Non-Insuring Companies Dismissed from First-Party Action -- Landlord Found to Be an Additional Insured Only under Tenant's CGL Coverage

COMMERCIAL PROPERTY – NON-INSURING COMPANIES – ADDITIONAL INSURED – NO FIRST-PARTY BUILDING COVERAGE
SUS, Inc. v. St. Paul Travelers Group
(3rd Dept., decided 7/1/2010)

SUS, Inc. owned and operated a restaurant and leased the property from plaintiff New Prospect Properties, LLC.  In 2008, a fire completely destroyed the restaurant, including the building and its contents. At the time of the fire, SUS had an insurance policy with Charter Oak Fire Insurance Company providing commercial general liability (CGL) insurance and businessowners' property insurance coverage.  New Prospect was expressly named as an "[a]dditional [i]nsured" on an endorsement to SUS's CGL coverage, but was not named under SUS's business property coverage.

After certain claims made by plaintiffs under the policy were denied, they commenced this action against, among others, defendants St. Paul Travelers Group, Travelers Indemnity Company, Travelers Indemnity Company of America, St. Paul Travelers Companies, Inc., St. Paul Fire and Marine Insurance Company and Charter Oak Fire Insurance Company.  The Travelers defendants moved, pursuant to CPLR 3211 (a) (1) and (7), to dismiss the complaint except as against Charter Oak, alleging that none of the other Travelers defendants was an insuring company under the policy.  They also sought to dismiss any claims for damage to the building itself as not covered under the policy, and to remove Sangiovese Restaurant and New Prospect as plaintiffs.  Supreme Court granted that portion of the motion which sought removal of Sangiovese Restaurant as a plaintiff, and otherwise denied the motion.  The Travelers defendants appealed.

In MODIFYING the order appealed from, the Third Department held:

1. Dismissal of Non-Insuring Companies:  All but Charter Oak should have been dismissed as defendants.  Charter Oak alone issued the policy at issue.  The word "Travelers" and its logo on the declarations pages and certain portions of the policy did not serve to create an ambiguity where no other existed.  Since plaintiffs neither alleged nor submitted any facts indicating that the other Travelers defendants exercised direct dominion and control over Charter Oak, there was no basis upon which to predicate liability against them.
   
   
2. Scope of Additional Insured Coverage for Owner/Landlord:  Any claims under the policy by New Prospect, the landlord and owner of the premises, should have been dismissed because New Prospect was not named to any extent under SUS's businessowners' property coverage.  Although New Prospect was named as an "additional insured" under SUS's CGL coverage, the standard CGL policy — like the one at issue here — does not cover damage to property owned by the insured, but rather provides coverage for liability to third parties pursuant to a judgment or settlement.  Since New Prospect was not named under SUS's businessowners' property coverage and its status as an additional insured under the CGL policy did not entitle it to any coverage in this first-party liability claim, any claims asserted by New Prospect must be dismissed.
   
   
3. Scope of Businessowners Property Coverage for Named Insured Tenant:  The policy provided no coverage for damage to the building itself and, therefore, SUS's claims for any such damage should have been dismissed.  While the "Businessowners Declarations" of the policy set forth a limit of insurance for "Business Personal Property" and other coverage extensions, such as accounts receivable and fine arts, no limit of insurance was shown for the building.  As such, the subject building was not covered under the clear language of the businessowners' property coverage part of the policy.  Furthermore, the CGL portion of the declarations — which provides a limit of insurance of $300,000 for "Damage to Premises Rented to You" — was not applicable to SUS's first-party liability claim for damage to the building.  The CGL coverage expressly limited Charter Oak's liability to SUS to those sums that SUS becomes legally obligated to pay as property damage arising from a covered event, and there was no allegation that SUS had been found legally obligated to pay any of the damages alleged.  Accordingly, Supreme Court should have dismissed all claims by SUS seeking recovery for damage to the building.