10-3941-cv
In re September 11 Property Damage
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER
FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY
ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL
APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY
CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.
At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Daniel Patrick Moynihan
United States Courthouse, 500 Pearl Street, in the City of New
York, on the 7th day of August, two thousand twelve.
PRESENT:
RALPH K. WINTER,
CHESTER J. STRAUB,
DENNY CHIN,
Circuit Judges.
- - - - - - - - - - - - - - - - - - - - -x
In re SEPTEMBER 11 PROPERTY
DAMAGE AND BUSINESS LOSS
LITIGATION
THE PORT AUTHORITY OF NEW YORK &
NEW JERSEY,
Defendant-Third Party
Plaintiff-Appellant,
- v. - 10-3941-cv
CITIGROUP, INC., CITIGROUP GLOBAL MARKETS
HOLDINGS INC.,
Defendants-Appellees,
- v. -
GARY MICHAEL LOW, et al.,
Plaintiffs,
- and -
AMERICAN AIRLINES, INCORPORATED, et al.,
Defendants,
- and -
ELLEN MARIANI,
Claimant.
- - - - - - - - - - - - - - - - - - - - -x
FOR DEFENDANT-THIRD PARTY LEAH SEARS (Paul Andrew Scrudato,
PLAINTIFF-APPELLANT: Beth D. Jacob, Donald Allen Klein,
on the brief), Schiff Hardin LLP,
Atlanta, Georgia, and New York, New
York.
FOR DEFENDANTS-APPELLEES: CHRISTOPHER P. MOORE (Thomas J.
Moloney, on the brief), Cleary
Gottlieb Steen & Hamilton LLP, New
York, New York.
Appeal from the United States District Court for the
Southern District of New York (Hellerstein, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the order and opinion of the district court is
AFFIRMED.
Defendant-Third Party Plaintiff-Appellant the Port
Authority of New York and New Jersey (the "Port Authority")
appeals from the district court's order and opinion dated
September 1, 2010, granting summary judgment to Defendants-
Appellees Citigroup, Inc. and Citigroup Global Markets Holdings,
Inc. (together, "Citigroup") on the Port Authority's claims for
-2-
indemnification.1 We assume the parties' familiarity with the
facts and procedural history of the case and the issues presented
for review, which we summarize below.
In 1968, the Port Authority and Consolidated Edison
Company of New York ("Con Ed") entered into a fifty-year lease
for an electrical substation at the World Trade Center. The
lease reserved to the Port Authority the right to construct a
building over the substation. In 1980, the Port Authority
entered into a lease agreement with what is now Silverstein
Properties ("Silverstein") permitting Silverstein to construct an
office building -- 7 World Trade Center ("7WTC") -- above the
substation. Once constructed, 7WTC was to be owned by the Port
Authority and leased to Silverstein.
In 1988, Citigroup2 agreed to lease portions of 7WTC
from Silverstein, and it installed diesel emergency generators on
the fifth floor, along with a fuel supply system connected to two
6,000-gallon fuel tanks under the loading dock of the building.
In a separate agreement with the Port Authority (the "Consent
1
The district court did not enter a separate judgment
dismissing the action. When a judgment is required to be set out
in a separate document but is not, judgment is deemed entered 150
days after the entry of the dispositive order. Fed. R. Civ. P.
58(c)(2)(B). Despite the lack of a judgment, this Court has
jurisdiction to hear the appeal of the order, which was a "final
decision" within the meaning of 28 U.S.C. § 1291. See Leftridge
v. Conn. State Trooper Officer No. 1283, 640 F.3d 62, 66-67 (2d
Cir. 2011) (finding this Court has jurisdiction to review a
"final decision" -- "one which ends the litigation on the merits
and leaves nothing for the court to do but execute the judgment"
(internal quotation marks omitted)).
2
"Citigroup," in the context of lease negotiations,
refers to both Citigroup and its predecessor, Salomon Inc.
-3-
Agreement"), Citigroup agreed to indemnify the Port Authority
with respect to:
(a) any and all claims (i) arising from (A)
the operation, maintenance or management by
[Citigroup] of the Demised Premises, or (B)
any work or thing whatsoever done, or any
condition created in or about the Demised
Premises during the Term by [Citigroup] . . .
and (b) all reasonable costs, expenses and
liabilities incurred in or in connection with
each such claim or proceeding brought
thereon.
(A 932).
In 1999, the New York City Office of Emergency
Management ("OEM") constructed an emergency command center on the
twenty-third story of 7WTC. OEM installed a back-up generator
system that utilized multiple diesel fuel tanks.
On September 11, 2001, terrorists attacked Towers One
and Two of the World Trade Center. As the towers collapsed,
debris fell on 7WTC, setting it on fire. Eventually, 7WTC
collapsed as well.
A series of lawsuits followed. In Consolidated Edison
Co. of New York, Inc. v. Port Authority ("Aegis I"), 02 Civ. 7188
(AKH) (S.D.N.Y.), Con Ed and, inter alia, its insurers, Aegis
Insurance Services, Inc., asserted claims against the Port
Authority, as owner of 7WTC, for the "negligent design, approval,
inspection, installation, maintenance, operation, conduct and
control of [7WTC] . . . and the diesel fuel tanks therein."
Aegis I, 02 Civ. 7188 (AKH), Am. Compl. (Dec. 9, 2003), ECF No.
