Preview
FILED: NEW YORK COUNTY CLERK 05/07/2016 05:02 AM INDEX NO. 652212/2013
NYSCEF DOC. NO. 255 RECEIVED NYSCEF: 05/07/2016
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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VERIZON NEW YORK INC.,
Plaintiff,
Index No.: 652212/2013
-against-
50 VARICK LLC, FOUNDATIONS GROUP I, INC.,
ROCK SCAFFOLDING CORP.,
ADJMI & ANDREOLI, INC., and "JOHN DOE",
Defendants.
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REPLY MEMORANDUM OF LAW
IN FURTHER SUPPORT OF 50 VARICK LLC's
CROSS- MOTION FOR SUMMARY JUDGMENT
Respectfully Submitted,
WOOD SMITH HENNING & BERMAN LLP
Attorneys for Defendant
50 Varick LLC
222 East 41st Street, 21st Floor
New York, New York 10017
(212) 999-7100
Of Counsel
Nancy Quinn Koba
Thomas E. Raccuia
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PRELIMINARY STATEMENT
This memorandum of law is submitted: (1) in reply to plaintiff, Verizon New York Inc.'s
("Verizon" or "Plaintiff"), papers opposing that part of defendant, 50 Varick LLC's ("Varick"), cross-
motion seeking an Order, pursuant to CPLR §3212, granting it summary judgment dismissing the
first, second, third, fourth and fifth causes of action contained in the plaintiff's complaint; (2) in reply
to co-defendants, Foundations Group, Inc.'s ("Foundations") and Rock Scaffolding, Inc.'s
("Rock"), papers opposing that part of Varick's cross-motion seeking an Order, pursuant to CPLR
§3212, granting it summary judgment dismissing all cross- claims interposed against it and
granting it contractual indemnification against Foundations and Rock on its cross- claims for all
sums incurred in the defense of this action and, if applicable, any sums awarded to plaintiff; (3) in
further support of Varick's cross –motion for summary judgment; and (4) in support of an Order
granting such other and further relief as to the Court deems just and proper.
It is respectfully submitted that the record before the Court warrants the grant of Varick's
cross-motion for summary judgment in all respects as the probative evidence establishes that:
Varick did not breach any agreement with Verizon; Verizon's action must be dismissed due to its
admitted spoliation of essential evidence; Verizon's action is barred by a valid waiver of subrogation
provision; Varick was not negligent and is not vicariously liable for the alleged negligence of its
independent contractors; Verizon's gross-negligence claim is without merit and Varick is entitled to
full contractual indemnification from the co-defendants, which were solely responsible for the means
and methods of construction that allegedly caused plaintiff's purported damages. The first, second,
third, fourth and fifth causes of action contained in the plaintiff's complaint and all cross claims
interposed against Varick must therefore be dismissed as a matter of law.
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ARGUMENT
STANDARD OF REVIEW
Summary judgment shall be granted to a defendant if, upon all the papers and proof
submitted, the defense shall be established sufficiently to warrant the court to direct judgment in
favor of the defendant as a matter of law. See, CPLR 3212(b); State v. Metz, 241 A.D.2d 192 (1st
Dept. 1998). Here, Varick made a prima facie showing of its entitlement to judgment as a matter of
law, thereby shifting the burden to the plaintiff and the co-defendants to produce admissible
evidence showing the existence of a material issue of fact requiring a trial. See, Zuckerman v. City
of New York, 49 N.Y.2d 557 (1980). As the plaintiff and the co-defendants failed to submit
evidentiary proof that a material question of fact exists as to Varick's lack of liability in this action
and entitlement to indemnification of all expenses incurred in the defense of this action and arising
out of work to be performed under the co-defendants' contracts, summary judgment should be
granted to Varick. See, Alvarez v. Prospect Hospital, 68 N.Y.2d 320 (1986); Ferrante v. American
Lung Assoc., 90 N.Y.2d 623 (1997).
POINT I
VARICK IS ENTITLED TO THE DISMISSAL OF PLAINTIFF'S CLAIMS FOR
BREACH OF CONTRACT OR BREACH OF THE STIPULATION AS THE
CONSTRUCTION AND WATERPROOFING METHODS AND THE SEQUENCING OF
THE WORK, INCLUDING CHANGES THERETO, WERE PRESENTED TO
VERIZON'S DESIGNATED REPRESENTATIVE AND APPROVED BY HIM BEFORE
THEY WERE IMPLEMENTED AND THE DECLARATION DID NOT REQUIRE
SUCH APPROVAL TO BE IN WRITING
Verizon asserts the Court should issue an order granting it summary judgment on its breach
of contract claims pursuant to the Condominium Declaration and the Stipulation between plaintiff
and Varick, or alternatively, deny Varick's motion for summary judgment as to its breach of contract
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causes of action1 because the Condominium Declaration ("Declaration") (a) required Varick to
submit proposed "material modifications" to the "approved sequence of work" to Verizon and
obtain its written approval of same, and (b) contained a "no-waiver" clause.2 This contention,
however, is contrary to the express terms of the Declaration and the evidence.
A. Varick Complied with the Declaration
The plaintiff relies upon the following language contained in Ex., F, Section 10 of the
Declaration:
With respect to approval of an Alteration … the Board or Unit Owner shall submit to
the Cable Vault Unit Owner reasonably detailed plans and specifications (including
any subsequent material modification of same)3 and a description of the
construction methods sufficient to allow the Cable Vault Unit Owner to ensure such
Alteration does not have an Adverse Effect, and such other information as reasonably
required by the Cable Vault Unit Owner. The Cable Vault Unit Owner shall approve
or reject any such submission within forty-five (45) days after receipt (or twenty (20)
days with respect to any revision thereto that does not reflect a material variation in
scope or concept from the original plans and specifications and description of
construction methods). Such response…shall include reasonable detail as to the
nature of its obligation. The Cable Vault Unit Owner may impose reasonable
conditions and procedures to be complied with during the construction for the
purposes of ensuring that no Adverse Effect occurs, and the Board, Unit Owner or
Occupant … shall materially comply therewith. (Emphasis added.)
(Van Der Tuin Aff., Ex. G at G59).4
It is undisputed that Varick submitted its plans and specifications to Verizon for the work to be
performed in its Unit and that the plans were approved by William Sieling and Jim Tousignant on
behalf of Verizon. (Koba Reply Aff., Ex. A, pp. 21, 23, L.16-15 – p.24, L.2-9)5 It is equally
1
The first and fifth causes of action contained in the plaintiff's complaint.
2
Plaintiff's reply memorandum of law in support of its motion for partial summary judgment, Point I, pp 6-9.
3
The emphasis is supplied as it is the clause emphasized by the plaintiff.
4
Van Der Tuin Aff. refers to the Affirmation of John Van Der Tuin, dated February 25, 2016, submitted in support
Plaintiff's motion for partial summary judgment. (ECF 118).
5
Reply Aff. refers to the Reply Affirmation of Nancy Quinn Koba, dated May 6, 2016, submitted in further support
of Varick's cross-motion for summary judgment.
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undisputed that a description of the construction methods was also submitted to and approved by
Verizon. (Koba Aff, Ex. I, p. 29, L9-11)6 Accordingly, Varick did not breach the Declaration.
The cited clause of the Declaration highlighted by the Plaintiff in its reply memorandum of
law purportedly establishing Varick's breach thereof does not apply to construction means and
methods. The customary rule of contract construction is that “where general words occur at the end
of a sentence, they refer to and qualify the whole; while, if they are in the middle of a sentence, and
sensibly apply to a particular branch of it,they are not to be extended to that which follows”
(Matter of Budd v. Valentine, 283 N.Y. 508, 511, 29 N.E.2d 65, quoting Application of New York
Telephone Co., 257 A.D. 415, 419, 13 N.Y.S.2d 359, aff'd 282 N.Y. 667, 26 N.E.2d 805). "
Paramount Communications, Inc. v. Horsehead Industries, Inc., 231 A.D.2d 40, 47 (1997). Here,
the phrase "including any subsequent material modification of same" is in the middle of the
sentence and clearly refers to and qualifies only plans and specification as to the Alteration work.
