Agostinelli v. Stein

Lawton, J. (concurring).

I concur in the result only because, contrary to the view of the majority, I do not believe that plaintiff insurers can be precluded from exercising their right of subrogation based on a unit owner’s breach of the bylaws of defendant Westage at the Harbor (Condominium) requiring that, if a unit owner obtains a policy of insurance, the policy must contain a waiver of subrogation clause against the Condominium and defendant Westage Board of Managers (Board). The majority relies on Kaf-Kaf, Inc. v Rodless Decorations (90 NY2d 654, 660 [1997]) for the proposition that an insured can waive an insurer’s right of subrogation. Kaf-Kaf, Inc., however, involved a lease agreement pursuant to which the tenant expressly released and waived all right of recovery against the owner. In holding that the insurer was precluded from asserting a subrogation claim, the Court of Appeals applied the general rule that the insurer stands in the shoes of the insured subject to whatever defenses that could be raised against the insured (see id. at 660-661). In relying on Kaf-Kaf, Inc., the majority equates the provision in the bylaws requiring that the unit owners’ insurance policies, if obtained, must contain a waiver of subrogation against the Condominium and Board to a requirement in a lease that the tenant waive any claims against the owner. The requirement at issue herein, i.e., that a policy of insurance obtained by a unit holder must contain a waiver of subrogation clause, merely places a duty on the unit owners and does not create the waiver of liability at issue in Kaf-Kaf, Inc. A breach of that requirement by a unit owner does not preclude the unit owner from recovering damages from the Condomin*987ium and Board or others for damages if it could be shown that the Board or its employees were at fault for the fire at issue herein. Logically, if a unit owner has the right to sue the Condominium and Board then, under the principle that the insurer stands in the shoes of its insured (see id. at 660), the insurer of the unit owner also has that right.

I note that, if the bylaws specifically precluded a subrogation claim, I would agree with the majority’s analysis that all insurers would be barred from bringing any subrogation claims. Here, however, they do not. I also do not believe that this case turns on “the legal issue of what the parties intended” (S.S.D.W. Co. v Brisk Waterproofing Co., 76 NY2d 228, 232 [1990]), despite the reliance of the majority on two cases in which that test was applied (see id. at 233-234; Loctite VSI v Chemfab N.Y., 268 AD2d 869, 871 [2000]). Consequently, in my view Supreme Court had a sound basis for determining that the Board is limited to its remedy against the unit owners for failing to obtain insurance with a waiver of subrogation clause, as required by the bylaws.

Because there was insurance in this instance, the issue is whether plaintiff insurers are barred by the bylaws from bringing subrogation claims. In my view, they are not, inasmuch as the bylaws do not require a unit owner to obtain an insurance policy in the first instance but instead, they require only that, if an insurance policy is obtained, it must contain a waiver of subrogation clause. The issue thus is, what is the proper result if there is no bar of subrogation. If there is indeed liability for the fire on the part of the Board, plaintiff insurers could then recover for their losses. The Board in turn would then have a claim against the unit owners for failing to obtain insurance with a waiver of subrogation clause. The effect, under this “round robin” of liability, is that plaintiff insurers would be making subrogation claims against their insureds when, in fact, it is well established that “[a]n insurer has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered” (Pennsylvania Gen. Ins. Co. v Austin Powder Co., 68 NY2d 465, 468 [1986]).

In my view, plaintiff insurers in this case are barred from making subrogation claims against the Board and its employees only, under equitable principles and for public policy reasons. Such a split in coverage was sanctioned by the Court of Appeals in S.S.D.W. Co. (76 NY2d at 230). In all other respects, I concur with the majority. Present—Green, J.P., Hurlbutt, Scudder, Lawton and Hayes, JJ.