Preview
Gwertzman File No. X36-11193R (DSS:smd)
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
AIG PROPERTY CASUALTY COMPANY as subrogee of
AMY IRVING,
Plaintiff,
Index No.: 150165/2017
-against-
SF CONSTRUCTION SERVICES, INC., A&J WOOD NOTICE OF
FLOORS, INC., SETTLEMENT
Defendants.
SF CONSTRUCTION SERVICES, INC.,
Defendant/Third
Party Plaintiff,
-against-
ELITE PRO CONSTRUCTION GROUP INC.,
Third Party Defendant.
C O U N S E L O R S:
PLEASE TAKE NOTICE that the within Proposed Order will be presented for
settlement and signature to the Honorable Shlomo Hagler of the Court at the Supreme Court,
New York County on the 18th day of July, 2022.
GWERTZMAN LEFKOWITZ
SMITH & SULLIVAN LLP
_____________________________
By: DAVID S. SMITH
Attorneys for Plaintiff
AIG Property Casualty Company
a/s/o Amy Irving
14 Wall Street, Suite #3-D
New York, New York 10005
(212) 968-1006
To: All parties via NYSCEF
FILE NO.: X36-11193R (DSS:smd)
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
AIG PROPERTY CASUALTY COMPANY as subrogee of
AMY IRVING, ORDER
Plaintiff,
Index No.: 150165/2017
-against-
SF CONSTRUCTION SERVICES, INC., A&J WOOD
FLOORS, INC.,
Defendants.
SF CONSTRUCTION SERVICES, INC.,
Defendant/Third
Party Plaintiff,
-against-
ELITE PRO CONSTRUCTION GROUP INC.,
Third Party Defendant.
Defendant/Third Party Plaintiff, SF Construction Services, Inc. having made a motion
for Summary Judgment against the Plaintiff and Third Party Defendant Elite Pro Construction
Group Inc., having made a motion for Summary Judgment against the plaintiff, and the plaintiff
having served opposition papers to both the motion and cross-motion, and the defendant/third
party plaintiff SF Construction Services, Inc. and thirty party defendant Elite Pro Construction
Group, Inc., having served reply papers, and after oral arguments held before the Court on
May 3, 2022 and July 11, 2022 (copies of the transcripts for the Oral Argument held on those
dates are attached hereto as Exhibits A and B, respectively), it is hereby Ordered that the
motion and cross-motion is granted in part to the extent that $230,704.00 of the damages
sustained by the plaintiff’s subrogor was within the scope of the work of the contract between
Amy Irving and SF Construction Services Inc. and subject to the waiver of subrogation clause
in the contract and the motion and cross-motion are denied in part since the remainder of the
damages sustained to plaintiff’s subrogor’s property was beyond the scope of the work and not
subject to the waiver of subrogation clause. S.S.D.W. Co., vs. Brisk Waterproofing Co., 76
N.Y. 2d 228 (1990) and it is further
ORDERED that plaintiff’s subrogor’s deductible interest of $186,750.00 is not subject
to the waiver of subrogation clause in the contract. Gap, Inc. vs. Red Apple Cos. 282 A.D. 2d
119 (1st Dist. 2001).
SO ORDERED
_________________________
SHLOMO HAGLER, JSC
EXHIBIT A
1
1 SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK - CIVIL TERM - PART 17
2 -------------------------------X
AIG PROPERTY CASUALTY COMPANY
3 as subrogee of AMY IRVING,
4 Plaintiff
5 v. Index No. 150165/2017
6 SF CONSTRUCTION SERVICES, INC.,
A&J WOOD FLOORS, INC.,
7
Defendants.
8 -------------------------------X
SF CONSTRUCTION SERVICES, INC.,
9
Defendant/Third
10 Party Plaintiff,
11 v.
12 ELITE PRO CONSTRUCTION GROUP, INC.,
13 Third Party Defendant
--------------------------------X
14 Via MS Teams
New York, New York
15 May 3, 2022
16 B E F O R E:
17 H O N O R A B L E S H L O M O S. H A G L E R,
18 Justice
A P P E A R A N C E S:
19
GWERTZMAN LEFKOWITZ SMITH & SULLIVAN LLP
20 14 Wall Street, Suite 3-D
New York, New York 10005
21 BY: DAVID SMITH, ESQ.,
Attorneys for Plaintiff
22
BARTLETT LLP
23 320 Carleton Avenue, Suite 7500
Central Islip, New York 11722
24 BY: MATTHEW J. MINERO, ESQ.,
Attorneys for SF Construction
25
Anthony Armstrong, Official Court Reporter
2
1 A P P E A R A N C E S (Cont'd):
2 FARBER BROCKS & ZANE, LLP
400 Garden City Plaza, Suite 100
3 Garden City, New York 11530
BY: JAMES M. O'HARA, ESQ.,
4 Attorneys for Elite Pro Construction
5 LAW OFFICE OF JAMES J. TOOMEY
485 Lexington Avenue, 7th Floor
6 New York, New York 10017
BY: ROBERT P. FUMO, ESQ.,
7 Attorneys for A&J Wood Floors
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22 Reported by: Anthony Armstrong, Official Court Reporter
23
24
25
Anthony Armstrong, Official Court Reporter
3
Proceedings
02:40:44 1 THE COURT: Appearances, please.
02:40:44 2 MR. MINERO: I'm Matthew Minero of Bartlett,
02:40:44 3 LLP, representing the defendant, SF Construction.
02:40:47 4 MR. SMITH: My name is David Smith. I'm with
02:40:49 5 the law firm of Gwertzman Lefkowitz Smith & Sullivan,
02:40:49 6 attorneys for the plaintiff.