The conclusion that the phrase "(including any subsequent material modification of same)"7
pertains to only the words that precede it, i.e. plans and specifications for the Alteration work, is
buttressed by the use of parentheses to separate the phrase and the use of "and" between the end of
the first part of the sentence and the words that follow, i.e. "and a description of the construction
methods sufficient to allow the Cable Vault Unit Owner to ensure such Alteration does not have an
Adverse Effect, and such other information as reasonably required by the Cable Vault Owner." If
plaintiff wanted the phrase to apply to the entire sentence, it could have done so by including it at
6
Koba Aff. refers to the Affirmation of Nancy Quinn Koba, dated March 29, 2016, submitted in support of Varick's
cross-motion for summary judgment and in opposition to plaintiff's motion for summary judgment and the exhibits
annexed thereto.
7
Plaintiff also failed to demonstrate that the change in sequence was a "material modification" in the construction
methods. Verizon's claim that Varick breached the Declaration is also premised on the assumption that the change in
work sequence was a "material modification" to the MOP, as Section 10 of the Declaration only requires written
submissions of "material modification" to alteration plans. Therefore, Verizon failed to establish either that the clause
applied to the construction methods or that the change in sequence was "material."
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the end of the sentence. Thus, a modification of construction means and methods, which include
the coordination and sequencing of the work, did not require Verizon's written approval and the
absence of the same does not constitute a breach of the Declaration.
B. Verizon's Designated Representative Approved the Removal of
the Temporary Roof and the New Waterproofing Measures
Contrary to plaintiff's contention, the record demonstrates both that it was understood there
may be changes to the sequencing plan as the project progressed and that Sieling was consulted
about the need to remove the temporary roof before the concrete was poured so that the steel for the
curtainwall could be installed and was consulted about the waterproofing methods that would be
implemented before the temporary roof was removed.
Joseph Nigro ("Nigro") was Foundations ' original project manager. He testified that he
developed the initial plan to waterproof the fifth floor while the structural work was being
performed. Nigro further testified that he understood his logistics plan was the start of the process;
he anticipated they would be revisiting the plan on a regular basis. (Koba Aff., Ex. J, p. 48:L5-21)
Nigro was replaced by Anthony Colon ("Colon"), who testified that prior to commencing
demolition of the sixth floor slab he had multiple conversations and communications with Sieling
regarding a new waterproofing plan. This plan included: (1) installing all metal decking for the new
permanent roof on the eighth floor and (2) installing a parachute system consisting of plastic tarps
and pumps underneath the sixth floor to protect the fifth floor. (Koba Aff, Ex. K, p. 40-41) The
demolition of the temporary roof did not commence until after Sieling approved the new plan and
items (1) and (2) were installed. (Id. at 42-44; 288)
Moreover, Sieling testified that he visited the site weekly. Colon testified that they started to
demolish the sixth floor slab in early August and that before the storm, Sieling told him he was
receiving complaints from Verizon about the vibrations from the falling debris. They developed a
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buffer to decrease the vibrations. (Koba Aff, Ex. K, pp. 102:11-22 – 103:2-13, 104:6-10, 284:14-18)
Sieling visited the area before the storm to observe how the buffer was working. (Id. at p. 105:4-14)
He therefore had actual knowledge before the storm that the temporary roof was being demolished
before the permanent roof had been completely installed (Id. at pp. 284:14-25 -2852-9), and of the
new waterproofing methods being used as he discussed with Colon.
C. The "no-waiver" Clause Is Irrelevant to Varick's
Lack Liability to Plaintiff
Varick maintains the Declaration did not require it to obtain Verizon's written approval to
change the sequencing of the construction work. However, if this Court should find otherwise, it is
submitted that the "no-waiver" clause in the Declaration does not operate to impose liability upon
Varick because Plaintiff agreed to the limited modification of the sequencing plan and had full
knowledge of the same before it was implemented.
Verizon urges that Varick breached the Declaration despite Sieling's, its designated
representative, approval of changes in the work sequence because the "no-waiver" clause contained
in the Declaration means that Sieling's oral approval is legally irrelevant. (Van Der Tuin Aff. Ex. G,
p.42) In support of this argument, Verizon cites to a number of cases wherein courts have enforced
so called "no-waiver" clauses and held that a party has not forfeited its contractual rights merely by
failing to enforce them. This general principal of law, however, is neither universal nor dispositive.
A distinction can be made between the facts of the cases cited by plaintiff wherein a party merely
chose not to enforce its rights, and the facts of the instant case wherein the Plaintiff's agent and
designated representative actively participated in the decision to modify the work sequence and the
methods to waterproof the fifth floor.
In Jefpaul Garage Corp. v. Presbyterian Hosp. in City of N.Y., 61 N.Y.2d 442 (1984) a
landlord was permitted to refuse to renew a tenant's lease due to the tenant's failure to comply with
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its terms, even though the landlord had failed to evict the tenant due to his prior breach. The court
ruled in favor of the landlord because the lease contained a "no-waiver" clause. Plotch v. 375
Riverside Dr. Owners, Inc., 92 A.D.3d 478 (2012) simply states that such clauses are enforceable –
the court noted that the plaintiff had failed to identify any conduct of the defendants' which could be
considered a waiver. In Allied Irish Banks, PLC v. Young Men's Christian Assn. of Greenwich, 36
Misc. 3d 216 (Sup. Ct. 2012), aff'd sub nom. Allied Irish Banks, P.L.C. v. Young Men's Christian
Ass'n of Greenwich, 105 A.D.3d 516 (2013), the defendant's failure to assert any particularized facts
supporting it's assertion of "waiver" was dispositive; the court merely noted the existence of the "no-
waiver" clause as another factor in favor of the plaintiff's position. Finally, in Town of Hempstead v.
Incorporated Village. of Freeport, 15 A.D.3d 567 (2005), the plaintiff sought to enforce a
contractually agreed upon minimum yearly payment schedule following years of permitting the
defendant to pay less. The court's decision to enforce the yearly minimum payment schedule in
favor of the plaintiff was premised primarily on the fact that the contract expressly "authorized the
plaintiffs, in their sole discretion, to reduce" defendant's minimum payment and then to later increase
it to the contractually stated minimum. The court noted the existence of a "no-waiver" clause, but
the flexible payment schedule contemplated by the contract was ultimately dispositive.
The facts of all the above cited cases are distinguishable from the facts herein because in
those cases, the parties seeking to enforce the "no-waiver" clauses were not active participants in the
decision to deviate from the terms of the contract; at most, they were merely aware of the alleged
breach. Here, Sieling was not only fully aware of the changes to the work sequence, he was an
active participant in the decision to change said sequence. Prior to commencing demolition of the
sixth floor slab, Colon had multiple conversations with Sieling regarding a new waterproofing plan
to be implemented before the commencement of the demolition of the temporary roof (Koba Aff,
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Ex. K, p. 40-41) Demolition of the sixth floor did not commence until after Sieling had approved the
new plan. (Id. at 42-44; 288) Sieling's active participation in the decision to change the work
sequence vitiates the enforceability of the "no-waiver" clause.
