GREAT AMERICAN INSURANCE COMPANY, BREWER STREET BOATWORKS
LTD., Plaintiffs, - against - SIMPLEXGRINNELL LP, Defendant.
Docket Number: 0102557/2007, Index No.: 102557/2007
SUPREME COURT OF NEW YORK, NEW YORK COUNTY
2008 NY Slip Op 30021U; 2008 N.Y. Misc. LEXIS 7730
January 3, 2008, Decided
NOTICE: THIS OPINION IS UNCORRECTED AND WILL NOT BE PUBLISHED IN THE PRINTED
JUDGES: Michael D. Stallman, J.S.C.
OPINION BY: MICHAEL D. STALLMAN
Decision and Order
HON. MICHAEL D. STALLMAN, J:
In this subrogation action, defendant SimplexGrinnell LP (Simplex) moves,
pursuant to CPLR 3211 (a)(1), to dismiss plaintiff Great American Insurance
Company's (Great American) claims on the ground that the subrogration action has
been contractually waived.
Great American is an insurance provider, which reimbursed its insured under a
policy of insurance for loss and damage to interior sections of the insured's
building and business's personal property.
Plaintiff Brewer Street Boatworks LTD. (Boatworks) is a Rhode Island
corporation doing business, specializing in boat repair, boat sales and boat
electronics. Boatworks leases a building at 222 Connell Highway in Newport,
Rhode Island, and maintains a showroom on the premises (the Building).
Simplex is a limited partnership organized and existing under the laws of the
State of Delaware, doing business in New York. Simplex is in the business of
installing and maintaining fire prevention sprinkler systems. Simplex is a
subsidiary of TYCO Corporation.
On April 19, 2005, Boatworks signed a service agreement with Simplex to
maintain and service a dry sprinkler system, which was previously installed in
the Building prior to Boatworks's lease of that space (4/19/05 Service
Agreement). The initial term of the 4/19/05 Service Agreement was one year,
i.e., up until April 19, 2006. Therein, the following services were specifically
contracted for: (1) quarterly testing and inspection of fire sprinkler systems,
including (a) wet/dry pipe sprinkler inspection, and (b) dry sprinkler trip
test; (2) quarterly testing and inspection of fire alarm detection systems; and
(3) and annual test and inspection of up to 12 fire extinguishers (see Pricing
Summary and Special Provisions of 4/19/05 Service Agreement).
Paragraph 6 of the 4/19/05 Service Agreement provides: "Customer agrees to
look exclusively to the Customer's insurer to recover for injuries or damage in
the event of any loss or injury and that Customer releases and waives all right
against Company arising by way of subrogation." Paragraph 16 of the 4/19/05
Service Agreement states that the laws of Massachusetts shall govern the
validity, enforceability and interpretation of the agreement. Paragraph 18
"This Agreement supersedes all prior representations,
understandings or agreements between the parties, written or oral, and
shall constitute the sole terms and conditions for all of sale
equipment and services. No waiver, change or modification of any terms
or conditions of this Agreement shall be binding on Company unless
made in writing and signed by an Authorized Representative of
On December 9, 2005, Simplex responded to a service request from Boatworks
and then inspected and reset plaintiff's dry sprinkler system (12/9/05 Service
Request). Additionally, the Service Request, on the back of the receipt, lists a
number of Terms and Conditions to which it holds Boatworks obligated.
Specifically, Paragraph 1 of the Terms and Conditions of the 12/9/05 Service
Request provides, among other things:
"Customer agrees to look exclusively to the Customer's insurer to
recover for injuries or damage in the event of any loss or injury and
that Customer releases and waives all right of recovery against
Company arising by way of subrogation."
Paragraph 8 further provides:
"All work is subject to review and rebilling in accordance with the
terms and conditions of Customer's agreement/contract with Company, if
one is in effect. . . . Customer is aware that the Limitation of
Liability and other provisions set forth in any existing agreement or
contract, if one is in effect, or set forth above, apply to services
performed and materials supplied. The terms of this Service Request
shall govern notwithstanding any inconsistent or additional terms and
conditions in any purchase order or other document submitted by
There is no choice of law provision or merger and integration clause in the
12/9/05 Service Request's Terms and Conditions.
