Landlord not an additional insured for property damage under tenant's policy: Court grants summary judgment to insurer

Cog-Net Building Corp. v. The Travelers Indemnity Company, and Russo Picciurro Maloy, LLC d/b/a RPM Insurance Agency, Index 100587/2010 (Sup.Ct. Richmond Cty. May 22, 2013)

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Justice Joseph J. Maltese granted motions for summary judgment by a defendant insurer and a co-defendant insurance broker in an action by a landlord under a commercial package insurance policy issued to its tenant.

After plaintiff's building was damaged by fire, it submitted a property damage claim under its tenant's policy, on which it was listed as a loss payee. Claiming that it should have been named an additional insured instead, landlord sought reformation.

The defendant insurer had discovered that the named insured tenant had hired an arsonist to burn down the building and therefore denied the claim. It was conceded, though, that the landlord had not been involved in procuring the fire. Case law is clear that a loss payee's rights are co-extensive with those of the named insured. Therefore, since the tenant was not entitled to payment, neither was the landlord. Had the landlord been an additional insured, argued its attorney, its rights would have been independent of the tenant's thereby entitling it to recover as an innocent insured.

Deposition testimony established, prima facie, that the insurer's underwriting guidelines did not allow it to issue property insurance to tenants naming their building owners as additional insureds. Any request for such coverage would have been denied, and, in any event, it was shown on the motion that there was no credible evidence that anyone had actually asked. The court held that reformation was not warranted.

AGF&J Counsel Mark Ian Binsky and associate D. Carolina Lopez briefed and argued this motion on behalf of Travelers.