The facts of Simon & Son Upholstery, Inc. v. 601 W. Associates, LLC, 268 A.D.2d 359 (1st
Dept. 2000), are analogous to the facts of the case at bar. In Simon, a tenant sought an injunction
directing his landlord to provide after-hours elevator service for plaintiff's upholstery and
photographic business, notwithstanding the fact that the lease only provided for service during
business hours, based on prior after-hours use for those purposes as permitted by the defendant-
landlord's predecessor. The First Department granted plaintiff an injunction stating:
We recognize that the lease contained nonwaiver and merger clauses, but note that in
this case the prior landlord was fully apprised and involved in the photography
studio modifications, including approving the renovations, providing tenant parking,
accepting payments from the photography tenant, and using the premises in a sales
brochure. This active involvement is in stark contrast to the landlord's passive
acceptance of late rent payments in Jefpaul Garage Corp. v. Presbyterian Hosp. in
City of New York, 61 N.Y.2d 442, 474 N.Y.S.2d 458, 462 N.E.2d 1176. Here, in
distinction to Jefpaul, there are sufficient indicia that the reasonable expectations of
both parties under the original lease were supplanted by subsequent actions.
(emphasis supplied)
Id. at 360.
Based upon the evidence before the Court, a similar finding is warranted in this matter. There is
sufficient indicia that the original written sequencing plan was supplanted by the subsequent actions
and approval of plaintiff's designated representative and the lack of written approval of the change
does not provide a predicate for finding Varick breached the Declaration.
The record establishes that Varick at all times acted in accordance with the Declaration, the
approved plans and the change in sequence of the work approved by and with the full knowledge of
Verizon's designated representative. It therefore did not breach the Declaration. Since it did not
breach the same, it has no liability for the plaintiff's attorney's fees and costs incurred in this action
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as Plaintiff is not, and cannot be, the prevailing party. Therefore, the first and fifth causes of action
contained in the complaint must be dismissed.
POINT II
VERIZON'S CLAIMS ARE BARRED
BY A VALID WAIVER OF SUBROGATION PROVISION
Plaintiff's interpretation of the waiver of subrogation provision contained in the Declaration
at Article 7 (Insurance), section 7.3 (Other Insurance Requirements) D (Insurance to be Maintained
by Unit Owners), is contrary to the express language of the same. The clause herein did require each
Unit Owner, including Plaintiff, to maintain insurance covering its Unit, its contents and its limited
common elements for the "full replacement value;" to procure and maintain a commercial general
liability insurance against claims for property damage occurring on, in or about their Units; and
ensure that its property insurance policies contained standard waivers of subrogation as to recovery
against the Board and other Unit Owners. (Van Der Tuin Aff., Ex. G, p.26) Thus, Plaintiff's
assertion that it was not required to look first to its own insurer for damages allegedly caused by
Varick, citing Abacus Federal Savings Bank v. ADT Security Services, Inc., 18 N.Y.3d 675 (2012),
is erroneous. In Abacus, the court held that subrogation was not waived when a contract stated that
the insurance, if any was obtained, was plaintiff's responsibility to obtain. Id. at 682. In this case,
however, the Declaration affirmatively required Plaintiff to obtain insurance covering the type of
claim for which it seeks recovery in this action.
Further, the Declaration allocated the risk of loss to the Units and the contents therein to the
insurance each Unit owner was required to maintain for the "full replacement value" of the covered
property and required that all property insurance policies contain standard waiver of subrogation
provisions. Implicit in said provisions is the requirement that each Unit Owner look to its own
insurance for any damage to its contents or Unit that were required to be covered by the
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aforementioned mandatory coverage and not to the Board or the other Unit Owner. Otherwise, the
language would be superfluous.
The rules of contract interpretation are well settled in this State. "When parties set down
their agreement in a clear, complete document, their writing should as a rule be enforced according
to its terms" (W.W.W. Assoc., 77 NY2d at 162). We apply this rule with even greater force in
commercial contracts negotiated at arm's length by sophisticated, counseled businesspeople (see
Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475 [2004]; R/S Assoc. v New
York Job Dev. Auth., 98 NY2d 29, 32 [2002]; Riverside S. Planning Corp. v CRP/Extell Riverside,
L.P., 60 AD3d 61, 67 [2008], affd 13 NY3d 398 [2009])." Ashwood Capital, Inc. v. OTG
Management, Inc., 99 A.D.3d 1, 7 (1st Dept. 2012). Therefore, "courts may not by construction add
or excise terms, nor distort the meaning of those used and thereby make a new contract for the
parties under the guise of interpreting the writing" (Reiss, 97 NY2d at 199 [internal quotation marks
and citation omitted]). When a court construes a contract, its interpretation must give meaning to all
the contractual clauses. See, Two Guys v. SFR Realty Associates, 63 N.Y.2d 396, 403 (1984). The
Court of Appeals in Corhill Corp. v. SD Plants, Inc., 9 N.Y.2d 595 (1961) stated the rule as follows:
It is a cardinal rule of construction that a court should not "adopt an interpretation"
which will operate to leave a "provision of a contract * * * without force and effect"
(Muzak Corp. v. Hotel Taft Corp., 1 N Y 2d 42, 46; Fleischman v. Furgueson, 223
N.Y. 235, 239).
The application of these settled rules of contract interpretation to the Declaration and the
facts of this case requires the rejection of Plaintiff's interpretation of the Declaration which would
render the provisions of Section 7.3 (D) thereof meaningless. The only reasonable interpretation of
the clear language of the subject clause is that the parties intended the Unit Owners to insure all
damages to the contents, betterments, improvements, appliances, furnishings etc. in their Units in
lieu of seeking recovery of damages to the same from either the Board or the other Unit Owner.
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See, Kaf-Kaf, Inc. v. Rodless Decorations, Inc., 90 N.Y.2d 654 (1997). Although the Declaration
gave Plaintiff the option to "self-insure" the mandatory property insurance providing "full
replacement value" for its contents, Plaintiff's risk management decision to act as its own insurer did
not obviate the intent of the parties to forego recompense from the Board or the other Unit Owner for
any claims falling within the mandatory coverage.
Plaintiff's second argument in opposition to application of the waiver of subrogation clause is
equally without merit. Section 6.1(A)(v) of the Declaration provides in relevant part that the Unit
Owner shall "maintain additional insurance in full force and effect throughout the construction
period, as may be reasonably required by the Board. (emphasis supplied)." Although the Board
could require Varick to maintain additional insurance during the construction period, Plaintiff has
failed to present any evidence that the Board exercised this option and required Varick to maintain
any additional insurance during construction. The record demonstrates that the only insurance
mandated was the property insurance required by §7.3 (D) of the Declaration which policies were to
contain a standard waiver of subrogation endorsement.
Article 6 also does not apply to the contents in the Unit. The clause limits any repair
obligation to the other Units, not contents in the Unit, or any Common Elements. The Declaration
describes the Unit as: all non-structural walls within such Unit, all utility lines, conduits, ducts,
shafts, pipes, plumbing, wiring, chimneys, flues, vents, equipment, fixtures, machinery, landscaping
and other services, facilities and equipment for the furnishing of utilities or services exclusively used
in connection with such Unit and located within such Unit." See, Declaration, §3.2 (B). This
provision therefore is not even applicable to the majority of the plaintiff's claim, which is for
contents in its Unit. (Van Der Tuin Aff, Ex. G, p.26)
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The New York Court of Appeals in Abacus Federal Savings Bank v. ADT Security Services,
18 N.Y.3d 675 (2012), upheld a similar waiver of subrogation provision and dismissed the
complaint. As the Court of Appeals dismissed the complaint in Abacus, it is respectfully submitted
that this Court should dismiss Plaintiff's claims against Varick.
POINT III
PLAINTIFF'S CLAIMS MUST BE DISMISSED DUE
TO ITS SPOLIATION OF ESSENTIAL EVIDENCE
Plaintiff proffers several theories as to why it should not be sanctioned for spoliation, none
of which is persuasive. Firstly, Plaintiff asserts Varick was afforded the opportunity to inspect the
damaged equipment because Varick's owner representative, Greg Altshuler, was shown the Verizon
Unit the day after the flooding. This assertion, while true, is disingenuous in that it ignores that
Altshuler was not an expert and lacked knowledge of telecommunications equipment and networks
to assess any damage to Plaintiff's equipment.
