31
Lease and that, under the terms of that lease, Con Ed is barred from bringing an action
against Citigroup and must instead seek relief in accordance with the remedies provided
under its agreement with the Port Authority.
4
Plaintiffs' Complaint, alleging negligence
by Citigroup in the construction and maintenance of its leased premises, is not based on
specific aspects of the Con Ed Lease. Nevertheless, Citigroup sets out the Con Ed Lease
to support its motion to dismiss the complaint on its face, and bases its argument on
specific covenants of that Lease. Plaintiffs and the Port Authority take issue with
Citigroup's assertion, and argue that it is not entitled to third party beneficiary status.
Citigroup contends that sections 8 and 16 of the Con Ed Lease limit the
remedies available to Con Ed in the event that the substation was damaged as a result of
the construction of the 7WTC commercial tower. Section 8(b) expressly stated that the
Port Authority's exercise of its right to construct a commercial tower above the
substation would not be "the grounds of any abatement of rental nor any claim or demand
for damages, consequential or otherwise." (Con Ed Lease, § 8(b).) Section 16 further
limited the remedies available to Con Ed, providing that any damage resulting from the
construction would only give rise to a claim for reimbursement of expenses incurred in
"maintaining, replacing, or rebuilding the Substation." (Con Ed Lease § 16.) Con Ed's
insurer's subrogation rights are limited in the same way that Con Ed's rights and
remedies are limited by the Con Ed Lease. See Restatement (Third) of Suretyship and
Guaranty, § 27 (1996). Thus, to the extent that Citigroup may be considered a third party
beneficiary of the Con Ed Lease, Citigroup will have that same status with respect to Con
Ed's subrogated insurers, the plaintiffs.
4
For a complete discussion of the Con Ed Lease see discussion supra Part III.C.1.