10, ¶ 35(a). The district court granted summary judgment to the
Port Authority on Con Ed's breach of contract and negligence
-4-
claims. This Court vacated the dismissal, Aegis Ins. Servs.,
Inc. v. Port Auth., 435 F. App'x 18 (2d Cir. 2011) (summary
order), and the parties subsequently settled, Aegis I, 02 Civ.
7188 (AKH), Stipulation and Order of Dismissal (June 13, 2012),
ECF No. 287, at 1-2.
In Certain Underwriters at Lloyds, London v. Port Auth.
("Certain Underwriters"), Citigroup's subrogated insurers sued
the Port Authority for negligence with respect to the design,
approval, inspection, installation, maintenance, operation,
conduct, control, and location of diesel fuel tanks in 7WTC and
with respect to inadequate fire proofing. Certain Underwriters,
02 Civ. 7328 (AKH), Am. Compl. (Dec. 4, 2002), ECF No. 5. The
case settled. Certain Underwriters, 02 Civ. 7328 (AKH),
Stipulation and Order of Dismissal (July 9, 2008), ECF No. 42.
The Port Authority filed this case below, asserting
claims against Citigroup for indemnification with respect to
Aegis I and Certain Underwriters pursuant to the indemnification
provision in the Consent Agreement. The Port Authority and
Citigroup cross-moved for summary judgment. The district court
denied the Port Authority's motion and granted Citigroup's,
noting that the allegations in the Aegis I and Certain
Underwriters complaints were not "sufficiently broad to implicate
Citigroup's conduct," and holding that, in any event, the
"indemnification obligations do not extend to claims regarding
latent design defects in Citigroup's diesel fuel system and
backup generator." In re Sept. 11 Litig., 734 F. Supp. 2d 542,
550 (S.D.N.Y. 2010). The Port Authority now appeals.
-5-
We review a district court's grant of summary judgment
de novo. Johnson v. Killian, 680 F.3d 234, 236 (2d Cir. 2012)
(per curiam).
We hold that the district court properly dismissed the
Port Authority's claim against Citigroup for indemnification.
The indemnification provision in the Consent Agreement required
Citigroup to reimburse the Port Authority with respect to claims
arising from "the operation, maintenance or management by
[Citigroup] of the Demised Premises" or "any work or thing" done
or "any condition" created "in or about the Demised Premises" by
Citigroup. (See A 932). No such claims were asserted by the
plaintiffs in either Aegis I or Certain Underwriters.
In the Notice of Claim submitted to the Port Authority
before the commencement of Aegis I, the plaintiffs alleged that
the negligent installation, construction, and maintenance of the
OEM diesel fuel tanks caused the damage to the plaintiffs'
clients' property. Aegis I, 21 MC 101 (AKH), Notice of Claim
(Oct. 7, 2009), ECF No. 953, Exh. 16, ¶ 3 ("New York City . . .
so negligently, recklessly and carelessly installed, located,
constructed and maintained diesel fuel tanks located in [7WTC] as
to cause the collapse of [7WTC] and damage property of claimants'
insured."). Nowhere in the Aegis I notice of claim is there a
reference to the Citigroup fuel tanks. Although the notice of
claim includes general references to "the diesel fuel tanks" at
7WTC in its second paragraph, the next paragraph provides the
specifics of the claim and it refers only to the New York City
-6-
tanks. Nor did the complaint and amended complaints in Aegis I
reference the Citigroup fuel tanks. The complaints focused
solely on the OEM tanks and "diesel fuel tanks," with no specific
mention of Citigroup. See Aegis I, 02 Civ. 7188 (AKH), Second
Am. Compl. (July 11, 2008), ECF No. 133, ¶¶ 12-15, 19-20, 35, 40-
42; see also Aegis I, 02 Civ. 7188 (AKH), First Am. Compl. (Dec.
9, 2003), ECF No. 10.
Similarly, the notice of claim and complaints filed in
Certain Underwriters did not allege that Citigroup was
negligent.3 See Certain Underwriters, 02 Civ. 7328 (AKH), Second
Am. Compl. (Apr. 4, 2003), ECF No. 14 (referring only to the OEM
tanks, "diesel fuel, stored in tanks that the Port Authority
designed, and/or approved," and "all diesel fuel storage tanks"
related to "all emergency standby generator systems installed and
utilized within 7 WTC").
Neither Aegis I nor Certain Underwriters, therefore,
triggered the indemnification provision, as the cases did not
involve claims against the Port Authority arising from
Citigroup's "operation, maintenance or management" of its diesel
fuel tanks in 7WTC.
3
In fact, the plaintiffs in Certain Underwriters were
Citigroup's subrogated insurers, suing the Port Authority for
negligence related to the destruction of Citigroup's property and
tenancy at 7WTC. See In re Sept. 11 Litig., 734 F. Supp. 2d at
548 ("Since Lloyds sued as subrogee of its insured, Citigroup, it
did not allege that Citigroup was negligent or otherwise
responsible for Tower 7's collapse."). Of course, they did not
allege that Citigroup was negligent.
-7-
We have considered the Port Authority's remaining
arguments and conclude that they are without merit. Accordingly,
the order of the district court is hereby AFFIRMED.
FOR THE COURT:
CATHERINE O'HAGAN WOLFE, CLERK
-8-