Plaintiff asserts it "was prepared to cooperate fully with any additional inspection requests,"
but that Varick never requested an inspection. Plaintiff's assertion that it was prepared to cooperate
with inspection requests is flatly contradicted by the fact that the equipment was destroyed shortly
after the flood, despite the direction of its employee, Osborne Martin, that it be preserved. (Koba
Aff., Ex. I, pp. 113, 116; Ex. L, pp. 57:11-15, 23-25, 58:3-15) This direction was obviously due to
Plaintiff's intention to file a claim to recover for any damages to its property and equipment, which it
claims totals approximately $463,000. Given the sum claimed and the specialized nature of the
items allegedly damaged, inspection of the damaged property was essential to Varick defense to the
amount of claimed damages, which are impacted by the age, condition, and depreciation of the
property immediately before the alleged damage. Destruction of this equipment has deprived Varick
of any ability or means to assess the alleged damages. Photographs do not fill the gap of an actual
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inspection as the do not show the damaged cards, switches etc. – just the frames and the walls.
Varick did not request an inspection as it would have been futile due to the Plaintiff's destruction of
the damaged items without prior notice to the parties.
Plaintiff also argues that it should not be sanctioned because its destruction of essential
evidence was not willful. This, too is irrelevant, as sanctions are not limited to cases of intentional
spoliation because negligent destruction of evidence can be just as prejudicial to a party's defense as
willful destruction of evidence. See, Squitieri v. City of New York, 248 A.D.2d 201, 202 (1998);
Mudge, Rose, Guthrie, Alexander & Ferdon v. Penguin Air Conditioning Corp., 221 A.D.2d 243,
243(1995). Accordingly, Verizon's action must be dismissed because of its spoliation of essential
evidence.
POINT IV
VARICK WAS NOT NEGLIGENT AND IS NOT VICARIOUSLY LIABLE
FOR THE ACTIONS OF FOUNDATIONS AND ROCK
Plaintiff 's complaint asserts that Varick owed it a duty to avoid damage to its Units in
carrying out the project and was negligent in authorizing, allowing and/ or failing to prevent
Foundations from removing the temporary roof before the installation of the permanent roof
contrary to the sequence plan and failing to properly supervise Rock regarding the installation of
the tarps. In other words, Plaintiff seeks to hold Varick vicariously liable for the alleged acts or
omission of its independent contractors as it is undisputed that Varick did not, itself, perform any of
the work, did not remove the temporary roof, did not develop the waterproofing methods and did not
develop the means and methods of construction. The work was done by Foundations and Rock and
the sequence of the work, and the change to the same, was developed by Foundations with the
approval of Plaintiff's designated representative, Sieling. (Koba Aff., Ex. C, ¶ 59-64) Varick,
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however, cannot be held liable for the actions of Foundations or Rock because they were
independent contractors.
Plaintiff asserts Varick can be held vicariously liable for the actions of its independent
contractors based upon the holding in Miles v. R & M Appliance Sales, Inc., 26 N.Y.2d 451 (1970).
The facts of Miles are distinguishable from the facts of the case at bar. The Miles Court found the
employer, R & M Appliance, could be held vicariously liable for the negligence of its independent
contractor where it agreed to perform services for the plaintiff who accepted them with the
reasonable belief that R & M Appliance or its employee were performing the services. Id. at 454.
Unlike in Miles, Verizon was fully aware that the work would be performed by Foundations and not
Varick. The facts of Linares v. Fairfield Views, Inc., 231 A.D.2d 418 (1st Dept. 1996) are also
distinguishable from the facts of this case. In Linares, the building owner was held vicariously liable
for the negligence of its elevator contractor because it had a non delegable duty to maintain the
premises pursuant to statute. Id. at 419. Verizon has not cited any statute imposing a non-delegable
duty on Varick. Nor has it cited a non delegable contractual duty that provides a basis for imposing
liability upon Varick.
Plaintiff is also mistaken that vicarious liability can be imposed upon Varick as the work
was "inherently dangerous." This exception applies when the work involves a risk of harm
inherent in the nature of the work itself and the risk inherent in the nature of the work is known or
should be known to the employer. See, Chainani v. Board of Education, 87 N.Y.2d 370, 381 (1995);
Rosenberg v. Equitable Life Assurance Society of the United States, 79 N.Y.2d 663 (1992). This
exception has been applied to activities involving "blasting, certain types of construction and
working with high tension electric wires." Chainani, 87 N.Y.2d at 381. The Plaintiff's alleged
damages in this case did not arise from a risk inherent in the work itself. Rather, the flooding arose
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from a rainstorm of such severity it caused the electricity to go out, resulting in the loss of the
electrical water pumps, and damaged the plastic sheeting that had been installed to prevent water
from entering the building. At best, the failure of the waterproofing measures to prevent water from
entering the building may constitute ordinary negligence by Foundations and Rock, the independent
contractors responsible for the same. Varick therefore cannot be held vicariously liable for their
alleged negligence.
Plaintiff also failed to establish any alleged causally related damages by competent and
admissible evidence. The deficiency of proof due to Osborne Martin's hearsay affidavit cannot be
corrected by including new evidence in Verizon's reply papers. See, GMAC v. Minewiser, 115
A.D.3d 707 (2nd Dept. 2014); Cooling v. Wassong, 5 Misc.3d 22 (App. T, 1St. Dept. 2004).
Therefore, Plaintiff cannot establish a prima facie case, and the second and fourth causes of action
must be dismissed.
POINT V
VERIZON'S GROSS NEGLIGENCE
CLAIM IS WITHOUT MERIT
Plaintiff's opposition is premised upon its erroneous assertion that Varick is liable for gross
negligence because it allegedly breached its duties to Verizon while aware of the sensitive nature of
Plaintiff's telecommunications equipment and the potential impact on the public if the same was
damaged.8 However, as stated in Verizon v. Optical Communications Group, Inc., 91 A.d.3d 176
(1st Dept. 2011), "the regulation of telecommunications carriers is not in the same league as the
protection of the personal safety of citizens." Id. at 182, citing New York University v. Continental
Insurance Co., 87 N.Y.2d 308 (1995). Thus, the mere potential for damage to telecommunications
equipment does not create a heightened duty.
8
Plaintiff's Reply Memo of Law, pp. 23-24.
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The record before the Court is devoid of any conduct by Varick that "evinces a reckless
disregard for the rights of others or 'smacks' of intentional wrongdoing." Colnaghi, U.S.A., Ltd. v.
Jewelers Prot. Servs., Ltd., 81 N.Y.2d 821, 823-24 (1993). Rather, the record demonstrates that
Varick advised Foundations of the need to protect the fifth floor from water infiltration, that
Foundations developed the water protection plan with Sieling's approval, that the water plan was
only modified after Foundations consulted with and secured Sieling's approval, that Foundations
installed the metal decking on both the roof and the sixth floor and installed a parachute system that
was used in conjunction with trash cans and pumps and took steps to prepare for the coming storm.
The absence of "evidence of any intentional or reckless acts or omissions on the part of" Varick
mandates dismissal of a gross negligence claim. Prato v. Vigliotta, 253 A.D.2d 749, 750 (1st Dept.
1998).
POINT VI
VARICK IS ENTITLED TO SUMMARY JUDGMENT ON ITS
CLAIMS FOR CONTRACTUAL INDEMNIFICATION AGAINST
FOUNDATIONS AND ROCK
Foundations and Rock both oppose Varick's motion for summary judgment on its cross-
claims against them for contractual indemnification based on the unsubstantiated assertion that
contractual indemnification is not available to Varick due to Varick's alleged negligence. The
record does not contain competent evidence of any acts or omissions attributable to Varick as
opposed to Foundations or Rock.
