New York Trial Court Allows Subrogation Action, Arising Out of 1993 World Trade Center Bombing, Against Additional Named Insured
April, 2003
Facts
Plaintiff, Sumitomo Marine and Fire Insurance Company, Ltd., issued two insurance policies to Sumitomo Bank, Ltd. and Sumitomo Bank Capital Market’s Inc., respectively, tenants in the World Trade Center. The policies listed the Port Authority of New York and New Jersey (owner of the World Trade Center) as an additional named insured “under the polic[ies’] Comprehensive General Liability Coverage, with respect to ‘liability arising out of the ownership, maintenance or use of that part of the premises leased to’ Sumitomo Bank, Ltd.” and Sumitomo Bank Capital Market’s, Inc.
Plaintiff indemnified the Sumitomo insureds/tenants for their property damage. Thereafter, plaintiff filed suit against The Port Authority, “under three causes of action: (1) negligence in, among other things, failing to anticipate the possibility of a terrorist attack, in failing to warn of the possibility of an attack, and in failing to prevent the bombing; (2) recklessness, for the same alleged derelictions; and (3) violation of the covenant of quiet enjoyment.”
The Port Authority moved to dismiss the complaint, asserting that the anti-subrogation rule prohibits plaintiff’s claim against The Port Authority since The Port Authority is an additional named insured in plaintiff’s policies. The anti-subrogation rule provides “that ‘an insurer cannot be a subrogee against its insured for the very claim for which the insured was covered. . . .” Sumitomo Marine and Fire Ins. Co. v. Port Authority of N.Y. and N.J., 230 NYLJ No. 3 (July 3, 2003).
Analysis
The court rejected defendant’s position, noting that: (1) the Port Authority was not an insured under plaintiff’s policies for all types of coverage, but only under the Commercial General Liability Coverage portion of the policies; and (2) plaintiff paid its insureds for property damage under the Commercial Property Coverage, or Enhanced Covered Property Coverage, and not for third-party losses under the Commercial General Liability Coverage section. Thus, the court concluded that The Port Authority was only covered under the plaintiff’s subrogors’ policies “for the risk of liability to third persons for injuries arising from the ownership, maintenance or use of the subrogors’ leased premises.”
Since plaintiff’s claims against The Port Authority sought reimbursement for property damage sustained by the insureds for their own property, and there were no claims for indemnification for third-party claims, the court held that the anti-subrogation rule was inapplicable and denied the motion to dismiss.
Learning Point:
Although an adversary may be an additional named insured, subrogation may still be permitted. This court decision is not the first of its kind. In fact, the author of this article has stated in previous articles and lectures that it is imperative to completely analyze an insurance policy when potentially faced with an anti-subrogation rule bar.
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