02:41:04 7 MR. O'HARA: I'm James O'Hara from the law firm
02:41:06 8 of Farber Brocks & Zane, for the third-party
02:41:09 9 defendant, Elite Pro Construction.
02:41:29 10 THE COURT: Good afternoon.
02:41:30 11 I have before me a motion for summary judgment
02:41:35 12 by defendant SF Construction, and then there's a cross
02:41:38 13 motion by Elite Pro Construction for summary judgment.
02:41:41 14 It's really the same issue by both defendants.
02:41:46 15 Counsel for SF Construction, you began the
02:41:49 16 motion practice. It's your motion. You may argue the
02:41:52 17 motion.
02:41:54 18 MR. MINERO: Thank you, your Honor. Like I
02:41:55 19 said, I represent SF Construction. We believe this is
02:41:59 20 fairly straightforward.
02:42:00 21 SF Construction entered into a renovation
02:42:04 22 agreement with plaintiff's insured to do some
02:42:08 23 renovations in her apartment. At some point in time a
02:42:13 24 fire occurred and there was damages. AIG on behalf of
02:42:20 25 its insured paid those damages, which is the sum of I
Anthony Armstrong, Official Court Reporter
4
Proceedings
02:42:24 1 think 1.4 million, which it's looking to recover here.
02:42:29 2 Just by way of a little more context, we're the
02:42:32 3 general contractor. We either directly or indirectly
02:42:35 4 hired Elite Pro and A&J Wood Floor. For purposes of
02:42:41 5 today, they're both entities that were doing our work.
02:42:45 6 The renovation agreement between my client and
02:42:48 7 plaintiff's insured has a waiver of subrogation
02:42:53 8 provision. It's a 2007 AIA contract. The provision
02:42:58 9 is very clear: So as long as a claim is covered by
02:43:05 10 insurance and so long as both parties's insurance
02:43:10 11 policies provide for waivers of subrogation, you can't
02:43:15 12 bring a claim. And both my policy, which is issued by
02:43:19 13 I think Southwest Insurance Company, and the AIG
02:43:23 14 policy contain consents that would allow for waivers
02:43:28 15 of subrogation.
02:43:31 16 Since she was paid in full under her policy,
02:43:35 17 except for a deductible claim, which is really not at
02:43:39 18 issue here because it has not been asserted, there's
02:43:42 19 really no claim here to be had. As a matter of law,
02:43:45 20 the claim should be dismissed.
02:43:52 21 MR. SMITH: Can I speak, your Honor?
02:43:54 22 THE COURT: Who do you represent?
02:43:56 23 MR. SMITH: I represent the plaintiff.
02:43:59 24 THE COURT: Let me first hear from Elite Pro
02:44:02 25 Construction - it's really the same argument - and
Anthony Armstrong, Official Court Reporter
5
Proceedings
02:44:04 1 then you could oppose both motions. It's really an
02:44:08 2 issue rather than two motions. If one goes, the other
02:44:11 3 one goes as well.
02:44:13 4 MR. O'HARA: Correct, your Honor.
02:44:26 5 We agree that there's a waiver of subrogation
02:44:29 6 here. My client's policy also provides for a waiver
02:44:33 7 of subrogation which is applicable here. I would just
02:44:36 8 like to point out that in the opposition papers
02:44:38 9 plaintiff did not argue that there is no waiver of
02:44:41 10 subrogation. They're simply arguing the extent of the
02:44:46 11 subrogation and how far that waiver goes.
02:44:49 12 THE COURT: Let me just highlight a few things
02:44:52 13 that were in the papers but were not mentioned here so
02:44:55 14 that we have a full record.
02:44:59 15 So this is a subrogation action. It involves
02:45:05 16 the AIG's insured that was involved in construction of
02:45:11 17 the apartment. The unit was 9C and 9D at 75 Central
02:45:22 18 Park West in the City. There was an allegation of
02:45:27 19 improper storage of used rags used in floor finishing
02:45:34 20 work which may have caused the fire.
02:45:38 21 In addition, counsel had raised the issue of the
02:45:46 22 waiver of subrogation; specifically, counsel had cited
02:45:53 23 to a Third Department decision, Mu Chapter of the
02:46:01 24 Sigma Pi Fraternity of US versus Northeast
02:46:12 25 Construction Services, 273 A.D. 2nd 579. And again,
Anthony Armstrong, Official Court Reporter
6
Proceedings
02:46:20 1 that's a Fourth -- I'm sorry, Third Department
02:46:25 2 decision from 2000.
02:46:29 3 In opposition to the motion, plaintiff stated
02:46:32 4 that the policy provides for the insurance applicable
02:47:00 5 to the work. So what does that mean? And counsel
02:47:04 6 cited the -- in this case to say that it goes beyond
02:47:07 7 -- it doesn't mean what was the work on the contract
02:47:13 8 and very similar clause. And the Appellate Division
02:47:20 9 found that it was not limited to the work, but also
02:47:26 10 provided for other damages that accrued thereto.
02:47:36 11 With that full picture, counsel can oppose the
02:47:43 12 motion.
02:47:44 13 MR. SMITH: Thank you, your Honor.
02:47:46 14 THE COURT: I've read all the papers.
02:47:50 15 MR. SMITH: We appreciate that, your Honor.
02:47:52 16 I wanted to point out, you know, that the case
02:47:56 17 that was cited by the movant's counsel in their reply
02:48:00 18 was a Third Department case. The case that I'm
02:48:05 19 relying upon, which is the SSDW versus Brisk, is a
02:48:12 20 Court of Appeals case. That's only a Third Department
02:48:15 21 case. And I think that there was a case that was -- I
02:48:18 22 didn't have a chance to do a surreply.