As a threshold matter, the indemnification clauses upon which Varick's claims are based are
enforceable and do not violate General Obligations Law § 5-322.1 because they authorize
indemnification only to "the fullest extent authorized by law." (Koba Aff., Ex. P, § 3.18 of the
General Conditions of the Contract for Construction between Varick and Foundations; Ex. Q § 4.6.1)
LEGAL:10331-0005/5723492.1
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FILED: NEW YORK COUNTY CLERK 05/07/2016 05:02 AM INDEX NO. 652212/2013 NYSCEF DOC. NO. 255 RECEIVED NYSCEF: 05/07/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ------------------------------------------------------------------x VERIZON NEW YORK INC., Plaintiff, Index No.: 652212/2013 -against- 50 VARICK LLC, FOUNDATIONS GROUP I, INC., ROCK SCAFFOLDING CORP., ADJMI & ANDREOLI, INC., and "JOHN DOE", Defendants. ------------------------------------------------------------------x REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF 50 VARICK LLC's CROSS- MOTION FOR SUMMARY JUDGMENT Respectfully Submitted, WOOD SMITH HENNING & BERMAN LLP Attorneys for Defendant 50 Varick LLC 222 East 41st Street, 21st Floor New York, New York 10017 (212) 999-7100 Of Counsel Nancy Quinn Koba Thomas E. Raccuia LEGAL:10331-0005/5723492.1 1 of 19 PRELIMINARY STATEMENT This memorandum of law is submitted: (1) in reply to plaintiff, Verizon New York Inc.'s ("Verizon" or "Plaintiff"), papers opposing that part of defendant, 50 Varick LLC's ("Varick"), cross- motion seeking an Order, pursuant to CPLR §3212, granting it summary judgment dismissing the first, second, third, fourth and fifth causes of action contained in the plaintiff's complaint; (2) in reply to co-defendants, Foundations Group, Inc.'s ("Foundations") and Rock Scaffolding, Inc.'s ("Rock"), papers opposing that part of Varick's cross-motion seeking an Order, pursuant to CPLR §3212, granting it summary judgment dismissing all cross- claims interposed against it and granting it contractual indemnification against Foundations and Rock on its cross- claims for all sums incurred in the defense of this action and, if applicable, any sums awarded to plaintiff; (3) in further support of Varick's cross –motion for summary judgment; and (4) in support of an Order granting such other and further relief as to the Court deems just and proper. It is respectfully submitted that the record before the Court warrants the grant of Varick's cross-motion for summary judgment in all respects as the probative evidence establishes that: Varick did not breach any agreement with Verizon; Verizon's action must be dismissed due to its admitted spoliation of essential evidence; Verizon's action is barred by a valid waiver of subrogation provision; Varick was not negligent and is not vicariously liable for the alleged negligence of its independent contractors; Verizon's gross-negligence claim is without merit and Varick is entitled to full contractual indemnification from the co-defendants, which were solely responsible for the means and methods of construction that allegedly caused plaintiff's purported damages. The first, second, third, fourth and fifth causes of action contained in the plaintiff's complaint and all cross claims interposed against Varick must therefore be dismissed as a matter of law. LEGAL:10331-0005/5723492.1 2 of 19 ARGUMENT STANDARD OF REVIEW Summary judgment shall be granted to a defendant if, upon all the papers and proof submitted, the defense shall be established sufficiently to warrant the court to direct judgment in favor of the defendant as a matter of law. See, CPLR 3212(b); State v. Metz, 241 A.D.2d 192 (1st Dept. 1998). Here, Varick made a prima facie showing of its entitlement to judgment as a matter of law, thereby shifting the burden to the plaintiff and the co-defendants to produce admissible evidence showing the existence of a material issue of fact requiring a trial. See, Zuckerman v. City of New York, 49 N.Y.2d 557 (1980). As the plaintiff and the co-defendants failed to submit evidentiary proof that a material question of fact exists as to Varick's lack of liability in this action and entitlement to indemnification of all expenses incurred in the defense of this action and arising out of work to be performed under the co-defendants' contracts, summary judgment should be granted to Varick. See, Alvarez v. Prospect Hospital, 68 N.Y.2d 320 (1986); Ferrante v. American Lung Assoc., 90 N.Y.2d 623 (1997). POINT I VARICK IS ENTITLED TO THE DISMISSAL OF PLAINTIFF'S CLAIMS FOR BREACH OF CONTRACT OR BREACH OF THE STIPULATION AS THE CONSTRUCTION AND WATERPROOFING METHODS AND THE SEQUENCING OF THE WORK, INCLUDING CHANGES THERETO, WERE PRESENTED TO VERIZON'S DESIGNATED REPRESENTATIVE AND APPROVED BY HIM BEFORE THEY WERE IMPLEMENTED AND THE DECLARATION DID NOT REQUIRE SUCH APPROVAL TO BE IN WRITING Verizon asserts the Court should issue an order granting it summary judgment on its breach of contract claims pursuant to the Condominium Declaration and the Stipulation between plaintiff and Varick, or alternatively, deny Varick's motion for summary judgment as to its breach of contract LEGAL:10331-0005/5723492.1 3 of 19 causes of action1 because the Condominium Declaration ("Declaration") (a) required Varick to submit proposed "material modifications" to the "approved sequence of work" to Verizon and obtain its written approval of same, and (b) contained a "no-waiver" clause.2 This contention, however, is contrary to the express terms of the Declaration and the evidence. A. Varick Complied with the Declaration The plaintiff relies upon the following language contained in Ex., F, Section 10 of the Declaration: With respect to approval of an Alteration … the Board or Unit Owner shall submit to the Cable Vault Unit Owner reasonably detailed plans and specifications (including any subsequent material modification of same)3 and a description of the construction methods sufficient to allow the Cable Vault Unit Owner to ensure such Alteration does not have an Adverse Effect, and such other information as reasonably required by the Cable Vault Unit Owner. The Cable Vault Unit Owner shall approve or reject any such submission within forty-five (45) days after receipt (or twenty (20) days with respect to any revision thereto that does not reflect a material variation in scope or concept from the original plans and specifications and description of construction methods). Such response…shall include reasonable detail as to the nature of its obligation. The Cable Vault Unit Owner may impose reasonable conditions and procedures to be complied with during the construction for the purposes of ensuring that no Adverse Effect occurs, and the Board, Unit Owner or Occupant … shall materially comply therewith. (Emphasis added.) (Van Der Tuin Aff., Ex. G at G59).4 It is undisputed that Varick submitted its plans and specifications to Verizon for the work to be performed in its Unit and that the plans were approved by William Sieling and Jim Tousignant on behalf of Verizon. (Koba Reply Aff., Ex. A, pp. 21, 23, L.16-15 – p.24, L.2-9)5 It is equally 1 The first and fifth causes of action contained in the plaintiff's complaint. 2 Plaintiff's reply memorandum of law in support of its motion for partial summary judgment, Point I, pp 6-9. 3 The emphasis is supplied as it is the clause emphasized by the plaintiff. 4 Van Der Tuin Aff. refers to the Affirmation of John Van Der Tuin, dated February 25, 2016, submitted in support Plaintiff's motion for partial summary judgment. (ECF 118). 5 Reply Aff. refers to the Reply Affirmation of Nancy Quinn Koba, dated May 6, 2016, submitted in further support of Varick's cross-motion for summary judgment. LEGAL:10331-0005/5723492.1 4 of 19 undisputed that a description of the construction methods was also submitted to and approved by Verizon. (Koba Aff, Ex. I, p. 29, L9-11)6 Accordingly, Varick did not breach the Declaration. The cited clause of the Declaration highlighted by the Plaintiff in its reply memorandum of law purportedly establishing Varick's breach thereof does not apply to construction means and methods. The customary rule of contract construction is that “where general words occur at the end of a sentence, they refer to and qualify the whole; while, if they are in the middle of a sentence, and sensibly apply to a particular branch of it,they are not to be extended to that which follows” (Matter of Budd v. Valentine, 283 N.Y. 508, 511, 29 N.E.2d 65, quoting Application of New York Telephone Co., 257 A.D. 415, 419, 13 N.Y.S.2d 359, aff'd 282 N.Y. 667, 26 N.E.2d 805). " Paramount Communications, Inc. v. Horsehead Industries, Inc., 231 A.D.2d 40, 47 (1997). Here, the phrase "including any subsequent material modification of same" is in the middle of the sentence and clearly refers to and qualifies only plans and specification as to the Alteration work. The conclusion that the phrase "(including any subsequent material modification of same)"7 pertains to only the words that precede it, i.e. plans and specifications for the Alteration work, is buttressed by the use of parentheses to separate the phrase and the use of "and" between the end of the first part of the sentence and the words that follow, i.e. "and a description of the construction methods sufficient to allow the Cable Vault Unit Owner to ensure such Alteration does not have an Adverse Effect, and such other information as reasonably required by the Cable Vault Owner." If plaintiff wanted the phrase to apply to the entire sentence, it could have done so by including it at 6 Koba Aff. refers to the Affirmation of Nancy Quinn Koba, dated March 29, 2016, submitted in support of Varick's cross-motion for summary judgment and in opposition to plaintiff's motion for summary judgment and the exhibits annexed thereto. 