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  Insurance Coverage/General Liability

Greater New York Mut. Ins. Co. v. Mutual Marine Office, Inc., 3 A.D.3d 44, 769 N.Y.S.2d 234 (2003 1st Dept.), involved a claim by Greater New York on behalf of its insured, Seward Park Housing, seeking a declaratory judgment that Mutual Marine Office’s principal was obligated to defend and indemnify Seward Park Housing for claims arising out of a garage collapse.

Seward owned an apartment complex which included an underground parking garage. The garage was operated by Ulltra East Parking pursuant to a garage operator’s agreement. The agreement required Ulltra to obtain liability insurance insuring Seward from claims for damage incurred in the premises. Ulltra obtained liability insurance from Mutual Marine Office’s principal which included Garage Keepers Liability insurance that provided coverage in connection with Ulltra’s garage operations. The policy also included an additional insured endorsement which provided additional insured coverage to those whom Ulltra agreed to provide coverage, but only with respect to operations performed by or on behalf of Ulltra.

Upon cross motions for summary judgment, the lower court granted Greater New York’s motion for summary judgment and denied Mutual Marine Office’s principal’s cross-motion. The trial court held that the additional insured endorsement contained in Ulltra’s general liability policy was triggered in that the claims arise out of damage to the vehicles while parked in the garage maintained by Ulltra, and therefore, arose out of Ulltra’s operations. As a result, the court also held that Mutual Marine Office’s principal must reimburse Greater New York for the costs and expenses incurred in defending and indemnifying Seward on the subject claims.

Our firm appealed the decision on behalf of Mutual Marine Office’s principal. The Appellate Division agreed with our client’s position and reversed the trial court’s decision. The Appellate Division held that the collapse of the roof of the parking garage did not arise out of Ulltra’s operations and, therefore, the additional insured endorsement of the policy was never triggered.

In reaching this decision, the Appellate Division distinguished, and found inapplicable, cases relied on by Seward and the lower court that dealt with the interpretation of additional insured provisions in policies for subcontractors in the construction field, and not policies for garage operators. The Appellate Division held that given the significantly different relationship between an owner/general contractor and lessor/lessee garage keeper, the rationale for extending additional insured coverage to an owner does not apply to the additional insured endorsement in a Comprehensive General Liability policy with a Garage Keepers Liability endorsement. The Appellate Division noted that a construction contractor, working in furtherance of its contract with the owner, is in the best position to avoid or reduce the risk of injury, especially to its own employees and those of its subcontractors. The Appellate Division found that such considerations do not apply to the relationship of a lessee garage keeper to the lessor, especially when the lease reserved to the lessor the sole responsibility for structural repairs. Accordingly, the Appellate Division held that unlike the contractor or subcontractor, which had the opportunity to control or minimize the risk of injury to its employees and those acting on its behalf at the construction site, Ulltra was in no position to avoid the risk of a structural collapse of the roof of a garage it leased, an event completely beyond its control.