02:48:22 23 But there was a case that was in federal court
02:48:27 24 called Garden City Apartments LLC versus Xcel Plumbing
02:48:35 25 of New York Inc., 233 F. Supp. 3B 346. That was an
Anthony Armstrong, Official Court Reporter
7
Proceedings
02:48:44 1 Eastern District case. In fact, Mr. O'Hara's firm was
02:48:49 2 on the other side of it. And there, that same issue
02:48:53 3 that was brought up in the Third Department case that
02:48:55 4 there was a revision of the AIA contract, and in that
02:49:00 5 one, the federal court, which is a 2017 decision, they
02:49:06 6 disregarded that and they disregarded the Third
02:49:08 7 Department case, which was a lower court case. SSDW
02:49:13 8 has not been overturned and still the law of the
02:49:16 9 state, and it's the higher court.
02:49:18 10 You shouldn't really apply a Third Department
02:49:20 11 case to this particular matter. The contract itself
02:49:26 12 was a limited contract for certain work in certain
02:49:30 13 portion of --
02:49:31 14 THE COURT: Let me stop you for a second.
02:49:33 15 Please tell me where within the Court of Appeals
02:49:36 16 case do we have this particular language and the Court
02:49:40 17 of Appeals ruled that the language of the contract
02:49:51 18 only applied to the work. We know we have all the
02:49:58 19 language. Show me within the Court of Appeals where
02:50:01 20 you can extrapolate that I shouldn't read the
02:50:07 21 language -- the exact language of this provision as
02:50:12 22 was interpreted by the Third Department.
02:50:15 23 MR. SMITH: Well, the SSDW case involved where
02:50:19 24 there was like work being done on certain floors in
02:50:22 25 construction and then caused damaged in other portions
Anthony Armstrong, Official Court Reporter
8
Proceedings
02:50:25 1 of the building, which was not a portion of the
02:50:28 2 contract. We're trying to argue here similarly that
02:50:32 3 we had -- they were working in a portion of Ms.
02:50:37 4 Irving's apartment. It caused damage to other areas
02:50:41 5 of her apartment which were not part of the contract
02:50:47 6 and which was not within the scope of the work.
02:50:51 7 Therefore, if it's beyond the scope of that particular
02:50:53 8 contract, it's outside the waiver.
02:50:56 9 THE COURT: That was in the Court of Appeals?
02:50:58 10 MR. SMITH: That was in the Court of Appeals
02:50:59 11 case. My office did the Court of Appeals case back in
02:51:02 12 1980.
02:51:03 13 THE COURT: So you're saying the Third
02:51:05 14 Department is not in consonance with the Court of
02:51:09 15 Appeals case?
02:51:10 16 MR. SMITH: If you look at that Third
02:51:12 17 Department case, they talked about a little footnote
02:51:16 18 in there. It was not something -- they didn't
02:51:21 19 overturn SSDW.
02:51:25 20 MR. MINERO: Your Honor, if I may.
02:51:27 21 There was no need for the Third Department to
02:51:29 22 overturn the Brisk Waterproofing decision because
02:51:34 23 they're discussing two very different provisions. In
02:51:40 24 fact, what the AIA did in response to Brisk
02:51:44 25 Waterproofing is amend the section that deals with
Anthony Armstrong, Official Court Reporter
9
Proceedings
02:51:48 1 waivers of subrogation to not be precluded by the
02:51:54 2 original language in their 1987 agreement, that they
02:51:58 3 in fact wanted the waiver to be very broad. That's
02:52:02 4 why the language was changed. That's what the Third
02:52:05 5 Department held, albeit in a footnote, which really it
02:52:09 6 doesn't matter. It's contract interpretation.
02:52:11 7 And that's what we have here. We have a 2007
02:52:14 8 version of the agreement. It's not the agreement that
02:52:17 9 was at issue in Brisk. There's a much broader
02:52:22 10 provision, and it covers everything that is covered by
02:52:24 11 insurance, which is what we have here.
02:52:27 12 MR. SMITH: And I think, your Honor, just that
02:52:29 13 case that I cited in the Eastern District --
02:52:35 14 THE COURT: Mr. Smith, you have to realize that
02:52:38 15 there is a federal court case, a lower federal court
02:52:41 16 case, quite frankly, which means I can disagree with
02:52:45 17 an Eastern District judge. I don't have to follow the
02:52:48 18 Eastern District. If there is a pronouncement in any
02:52:51 19 one of the departments, and if there's nothing in the
02:52:56 20 First Department, I must follow the Third Department.
02:52:59 21 It's actually one of my decisions that was affirmed by
02:53:02 22 the Appellate Division in the Court of Appeals that
02:53:04 23 says that. It's black letter law.
02:53:07 24 I cannot follow a federal court decision in the
02:53:10 25 face of a Third Department decision when there's a
Anthony Armstrong, Official Court Reporter
10
Proceedings
02:53:14 1 vacuum in the First Department. And clearly I looked.
02:53:17 2 I could not find the decision in the First Department.
02:53:21 3 I think the Second Department mentioned it, and the
02:53:26 4 Fourth Department mentioned it as well. I didn't see
02:53:32 5 any decision from any department that overturned or
02:53:38 6 disagreed with the Third Department's interpretation
02:53:44 7 of the very same provision.
02:53:48 8 And you are correct, it is dealt with in the
02:53:51 9 footnote. It dealt with it sweetly. It says that
02:53:56 10 it's a different provision. Therefore, we're not
02:54:01 11 following the SSDW versus Brisk case.
02:54:07 12 MR. SMITH: Well, I don't think that SSDW has
02:54:13 13 been overturned.
02:54:15 14 THE COURT: Not overturned. It's a different
02:54:17 15 version. It doesn't have to be overturned. The Third
02:54:20 16 Department can't overturn a Court of Appeals case.
