Upon the foregoing papers, plaintiffs the Burlington Insurance Company (Burlington) and Capsys Corporation (Capsys) (collectively plaintiffs) move, for an order, pursuant to CPLR 3212 granting Burlington and Capsys judgment as a matter of law and ordering defendant Caliber One Indemnity Company (Caliber One) to: (a) defend and indemnify Capsys in the lawsuit entitled Marco Randazzo against Monandock Construction, Inc., Capsys Corp., and Nehemiah Housing Development Fund Company Inc., Index No. 23247/04, Supreme Court, Kings County (the Randazzo action); and (b) reimburse Burlington and/or Capsys for all defense costs incurred to date by Burlington and or Capsys in the Randazzo action. Caliber One cross-moves for an order: (1) pursuant to CPLR 3212/3215 directing the entry of judgment in favor of Caliber One and against Capsys and Burlington; and (2) upholding and affirming Caliber One's denial of Capsys' request for coverage.

On January 1, 2001, Monandock Construction Inc., (Monandock) hired Capsys to manufacture pre-fabricated homes for the Nehemiah Housing Project. Capsys hired Eagle One to create and install roofs on the pre-fabricated homes. The contract between Capsys and Eagle One required Eagle One to defend and indemnify Capsys, and to procure additional insurance covering Capsys for claims arising out of Eagle One's work. Caliber One provided commercial general liability coverage to Eagle One and the policy contained a blanket additional insured endorsement covering Capsys as an additional insured. Randazzo worked for one of Monandock's subcontractors on the Nehemiah Housing project. On March 7, 2003, Randazzo claims to have slipped and fallen on ice that had accumulated in or about the doorframe of a prefabricated house. On July 23, 2004, he commenced the Randazzo action. On October 29, 2007, Capsys tendered its defense and [*2]indemnity to Caliber One based on its status as an additional insured under Eagle One's general commercial liability policy. On November 5, 2007, Caliber One sent a letter to Capsys stating that it had issued a disclaimer to Eagle One and, as such, Caliber One would not be accepting Capsys' tender for defense and indemnification. On July 23, 2008, Capsys and Burlington instituted this action to obtain a declaration of their rights under the Caliber One policy.

Plaintiffs seek an order directing Caliber One to: (a) defend and indemnify Capsys in the Randazzo action; and (b) reimburse Burlington and/or Capsys for all defense costs incurred to date by Burlington and or Capsys in the Randazzo action.

Caliber One cross-moves for a declaration that no coverage exists for Capsys under the policy and an order upholding and affirming its denial of Capsys' request for coverage.

In support of their motion, plaintiffs argue that the Caliber One policy provides coverage to Capsys as an additional insured. They point to Endorsement No.12 of the policy which named as an additional insured, anyone Eagle One was required to add pursuant to a written contract. They further point out that the contract between Eagle One and Capsys required Eagle One to procure insurance and add Capsys as an additional insured. It is undisputed that the Caliber One policy was in effect on the date of Randazzo's accident. Caliber One admits that Capsys was an additional insured but only for liability which arose out of Eagle One's roofing work at the project.

Plaintiffs also argue that because Caliber One never disclaimed coverage to Capsys pursuant to Insurance Law §3420, Caliber One owes Capsys a defense and indemnification in the Randazzo action. Plaintiffs aver that Caliber One's disclaimer to Eagle One does not satisfy its duty to issue a disclaimer to Capsys under Insurance Law§ 3420 (d).

In support of its cross motion, Caliber One argues that Capsys is not an additional insured under the policy because Randazzo's injuries did not arise from the work of Eagle One. It also points to the language of Endorsement #12 which states in pertinent part:

WHO IS AN INSURED (Section II) is amended to include as an insured the person(s) or organization(s) shown in the Schedule as an insured but only with respect to liability arising out of your work (Eagle One) for that insured by or for you.

Thus, Caliber One does not deny that Capsys would qualify as an additional insured under the policy but argues that this coverage is only available for liability which arose out of Eagle One's roofing work, specifically the installation of a rubber roof at the site. Caliber One argues that plaintiffs have not produced any proof that the ice upon which Randazzo fell entered the building as a result of Eagle One's work. In fact, Caliber One points to Randazzo's testimony that the ice upon which he fell was formed under plastic that had been placed to protect the flooring and, thus, Caliber One argues that if water entered the building through the roof the ice would have formed on top of the plastic. Caliber One maintains that Capsys can only trigger coverage by establishing that Eagle One created the condition which caused the roof to leak and the resultant ice formation. Caliber One contends that Capsys has failed to establish this.

