United States District Court,

S.D. New York.

GREAT AMERICAN E & S INSURANCE COMPANY, Crescent Contracting Corp., and Rsui Indemnity Company, Plaintiffs,

v.

HARTFORD FIRE INSURANCE COMPANY, Defendant.

 

No. 09 Civ. 10010(PAC)(GWG).

Aug. 3, 2012.

 

REPORT AND RECOMMENDATION

GABRIEL W. GORENSTEIN, United States Magistrate Judge.

*1 Plaintiffs Crescent Contracting Corp. (“Crescent”), Great American E & S Insurance Company (“Great American”), and RSUI Indemnity Company (“RSUI”) have brought this case against Hartford Fire Insurance Company (“Hartford”) seeking to recover under an insurance policy issued by Hartford for the costs plaintiffs incurred litigating and settling multiple previous litigations. Those litigations were brought by workers who were injured when a crane collided with vehicles at an underground construction site. Plaintiffs have now moved for partial summary judgment against Hartford on various grounds relating to their claims under the policy.FN1 Hartford has cross-moved for summary judgment, seeking a declaration that it owed no duty to defend or indemnify Crescent for the underlying tort actions and that it owes no duty to reimburse Great American and RSUI for the costs they incurred defending and indemnifying Crescent in those actions.FN2

 

FN1. See Notice of Motion, filed Feb. 17, 2012 (Docket # 22); Plaintiffs’ Statement of Undisputed Material Facts Pursuant to Local Rule 56.1, filed Feb. 17, 2012 (Docket # 23) (“Pl. Rule 56.1 Statement”); Memorandum of Law in Support of Plaintiffs’ Motion for Partial Summary Judgment Pursuant to Fed.R.Civ.P. 56, filed Feb. 17, 2012 (Docket # 25) (“Pl.Mem.”); Declaration of Eric D. Suben in Support of a Motion for Partial Summary Judgment, filed Feb. 17, 2012 (Docket # 28) (“Suben Decl.”); Plaintiffs’ Reply Brief in Support of Motion for Partial Summary Judgment and Opposition to Defendant’s Cross–Motion for Summary Judgment, filed Apr. 2, 2012 (Docket # 34) (“Pl.Reply”).

 

FN2. See Notice of Motion, filed Mar. 19, 2012 (Docket # 29); Affidavit of Louis DeRossi, filed Mar. 19, 2012 (Docket # 30) (“DeRossi Aff.”); Declaration of Nicholas P. Calabria in Support of Defendant’s Motion for Summary Judgment, filed Mar. 19, 2012 (Docket # 31) (“Calabria Decl.”); Memorandum of Law in Support of Defendant’s Motion for Summary Judgment and in Opposition to Plaintiffs’ Motion for Partial Summary Judgment, filed Mar. 19, 2012 (Docket # 32) (“Def.Mem.”); Rule 56.1 Response and Statement of Undisputed Material Facts, filed Mar. 19, 2012 (Docket # 33) (“Def. Rule 56.1 Statement”); Defendant Hartford Fire Insurance Company’s Reply Memorandum of Law, filed Apr. 16, 2012 (Docket # 35).

 

For the reasons stated below, plaintiffs’ motion should be denied and Hartford’s motion should granted.

 

I. BACKGROUND

The following facts are not disputed.

 

A. Underlying Accident and Litigation

On the night of July 9, 2004, two separate groups were scheduled to work on Amtrak’s East River tunnel. Def. Rule 56.1 Statement ¶ 26.FN3 One group was working on Crescent’s “Standpipe Project” at the east portal of “Mainline Track No. 1.” Id. ¶ 27. This group included Crescent employees, Amtrak pilots, and employees of other contractors. Id. A separate and unrelated group of workers was changing a transformer at a site east of the Standpipe Project using a Terex crane. Id. All the workers were on or near a track, referred to as “Mainline Track No. 1,” which had been taken out of service. Id. ¶¶ 26–27.

 

FN3. Plaintiffs did not file a statement under Local Civil Rule 56.1(b) in response to defendant’s Rule 56.1 Statement. Thus, all of defendants’ statements are “deemed to be admitted for purposes of [this] motion.” S.D.N.Y. Local Civ. Rule 56.1(c).

 

The Standpipe Project group was using three Crescent trucks, referred to as “International High Rail vehicles,” that were equipped with regular wheels and rails so that the vehicle could travel on the railroad tracks. Id. ¶ 28. The trucks each had an 18–to 20–foot flatbed, which was 6 feet above the ground. Id. As a general rule, the Standpipe Project would start on Friday nights and last until Sunday around noon. Id. ¶ 29. The three Crescent trucks would be taken from Amtrak’s yard on Friday night, put on the tracks, and driven on the rails to the work location, where the trucks would remain on the rails until noontime on Sunday. Id. ¶ 30. Importantly, two of the Crescent trucks would be attached in tandem at their rear ends so that the flatbeds of the tandem trucks could be used as one continuous work platform. Id. ¶ 31. The tandem truck platform was loaded with tools, equipment, a generator, fluorescent lighting on multiple four-to six-foot fixtures per truck, a porta-potty, fans, and vacuums. Id . ¶ 33.