02:54:23 17 What the Third Department says is that SSDW is no
02:54:27 18 longer applicable because there was a change in the
02:54:30 19 provision.
02:54:31 20 You want me to read it to you? I will read you
02:54:34 21 the footnote. I am sure you have read it a hundred
02:54:37 22 times. Let me read it into the record. Maybe I'm not
02:54:40 23 being clear.
02:54:41 24 The Third Department said it quite, I said,
02:54:44 25 sweetly. It's true. It's footnote two.
Anthony Armstrong, Official Court Reporter
11
Proceedings
02:54:51 1 "To the extent defendant relies upon SSDW
02:54:55 2 Company versus Brisk Waterproofing Company, 76 NY 2d
02:55:00 3 228, in urging a contrary result, we need note only
02:55:03 4 that the Court of Appeals in Brisk was considering the
02:55:06 5 effect of the waiver clause contained in the 1976
02:55:09 6 version of the American Institute of Architect's
02:55:13 7 contract. Such clause has since been amended for the
02:55:16 8 express purpose of overcoming the holding in Brisk."
02:55:24 9 I won't read anymore. That's really the
02:55:27 10 relevant portion. And Mr. Minero alluded to it. I
02:55:31 11 wanted to read it in whole, at least that's what's
02:55:33 12 applicable.
02:55:34 13 Mr. Smith, you can't rely on SSD because the
02:55:38 14 provision was changed.
02:55:39 15 MR. SMITH: Well, I'm just saying, you know, I
02:55:42 16 know that there was a -- in the federal court case,
02:55:45 17 which was on a diversity matter, they went the other
02:55:49 18 way on that.
02:55:51 19 THE COURT: You said it too fast.
02:55:53 20 Do you have a citation? I am not aware of that
02:55:56 21 case. I don't see the -- when I --
02:56:01 22 MR. SMITH: 233 --
02:56:02 23 THE COURT: Slow down. 233...
02:56:05 24 MR. SMITH: F. Supp. 3d 346.
02:56:28 25 THE COURT: Give me a five-minute break.
Anthony Armstrong, Official Court Reporter
12
Proceedings
02:56:30 1 (There was a recess.)
02:56:30 2 **********
03:09:22 3 THE COURT: I need a little clarification.
03:09:25 4 Maybe I'm not digesting what the Third Department did
03:09:29 5 and what the Court of Appeals said and how the changes
03:09:35 6 to the AIA contract occurred. Because I have the SSDW
03:09:44 7 Company versus Brisk decision, and I have the Article
03:09:51 8 17.6. Let me read that into the record because it
03:09:59 9 looks similar to the language we have here. Let me
03:10:03 10 just read it.
03:10:05 11 And this is from SSDW. Article 17.6 provides,
03:10:12 12 "The owner and contractor waive all rights against
03:10:21 13 each other for damages caused by fire or other peril,"
03:10:28 14 and they highlight this portion, "to the extent
03:10:35 15 covered by insurance obtained pursuant to this article
03:10:41 16 or any other property insurance applicable to the
03:10:45 17 work."
03:10:46 18 And that's the exact language that I have in the
03:10:48 19 Third Department decision.
03:10:53 20 Is that wrong, Mr. Minero? Isn't it exactly the
03:10:58 21 same as in SSDW?
03:11:02 22 MR. O'HARA: No, Judge, it's not exactly the
03:11:05 23 same. Because the new language speaks to all damages,
03:11:13 24 claims covered by any applicable insurance not just to
03:11:18 25 the work.
Anthony Armstrong, Official Court Reporter
13
Proceedings
03:11:21 1 THE COURT: No. I guess maybe I'm not being
03:11:23 2 clear. I'm not talking about the provisions that you
03:11:26 3 have here. I'm talking about the SSDW provision and
03:11:32 4 the Third Department decision's provision. Are they
03:11:38 5 different? Is the SSDW provision the same as the Mu
03:11:45 6 Chapter's provision, which is 11.3.7?
03:11:50 7 MR. O'HARA: No. It's different. It gets put
03:11:52 8 into 7.3.3. They redid the language to make it more
03:12:02 9 broad. That's what we --
03:12:05 10 THE COURT: So where is that? Where is that in
03:12:08 11 the Sigma -- the Mu Chapter of Sigma Fraternity --
03:12:15 12 let's call it the Third Department to make it easier.
03:12:21 13 MR. O'HARA: It's at -- let's see, it's at page
03:12:25 14 581 I guess for -- I'm pulling up that decision
03:12:33 15 myself, too, Judge. Bear with me for one second.
03:12:53 16 THE COURT: "To the extent covered by property
03:12:55 17 insurance;" is that the language you are talking
03:12:57 18 about?
03:12:58 19 MR. O'HARA: Yes. It's not about work. It's
03:13:01 20 about coverage by insurance. That's the key
03:13:08 21 difference here. It was done specifically for that
03:13:13 22 SSDW, Brisk, whatever you want to call it, is no
03:13:19 23 longer, you know, I guess, binding on the waiver of
03:13:23 24 subrogation in these agreements. This new case, the
03:13:27 25 Garden City case, from my very quick reading of it,
Anthony Armstrong, Official Court Reporter
14
Proceedings
03:13:31 1 and we can debate it --
03:13:33 2 THE COURT: Let's stop for a second.
03:13:34 3 Before we get there, I want to understand the
03:13:37 4 difference between the SSDW policy provision and the
03:13:41 5 Third Department decision. Because when I read the --
03:13:46 6 on page also 581, closer to 582, it read 11.3.7, and
03:13:57 7 then when I look at article 17.6, it looks identical.
03:14:08 8 MR. O'HARA: Bear with me for one second, your
03:14:10 9 Honor.