Caliber One contends that, at a minimum, questions of fact exist as to how the ice formed pointing to the fact that the record reveals that the roofing for this project was installed in two distinct phases as follows. First, at an off-site warehouse, Eagle One affixed roofing material over the entirety of the structure before shipping it to the project site. Each unit was then placed one and one half inches apart leaving a gap of this size in the roof between the units. After several units were [*3]fabricated Capsys' employees would fabricate plywood boards to cover the gaps between the units. Thereafter, Capsys would request Eagle One to place roofing materials over the newly installed plywood so that a watertight seal could be obtained. However, prior to the installation of the plywood coverings, the walls of the unit would be exposed to the elements, sometimes for several days.

Caliber One points to Randazzo's deposition testimony in which he stated that the paint on the outside walls of the unit at which he fell had bubbled off the walls leading him to determine that there was a water leak in the unit. Further he testified that the unit where he fell had been placed on the foundation two days prior to his fall and, that, on the day of his fall Capsys employees were on the roof installing the plywood coverings. Thus Caliber One contends that a question of fact exists regarding what caused the ice inasmuch as it could have occurred as a result of water leaking through the un-waterproofed gypsum boards of the unit, which was clearly not Eagle One's work.

In further support of its motion, plaintiffs correctly point out that Insurance Law § 3420(d) requires that a written notice of disclaimer of liability or denial of coverage must be given to the "insured and the injured person or any other claimant." It has been held that "[a]dditional insured is a recognized term in insurance contracts, . . . [and that] the well-understood meaning of the term is an entity enjoying the same protection as the named insured" (Pecker Iron Works of NY v Traveler's Ins. Co., 99 NY2d 391, 393, 786 ] [internal quotation marks and citations omitted]). As such, the standard for determining whether an additional named insured is entitled to a defense is the same standard that is used to determine if a named insured is entitled to a defense (BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708 [2007]). Here, as discussed below, that standard has been met, and thus, Caliber One was obligated to issue a timely disclaimer to Capsys as an additional insured under the policy.

"It is well settled that an insurance company's duty to defend is broader than its duty to indemnify. Indeed, the duty to defend is "exceedingly broad" and an insurer will be called upon to provide a defense whenever the allegations of the complaint "suggest . . . a reasonable possibility of coverage" (Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 648 [1993]). Accordingly "[i]f, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured no matter how groundless, false or baseless the suit may be" (Ruder & Finn v Seaboard Sur. Co., 52 NY2d 663, 670 [1981]). The duty remains "even though facts outside the four corners of [the] pleadings indicate that the claim may be meritless or not covered" (Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 63 [1991]). Thus, "if [a] complaint contains any facts or allegations which bring the claim even potentially within the protection purchased, the insurer is obligated to defend" (BP A.C. Corp., 8 NY3d at 714). Moreover, th e Court of Appeals has held that "when a policy represents that it will provide the insured with a defense, we have said that it actually constitutes "litigation insurance" in addition to liability coverage" (Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131 [2006]; see Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 310 [1984]; International Paper Co. v Continental Cas. Co., 35 NY2d 322, 326 [1974]). Thus, an insurer may be required to defend under a contract even though it may not be required to pay once the litigation has run its course.

Since there is a possibility that Randazzo's injuries arose out of Eagle One's work for Capsys , Caliber One's obligation to provide Capsys with a defense is triggered. Accordingly, those branches [*4]of plaintiffs' motion seeking an order directing Caliber One to defend Capsys in the Randazzo action and to reimburse plaintiffs for all defense costs incurred to date is granted.

That branch of plaintiffs' motion seeking indemnification from Caliber One is denied as premature. The duty to indemnify requires a determination that the insured is liable for a loss that is covered by the policy (see Servidone Constr. Corp. v Security Ins. Co. of Hartford, 64 NY2d 419 [1985]; Serrano v Republic Ins., 48 AD3D 665 [2008]). "New York law . . . follow[s] the general rule that liability of the insurer attaches when there is a final judgment against the insured as a result of an obligation imposed by law" (Westchester Fire Ins. Co. v Utica First Ins. Co., 40 AD3d 978, 980 [2007] quoting M & M Elec. v Commercial Union Ins. Co., 241 AD2d 58, 60; see State Farm Mut. Auto. Ins. Co. v Westlake, 35 NY2d 587 [1974]; 755 Seventh Ave. Corp. v Carroll, 266 NY 157, 161 [1935]). When insurers agree to pay all sums which an insured becomes "legally obligated to pay as damages," there must be "an establishment of legal liability for payment of damages" to trigger the insurers' duty to indemnify the insured (Westchester Fire Ins. Co., 40 AD3d at 978; M & M Elec., 241 AD2d at 60).

Caliber One's cross motion is denied in its entirety.

The foregoing constitutes the decision and order of the court

E N T E R,

J. S. C.