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Supreme Court of New York6/25/1998
Order, Supreme Court, New York County (Ira Gammerman, J.), entered December 24, 1996, which denied plaintiff's motion for summary judgment declaring that defendant National Union is obligated to reimburse it for the costs incurred in defending an underlying personal injury action and third-party action and granted National Union's cross-motion for summary judgment dismissing the complaint, unanimously reversed, on the law, with costs, plaintiff's motion granted, National Union's cross-motion denied and it is declared that the policy of insurance issued by National Union to Vanderbilt Biltmore Corp. covers plaintiffs Harry Macklowe, Harry Macklowe Real Estate Co., Inc. and McGraw Hudson Construction Corp. as additional insurers under said policy and defendant National Union had a duty to undertake and bear all defense and legal costs and attorney's fees in the underlying Mike action; that plaintiff Aetna Casualty and Surety Company is entitled to judgment against National Union in the sum of $60,500.00, the amount of the judgment entered in the Mike action on August 1, 1995, together with costs and interest from that date; and, that Aetna is further awarded judgment against National Union for its legal costs and attorneys fees in the Mike action in the sum of $72,636.97 plus costs and interest from August 1, 1995. The Clerk is directed to enter judgment accordingly.
On January 24, 1989, Eldee Mike, an employee of defendant Vanderbilt Biltmore Corp., was injured while working on a construction project at the Hotel Macklowe in Manhattan. Plaintiffs Harry Macklowe, Harry Macklowe Real Estate and McGraw Hudson Construction (hereafter collectively "Macklowe") were the owners, general contractors and construction managers for the project, and Vanderbilt was a subcontractor.
It is undisputed that the subcontract between Macklowe and Vanderbilt contained a "hold harmless" indemnification clause, and required Vanderbilt to obtain liability insurance naming Macklowe as additional insureds. National Union insured Vanderbilt against workers' compensation and liability claims. American International Group (AIG) was National Union's authorized representative, and it or one of its affiliates commenced workers' compensation payments to Mike on February 22, 1989.
On or about January 21, 1992, Mike sued Macklowe for negligence and violation of Labor Law ยงยง 240 and 241(6) and, on or about January 26, 1994, Macklowe commenced a third-party action for contractual and common-law indemnification and for defense costs against Vanderbilt and another subcontractor. Vanderbilt, which had been officially dissolved as of March 24, 1993, never responded to the complaint or notified National Union of the action. On July 1, 1994, an order was entered, granting a default judgment on the issue of liability against Vanderbilt with an assessment of damages to be made at trial. After a jury trial, Mike was awarded $60,500, Vanderbilt was found solely liable and Macklowe was granted judgment over against Vanderbilt.
At the time that Macklowe commenced its third-party action against Vanderbilt, Vanderbilt had already been dissolved. Thus, on February 18, 1994, Macklowe's insurer Aetna wrote AIG, confirming an earlier telephone conversation on that date, that Vanderbilt was insured by AIG/National Union under Policy #8171027, that Mike had claimed against Macklowe arising out of a January 24, 1989 accident and that Vanderbilt, as subcontractor, was supposed to name Macklowe as additional insureds on the named policy, and that Vanderbilt "might be out of business at this time". (The letter concluded by asking whether Macklowe was named as an additional insured and the policy limits. AIG
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