03:14:30 10 THE COURT: The only thing I see different is
03:14:32 11 property versus insurance.
03:15:41 12 MR. O'HARA:
Preview
Gwertzman File No. X36-11193R (DSS:smd) SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK AIG PROPERTY CASUALTY COMPANY as subrogee of AMY IRVING, Plaintiff, Index No.: 150165/2017 -against- SF CONSTRUCTION SERVICES, INC., A&J WOOD NOTICE OF FLOORS, INC., SETTLEMENT Defendants. SF CONSTRUCTION SERVICES, INC., Defendant/Third Party Plaintiff, -against- ELITE PRO CONSTRUCTION GROUP INC., Third Party Defendant. C O U N S E L O R S: PLEASE TAKE NOTICE that the within Proposed Order will be presented for settlement and signature to the Honorable Shlomo Hagler of the Court at the Supreme Court, New York County on the 18th day of July, 2022. GWERTZMAN LEFKOWITZ SMITH & SULLIVAN LLP _____________________________ By: DAVID S. SMITH Attorneys for Plaintiff AIG Property Casualty Company a/s/o Amy Irving 14 Wall Street, Suite #3-D New York, New York 10005 (212) 968-1006 To: All parties via NYSCEF FILE NO.: X36-11193R (DSS:smd) SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK AIG PROPERTY CASUALTY COMPANY as subrogee of AMY IRVING, ORDER Plaintiff, Index No.: 150165/2017 -against- SF CONSTRUCTION SERVICES, INC., A&J WOOD FLOORS, INC., Defendants. SF CONSTRUCTION SERVICES, INC., Defendant/Third Party Plaintiff, -against- ELITE PRO CONSTRUCTION GROUP INC., Third Party Defendant. Defendant/Third Party Plaintiff, SF Construction Services, Inc. having made a motion for Summary Judgment against the Plaintiff and Third Party Defendant Elite Pro Construction Group Inc., having made a motion for Summary Judgment against the plaintiff, and the plaintiff having served opposition papers to both the motion and cross-motion, and the defendant/third party plaintiff SF Construction Services, Inc. and thirty party defendant Elite Pro Construction Group, Inc., having served reply papers, and after oral arguments held before the Court on May 3, 2022 and July 11, 2022 (copies of the transcripts for the Oral Argument held on those dates are attached hereto as Exhibits A and B, respectively), it is hereby Ordered that the motion and cross-motion is granted in part to the extent that $230,704.00 of the damages sustained by the plaintiff’s subrogor was within the scope of the work of the contract between Amy Irving and SF Construction Services Inc. and subject to the waiver of subrogation clause in the contract and the motion and cross-motion are denied in part since the remainder of the damages sustained to plaintiff’s subrogor’s property was beyond the scope of the work and not subject to the waiver of subrogation clause. S.S.D.W. Co., vs. Brisk Waterproofing Co., 76 N.Y. 2d 228 (1990) and it is further ORDERED that plaintiff’s subrogor’s deductible interest of $186,750.00 is not subject to the waiver of subrogation clause in the contract. Gap, Inc. vs. Red Apple Cos. 282 A.D. 2d 119 (1st Dist. 2001). SO ORDERED _________________________ SHLOMO HAGLER, JSC EXHIBIT A 1 1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK - CIVIL TERM - PART 17 2 -------------------------------X AIG PROPERTY CASUALTY COMPANY 3 as subrogee of AMY IRVING, 4 Plaintiff 5 v. Index No. 150165/2017 6 SF CONSTRUCTION SERVICES, INC., A&J WOOD FLOORS, INC., 7 Defendants. 8 -------------------------------X SF CONSTRUCTION SERVICES, INC., 9 Defendant/Third 10 Party Plaintiff, 11 v. 12 ELITE PRO CONSTRUCTION GROUP, INC., 13 Third Party Defendant --------------------------------X 14 Via MS Teams New York, New York 15 May 3, 2022 16 B E F O R E: 17 H O N O R A B L E S H L O M O S. H A G L E R, 18 Justice A P P E A R A N C E S: 19 GWERTZMAN LEFKOWITZ SMITH & SULLIVAN LLP 20 14 Wall Street, Suite 3-D New York, New York 10005 21 BY: DAVID SMITH, ESQ., Attorneys for Plaintiff 22 BARTLETT LLP 23 320 Carleton Avenue, Suite 7500 Central Islip, New York 11722 24 BY: MATTHEW J. MINERO, ESQ., Attorneys for SF Construction 25 Anthony Armstrong, Official Court Reporter 2 1 A P P E A R A N C E S (Cont'd): 2 FARBER BROCKS & ZANE, LLP 400 Garden City Plaza, Suite 100 3 Garden City, New York 11530 BY: JAMES M. O'HARA, ESQ., 4 Attorneys for Elite Pro Construction 5 LAW OFFICE OF JAMES J. TOOMEY 485 Lexington Avenue, 7th Floor 6 New York, New York 10017 BY: ROBERT P. FUMO, ESQ., 7 Attorneys for A&J Wood Floors 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Reported by: Anthony Armstrong, Official Court Reporter 23 24 25 Anthony Armstrong, Official Court Reporter 3 Proceedings 02:40:44 1 THE COURT: Appearances, please. 02:40:44 2 MR. MINERO: I'm Matthew Minero of Bartlett, 02:40:44 3 LLP, representing the defendant, SF Construction. 02:40:47 4 MR. SMITH: My name is David Smith. I'm with 02:40:49 5 the law firm of Gwertzman Lefkowitz Smith & Sullivan, 02:40:49 6 attorneys for the plaintiff. 02:41:04 7 MR. O'HARA: I'm James O'Hara from the law firm 02:41:06 8 of Farber Brocks & Zane, for the third-party 02:41:09 9 defendant, Elite Pro Construction. 02:41:29 10 THE COURT: Good afternoon. 02:41:30 11 I have before me a motion for summary judgment 02:41:35 12 by defendant SF Construction, and then there's a cross 02:41:38 13 motion by Elite Pro Construction for summary judgment. 02:41:41 14 It's really the same issue by both defendants. 