On December 16, 2005, a piping fitting on the dry pipe sprinkler system that
had been installed in Boatworks's offices allegedly ruptured, causing flooding
in Boatworks' showroom. The rupture in the pipe fitting was due to freezing of
water in the dry sprinkler system line, which Boatworks claims was not drained
from the system on December 9, 2005.
Plaintiffs allege that the property damage that occurred as a result of the
rupture was due to the negligence and gross negligence of Simplex. Plaintiffs
allege that the loss and damages resulting from the damage to Boatworks's
building and business's personal property, as well as costs of engineering
reports, service and survey fee amounts to $ 44,997.40.
Pursuant to an insurance policy, Great American reimbursed Boatworks, and
contends that it is subrogated to all the rights of its insured against Simplex.
Simplex contends that the lawsuit should be dismissed as Great American's
right of subrogation has been contractually waived. Specifically, the agreements
between Boatworks and Simplex expressly provide: "[Boatworks] releases and
waives all right of recovery against [Simplex] arising by way of subrogation."
Therefore, Simplex contends that since Great American, as a subrogated insurer,
can only assert the rights possessed by its insured, the contracts between
Boatworks and Simplex are binding on Great American and preclude this action.
"'A complaint should not be dismissed on a pleading motion so long as, when
the plaintiff's allegations are given the benefit of every possible inference, a
cause of action exists'" (Rosen v Raum, 164 AD2d 809, 810 [1st Dept 1990],
quoting R.H. Sanbar Projects. Inc. v Gruzen Partnership, 148 AD2d 316, 318 [1st
Dept 1989] [internal citation omitted]; see also Guggenheimer v Ginzburg, 43
NY2d 268 ; Rovello v Orofino Realty Co., 40 NY2d 633 ). Further, the
material allegations of the complaint are deemed to be true and "the proper
inquiry is whether a cause of action exists, not whether it has been properly
stated" (Rosen, 164 AD2d at 810, citing Ippolito v Lennon, 150 AD2d 300, 302
[1st Dept 1989]).
Under CPLR 3211 (a)(1), "[a] party may move for judgment dismissing one or
more causes of action asserted against him on the ground that . . . defense is
grounded upon documentary evidence." The court may grant dismissal when the
"'documentary evidence submitted conclusively establishes a defense to the
asserted claims as a matter of law'" (Goldman v. Metropolitan Life Ins, Co., 5
NY3d 561, 571  [citation omitted]). Construction of an unambiguous
contract is a matter of law that may be decided by the court on a 3211 (a)(1)
motion to dismiss (Beal Sav. Bank v Sommer, 8 NY3d 318, 325 ).
Simplex argues that under both New York and Rhode Island law, Great
American's right of subrogation has been contractually waived vis-a-vis the
4/19/05 Service Agreement and 12/9/05 Service Request. Plaintiffs argue,
however, that pursuant to the 4/19/05 Service Agreement, Massachusetts law is
the choice of law contracted between the parties, and that Simplex's failure to
provide the court with any support for its motion under Massachusetts law,
warrants denial of the motion to dismiss. Alternatively, plaintiffs argue that,
looking at both Massachusetts and New York law, the service agreement is
unconscionable and offends public policy.
Choice of law provisions in agreements are generally enforceable (Marine
Midland Bank, N.A. v United Missouri Bank, N.A., 223 AD2d 119, 122-123 [1st Dept
1996]). In this case, the 4/19/05 Service Agreement contains a choice of law
provision electing Massachusetts law as governing.
