| DiBuono v Abbey, LLC |
| 2011 NY Slip Op 02837 [83 AD3d 650] |
| April 5, 2011 |
| Appellate Division, Second Department |
| James DiBuono et al., Plaintiffs, v Abbey, LLC, et al.,Defendants, and L.M.C. Partners, LLC, Defendant/Third-Party Plaintiff-Respondent. PalisadesResources, Inc., Third-Party Defendant-Appellant. |
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In an action to recover damages for injury to property and a related third-party action, interalia, in effect, for contractual indemnification, the third-party defendant appeals, as limited by itsbrief, from so much of an order of the Supreme Court, Westchester County (Lefkowitz, J.),entered December 10, 2009, as granted those branches of the motion of the defendant/third-partyplaintiff which were for summary judgment on its causes of action to recover damages for breachof contract for failure to procure insurance, in effect, for contractual indemnification, and for ajudgment declaring that it is obligated to defend and indemnify the defendant/third-party plaintiffin the main action.
Ordered that the order is modified, on the law, (1) by deleting the provisions thereof grantingthose branches of the motion of the defendant/third-party plaintiff which was for summaryjudgment on so much of its cause of action, in effect, for contractual indemnification as wasbased on damages allegedly sustained before and after the term of the subject lease and on somuch of its cause of action which was for a judgment declaring that the third-party defendant isobligated to defend and indemnify it in the main action for damages allegedly sustained beforeand after the term of the subject lease, and substituting therefor a provision denying thosebranches of the motion, and (2) by adding a provision thereto searching the record and awardingsummary judgment to the third-party defendant dismissing so much of the defendant/third-partyplaintiff's cause of action, in effect, for contractual indemnification as was based on damagesallegedly sustained before and after the term of the subject lease, and declaring that it is notobligated to defend and indemnify the defendant/third-party plaintiff in the main action fordamages allegedly sustained before and after the term of the subject lease; as so modified, theorder is affirmed insofar as appealed from, without costs or disbursements.
The plaintiffs commenced this action to recover damages for injuries to their land, allegingthat on or before July 25, 2005, their property had been contaminated by the leaking of petroleumfrom gasoline storage tanks located at three nearby service stations. One of those service stationswas allegedly owned and operated by the defendant/third-party plaintiff, L.M.C. Partners, LLC(hereinafter LMC). LMC commenced a third-party action against Palisades Resources, Inc.(hereinafter Palisades), to whom it leased its service station from 1999 through 2004, allegingthat Palisades breached the lease by failing to procure insurance, and by failing to defend andindemnify it in the action commenced by the plaintiffs.
LMC moved for summary judgment on its first cause of action to recover damages for breachof contract for failure to procure insurance, its second cause of action, in effect, for contractualindemnification, and its third cause of action for a judgment declaring that Palisades is obligatedto defend and indemnify it in the main action. The Supreme Court granted LMC's motion,finding that Palisades breached its obligation under the lease to procure insurance coverage inLMC's favor, that Palisades breached its obligation under the lease to defend and indemnifyLMC in the main action, and that LMC was entitled to a judgment declaring that Palisades isobligated to defend and indemnify LMC in the main action. We modify.