02:41:46 15 Counsel for SF Construction, you began the 02:41:49 16 motion practice. It's your motion. You may argue the 02:41:52 17 motion. 02:41:54 18 MR. MINERO: Thank you, your Honor. Like I 02:41:55 19 said, I represent SF Construction. We believe this is 02:41:59 20 fairly straightforward. 02:42:00 21 SF Construction entered into a renovation 02:42:04 22 agreement with plaintiff's insured to do some 02:42:08 23 renovations in her apartment. At some point in time a 02:42:13 24 fire occurred and there was damages. AIG on behalf of 02:42:20 25 its insured paid those damages, which is the sum of I Anthony Armstrong, Official Court Reporter 4 Proceedings 02:42:24 1 think 1.4 million, which it's looking to recover here. 02:42:29 2 Just by way of a little more context, we're the 02:42:32 3 general contractor. We either directly or indirectly 02:42:35 4 hired Elite Pro and A&J Wood Floor. For purposes of 02:42:41 5 today, they're both entities that were doing our work. 02:42:45 6 The renovation agreement between my client and 02:42:48 7 plaintiff's insured has a waiver of subrogation 02:42:53 8 provision. It's a 2007 AIA contract. The provision 02:42:58 9 is very clear: So as long as a claim is covered by 02:43:05 10 insurance and so long as both parties's insurance 02:43:10 11 policies provide for waivers of subrogation, you can't 02:43:15 12 bring a claim. And both my policy, which is issued by 02:43:19 13 I think Southwest Insurance Company, and the AIG 02:43:23 14 policy contain consents that would allow for waivers 02:43:28 15 of subrogation. 02:43:31 16 Since she was paid in full under her policy, 02:43:35 17 except for a deductible claim, which is really not at 02:43:39 18 issue here because it has not been asserted, there's 02:43:42 19 really no claim here to be had. As a matter of law, 02:43:45 20 the claim should be dismissed. 02:43:52 21 MR. SMITH: Can I speak, your Honor? 02:43:54 22 THE COURT: Who do you represent? 02:43:56 23 MR. SMITH: I represent the plaintiff. 02:43:59 24 THE COURT: Let me first hear from Elite Pro 02:44:02 25 Construction - it's really the same argument - and Anthony Armstrong, Official Court Reporter 5 Proceedings 02:44:04 1 then you could oppose both motions. It's really an 02:44:08 2 issue rather than two motions. If one goes, the other 02:44:11 3 one goes as well. 02:44:13 4 MR. O'HARA: Correct, your Honor. 02:44:26 5 We agree that there's a waiver of subrogation 02:44:29 6 here. My client's policy also provides for a waiver 02:44:33 7 of subrogation which is applicable here. I would just 02:44:36 8 like to point out that in the opposition papers 02:44:38 9 plaintiff did not argue that there is no waiver of 02:44:41 10 subrogation. They're simply arguing the extent of the 02:44:46 11 subrogation and how far that waiver goes. 02:44:49 12 THE COURT: Let me just highlight a few things 02:44:52 13 that were in the papers but were not mentioned here so 02:44:55 14 that we have a full record. 02:44:59 15 So this is a subrogation action. It involves 02:45:05 16 the AIG's insured that was involved in construction of 02:45:11 17 the apartment. The unit was 9C and 9D at 75 Central 02:45:22 18 Park West in the City. There was an allegation of 02:45:27 19 improper storage of used rags used in floor finishing 02:45:34 20 work which may have caused the fire. 02:45:38 21 In addition, counsel had raised the issue of the 02:45:46 22 waiver of subrogation; specifically, counsel had cited 02:45:53 23 to a Third Department decision, Mu Chapter of the 02:46:01 24 Sigma Pi Fraternity of US versus Northeast 02:46:12 25 Construction Services, 273 A.D. 2nd 579. And again, Anthony Armstrong, Official Court Reporter 6 Proceedings 02:46:20 1 that's a Fourth -- I'm sorry, Third Department 02:46:25 2 decision from 2000. 02:46:29 3 In opposition to the motion, plaintiff stated 02:46:32 4 that the policy provides for the insurance applicable 02:47:00 5 to the work. So what does that mean? And counsel 02:47:04 6 cited the -- in this case to say that it goes beyond 02:47:07 7 -- it doesn't mean what was the work on the contract 02:47:13 8 and very similar clause. And the Appellate Division 02:47:20 9 found that it was not limited to the work, but also 02:47:26 10 provided for other damages that accrued thereto. 02:47:36 11 With that full picture, counsel can oppose the 02:47:43 12 motion. 02:47:44 13 MR. SMITH: Thank you, your Honor. 02:47:46 14 THE COURT: I've read all the papers. 02:47:50 15 MR. SMITH: We appreciate that, your Honor. 02:47:52 16 I wanted to point out, you know, that the case 02:47:56 17 that was cited by the movant's counsel in their reply 02:48:00 18 was a Third Department case. The case that I'm 02:48:05 19 relying upon, which is the SSDW versus Brisk, is a 02:48:12 20 Court of Appeals case. That's only a Third Department 02:48:15 21 case. And I think that there was a case that was -- I 02:48:18 22 didn't have a chance to do a surreply. 02:48:22 23 But there was a case that was in federal court 02:48:27 24 called Garden City Apartments LLC versus Xcel Plumbing 02:48:35 25 of New York Inc., 233 F. Supp. 3B 346. That was an Anthony Armstrong, Official Court Reporter 7 Proceedings 02:48:44 1 Eastern District case. In fact, Mr. O'Hara's firm was 02:48:49 2 on the other side of it. And there, that same issue 02:48:53 3 that was brought up in the Third Department case that 02:48:55 4 there was a revision of the AIA contract, and in that 02:49:00 5 one, the federal court, which is a 2017 decision, they 02:49:06 6 disregarded that and they disregarded the Third 02:49:08 7 Department case, which was a lower court case. SSDW 02:49:13 8 has not been overturned and still the law of the 02:49:16 9 state, and it's the higher court. 