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2. New York Law on Subrogation Rights Against a Named Insured
The Port Authority, without reference to those provisions obligating it to
reimburse Con Ed for damages incurred as a result of the construction of the 7WTC
commercial tower, contends that plaintiffs are barred from asserting a claim for damages
as the Port Authority is a named insured on the fire insurance policy obtained in
accordance with section 17 of the Con Ed Lease.
Under established New York law, "[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., 502 N.E.2d 982, 983 (N.Y.
1986). Further, an insurer may not "step into the shoes of its insured to sue a third-party
tortfeasor--if that third party also qualifies as an insured under the same policy--for
damages arising from the same risk caused by the policy." ELRAC, Inc. v. Ward, 748
N.E.2d 1, 9 (N.Y. 2001). Such a limitation on the subrogation rights of an insurer against
its insured is essential as permitting such an action would allow an insurer to pass the risk
of loss from itself to the very party it has undertaken to insure. Pennsylvania Gen., 502
N.E.2d at 985.
The Port Authority urges that I dismiss the claims of plaintiffs as violating
this established principle of New York subrogation law. At this stage, however, final
determinations as to the meaning of the agreement would be premature. The Port
Authority may be considered the insured under the policy paid by Con Ed, but it may also
be considered Con Ed's insurer under section 16, which expressly provides that the Port
Authority is obligated to reimburse Con Ed for expenses incurred in repairing and
replacing damaged parts of its substation and equipment. The Port Authority has not yet