"A party seeking summary judgment based on an alleged failure to procure insurance namingthat party as an additional insured must demonstrate that a contract provision required that suchinsurance be procured and that the provision was not complied with" (Rodriguez v SavoyBoro Park Assoc. Ltd. Partnership, 304 AD2d 738, 739 [2003]; see Kinney v LiskCo., 76 NY2d 215 [1990]; Keelan v Sivan, 234 AD2d 516, 517 [1996]; DiMurov Town of Babylon, 210 AD2d 373 [1994]). Here, LMC met this burden by submitting acopy of the lease which stated, among other things, that Palisades was to "maintain in full forceand effect" certain insurance policies naming LMC as an insured party, and a letter fromPalisades's insurer indicating that LMC was not named as an insured party on any policies issuedto Palisades. In opposition, Palisades failed to raise a triable issue of fact, since it did not submitany evidence demonstrating that it procured an insurance policy naming LMC as an insured party(see McGill v Polytechnic Univ., 235 AD2d 400, 401-402 [1997]; Keelan vSivan, 234 AD2d at 517-518). Contrary to Palisades's contention, "a final determination of. . . liability for . . . failure to procure insurance need not await afactual determination as to whose negligence, if anyone's, caused the plaintiff's injuries"(McGill v Polytechnic Univ., 235 AD2d at 402; see Keelan v Sivan, 234 AD2d at517-518; Mathew v Crow Constr. Co., 220 AD2d 490, 491 [1995]). Accordingly, theSupreme Court properly granted that branch of LMC's motion which was for summary judgmenton the issue of liability on its cause of action to recover damages for breach of contract for failureto procure insurance (see Kinney v Lisk Co., 76 NY2d 215 [1990]; Keelan vSivan, 234 AD2d at 517-518; DiMuro v Town of Babylon, 210 AD2d 373 [1994]).
Contrary to Palisades's contention, the indemnification provision in the lease agreement isnot rendered unenforceable by General Obligations Law § 5-321, which provides that anagreement that purports to exempt a lessor from its own negligence is void and unenforceable."[W]here, as here, the liability is to a third party, General Obligations Law § 5-321 doesnot preclude enforcement of an indemnification provision in a commercial lease negotiated atarm's length between two sophisticated parties when coupled with an insurance procurementrequirement" (Castano v Zee-Jay RealtyCo., 55 AD3d 770, 772 [2008]; see Great N. Ins. Co. v Interior Constr. Corp., 7 NY3d 412, 417[2006]; Hogeland v Sibley, Lindsay & Curr Co., 42 NY2d 153 [1977]). Under suchcircumstances, the purpose of the indemnity clause is not to exempt the lessor from liability tothe victim, but to allocate the risk of liability to third parties between the lessor and the lessee(see Castano v Zee-Jay Realty Co., 55 AD3d at 702). Here, LMC and Palisades agreed inthe indemnification provision in the lease that Palisades would be responsible for liability to thirdparties arising from damages incurred during the lease period.
However, the Supreme Court erred in granting that branch of LMC's motion which was forsummary judgment on so much of its cause of action, in effect, for contractual indemnification aswas based on damages allegedly sustained before and after the term of the lease. Here, thecomplaint in the main action alleged that the plaintiffs sustained damages as a result of petroleumdischarges from the demised premises occurring not only during Palisades's lease term, but alsobefore the term began and after it ended. However, LMC was not entitled to indemnificationunder the lease with Palisades for any petroleum discharges which occurred before or after theterm of the lease (cf. Sherry v Wal-MartStores E., L.P., 67 AD3d 992 [2009]; Barnes v New York City Hous. Auth., 43 AD3d 842 [2007]).
Additionally, since Palisades is not an insurer, its duty to defend "is no broader than [*2]its duty to indemnify" (Bellefleur v Newark Beth Israel Med. Ctr., 66 AD3d 807, 809[2009]; see George v Marshalls of MA,Inc., 61 AD3d 925, 931 [2009]; Bryde v CVS Pharmacy, 61 AD3d 907, 908-909 [2009];Cannavale v County of Westchester, 158 AD2d 645 [1990]). Thus, since LMC is notentitled to indemnification for damages allegedly sustained before and after the term of the lease,it is also not entitled to a defense for those periods of time.
Accordingly, upon searching the record, Palisades is entitled to summary judgmentdismissing so much of LMC's cause of action, in effect, for contractual indemnification as wasbased on damages allegedly sustained before and after the lease term, and declaring that it is notobligated to defend and indemnify LMC in the main action for damages allegedly sustainedbefore and after the lease term. Mastro, J.P., Dillon, Eng and Chambers, JJ., concur.