02:49:18 10 You shouldn't really apply a Third Department 02:49:20 11 case to this particular matter. The contract itself 02:49:26 12 was a limited contract for certain work in certain 02:49:30 13 portion of -- 02:49:31 14 THE COURT: Let me stop you for a second. 02:49:33 15 Please tell me where within the Court of Appeals 02:49:36 16 case do we have this particular language and the Court 02:49:40 17 of Appeals ruled that the language of the contract 02:49:51 18 only applied to the work. We know we have all the 02:49:58 19 language. Show me within the Court of Appeals where 02:50:01 20 you can extrapolate that I shouldn't read the 02:50:07 21 language -- the exact language of this provision as 02:50:12 22 was interpreted by the Third Department. 02:50:15 23 MR. SMITH: Well, the SSDW case involved where 02:50:19 24 there was like work being done on certain floors in 02:50:22 25 construction and then caused damaged in other portions Anthony Armstrong, Official Court Reporter 8 Proceedings 02:50:25 1 of the building, which was not a portion of the 02:50:28 2 contract. We're trying to argue here similarly that 02:50:32 3 we had -- they were working in a portion of Ms. 02:50:37 4 Irving's apartment. It caused damage to other areas 02:50:41 5 of her apartment which were not part of the contract 02:50:47 6 and which was not within the scope of the work. 02:50:51 7 Therefore, if it's beyond the scope of that particular 02:50:53 8 contract, it's outside the waiver. 02:50:56 9 THE COURT: That was in the Court of Appeals? 02:50:58 10 MR. SMITH: That was in the Court of Appeals 02:50:59 11 case. My office did the Court of Appeals case back in 02:51:02 12 1980. 02:51:03 13 THE COURT: So you're saying the Third 02:51:05 14 Department is not in consonance with the Court of 02:51:09 15 Appeals case? 02:51:10 16 MR. SMITH: If you look at that Third 02:51:12 17 Department case, they talked about a little footnote 02:51:16 18 in there. It was not something -- they didn't 02:51:21 19 overturn SSDW. 02:51:25 20 MR. MINERO: Your Honor, if I may. 02:51:27 21 There was no need for the Third Department to 02:51:29 22 overturn the Brisk Waterproofing decision because 02:51:34 23 they're discussing two very different provisions. In 02:51:40 24 fact, what the AIA did in response to Brisk 02:51:44 25 Waterproofing is amend the section that deals with Anthony Armstrong, Official Court Reporter 9 Proceedings 02:51:48 1 waivers of subrogation to not be precluded by the 02:51:54 2 original language in their 1987 agreement, that they 02:51:58 3 in fact wanted the waiver to be very broad. That's 02:52:02 4 why the language was changed. That's what the Third 02:52:05 5 Department held, albeit in a footnote, which really it 02:52:09 6 doesn't matter. It's contract interpretation. 02:52:11 7 And that's what we have here. We have a 2007 02:52:14 8 version of the agreement. It's not the agreement that 02:52:17 9 was at issue in Brisk. There's a much broader 02:52:22 10 provision, and it covers everything that is covered by 02:52:24 11 insurance, which is what we have here. 02:52:27 12 MR. SMITH: And I think, your Honor, just that 02:52:29 13 case that I cited in the Eastern District -- 02:52:35 14 THE COURT: Mr. Smith, you have to realize that 02:52:38 15 there is a federal court case, a lower federal court 02:52:41 16 case, quite frankly, which means I can disagree with 02:52:45 17 an Eastern District judge. I don't have to follow the 02:52:48 18 Eastern District. If there is a pronouncement in any 02:52:51 19 one of the departments, and if there's nothing in the 02:52:56 20 First Department, I must follow the Third Department. 02:52:59 21 It's actually one of my decisions that was affirmed by 02:53:02 22 the Appellate Division in the Court of Appeals that 02:53:04 23 says that. It's black letter law. 02:53:07 24 I cannot follow a federal court decision in the 02:53:10 25 face of a Third Department decision when there's a Anthony Armstrong, Official Court Reporter 10 Proceedings 02:53:14 1 vacuum in the First Department. And clearly I looked. 02:53:17 2 I could not find the decision in the First Department. 02:53:21 3 I think the Second Department mentioned it, and the 02:53:26 4 Fourth Department mentioned it as well. I didn't see 02:53:32 5 any decision from any department that overturned or 02:53:38 6 disagreed with the Third Department's interpretation 02:53:44 7 of the very same provision. 02:53:48 8 And you are correct, it is dealt with in the 02:53:51 9 footnote. It dealt with it sweetly. It says that 02:53:56 10 it's a different provision. Therefore, we're not 02:54:01 11 following the SSDW versus Brisk case. 02:54:07 12 MR. SMITH: Well, I don't think that SSDW has 02:54:13 13 been overturned. 02:54:15 14 THE COURT: Not overturned. It's a different 02:54:17 15 version. It doesn't have to be overturned. The Third 02:54:20 16 Department can't overturn a Court of Appeals case. 02:54:23 17 What the Third Department says is that SSDW is no 02:54:27 18 longer applicable because there was a change in the 02:54:30 19 provision. 