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VICTORY CONTAINER CORP. v. SPHERE INS. CO.

March 20, 1978

VICTORY CONTAINER CORPORATION, and WARRENSBURG PAPER & BOARD CORP., Plaintiffs,
v.
SPHERE INSURANCE COMPANY, EXCESS INSURANCE COMPANY, SOUTH EASTERN FIDELITY INSURANCE COMPANY, and FOREMOST INSURANCE COMPANY, Defendants



The opinion of the court was delivered by: TENNEY

TENNEY, J.

 Plaintiffs Victory Container Corporation and Warrensburg Paper & Board Corp. have moved for partial summary judgment pursuant to Rule 56(c) of the Federal Rules of Civil Procedure against defendants Sphere Insurance Company and Excess Insurance Company on the issue of liability under an insurance policy issued by defendants. *fn1" Jurisdiction is based upon diversity. 28 U.S.C. ยง 1332. Plaintiffs claim that by the terms of the policy defendants' total liability is $490,000. Sphere and Excess oppose the motion, asserting that maximum liability is $250,000. For the reasons that follow, plaintiffs' motion for partial summary judgment is granted.

 The Warrensburg Paper Mill was one of a number of locations covered to plaintiffs' benefit by a policy issued by defendants in December 1975 through their General Agents, Universal Excess Company and Inram Corporation. The policy provided the primary layer of coverage against property damage and business interruption losses from flood and other perils. *fn2" As a result of a flood occurring in April 1976, the Mill property was damaged. Although there were negotiations concerning the claimed damages, plaintiffs have been unable to recover under the policy. Plaintiffs now claim property damage of $250,000 and business interruption loss of $240,000, for a total of $490,000. Defendants both dispute the damages and assert as an affirmative defense that the terms of the policy limit their liability for loss occasioned by the flood to a total of $250,000. *fn3"

 By its terms the policy provides a maximum coverage of $500,000 "in any one loss casualty or disaster, which limit shall be subject to further reduction by any sub-limit appearing herein in respect of any peril or form of coverage, and shall be subject, further, to any reduced limit of liability designated in any location schedule attached hereto." The Declaration Form, relied on by both plaintiffs and defendants, names Victory as the insured and states, in relevant part:

 
LOCATION : As per Location Schedule attached,
 
PROPERTY LIMITS : * * *
 
B. Flood - Aggregate limit of $250,000.
 
* * *
 
DEDUCTIBLE : A. Flood - $2,500.
 
B. All other perils - $1,000.
 
VALUED BUSINESS INTERRUPTION : This clause supersedes Gross Earnings Form #140 with respect to the evaluation of a Business Interruption Loss.
 
At each location where Business Interruption is insured, it is agreed that the amount of loss for each . . . day . . . shall be the Per Diem amount specified in the Location Schedule . . . but not to exceed the Maximum specified in the Location Schedule in any one loss.

 The Gross Earnings Endorsement (Form #140), made a part of the policy, broadens the policy to cover loss "from necessary interruption of business caused by the perils insured against damaging or destroying . . . real or personal property (except finished stock) at the premises described . . ., subject to the limit of liability specified . . . for the premises at which the damage or destruction occurs." The Location Schedule to which the maximum coverage statement and Declaration Form refer states, with respect to the Mill property: VICTORY CONTAINER CORPORATION, et al., Plaintiffs, against SHERE INSURANCE COMPANY, et al., Defendants. BLANKET BUSINESS INTERRUPTION BUILDING CONTENTS PROPERTY PER DIEM MAXIMUM TOTAL $600,000 $1,550,000 $2,150,000 $3,00 0 $240,000 $2,390,000

 The sole issue now before the Court is the maximum extent of coverage for which the insurer is liable for both the property damage and business interruption losses on this insurance policy. *fn4" Resolution of the controversy turns upon the interpretation of the written contract which, in turn, involves a determination of the intent of the parties as it is expressed by the language used. Hartford Accident & Indemnity Co. v. Wesolowski, 33 N.Y.2d 169, 305 N.E.2d 907, 350 N.Y.S.2d 895 (1973); Sperling v. Great American Indemnity Co., 7 N.Y.2d 442, 166 N.E.2d 482, 199 N.Y.S.2d 465 (1960); Raleigh Associates v. Henry, 302 N.Y. 467, 99 N.E.2d 289 (1951). It is for the Court to decide whether a contract is ambiguous and if it finds that it is not, to interpret the contract as a matter of law. Bethlehem Steel Co. v. Turner Construction Co., 2 N.Y.2d 456, 141 N.E.2d 590, 161 N.Y.S.2d 90 (1957). A contract presents an ambiguity when the "language is susceptible of at least two fairly reasonable interpretations." Aetna Casualty & Surety Co. v. Giesow, 412 F.2d 468, 471 (2d Cir. 1969). Accord, Heyman v. Commerce & Industry Insurance Co., 524 F.2d 1317 (2d Cir. 1975); Union Insurance Society of Canton, Ltd. v. William Gluckin & Co., 353 F.2d 946 (2d Cir. 1965). However, "[mere] assertion by one that contract language means something to him, where it is otherwise clear, unequivocal and understandable when read in connection with the whole contract, is not in and of itself enough to raise a triable issue of ...


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