. of Am., 97 AD2d 791, 792 [1983]). Having commenced the instant action,plaintiff stepped into the shoes of Rainer's Gourmet, "succeeding to the benefits which it mightbring, but chargeable to the extent of it with the liabilities of [Rainer's Gourmet]"(Seibert v Dunn, 216 NY 237, 245-246 [1915] [emphasis added]). [*3]Despite plaintiff's contention and Supreme Court's conclusion tothe contrary, defendants' claims may properly be interposed as counterclaims (see Siegel,NY Prac § 226 [4th ed]; Siegel, Practice Commentaries, McKinney's Cons Laws of NY,Book 7B, CPLR C3019:5, at 210-211; see also Allstate Ins. Co. v Babylon ChryslerPlymouth, 45 AD2d 969 [1974]; cf. James Talcott, Inc. v Winco Sales Corp., 14NY2d 227, 231-233 [1964]). However, they cannot effect an affirmative recovery againstplaintiff, but rather may be maintained against plaintiff in the present action only to the extent ofsetting off plaintiff's claim (see Allstate Ins. Co. v Babylon Chrysler Plymouth, 45 AD2dat 969; see also Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book7B, CPLR C3019:5, at 210; Travelers Indem. Co. v Zeff Design, 23 Misc 3d 1121[A],2009 NY Slip Op 50878[U], *2 [2009]; Allstate Ins. Co. v Trans Hudson Express, Inc., 4Misc 3d 1029[A], 2004 NY Slip Op 51124[U], *2-3 [2004]). In order to seek affirmative relief,defendants must commence an independent action against Rainer's Gourmet or implead Rainer'sGourmet on the counterclaims (see CPLR 3019 [d]; see also Siegel, PracticeCommentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3019:5, at 211).
The parties' remaining contentions have been reviewed and are either without merit or havebeen rendered academic by our decision.
Rose, Lahtinen, McCarthy and Egan Jr., JJ., concur. Ordered that the order is modified, onthe law, without costs, by reversing so much thereof as granted defendants' motion for summaryjudgment and granted plaintiff's cross motion for summary judgment dismissing defendants'counterclaims to the extent that they seek to set off plaintiff's claim; motion and cross motiondenied to said extent; and, as so modified, affirmed.