02:54:31 20 You want me to read it to you? I will read you 02:54:34 21 the footnote. I am sure you have read it a hundred 02:54:37 22 times. Let me read it into the record. Maybe I'm not 02:54:40 23 being clear. 02:54:41 24 The Third Department said it quite, I said, 02:54:44 25 sweetly. It's true. It's footnote two. Anthony Armstrong, Official Court Reporter 11 Proceedings 02:54:51 1 "To the extent defendant relies upon SSDW 02:54:55 2 Company versus Brisk Waterproofing Company, 76 NY 2d 02:55:00 3 228, in urging a contrary result, we need note only 02:55:03 4 that the Court of Appeals in Brisk was considering the 02:55:06 5 effect of the waiver clause contained in the 1976 02:55:09 6 version of the American Institute of Architect's 02:55:13 7 contract. Such clause has since been amended for the 02:55:16 8 express purpose of overcoming the holding in Brisk." 02:55:24 9 I won't read anymore. That's really the 02:55:27 10 relevant portion. And Mr. Minero alluded to it. I 02:55:31 11 wanted to read it in whole, at least that's what's 02:55:33 12 applicable. 02:55:34 13 Mr. Smith, you can't rely on SSD because the 02:55:38 14 provision was changed. 02:55:39 15 MR. SMITH: Well, I'm just saying, you know, I 02:55:42 16 know that there was a -- in the federal court case, 02:55:45 17 which was on a diversity matter, they went the other 02:55:49 18 way on that. 02:55:51 19 THE COURT: You said it too fast. 02:55:53 20 Do you have a citation? I am not aware of that 02:55:56 21 case. I don't see the -- when I -- 02:56:01 22 MR. SMITH: 233 -- 02:56:02 23 THE COURT: Slow down. 233... 02:56:05 24 MR. SMITH: F. Supp. 3d 346. 02:56:28 25 THE COURT: Give me a five-minute break. Anthony Armstrong, Official Court Reporter 12 Proceedings 02:56:30 1 (There was a recess.) 02:56:30 2 ********** 03:09:22 3 THE COURT: I need a little clarification. 03:09:25 4 Maybe I'm not digesting what the Third Department did 03:09:29 5 and what the Court of Appeals said and how the changes 03:09:35 6 to the AIA contract occurred. Because I have the SSDW 03:09:44 7 Company versus Brisk decision, and I have the Article 03:09:51 8 17.6. Let me read that into the record because it 03:09:59 9 looks similar to the language we have here. Let me 03:10:03 10 just read it. 03:10:05 11 And this is from SSDW. Article 17.6 provides, 03:10:12 12 "The owner and contractor waive all rights against 03:10:21 13 each other for damages caused by fire or other peril," 03:10:28 14 and they highlight this portion, "to the extent 03:10:35 15 covered by insurance obtained pursuant to this article 03:10:41 16 or any other property insurance applicable to the 03:10:45 17 work." 03:10:46 18 And that's the exact language that I have in the 03:10:48 19 Third Department decision. 03:10:53 20 Is that wrong, Mr. Minero? Isn't it exactly the 03:10:58 21 same as in SSDW? 03:11:02 22 MR. O'HARA: No, Judge, it's not exactly the 03:11:05 23 same. Because the new language speaks to all damages, 03:11:13 24 claims covered by any applicable insurance not just to 03:11:18 25 the work. Anthony Armstrong, Official Court Reporter 13 Proceedings 03:11:21 1 THE COURT: No. I guess maybe I'm not being 03:11:23 2 clear. I'm not talking about the provisions that you 03:11:26 3 have here. I'm talking about the SSDW provision and 03:11:32 4 the Third Department decision's provision. Are they 03:11:38 5 different? Is the SSDW provision the same as the Mu 03:11:45 6 Chapter's provision, which is 11.3.7? 03:11:50 7 MR. O'HARA: No. It's different. It gets put 03:11:52 8 into 7.3.3. They redid the language to make it more 03:12:02 9 broad. That's what we -- 03:12:05 10 THE COURT: So where is that? Where is that in 03:12:08 11 the Sigma -- the Mu Chapter of Sigma Fraternity -- 03:12:15 12 let's call it the Third Department to make it easier. 03:12:21 13 MR. O'HARA: It's at -- let's see, it's at page 03:12:25 14 581 I guess for -- I'm pulling up that decision 03:12:33 15 myself, too, Judge. Bear with me for one second. 03:12:53 16 THE COURT: "To the extent covered by property 03:12:55 17 insurance;" is that the language you are talking 03:12:57 18 about? 03:12:58 19 MR. O'HARA: Yes. It's not about work. It's 03:13:01 20 about coverage by insurance. That's the key 03:13:08 21 difference here. It was done specifically for that 03:13:13 22 SSDW, Brisk, whatever you want to call it, is no 03:13:19 23 longer, you know, I guess, binding on the waiver of 03:13:23 24 subrogation in these agreements. This new case, the 03:13:27 25 Garden City case, from my very quick reading of it, Anthony Armstrong, Official Court Reporter 14 Proceedings 03:13:31 1 and we can debate it -- 03:13:33 2 THE COURT: Let's stop for a second. 03:13:34 3 Before we get there, I want to understand the 03:13:37 4 difference between the SSDW policy provision and the 03:13:41 5 Third Department decision. Because when I read the -- 03:13:46 6 on page also 581, closer to 582, it read 11.3.7, and 03:13:57 7 then when I look at article 17.6, it looks identical. 03:14:08 8 MR. O'HARA: Bear with me for one second, your 03:14:10 9 Honor. 03:14:30 10 THE COURT: The only thing I see different is 03:14:32 11 property versus insurance. 03:15:41 12 MR. O'HARA: