Westpoint International, Inc. v. American International South Insurance

Appellate Division of the Supreme Court of the State of New York

Mar 23, 2010

Versions:

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Order, Supreme Court, New York County (Herman Cahn, J.H.O.), entered on or about February 18, 2009, which, insofar as appealed from as limited by the briefs, in an action arising out of a breach of a commercial lease, after a nonjury trial, awarded judgment to plaintiff in the principal amount of $54,000 and dismissed defendant Ancona‘s counterclaims, unanimously reversed, on the law, without costs, the complaint dismissed, and judgment awarded to defendant on his counterclaim for rent in the amount of $18,000. The Clerk is directed to enter judgment accordingly.

In finding that plaintiff was entitled to rescission of its lease pursuant to Real Property Law § 223-a, the court overlooked the language of the lease that specifically excepted that statute, and provided that, in the event that defendant was unable to deliver possession, plaintiff was entitled to a rent abatement and not the cancellation of the lease. Accordingly, plaintiff‘s abandonment of the premises upon learning that a prior tenant claimed legal title thereto constituted a breach of the lease, entitling Ancona to damages (see Fox Paper v Schwarzman, 168 AD2d 604 [1990]).

Ancona did not provide documentation of the expenses for which he counterclaimed, and acknowledged that it was not until the end of the third month of the one-year lease that he completed the renovations that allowed the basement space in question to be legally rented as a separate unit and obtained a formal release of all claims to the space from the prior tenant. He is therefore awarded only the amount of rent for the nine-month period remaining on the lease ($54,000), minus the amount that was prepaid by the tenant ($36,000) (see Holy Props. v Cole Prods., 87 NY2d 130, 134 [1995]). Concur—Mazzarelli, J.P., Friedman, DeGrasse, Abdus-Salaam and Manzanet-Daniels, JJ.

Order, Supreme Court, New York County (Emily Jane Goodman, J.), entered July 17, 2009, which, insofar as appealed from, denied defendant‘s motion to dismiss the complaint, unanimously affirmed, with costs.

Although the underlying complaint contains some causes of action that are arguably subject to the insurance policy‘s “contract liability” exclusion, it alleges, in addition to a single cause of action for breach of contract, several causes of action sounding in tort and alleging statutory violations. Thus, defendant failed to demonstrate that the allegations cast the underlying complaint wholly within the exclusion, that no other reasonable interpretation of the exclusion is possible, and that no legal or factual basis exists that would potentially obligate defendant to indemnify plaintiffs (see Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 [1997]).

We reject defendant‘s apparent argument, based on Maroney v New York Cent. Mut. Fire Ins. Co. (5 NY3d 467, 472 [2005]), that the term “arising out of” in the contract liability exclusion is so broad as to comprehend any loss with even the slightest “causal relationship” to a breach of contract and that each cause of action in the underlying complaint stands in such a relationship to a breach of contract and is therefore excluded from coverage. Maroney is inapposite here, where, in addition to the contract claims, tort and statutory claims are asserted. An insurer has a duty to defend so long as there is any possibility of coverage under the policy, and here the possibility of coverage has not been eliminated (see Frontier Insulation Contrs., 91 NY2d at 175).

Nor is there any merit to defendant‘s argument that, because the policy defines “Claim” to mean lawsuit, rather than cause of action, the determination of whether the exclusion applies must be based not on separate causes of action but on the complaint as a whole. This is an unduly rigid construction of the term “[c]laim” in light of the realities of litigation, as well as “a strained, implausible reading of the complaint that is linguistically conceivable but tortured and unreasonable” (Northville Indus. Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 89 NY2d 621, 635 [1997] [internal quotation marks and citation omitted]). In any event, the thrust of the underlying action is not plaintiffs’ breaches of the various contracts at issue, but their marginalizing of the underlying plaintiff lenders’ shareholder rights and devaluing of their collateral, which actions give rise primarily to the tort and statutory claims asserted in the action and which would provide a basis for the action even in the absence of the agreements.

Although defendant makes much of it, the fact that the policy is not a “duty to defend” policy is not dispositive here (see Federal Ins. Co. v Kozlowski, 18 AD3d 33, 41-42 [2005]), since the policy expressly requires defendant to advance defense costs, subject to recoupment of any amounts advanced for claims ultimately determined not to be covered. Having failed to demonstrate that there is no possibility of coverage, defendant cannot avoid its obligation to advance defense costs (see e.g. Vigilant Ins. Co. v Credit Suisse First Boston Corp., 10 AD3d 528, 529 [2004]; Stonewall Ins. Co. v Asbestos Claims Mgt. Corp., 73 F3d 1178, 1219 [2d Cir 1995]). Concur—Mazzarelli, J.P., Friedman, DeGrasse, Abdus-Salaam and Manzanet-Daniels, JJ. [Prior Case History: 2009 NY Slip Op 31577(U).]

Order, Supreme Court, New York County (Jacqueline W. Silbermann, J.), entered September 29, 2008, which, to the extent appealed from as limited by the briefs, found defendant had not met his stipulated obligation to pay plaintiff $250,000, and directed him to pay that sum within 30 days, unanimously affirmed, with costs.

The parties clearly and unambiguously agreed that defendant would pay $250,000 directly to plaintiff over a period of three years following the execution of their stipulation in 2003. It is undisputed that defendant failed to make these payments. He contends that plaintiff should be equitably estopped from raising that failure because he made voluntary payments to third parties during that period. The court correctly rejected that argument without holding an evidentiary hearing. Concur—Mazzarelli, J.P., Friedman, DeGrasse, Abdus-Salaam and Manzanet-Daniels, JJ.

Order, Supreme Court, New York County (Lewis Bart Stone, J.), entered on or about June 20, 2008, which denied defendant‘s motion to vacate a judgment of the same court (Herbert I. Altman, J.), rendered March 16, 2006, convicting him, after a jury trial, of murder in the second degree, and sentencing him to a term of 25 years to life, unanimously affirmed.

The court properly denied defendant‘s CPL 440.10 motion to vacate his conviction on the ground of ineffective assistance of counsel. Defendant failed to present any evidence, such as an affidavit from counsel or an explanation for its absence, that would rebut the “strong presumption” that counsel‘s decision not to call certain witnesses was strategic (see People v Rivera, 71 NY2d 705, 709 [1988]; see also Strickland v Washington, 466 US 668 [1984]). The record, including counsel‘s opening statement, indicates that counsel intended to call several witnesses to support a justification defense. However, as the trial progressed, counsel may have reasonably concluded that the testimony of these witnesses would have been weak, inconsistent, or even helpful to the prosecution‘s case. Defendant‘s claim that counsel‘s performance was deficient is based on mere speculation and is unsupported by the record. Concur—Tom, J.P., Saxe, Nardelli, Renwick and Freedman, JJ.

Herman Cahn

J.H.O.

Emily Jane Goodman

Jacqueline W. Silbermann

Lewis Bart Stone

Herbert I. Altman

Tom, J.P., Saxe, Nardelli, Renwick and Freedman, JJ.