 

The Crescent trucks were equipped with three-to four-foot side rails, “which would be dropped horizontally toward the side of the tunnel, where the work itself was taking place.” Id. ¶ 32. These rails “extended to the bench wall of the tunnel and a board would also be connected to the flatbeds of the tandem trucks creating one large work platform for the Standpipe Project workers 6 feet off the ground.” Id.

 

*2 After the trucks stopped, they would remain stationary while work was performed on the standpipe on the tunnel wall. Id. ¶ 35. During this period, the trucks were put in park with the emergency brake engaged and chocks would be placed underneath the rail wheels. Id.

 

From the night of July 9 to the morning of July 10, 2004, the Crescent trucks were stopped at the worksite for two to three hours prior to the incident. Id. ¶ 34. The Crescent truck drivers, Joseph Adornetti and Girolamo Vitale, and Amtrak pilot, Edley Gayle, stayed in the cab of their vehicles for two to three hours—reading, eating, napping, and “doing nothing”—while the workers performed the standpipe work on the platform of the trucks that had been locked in tandem. Id. ¶ 36. The workers were required to remain on the platform of the trucks and the bench wall of the tunnel. Id. ¶ 37. At the time of the incident, Louis Cevasco, an employee of a contractor, sat on a canvas chair on the tandem truck platform. Id. ¶ 38. Jugal Sood, an employee of another contractor, was standing on the tandem truck platform. Id . Both were overseeing the Standpipe Project workers. Id.

 

While the standpipe work was proceeding, the Terex crane that had been used at the second worksite east of the Standpipe Project came crashing into the Crescent trucks, injuring workers on the Standpipe Project. Id. ¶ 39.

 

Cevasco filed a lawsuit on July 23, 2004, seeking recovery for his injuries. See Complaint, filed July 23, 2004 (Docket # 1 in Cevasco v. Nat’l R.R. Passenger Corp., 04 Civ. 5760). The other plaintiffs in the underlying litigations filed lawsuits to recover for their injuries in 2005 and 2006. See Complaint, filed Aug. 23, 2005 (Docket # 1 in Sood v. Nat’l R.R. Passenger Corp., 05 Civ. 7419); Complaint, filed Aug. 15, 2006 (Docket # 1 in Adornetti v. Nat’l R.R. Passenger Corp., 06 Civ. 6195); Complaint, filed Aug. 15, 2006 (Docket # 1 in Vitale v. Nat’l R.R. Passenger Corp., 06 Civ. 6196); Complaint, filed Sept. 11, 2006 (Docket # 1 in Gayle v. Nat’l R.R. Passenger Corp., 06 Civ. 6956). These actions eventually settled. See Pl. Rule 56.1 Statement ¶ 11; Def. Rule 56.1 Statement at 2.

 

B. Relevant Insurance Policies

An insurance policy issued by Hartford provided coverage to Crescent on the date of the accident. Pl. Rule 56.1 Statement ¶ 1. The policy provided both liability coverage for certain accidents involving covered automobiles and physical damage coverage to the covered vehicles for damages resulting from certain causes. See Hartford Business Auto Policy No. 16UENPG3941, effective June 1, 2004 (annexed as Ex. A to Suben Decl.) (“Policy”). Under the policy, Hartford agreed to “pay all sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies, caused by an ‘accident’ and resulting from the ownership, maintenance or use of a covered ‘auto’.” Id. § II(A). Hartford also agreed to “pay for ‘loss’ to a covered ‘auto’ or its equipment” depending on the cause of the damage to the covered automobile. Id. § III(A)(1). The Policy defines “auto” as “a land motor vehicle, ‘trailer’ or semitrailer designed for travel on public roads but does not include ‘mobile equipment’.” Id. § V(B). The Policy’s definition of “mobile equipment” includes “vehicles designed for use principally off public roads,” id. § V(J)(1), and “vehicles maintained primarily for purposes other than the transportation of persons or cargo,” id. § V(J)(6).