7 Plaintiff also failed to demonstrate that the change in sequence was a "material modification" in the construction methods. Verizon's claim that Varick breached the Declaration is also premised on the assumption that the change in work sequence was a "material modification" to the MOP, as Section 10 of the Declaration only requires written submissions of "material modification" to alteration plans. Therefore, Verizon failed to establish either that the clause applied to the construction methods or that the change in sequence was "material." LEGAL:10331-0005/5723492.1 5 of 19 the end of the sentence. Thus, a modification of construction means and methods, which include the coordination and sequencing of the work, did not require Verizon's written approval and the absence of the same does not constitute a breach of the Declaration. B. Verizon's Designated Representative Approved the Removal of the Temporary Roof and the New Waterproofing Measures Contrary to plaintiff's contention, the record demonstrates both that it was understood there may be changes to the sequencing plan as the project progressed and that Sieling was consulted about the need to remove the temporary roof before the concrete was poured so that the steel for the curtainwall could be installed and was consulted about the waterproofing methods that would be implemented before the temporary roof was removed. Joseph Nigro ("Nigro") was Foundations ' original project manager. He testified that he developed the initial plan to waterproof the fifth floor while the structural work was being performed. Nigro further testified that he understood his logistics plan was the start of the process; he anticipated they would be revisiting the plan on a regular basis. (Koba Aff., Ex. J, p. 48:L5-21) Nigro was replaced by Anthony Colon ("Colon"), who testified that prior to commencing demolition of the sixth floor slab he had multiple conversations and communications with Sieling regarding a new waterproofing plan. This plan included: (1) installing all metal decking for the new permanent roof on the eighth floor and (2) installing a parachute system consisting of plastic tarps and pumps underneath the sixth floor to protect the fifth floor. (Koba Aff, Ex. K, p. 40-41) The demolition of the temporary roof did not commence until after Sieling approved the new plan and items (1) and (2) were installed. (Id. at 42-44; 288) Moreover, Sieling testified that he visited the site weekly. Colon testified that they started to demolish the sixth floor slab in early August and that before the storm, Sieling told him he was receiving complaints from Verizon about the vibrations from the falling debris. They developed a LEGAL:10331-0005/5723492.1 6 of 19 buffer to decrease the vibrations. (Koba Aff, Ex. K, pp. 102:11-22 – 103:2-13, 104:6-10, 284:14-18) Sieling visited the area before the storm to observe how the buffer was working. (Id. at p. 105:4-14) He therefore had actual knowledge before the storm that the temporary roof was being demolished before the permanent roof had been completely installed (Id. at pp. 284:14-25 -2852-9), and of the new waterproofing methods being used as he discussed with Colon. C. The "no-waiver" Clause Is Irrelevant to Varick's Lack Liability to Plaintiff Varick maintains the Declaration did not require it to obtain Verizon's written approval to change the sequencing of the construction work. However, if this Court should find otherwise, it is submitted that the "no-waiver" clause in the Declaration does not operate to impose liability upon Varick because Plaintiff agreed to the limited modification of the sequencing plan and had full knowledge of the same before it was implemented. Verizon urges that Varick breached the Declaration despite Sieling's, its designated representative, approval of changes in the work sequence because the "no-waiver" clause contained in the Declaration means that Sieling's oral approval is legally irrelevant. (Van Der Tuin Aff. Ex. G, p.42) In support of this argument, Verizon cites to a number of cases wherein courts have enforced so called "no-waiver" clauses and held that a party has not forfeited its contractual rights merely by failing to enforce them. This general principal of law, however, is neither universal nor dispositive. A distinction can be made between the facts of the cases cited by plaintiff wherein a party merely chose not to enforce its rights, and the facts of the instant case wherein the Plaintiff's agent and designated representative actively participated in the decision to modify the work sequence and the methods to waterproof the fifth floor. In Jefpaul Garage Corp. v. Presbyterian Hosp. in City of N.Y., 61 N.Y.2d 442 (1984) a landlord was permitted to refuse to renew a tenant's lease due to the tenant's failure to comply with LEGAL:10331-0005/5723492.1 7 of 19 its terms, even though the landlord had failed to evict the tenant due to his prior breach. The court ruled in favor of the landlord because the lease contained a "no-waiver" clause. Plotch v. 375 Riverside Dr. Owners, Inc., 92 A.D.3d 478 (2012) simply states that such clauses are enforceable – the court noted that the plaintiff had failed to identify any conduct of the defendants' which could be considered a waiver. In Allied Irish Banks, PLC v. Young Men's Christian Assn. of Greenwich, 36 Misc. 3d 216 (Sup. Ct. 2012), aff'd sub nom. Allied Irish Banks, P.L.C. v. Young Men's Christian Ass'n of Greenwich, 105 A.D.3d 516 (2013), the defendant's failure to assert any particularized facts supporting it's assertion of "waiver" was dispositive; the court merely noted the existence of the "no- waiver" clause as another factor in favor of the plaintiff's position. Finally, in Town of Hempstead v. Incorporated Village. of Freeport, 15 A.D.3d 567 (2005), the plaintiff sought to enforce a contractually agreed upon minimum yearly payment schedule following years of permitting the defendant to pay less. The court's decision to enforce the yearly minimum payment schedule in favor of the plaintiff was premised primarily on the fact that the contract expressly "authorized the plaintiffs, in their sole discretion, to reduce" defendant's minimum payment and then to later increase it to the contractually stated minimum. The court noted the existence of a "no-waiver" clause, but the flexible payment schedule contemplated by the contract was ultimately dispositive. The facts of all the above cited cases are distinguishable from the facts herein because in those cases, the parties seeking to enforce the "no-waiver" clauses were not active participants in the decision to deviate from the terms of the contract; at most, they were merely aware of the alleged breach. Here, Sieling was not only fully aware of the changes to the work sequence, he was an active participant in the decision to change said sequence. Prior to commencing demolition of the sixth floor slab, Colon had multiple conversations with Sieling regarding a new waterproofing plan to be implemented before the commencement of the demolition of the temporary roof (Koba Aff, LEGAL:10331-0005/5723492.1 8 of 19 Ex. K, p. 40-41) Demolition of the sixth floor did not commence until after Sieling had approved the new plan. (Id. at 42-44; 288) Sieling's active participation in the decision to change the work sequence vitiates the enforceability of the "no-waiver" clause. The facts of Simon & Son Upholstery, Inc. v. 601 W. Associates, LLC, 268 A.D.2d 359 (1st Dept. 2000), are analogous to the facts of the case at bar. In Simon, a tenant sought an injunction directing his landlord to provide after-hours elevator service for plaintiff's upholstery and photographic business, notwithstanding the fact that the lease only provided for service during business hours, based on prior after-hours use for those purposes as permitted by the defendant- landlord's predecessor. The First Department granted plaintiff an injunction stating: We recognize that the lease contained nonwaiver and merger clauses, but note that in this case the prior landlord was fully apprised and involved in the photography studio modifications, including approving the renovations, providing tenant parking, accepting payments from the photography tenant, and using the premises in a sales brochure. This active involvement is in stark contrast to the landlord's passive acceptance of late rent payments in Jefpaul Garage Corp. v. Presbyterian Hosp. in City of New York, 61 N.Y.2d 442, 474 N.Y.S.2d 458, 462 N.E.2d 1176. Here, in distinction to Jefpaul, there are sufficient indicia that the reasonable expectations of both parties under the original lease were supplanted by subsequent actions. (emphasis supplied) Id. at 360. Based upon the evidence before the Court, a similar finding is warranted in this matter. There is sufficient indicia that the original written sequencing plan was supplanted by the subsequent actions and approval of plaintiff's designated representative and the lack of written approval of the change does not provide a predicate for finding Varick breached the Declaration. The record establishes that Varick at all times acted in accordance with the Declaration, the approved plans and the change in sequence of the work approved by and with the full knowledge of Verizon's designated representative. It therefore did not breach the Declaration. Since it did not breach the same, it has no liability for the plaintiff's attorney's fees and costs incurred in this action LEGAL:10331-0005/5723492.1 9 of 19 as Plaintiff is not, and cannot be, the prevailing party. Therefore, the first and fifth causes of action contained in the complaint must be dismissed. POINT II VERIZON'S CLAIMS ARE BARRED BY A VALID WAIVER OF SUBROGATION PROVISION Plaintiff's interpretation of the waiver of subrogation provision contained in the Declaration at Article 7 (Insurance), section 7.3 (Other Insurance Requirements) D (Insurance to be Maintained by Unit Owners), is contrary to the express language of the same. The clause herein did require each Unit Owner, including Plaintiff, to maintain insurance covering its Unit, its contents and its limited common elements for the "full replacement value;" to procure and maintain a commercial general liability insurance against claims for property damage occurring on, in or about their Units; and ensure that its property insurance policies contained standard waivers of subrogation as to recovery against the Board and other Unit Owners. (Van Der Tuin Aff., Ex. G, p.26) Thus, Plaintiff's assertion that it was not required to look first to its own insurer for damages allegedly caused by Varick, citing Abacus Federal Savings Bank v. ADT Security Services, Inc., 18 N.Y.3d 675 (2012), is erroneous. In Abacus, the court held that subrogation was not waived when a contract stated that the insurance, if any was obtained, was plaintiff's responsibility to obtain. Id. at 682. In this case, however, the Declaration affirmatively required Plaintiff to obtain insurance covering the type of claim for which it seeks recovery in this action. Further, the Declaration allocated the risk of loss to the Units and the contents therein to the insurance each Unit owner was required to maintain for the "full replacement value" of the covered property and required that all property insurance policies contain standard waiver of subrogation provisions. Implicit in said provisions is the requirement that each Unit Owner look to its own insurance for any damage to its contents or Unit that were required to be covered by the LEGAL:10331-0005/5723492.1 10 of 19 aforementioned mandatory coverage and not to the Board or the other Unit Owner. Otherwise, the language would be superfluous. The rules of contract interpretation are well settled in this State. "When parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms" (W.W.W. Assoc., 77 NY2d at 162). We apply this rule with even greater force in commercial contracts negotiated at arm's length by sophisticated, counseled businesspeople (see Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475 [2004]; R/S Assoc. v New York Job Dev. Auth., 98 NY2d 29, 32 [2002]; Riverside S. Planning Corp. v CRP/Extell Riverside, L.P., 60 AD3d 61, 67 [2008], affd 13 NY3d 398 [2009])." Ashwood Capital, Inc. v. OTG Management, Inc., 99 A.D.3d 1, 7 (1st Dept. 2012). Therefore, "courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing" (Reiss, 97 NY2d at 199 [internal quotation marks and citation omitted]). When a court construes a contract, its interpretation must give meaning to all the contractual clauses. See, Two Guys v. SFR Realty Associates, 63 N.Y.2d 396, 403 (1984). The Court of Appeals in Corhill Corp. v. SD Plants, Inc., 9 N.Y.2d 595 (1961) stated the rule as follows: It is a cardinal rule of construction that a court should not "adopt an interpretation" which will operate to leave a "provision of a contract * * * without force and effect" (Muzak Corp. v. Hotel Taft Corp., 1 N Y 2d 42, 46; Fleischman v. Furgueson, 223 N.Y. 235, 239). The application of these settled rules of contract interpretation to the Declaration and the facts of this case requires the rejection of Plaintiff's interpretation of the Declaration which would render the provisions of Section 7.3 (D) thereof meaningless. The only reasonable interpretation of the clear language of the subject clause is that the parties intended the Unit Owners to insure all damages to the contents, betterments, improvements, appliances, furnishings etc. in their Units in lieu of seeking recovery of damages to the same from either the Board or the other Unit Owner. LEGAL:10331-0005/5723492.1 11 of 19 See, Kaf-Kaf, Inc. v. Rodless Decorations, Inc., 90 N.Y.2d 654 (1997). Although the Declaration gave Plaintiff the option to "self-insure" the mandatory property insurance providing "full replacement value" for its contents, Plaintiff's risk management decision to act as its own insurer did not obviate the intent of the parties to forego recompense from the Board or the other Unit Owner for any claims falling within the mandatory coverage. Plaintiff's second argument in opposition to application of the waiver of subrogation clause is equally without merit. Section 6.1(A)(v) of the Declaration provides in relevant part that the Unit Owner shall "maintain additional insurance in full force and effect throughout the construction period, as may be reasonably required by the Board. (emphasis supplied)." Although the Board could require Varick to maintain additional insurance during the construction period, Plaintiff has failed to present any evidence that the Board exercised this option and required Varick to maintain any additional insurance during construction. The record demonstrates that the only insurance mandated was the property insurance required by §7.3 (D) of the Declaration which policies were to contain a standard waiver of subrogation endorsement. Article 6 also does not apply to the contents in the Unit. The clause limits any repair obligation to the other Units, not contents in the Unit, or any Common Elements. The Declaration describes the Unit as: all non-structural walls within such Unit, all utility lines, conduits, ducts, shafts, pipes, plumbing, wiring, chimneys, flues, vents, equipment, fixtures, machinery, landscaping and other services, facilities and equipment for the furnishing of utilities or services exclusively used in connection with such Unit and located within such Unit." See, Declaration, §3.2 (B). This provision therefore is not even applicable to the majority of the plaintiff's claim, which is for contents in its Unit. (Van Der Tuin Aff, Ex. G, p.26) LEGAL:10331-0005/5723492.1 12 of 19 The New York Court of Appeals in Abacus Federal Savings Bank v. ADT Security Services, 18 N.Y.3d 675 (2012), upheld a similar waiver of subrogation provision and dismissed the complaint. As the Court of Appeals dismissed the complaint in Abacus, it is respectfully submitted that this Court should dismiss Plaintiff's claims against Varick. POINT III PLAINTIFF'S CLAIMS MUST BE DISMISSED DUE TO ITS SPOLIATION OF ESSENTIAL EVIDENCE Plaintiff proffers several theories as to why it should not be sanctioned for spoliation, none of which is persuasive. Firstly, Plaintiff asserts Varick was afforded the opportunity to inspect the damaged equipment because Varick's owner representative, Greg Altshuler, was shown the Verizon Unit the day after the flooding. This assertion, while true, is disingenuous in that it ignores that Altshuler was not an expert and lacked knowledge of telecommunications equipment and networks to assess any damage to Plaintiff's equipment. Plaintiff asserts it "was prepared to cooperate fully with any additional inspection requests," but that Varick never requested an inspection. Plaintiff's assertion that it was prepared to cooperate with inspection requests is flatly contradicted by the fact that the equipment was destroyed shortly after the flood, despite the direction of its employee, Osborne Martin, that it be preserved. (Koba Aff., Ex. I, pp. 113, 116; Ex. L, pp. 57:11-15, 23-25, 58:3-15) This direction was obviously due to Plaintiff's intention to file a claim to recover for any damages to its property and equipment, which it claims totals approximately $463,000. Given the sum claimed and the specialized nature of the items allegedly damaged, inspection of the damaged property was essential to Varick defense to the amount of claimed damages, which are impacted by the age, condition, and depreciation of the property immediately before the alleged damage. Destruction of this equipment has deprived Varick of any ability or means to assess the alleged damages. Photographs do not fill the gap of an actual LEGAL:10331-0005/5723492.1 13 of 19 inspection as the do not show the damaged cards, switches etc. – just the frames and the walls. Varick did not request an inspection as it would have been futile due to the Plaintiff's destruction of the damaged items without prior notice to the parties. Plaintiff also argues that it should not be sanctioned because its destruction of essential evidence was not willful. This, too is irrelevant, as sanctions are not limited to cases of intentional spoliation because negligent destruction of evidence can be just as prejudicial to a party's defense as willful destruction of evidence. See, Squitieri v. City of New York, 248 A.D.2d 201, 202 (1998); Mudge, Rose, Guthrie, Alexander & Ferdon v. Penguin Air Conditioning Corp., 221 A.D.2d 243, 243(1995). Accordingly, Verizon's action must be dismissed because of its spoliation of essential evidence. POINT IV VARICK WAS NOT NEGLIGENT AND IS NOT VICARIOUSLY LIABLE FOR THE ACTIONS OF FOUNDATIONS AND ROCK Plaintiff 's complaint asserts that Varick owed it a duty to avoid damage to its Units in carrying out the project and was negligent in authorizing, allowing and/ or failing to prevent Foundations from removing the temporary roof before the installation of the permanent roof contrary to the sequence plan and failing to properly supervise Rock regarding the installation of the tarps. In other words, Plaintiff seeks to hold Varick vicariously liable for the alleged acts or omission of its independent contractors as it is undisputed that Varick did not, itself, perform any of the work, did not remove the temporary roof, did not develop the waterproofing methods and did not develop the means and methods of construction. The work was done by Foundations and Rock and the sequence of the work, and the change to the same, was developed by Foundations with the approval of Plaintiff's designated representative, Sieling. (Koba Aff., Ex. C, ¶ 59-64) Varick, LEGAL:10331-0005/5723492.1 14 of 19 however, cannot be held liable for the actions of Foundations or Rock because they were independent contractors. Plaintiff asserts Varick can be held vicariously liable for the actions of its independent contractors based upon the holding in Miles v. R & M Appliance Sales, Inc., 26 N.Y.2d 451 (1970). The facts of Miles are distinguishable from the facts of the case at bar. The Miles Court found the employer, R & M Appliance, could be held vicariously liable for the negligence of its independent contractor where it agreed to perform services for the plaintiff who accepted them with the reasonable belief that R & M Appliance or its employee were performing the services. Id. at 454. Unlike in Miles, Verizon was fully aware that the work would be performed by Foundations and not Varick. The facts of Linares v. Fairfield Views, Inc., 231 A.D.2d 418 (1st Dept. 1996) are also distinguishable from the facts of this case. In Linares, the building owner was held vicariously liable for the negligence of its elevator contractor because it had a non delegable duty to maintain the premises pursuant to statute. Id. at 419. Verizon has not cited any statute imposing a non-delegable duty on Varick. Nor has it cited a non delegable contractual duty that provides a basis for imposing liability upon Varick. Plaintiff is also mistaken that vicarious liability can be imposed upon Varick as the work was "inherently dangerous." This exception applies when the work involves a risk of harm inherent in the nature of the work itself and the risk inherent in the nature of the work is known or should be known to the employer. See, Chainani v. Board of Education, 87 N.Y.2d 370, 381 (1995); Rosenberg v. Equitable Life Assurance Society of the United States, 79 N.Y.2d 663 (1992). This exception has been applied to activities involving "blasting, certain types of construction and working with high tension electric wires." Chainani, 87 N.Y.2d at 381. The Plaintiff's alleged damages in this case did not arise from a risk inherent in the work itself. Rather, the flooding arose LEGAL:10331-0005/5723492.1 15 of 19 from a rainstorm of such severity it caused the electricity to go out, resulting in the loss of the electrical water pumps, and damaged the plastic sheeting that had been installed to prevent water from entering the building. At best, the failure of the waterproofing measures to prevent water from entering the building may constitute ordinary negligence by Foundations and Rock, the independent contractors responsible for the same. Varick therefore cannot be held vicariously liable for their alleged negligence. Plaintiff also failed to establish any alleged causally related damages by competent and admissible evidence. The deficiency of proof due to Osborne Martin's hearsay affidavit cannot be corrected by including new evidence in Verizon's reply papers. See, GMAC v. Minewiser, 115 A.D.3d 707 (2nd Dept. 2014); Cooling v. Wassong, 5 Misc.3d 22 (App. T, 1St. Dept. 2004). Therefore, Plaintiff cannot establish a prima facie case, and the second and fourth causes of action must be dismissed. POINT V VERIZON'S GROSS NEGLIGENCE CLAIM IS WITHOUT MERIT Plaintiff's opposition is premised upon its erroneous assertion that Varick is liable for gross negligence because it allegedly breached its duties to Verizon while aware of the sensitive nature of Plaintiff's telecommunications equipment and the potential impact on the public if the same was damaged.8 However, as stated in Verizon v. Optical Communications Group, Inc., 91 A.d.3d 176 (1st Dept. 2011), "the regulation of telecommunications carriers is not in the same league as the protection of the personal safety of citizens." Id. at 182, citing New York University v. Continental Insurance Co., 87 N.Y.2d 308 (1995). Thus, the mere potential for damage to telecommunications equipment does not create a heightened duty. 8 Plaintiff's Reply Memo of Law, pp. 23-24. LEGAL:10331-0005/5723492.1 16 of 19 The record before the Court is devoid of any conduct by Varick that "evinces a reckless disregard for the rights of others or 'smacks' of intentional wrongdoing." Colnaghi, U.S.A., Ltd. v. Jewelers Prot. Servs., Ltd., 81 N.Y.2d 821, 823-24 (1993). Rather, the record demonstrates that Varick advised Foundations of the need to protect the fifth floor from water infiltration, that Foundations developed the water protection plan with Sieling's approval, that the water plan was only modified after Foundations consulted with and secured Sieling's approval, that Foundations installed the metal decking on both the roof and the sixth floor and installed a parachute system that was used in conjunction with trash cans and pumps and took steps to prepare for the coming storm. The absence of "evidence of any intentional or reckless acts or omissions on the part of" Varick mandates dismissal of a gross negligence claim. Prato v. Vigliotta, 253 A.D.2d 749, 750 (1st Dept. 1998). POINT VI VARICK IS ENTITLED TO SUMMARY JUDGMENT ON ITS CLAIMS FOR CONTRACTUAL INDEMNIFICATION AGAINST FOUNDATIONS AND ROCK Foundations and Rock both oppose Varick's motion for summary judgment on its cross- claims against them for contractual indemnification based on the unsubstantiated assertion that contractual indemnification is not available to Varick due to Varick's alleged negligence. The record does not contain competent evidence of any acts or omissions attributable to Varick as opposed to Foundations or Rock. As a threshold matter, the indemnification clauses upon which Varick's claims are based are enforceable and do not violate General Obligations Law § 5-322.1 because they authorize indemnification only to "the fullest extent authorized by law." (Koba Aff., Ex. P, § 3.18 of the General Conditions of the Contract for Construction between Varick and Foundations; Ex. Q § 4.6.1) LEGAL:10331-0005/5723492.1