Where a contract provides that the law of a non-forum state will govern, New
York courts will honor such provision if the chosen state has a substantial
relationship to the parties or the transaction and does not violate a
fundamental public policy of the forum state. (See Welsbach Elec. Corp. v
MasTec. N. Am., Inc., 7 NY3d 624 ; Hugh O'Kane Electric Co., LLC v MasTec
N. Am., Inc., 19 AD3d 126, 127 [1st Dept 2005]; Finucane v Interior Constr.
Corp., 264 AD2d 618, 620 [1st Dept 1999] ["[w]here, as here, the parties have
agreed on the law that will govern their contract, it is the policy of the
courts of this State to enforce that choice of law, provided that (a) the law of
the State selected has a reasonable relation[ship] to the agreement and (b) the
law chosen does not violate a fundamental public policy of New York"] [internal
citations omitted]; Cargill, Inc. v Charles Kowsky Resources, Inc., 949 F2d 51
[2d Cir 1991]). Here, the parties fail to demonstrate any relationship to
Massachusetts. Rather, Boatworks is a Rhode Island corporation doing business in
Rhode Island, and Simplex is a Delaware corporation doing business in New York.
Moreover, if there is no "actual conflict between the laws of the competing
jurisdictions [,] . . . the court should apply the law of the forum state in
which the action is being heard" (Excess Ins. Co. Ltd. v Factory Mut. Ins. Co.,
2 AD3d 150, 151 [1st Dept 2003], affd, 3 NY3d 577 ). There is no dispute
that Rhode Island recognizes subrogation waiver clauses (see Lifespan Corp. v
Gilbane Bldg. Co., Index No. C.A. 02-3630, 2005 WL 477733, 2005 RI Super LEXIS
31 [RI Super, Feb. 24, 2005]). In Massachusetts, however, there is a split among
the courts as to the enforceability of waiver of subrogation provisions.
Generally, while such waivers are enforceable under Massachusetts law (see
Haemonetics Corp. v Brophy & Phillips Co., Inc., 23 Mass App Ct 254, 258 )
, some Massachusetts trial level courts have found that such an agreement cannot
serve to shield a defendant from responsibility for violation of a statutory
duty or public policy (see A.C. Moore Arts & Crafts, Inc. v Fellsway Plaza, LP,
23 Mass L Rptr 189 [Mass Super, Oct. 9, 2007], citing Henry v Mansfield Beauty
Academy. Inc., 353 Mass 507, 510-11 ; Federal Ins. Co. v CBT/Childs
Bertman Tseckares, Inc., 22 Mass L Rptr 472 [Mass Super, May 25, 2007]). Other
courts in Massachusetts have expressly rejected this view, holding that such
public policy exceptions do not limit waiver of subrogation clauses (see Great
Northern Ins. Co. v Architectural Environments, Inc., 514 F Supp 2d 139 [D Mass
2007]). No statutory duty or public policy is implicated here. In New York,
absent any indication of overreaching or unconscionability, a waiver of
subrogation rights provision is not violative of the General Obligations Law or
any other public policy (see Interested Underwriters at Lloyds v Ducor's Inc.,
103 AD2d 76, 77 [1st Dept 1984], affd 65 NY2d 647 ). As such, it cannot be
said that there is a clear conflict between New York and Assocs., 252 AD2d 391
[1st Dept 1998] [holding anti-subrogation clause, which applied "for loss or
damage resulting from fire or other casualty," broad enough to cover the loss
suffered by tenant]; Federal Ins. Co. v Honeywell, Inc., 243 AD2d 605 [2d Dept
As such, Great American stands in the shoes of its insured and any claims of
subrogation are therefore waived (see Progressive Ins. Co. v Sheri Torah, Inc.,
44 AD3d 837 [2d Dept 2007]; see also Seneca Ins. Co. v City of New York, 35 AD3d
248 [1st Dept 2006] [affirming dismissal of complaint since plaintiff, as
subrogee, stood in the shoes of a tenant who could not avoid the lease
provisions, including a waiver of subrogation]).
Defendant's motion is, therefore, granted.
Accordingly, it is
ORDERED that the motion to dismiss by SimplexGrinnell LP is granted and the
complaint is dismissed with costs and disbursements to defendant as taxed by the
Clerk of the Court; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.
Dated: January 3, 2008
New York, New York
/s/ Michael D. Stallman
GREAT AMERICAN INSURANCE COMPANY, BREWER STREET BOATWORKS, LTD., Plaintiffs, - against - SIMPLEXGRINNELL LP, Defendant. Docket Number: 0102557/2007, Index No.: 102557/2007
GREAT AMERICAN INSURANCE COMPANY, BREWER STREET BOATWORKS