 

*3 Crescent also had obtained a liability insurance policy through plaintiff Great American E & S Insurance Co. (“Great American”), which was effective on the date of the accident and provided liability coverage of up to $1 million per incident, with a $2 million aggregate cap. See Letter from Rollon L. Rhoane to Reed Rickman, dated Aug. 11, 2004 (annexed as Ex. D to Calabria Decl.). Plaintiff RSUI Indemnity Co. (“RSUI”) provided liability coverage in excess of the Great American policy. See Letter from John Graham to Reed Rickman, dated Aug. 13, 2004 (annexed as Ex. E to Calabria Decl.). Great American and RSUI defended Crescent during the litigation of the underlying claims. See Suben Decl. ¶ 12; DeRossi Aff. at 5–6.

 

On July 13, 2004, Crescent notified Hartford of its claim pursuant to the Policy for costs stemming from the underlying accident. Pl. Rule 56.1 Statement ¶ 2; Def. Rule 56.1 Statement at 1. Hartford responded by letter dated August 20, 2004, informing Crescent:

 

[a]s more fully set forth below, The Hartford will handle this matter under a reservation of rights, as your policy excludes coverage for bodily injury to your employees. In addition, your policy excludes coverage for liability assumed by an insured under an insured contract, for bodily injury arising out of construction or demolition operations within 50 feet of any railroad property. Finally, your policy does not provide coverage [for] bodily injury arising out of the use of your vehicles which are not covered “autos”.

 

Letter from Louis DeRossi to Steve Zassman, dated Aug. 20, 2004 (annexed as Ex. C to Suben Decl.) (“DeRossi Letter”) at 1. Hartford explained that, in light of the cited provisions, the Policy did not apply to any potential bodily injury claims of the two Crescent employees injured in the accident. See id. at 5; see also Policy §§ II(B)(3)-(5). Hartford also advised that insofar as Crescent’s liability stemming from the underlying accident extended to indemnification of Amtrak for torts committed by Amtrak, the Hartford policy does not apply. See DeRossi Letter at 5; see also Policy § V(G)(6)(a). Lastly, Hartford explained that because the Policy only applied to covered autos, which exclude “mobile equipment,” as defined in the Policy, “there would be no coverage for an ‘accident’ arising out of the operation of any equipment which is considered ‘mobile equipment’.” See DeRossi Letter at 6. Nonetheless, Hartford informed Crescent that it “will handle these potential claims under a reservation of rights, even though a coverage question exists.” Id. Hartford continued, “[N]o act of any company representative while investigating, negotiating settlement or defending any claim or lawsuit shall be construed as a waiver of any of The Hartford’s rights. We reserve the right under the policy to deny coverage to you or to anyone claiming coverage under this policy …. “ Id. Hartford also “reserve[d] the right to withdraw from the defense of any claim should sufficient facts be developed that take[ ] the claim outside the policy coverage.” Id.

 

*4 In a letter to Crescent dated June 6, 2005, Hartford acknowledged that it had received a copy of a third-party summons and complaint filed by Amtrak in the Cevasco litigation, which impleaded Crescent into the action. See Letter from Louis DeRossi to Steve Zassman, dated June 6, 2005 (annexed as Ex. D to Suben Decl.). Hartford informed Crescent that “[i]n keeping with the terms of your policy of insurance, the law firm of Churbuck, Calabria, Jones & Materazo … has been assigned to represent your interests in this lawsuit.” Id. (underlining in original). Hartford did not purport to reserve any rights in the letter, nor did it make any reference to the prior reservation of rights. See id.

 

Hartford subsequently learned that Great American had already retained the law firm Hoffman & Roth to represent Crescent in the action. DeRossi Aff. at 4. “Hartford therefore closed its file and did not become involved in the defense of the Cevasco Third–Party Complaint.” Id. Hartford also received the complaints filed against Crescent in the Sood and Gayle actions. See Def. Rule 56.1 Statement ¶¶ 15–16. Hartford learned that Great American had retained Hoffman & Roth to represent Crescent in the two actions. Id. ¶¶ 15, 17.

 

On June 20, 2007, Hartford issued three checks to Crescent, paying “for property damage to the trucks as ‘covered autos’ under the policy” totaling $104,908.71 in payments. Pl. Rule 56.1 Statement ¶ 8; accord Def. Rule 56.1 Statement at 1; see also Checks, dated June 20, 2007 (annexed as Ex. E to Suben Decl.).

 

On September 29, 2008, Great American wrote to Hartford asserting that Hartford had agreed by the August 20, 2004 DeRossi Letter to provide Crescent with a defense to the claims asserted against Crescent in the Cevasco action. See Letter from Carol LaFever to Louis DeRossi, dated Sept. 29, 2008 (annexed as Ex. P to Calabria Decl.). Great American requested that Hartford reopen its file on the Cevasco action and participate in the defense of the claim. See id. Great American also informed Hartford that “[i]t is our position that you owed a duty to provide Cresent [sic ] with a defense to this claim [.][T]herefore you owe us for half of this claim. Thus [we] expect the appropriate contribution for these expenses and seek to recover[ ] these fees.” Id.

 

Hartford responded through counsel to Great American’s September 29, 2008 letter. See Letter from Nicholas Calabria to Carol LaFever, dated Nov. 12, 2008 (annexed as Ex. F to Suben Decl.) (“Calabria Letter”). Hartford disclaimed any obligation to defend or indemnify Crescent because, in its view, the underlying accident “did not arise out of the ownership, maintenance, or use of a covered auto but rather arose out of the ownership, maintenance or use of mobile equipment as defined in the Hartford policy.” Id. at 3 (quotation marks omitted). The basis for this position was that the three Crescent trucks “were being used as work platforms on the rail line. Though the vehicles were stationary, they were on train wheels which were used to traverse the railroad tracks. The vehicles were, therefore, designed for use principally off public roads and/or were maintained primarily for purposes other than the transportation of persons or cargo.” Id.

 

*5 Hartford did not make any financial contribution to the settlement offers Great American and RSUI made on behalf of Crescent, “despite [Hartford’s] having previously acknowledged that the $1,000,000 liability limit of the auto policy would be available to Crescent on a primary basis.” Pl. Rule 56.1 Statement ¶ 10; Def. Rule 56.1 Statement at 1.

 

II. LAW GOVERNING MOTIONS FOR SUMMARY JUDGMENT

Rule 56(a) of the Federal Rules of Civil Procedure states that summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). A genuine issue of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

 

In determining whether a genuine issue of material fact exists, “[t]he evidence of the nonmovant is to be believed” and the court must draw “all justifiable inferences” in favor of the nonmoving party. Id. at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158–59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)). Nevertheless, once the moving party has shown that there is no genuine issue as to any material fact and that it is entitled to a judgment as a matter of law, “the nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial,’ “ Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed.R.Civ.P. 56(e)) (additional citation omitted) (emphasis in original), and “may not rely on conclusory allegations or unsubstantiated speculation,” Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir.1998) (citations omitted). In other words, the nonmovant must offer “concrete evidence from which a reasonable juror could return a verdict in his favor.” Anderson, 477 U.S. at 256. Where “the nonmoving party bears the burden of proof at trial, summary judgment is warranted if the nonmovant fails to make a showing sufficient to establish the existence of an element essential to [its] case.”   Nebraska v. Wyoming, 507 U.S. 584, 590, 113 S.Ct. 1689, 123 L.Ed.2d 317 (1993) (quoting Celotex, 477 U.S. at 322) (internal quotation marks omitted) (alteration in original). Thus, “[a] defendant moving for summary judgment must prevail if the plaintiff fails to come forward with enough evidence to create a genuine factual issue to be tried with respect to an element essential to its case.” Allen v. Cuomo, 100 F.3d 253, 258 (2d Cir.1996) (citing Anderson, 477 U.S. at 247–48).

 

III. LAW GOVERNING INTERPRETATIONS OF INSURANCE POLICIES

New York courts interpret insurance contracts “to give effect to the intent of the parties as expressed in the clear language of the contract.” Goldberger v. Paul Revere Life Ins. Co., 165 F.3d 180, 182 (2d Cir.1999) (citation and internal quotation marks omitted).FN4 Generally, the terms of insurance policies are read “ ‘in light of common speech and the reasonable expectations of a businessperson.’ “ Parks Real Estate Purchasing Grp. v. St. Paul Fire & Marine Ins. Co., 472 F.3d 33, 42 (2d Cir.2006) (quoting Pepsico, Inc. v. Winterthur Int’l Am. Ins. Co., 13 A.D.3d 599, 599–600, 788 N.Y.S.2d 142 (2d Dep’t 2004)) (additional citation omitted). “As with any contract, unambiguous provisions of an insurance contract must be given their plain and ordinary meaning …, and the interpretation of such provisions is a question of law for the court .” White v. Cont’l Cas. Co., 9 N.Y.3d 264, 267, 848 N.Y.S.2d 603, 878 N.E.2d 1019 (2007). “If the provisions are clear and unambiguous, courts are to enforce them as written. However, if the policy language is ambiguous … the ambiguity must be interpreted in favor of the insured.”   Goldberger, 165 F.3d at 182 (citation and internal quotation marks omitted). “The party claiming insurance coverage bears the burden of proving entitlement” to coverage under the insurance policy. Nat’l Abatement Corp. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 33 A.D.3d 570, 570–71, 824 N.Y.S.2d 230 (1st Dep’t 2006) (citing Kidalso Gas Corp. v. Lancer Ins. Co., 21 A.D.3d 779, 780–81, 802 N.Y.S.2d 9 (1st Dep’t 2005)).

 

FN4. Because both plaintiffs and defendant apply New York law in their moving papers, this Court will apply New York law as well. See Krumme v. WestPoint Stevens Inc., 238 F.3d 133, 138 (2d Cir.2000) (“The parties’ briefs assume that New York law controls, and such ‘implied consent is sufficient to establish choice of law.’ ”) (ellipsis omitted) (quoting Tehran–Berkeley Civil & Envtl. Eng’rs v. Tippetts–Abbett–McCarthy–Stratton, 888 F.2d 239, 242 (2d Cir.1989)).

 

IV. DISCUSSION

*6 Plaintiffs move for partial summary judgment against Hartford, contending, inter alia, that Hartford unreasonably delayed in disclaiming coverage to Crescent and that, as a result of that delay, New York Insurance Law (“N.Y.Ins.Law”) § 3420(d)(2) precludes Hartford from asserting a coverage defense. See Pl. Mem. at 9–18. Hartford moves for summary judgment, seeking a declaration that it is not obligated to provide any contribution to plaintiffs because the Policy does not cover the accident at issue. See Def. Mem. at 1–2.

 

A. Application of the Hartford Policy to Crescent’s Claims

N.Y. Ins. Law § 3420(d)(2) provides that if “an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant.” A prerequisite to the applicability of this rule, however, is that the insurance policy actually apply to the asserted claim in the first instance. See Worcester Ins. Co. v. Bettenhauser, 95 N.Y.2d 185, 188, 712 N.Y.S.2d 433, 734 N.E.2d 745 (2000) (“Disclaimer pursuant to section 3420(d) is unnecessary when a claim falls outside the scope of the policy’s coverage portion. Under those circumstances, the insurance policy does not contemplate coverage in the first instance ….”); accord Zappone v. Home Ins. Co., 55 N.Y.2d 131, 135–39, 447 N.Y.S.2d 911, 432 N.E.2d 783 (1982) (interpreting N.Y. Ins. Law § 167(8), a predecessor to N.Y. Ins. Law § 3420(d)(2)). Thus, while “disclaimer pursuant to section 3420(d) is necessary when denial of coverage is based on a policy exclusion without which the claim would be covered,” Worcester, 95 N.Y.2d at 188–89, 712 N.Y.S.2d 433, 734 N.E.2d 745, no timely notice is required where the insurer denies coverage by reason of the claim’s “lack of inclusion” in a policy, Zappone, 55 N.Y.2d at 137, 447 N.Y.S.2d 911, 432 N.E.2d 783. In Zappone, for example, the New York Court of Appeals upheld the insurer’s denial of coverage—even though the insurer failed to disclaim coverage for fifteen months after it received the initial claim—because the claim did not fall within the ambit of the policy’s coverage in the first instance. Id. at 140, 447 N.Y.S.2d 911, 432 N.E.2d 783.

 

Hartford has abandoned its previous argument that the Crescent trucks were not covered automobiles under the Policy. Hartford instead seeks summary judgment on the ground that the Policy does not provide coverage to injuries stemming from the accident between the Amtrak crane and the Crescent trucks by virtue of the manner in which the Crescent trucks were being used at the time of the accident. As noted, § II of the Policy, provides: “[Hartford] will pay all sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies, caused by an ‘accident’ and resulting from the ownership, maintenance or use of a covered ‘auto’.” Thus, the Hartford Policy applies if (a) an accident occurred that caused damages for which Crescent is liable to some entity, and (b) such damages resulted from the ownership, maintenance, or use of a covered vehicle. See Policy § II. Hartford does not dispute that the first prerequisite to coverage has been met here. Instead, it contests that the injuries arose out of the “ownership, maintenance, or use” of the Crescent trucks. See Def. Mem. at 8–17; Def. Reply at 5–9.

 

*7 In a superficial sense, the accident indeed resulted from the “use” of the trucks inasmuch as the workers were situated on the trucks at the time of the accident. But case law in New York interpreting almost identical language in automobile insurance policies has repeatedly held that not every use of a covered automobile triggers an automobile policy’s application. Rather, the only use of relevance is that the automobile be used “qua automobile”—that is, “as an automobile.” This principle was explained by the Second Department in Empire Insurance Co. v. Schliessman, 306 A.D.2d 512, 513, 763 N.Y.S.2d 65 (2d Dep’t 2003). In that case, the claimant had been injured when he fell off a parked truck while trying to rescue his four-year-old son from the top of the truck. Id. The Second Department’s ruling stated:

 

[The automobile liability] policy contains a standard automobile liability provision which requires the insurer to defend and indemnify its insureds for accidents resulting in bodily injury or property damage caused by an occurrence arising out of the “ownership, maintenance or use” of a covered auto (see e.g. Elite Ambulette Corp. v. All City Ins. Co., 293 A.D.2d 643 [2002]; U.S. Oil Ref. & Mktg. Corp. v. Aetna Cas. & Sur. Co., 181 A.D.2d 768 [1992]; United Servs. Auto. Assn. v. Aetna Cas. & Sur. Co., 75 A.D.2d 1022 [1980] ). “Generally, the determination of whether an accident has resulted from the use or operation of a covered vehicle requires consideration of whether, inter alia, the accident arose out of the inherent nature of the vehicle and whether the vehicle itself produced the injury” ( Eagle Ins. Co. v. Butts, 269 A.D.2d 558, 558–559 [2000]; U.S. Oil Ref. & Mktg. Corp. v. Aetna Cas. & Sur. Co., supra ). “Negligence in the use of the vehicle must be shown, and that negligence must be a cause of the injury” ( Argentina v. Emery World Wide Delivery Corp., 93 N.Y.2d 554, 562 [1999] ).

 

However, “ ‘[n]ot every injury occurring in or near a motor vehicle is covered by the phrase ‘use or operation’. The accident must be connected with the use of an automobile qua automobile’ “ ( Olin v. Moore, 178 A.D.2d 517, 518 [1991], quoting United Servs. Auto. Assn. v. Aetna Cas. & Sur. Co., supra ).

 

In this case, “[t]here were no allegations that the truck itself was used negligently” ( Progressive Cas. Ins. Co. v. Yodice, 276 A.D.2d 540, 542 [2000] ) or that its condition in any way contributed to the accident (see Eagle Ins. Co. v. Butts, supra ). Rather, it was merely the location of, and incidental to, the accident. Because the accident was not the result of any act or omission related to the ownership, maintenance, or use of the truck, the Supreme Court properly, in effect, declared that [the general liability policy issuer, rather than the automobile policy issuer] was obligated to defend and indemnify [the claimants] (see Elite Ambulette v. All City Ins. Co., supra at 644, 740 N.Y.S.2d 442).

 

*8 Id. at 513–14, 763 N.Y.S.2d 65. Other cases have expressed similar principles. See, e.g., Progressive Cas. Ins. Co. v. Yodice, 180 Misc.2d 863, 694 N.Y.S.2d 281, 283 (Sup.Ct.1999), aff’d, 276 A.D.2d 540, 714 N.Y.S.2d 715 (2d Dep’t 2000) (“Not every accident involving an automobile concerns the use or operation of that vehicle. The accident must be connected with the use of the automobile qua automobile. The use of the automobile as an automobile must be the proximate cause of the injury.”) (citing cases); Eagle Ins. Co. v. Butts, 269 A.D.2d 558, 558–59, 707 N.Y.S.2d 115 (2d Dep’t 2000) (“[T]he determination of whether an accident has resulted from the use or operation of a covered vehicle requires consideration of whether, inter alia, the accident arose out of the inherent nature of the vehicle and whether the vehicle itself produced the injury.”); United Servs. Auto. Ass’n v. Aetna Cas. & Sur. Co., 75 A.D.2d 1022, 1022, 429 N.Y.S.2d 508 (4th Dep’t 1980) (“Where the operation or driving function of an automobile or the condition of the vehicle itself is not the proximate cause of the injury, the occurrence does not arise out of its use or operation.”) (citing cases).

 

Here, at the time of the accident, the trucks had been stationary for two to three hours and were rendered immobile by chocks under their wheels. The surface of the truck flatbeds was covered with equipment, including a generator, fluorescent lighting, “a porta-potty,” and a chair on which one of the workers was sitting. The truck flatbeds had been fitted with extensions to increase their normal size. The trucks were not being used as a means of transportation of persons or cargo. See Aetna, 75 A.D.2d at 1022, 429 N.Y.S.2d 508 (“operation or driving function” of a truck must be the proximate cause of an injury for the injury to arise out of the truck’s use); Yodice, 694 N.Y.S.2d at 284 (the underlying accident must arise out of the operation of a truck “as a means of transportation”). Rather they were being used as stationary “work platforms.” For these reasons, the accident for which coverage is being sought did not result from the use of these trucks “as trucks .”

 

Plaintiffs do little to counter this conclusion. They do not make any affirmative arguments regarding the interpretation of the Policy language. Nor do they deny the applicability of the principles of interpretation of similar policy language, as articulated in the cases Hartford cites. Instead they attempt to distinguish the particular facts of these cases. See Pl. Reply at 7–8. But these attempts do not suggest that Hartford’s position is incorrect. For example, they attempt to distinguish Empire Insurance and Aetna on the ground that, here, it was the job of one of the injured workers to “operate” the truck at issue. Id. at 8, 581 N.Y.S.2d 822. But whether the Crescent trucks could be operated or used as trucks at some time is not the question before us. Rather, the question is whether the trucks were being used as trucks at the time of the accident. Plaintiffs also distinguish Aetna on the ground that the case “involve[d] personal lines coverage, rather than commercial lines coverage,” Pl. Reply at 8, but this distinction has no bearing on the relevance to this case of the Aetna court’s interpretation of the Aetna policy’s triggering condition, which is nearly identical to the triggering condition in the Hartford Policy.

 

*9 In sum, because it is clear that the trucks were not being used as trucks at the time of their collision with the Amtrak crane, the Hartford Policy does not cover liability arising out of that accident in the first instance, and N.Y. Ins. Law § 3420(d)(2) does not apply.

 

B. Plaintiffs’ Other Arguments Opposing Hartford’s Motion for Summary Judgment

Plaintiffs object that prior to the instant motion Hartford had never asserted the grounds it now raises to justify its disclaimer of coverage. Pl. Reply at 6–7. Plaintiffs thus seek to have the Court deny Hartford’s motion on the ground that the positions it took in the past regarding coverage are inconsistent with the position it has taken on this motion. For example, although Hartford now contends the underlying accidents did not arise out of the use of the Crescent trucks, as late as its 2008 disclaimer Hartford had asserted that the claims indeed did arise out of the use of Crescent’s vehicles, but that those vehicles were not “covered autos.” See Calabria Letter at 3. Plaintiffs assert that “[w]hether it is deemed to be by way of an admission, a waiver, or an estoppel, the fact that the underlying claims arose out of the ‘ownership, maintenance or use’ of the Crescent vehicles is conceded and resolved. No amount of 13th-hour lawyering can change that fundamental fact.” Pl. Reply at 7.

 

No citation is given, however, for the proposition that the prior conduct by Hartford could result in its “conced[ing]” the issue of coverage for purposes of this lawsuit. Plaintiffs argue that Hartford admitted in its Rule 56.1 submission that the Policy covers the underlying claims. See Pl. Reply at 9–10. This argument lacks merit, however, because only “facts,” not legal conclusions, are deemed established by a party’s failure to controvert an assertion contained in a counterparty’s Rule 56.1 submission. See S.D.N.Y. Local Civ. Rule 56.1(c). Plaintiffs give no reason as to why a purported admission on a legal issue could otherwise be binding as an “admission.” See generally Eagleston v. Guido, 41 F.3d 865, 874 (2d Cir.1994) (statements of party opponent were inadmissible as admissions “because they are legal conclusions concerning an ultimate issue in the case”).

 

Plaintiffs rely on Albert J. Schiff Associates, Inc. v. Flack, 51 N.Y.2d 692, 435 N.Y.S.2d 972, 417 N.E.2d 84 (1980), for the proposition that Hartford waived its right to disclaim coverage by previously failing to assert those grounds for disclaimer. See Pl. Reply at 13. Flack, however, squarely held that “where the issue is the existence or nonexistence of coverage (e.g., the insuring clause and exclusions), the doctrine of waiver is simply inapplicable.” 51 N.Y.2d at 698, 435 N.Y.S.2d 972, 417 N.E.2d 84 (citing cases).

 

As for estoppel, plaintiffs cite to O’Dowd v. American Surety Co. of New York, 3 N.Y.2d 347, 355, 165 N.Y.S.2d 458, 144 N.E.2d 359 (1957), for the principle that “when an insurer agrees to defend an insured while being fully cognizant of the grounds for a disclaimer, the insurer is estopped from later denying coverage.” Pl. Mem. at 18–19; see O’Dowd, 3 N.Y.2d at 355, 165 N.Y.S.2d 458, 144 N.E.2d 359 (“It is clear that when an insurer defends an action on behalf of an insured, in his stead, with knowledge of facts constituting a defense to the coverage of the policy, it is thereafter estopped from asserting that the policy does not cover the claim.”) (citing cases). Notwithstanding this broad language in O’Dowd, the O’Dowd court itself held that estoppel bars an insurer from denying coverage only where the insured had suffered “prejudice[ ]” by reason of the insurer’s agreement to undertake a coverage defense. Id. The other cases plaintiffs cite similarly recognize this principle. See, e.g., Flack, 51 N.Y.2d at 699, 435 N.Y.S.2d 972, 417 N.E.2d 84; Interstate Indem. Co. v. Cont’l Ins. Co., 1998 WL 118165, at *3 (S.D.N.Y. Mar.16, 1998); Hartford Accident & Indem. Co. v. Carson C. Peck Mem’l Hosp., 162 A.D.2d 659, 661, 558 N.Y.S.2d 959 (2d Dep’t 1990); Hartford Ins. Grp. v. Mello, 81 A.D.2d 577, 578, 437 N.Y.S.2d 433 (2d Dep’t 1981); Dattore v. Dattore, 2006 WL 469326, at *3 (N.Y.Sup.Ct. Feb.27, 2006); accord 269 Canal St. Corp. v. Zurich Gen. Accident & Liab. Ins. Co., 226 A.D. 516, 519, 235 N.Y.S. 63 (1st Dep’t 1929), aff’d, 252 N.Y. 603, 170 N.E. 159 (1930) (insurer had “interfere[d] with the defense”). Plaintiffs contend that prejudice to the insured is presumed as a matter of law where the insurer undertakes to defend the insured and thereby controls the insured’s defense in the underlying claims for some period. See Pl. Mem. at 20–21. Notwithstanding some case law in support of plaintiffs’ contention, see Bluestein & Sander v. Chi. Ins. Co., 2001 WL 167707, at *4 (S.D.N.Y. Feb.20, 2001); Lone Star Indus., Inc. v. Liberty Mut. Ins. Co., 689 F.Supp. 329, 333 (S.D.N.Y.1988), the First Department has explicitly held that the mere temporary loss of control of the handling of one’s case does not create a presumption of detrimental reliance:

 

*10 Supreme Court based its finding of estoppel on the erroneous premise that because Twin City controlled Federated’s defense in the underlying action, prejudice is presumed. In so holding, the court cited Bluestein & Sander v. Chicago Ins. Co. (276 F.3d 119, 122 [2d Cir.2002] ). Prejudice, however, is not uniformly presumed in such circumstances, and estoppel will lie only if the insured has demonstrated prejudice by the insurer’s actions ( National Indem. Co. v. Ryder Truck Rental, 230 A.D.2d 720, 646 N.Y.S.2d 169 [2d Dep’t 1996]; see also General Acc. Ins. Co. of Am. v. Metropolitan Steel Indus., 9 A.D.3d 254, 780 N.Y.S.2d 128 [1st Dep’t 2004] ). Prejudice is established only where the insurer’s control of the defense is such that the character and strategy of the lawsuit can no longer be altered (see e.g. United States Fid. & Guar. Co. v. New York, Susquehanna & W. Ry. Corp., 275 A.D.2d 977, 713 N.Y.S.2d 624 [4th Dep’t 2000] ).

 

Federated Dep’t Stores, Inc. v. Twin City Fire Ins. Co., 28 A.D.3d 32, 39, 807 N.Y.S.2d 62 (1st Dep’t 2006); accord Phila. Indem. Ins. Co. v. City of New York, 2011 WL 1237586, at *7–8 (S.D.N.Y. Mar.24, 2011); Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate 2003, 2011 WL 6258492, at *8 (D.Kan. Dec.15, 2011) (applying New York law), amended by 2011 WL 6258492 (D.Kan. Dec.15, 2011).

 

In any event, there is not the slightest showing that Hartford controlled Crescent’s defense or that there was any other form of prejudice. Crescent undertook its own defense from the beginning and has supplied no evidence that Hartford ever interfered with that defense, let alone that Hartford’s actions precluded Crescent from altering the character or strategy of the underlying litigation. Plaintiffs argue that “Hartford’s agreement to defend Crescent without reservation induced Crescent’s reasonable reliance on Hartford’s policy limit being made available to settle the underlying litigation.” Pl. Mem. at 21. But Crescent did not settle the underlying actions until after Hartford had explicitly disclaimed coverage, and therefore it was not reasonable for Crescent to rely on or anticipate the availability of the Hartford Policy limit for settlement purposes. There is simply no evidence that Hartford or the counsel it originally designated ever influenced any decisions regarding the litigation or settlement of the underlying tort cases. Crescent has failed to show that it was in any different position—let alone a worse position—than it would have been had Hartford informed it at the beginning that the accident was not covered by the Policy.

 

Accordingly, the Hartford Policy does not cover the accident at issue.

 

V. CONCLUSION

For the foregoing reasons, plaintiffs’ motion for partial summary judgment (Docket # 22) should be denied. Hartford’s motion for summary judgment (Docket # 29) should be granted. The case should be dismissed.

 

PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION

Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days including weekends and holidays from service of this Report and Recommendation to serve and file any objections. See also Fed.R.Civ.P. 6(a), (b), (d). Such objections (and any responses to objections) shall be filed with the Clerk of the Court, with copies sent to the Hon. Paul A. Crotty, and to the undersigned, at 500 Pearl Street, New York, New York 10007. Any request for an extension of time to file objections must be directed to Judge Crotty. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal. See Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir.2010).