MEMORANDUM AND ORDER
TRAGER, District Judge:
This action arises from the defendant's denial of plaintiff's claim under her fire insurance policy for the losses suffered as the result of a fire that occurred in her house on February 22, 1993. Suit was brought under diversity jurisdiction, although a 42 U.S.C. § 1982 claim has also been alleged on the basis of plaintiff's and plaintiff's spouse's ethnicity (Israeli).
Defendant is an Illinois corporation. New York State law has been applied without objection.
Plaintiff's complaint alleged seven causes of action. The first three causes of action are based on defendant's denial of the coverage provided under plaintiff's Deluxe Homeowners Policy: (1) property damage and losses consequent to a forced sale of the damaged home; (2) additional living expenses; and (3) loss of use of residence. The fourth cause of action claims consequential damages resulting from plaintiff's sale of the fire-damaged house for a price below its previous market value. The fifth cause of action arises under New York General Business Law § 349 and asserts a claim for punitive damages and legal fees in addition to the economic losses previously alleged. The sixth cause of action alleges, under 42 U.S.C. § 1982, that Allstate "engages in a pattern of denying claims to persons of Middle Eastern and/or Israeli backgrounds without basis or justification." Compl. P 33. The seventh cause of action asserts claims for negligent and/or intentional infliction of emotional distress in connection with defendant's insistence that plaintiff remain in the United States to participate in the claims evaluation process during a period in which plaintiff's mother was dying in Israel.
On October 6, 1995, defendant's motion to dismiss was granted with respect to plaintiff's fourth cause of action, her claim for consequential damages under the contract, on the authority of Harriman v. Norfolk & Dedham Mutual Fire Ins. Co., 172 A.D.2d 585, 586, 568 N.Y.S.2d 820 (N.Y. App. Div. 2d Dept. 1991) (holding that consequential damages beyond the limits of an insurance policy are generally not recoverable in actions on insurance policies because they are too speculative). See Oral Argument 10/6/95 Tr. at 2-4. Defendant's motion to dismiss the fifth, sixth and seventh causes of action, (the claims under N.Y. Gen. Bus. L. § 349, 42 U.S.C. § 1982, and for intentional/negligent infliction of emotional distress), was denied at the same time, although discovery with regard to these causes of action was stayed. See id. at 10-14. Subsequently, discovery proceeded on plaintiff's first, second and third causes of action, which were based on coverage under her homeowner's policy.
Defendant has moved for summary judgment on two of its thirteen affirmative defenses: failure to cooperate and intentional concealment. Specifically, defendant first asserts that "by failing to provide [Allstate] with her 1991 and 1992 tax returns, and by repeatedly failing to provide [Allstate] with information regarding how much money she had earned in 1991 and 1992, [Harary] has breached the terms and conditions of the cooperation clause of the insurance policy."
Markowitz Aff. P 6, attached to Def.'s Mot. for Summ. J. ("Def.'s Mot."). Second, Allstate asserts that it is also entitled to summary judgment because "by intentionally refusing to provide [Allstate] with information regarding how much money she earned in 1991 and 1992, plaintiff has violated the concealment or fraud provisions of [her] policy, thereby voiding [her] policy of insurance."
Id. Plaintiff replied and cross-moved for dismissal of defendant's nine affirmative defenses and for summary judgment.
The following discussion, as required on a motion for summary judgment, views the evidence and all reasonable inferences in the light most favorable to the non-movant which, for purposes of defendant's summary judgment motion, is the plaintiff.
1. Plaintiff's and her Husband's Financial Circumstances Prior to the Fire
Plaintiff purchased the house in 1981 with her first husband and became its sole owner after their divorce. See Harary Aff. P 3 attached to Pltf.'s Cross-Mot. for Summ. J. ("Harary Aff."); Refinancing Appl. dated October 18, 1991, Ex. X, Def.'s Mot.
In 1991, Harary sought to refinance her house and did so in 1992. It was appraised at that time, although she was unable to remember the appraised value. See Deposition Tr. of Zehava Harary ("Harary Dep.") at 46-47, Ex. D, Def.'s Mot.
Defendant has submitted records of Harary's refinancing application and other dealings with her mortgage company, Prudential Home Mortgage, that it obtained from that company. See "Kadilac Mortgage Bankers Ltd. Residential Loan Application," Ex. X, Def.'s Mot. The two 1991 applications for refinancing were signed by plaintiff and (in addition to simple refinancing) included an application for an increase of $ 67,500 in plaintiff's total indebtedness, from $ 147,500 to $ 215,000. This request was apparently granted because the Prudential mortgage was approximately $ 215,000. See Allstate Claim Narrative at 14, Ex. B, Pltf.'s Mot. On the application forms, Harary's monthly income was listed as $ 10,800, the value of the house was $ 550,000 and the value of the business owned by Harary was $ 1,500,000. See Ex. X, Def.'s Mot. Plaintiff has not represented that these forms accurately depict her income and assets nor has she represented that she was unaware of the contents of the two applications, both of which she signed in application for a mortgage whose proceeds she does not dispute receiving.
Using proceeds Ben-David received from the sale of a house in Israel, Harary and Ben-David renovated the house extensively prior to the fire. See Harary Aff. P 4. The refinancing application dated October 18, 1991 cites "complete renovation of bathrooms plus 2d floor refurnish, etc (see att. Pd. Bills)" as the reason for refinancing while the application dated November 16, 1991 gives "Repairs to Property" as the purpose. Ex. X, Def.'s Mot. The finished basement in which they were living at the time of the fire in February 1993 was also renovated. See Harary Dep. at 55, Ex. D, Def.'s Mot.
During the summer of 1992, Harary attempted to sell the house. See Harary Dep. at 43-51, Ex. D, Def.'s Mot. Harary reported having dealt with realtor Jon Sobel and his agent, Jackie Cohen, beginning in April 1992. The house was initially listed with an asking price of $ 600,000; however, it was rented in August 1992. Sobel recalled that Harary was willing to sell for $ 450,000, a figure he viewed as still too high. He thought it would sell for between $ 350,000 and $ 400,000. See Deposition Tr. of Jon Sobel at 10-12, Ex. E, Def.'s Mot. Harary avers that she "turned down at least three offers in the range of $ 350,000 because I felt the house was worth more than that." Harary Aff. P 5.
Plaintiff's policy with Allstate was called a "Deluxe Homeowners Policy" with a $ 270,000 limit on liability. Id. P 16. The policy submitted by Allstate includes a $ 280,000 limit of liability for "Dwelling Protection." See Allstate Declaration and Policy, Ex. 1, Gus Lambrianides Aff., Ex. AA, Def.'s Mot. Plaintiff claims, and defendant does not dispute, that the insurance limit was an underestimate of the value of the house. Defendant's investigators estimated the market value of the dwelling as $ 425,000 and its replacement cost as $ 375,000. See Allstate Claim Diary at 6, Ex. B, Pltf.'s Mot.
In August 1992, plaintiff rented the first and second floors of her house as well as part of the basement to Mr. and Mrs. Rudle, a Russian couple, for $ 1,800 per month, through Sobel's agency. Prior to this rental, plaintiff, her children, and Ben-David lived in the entire house. Harary explained the rental resulted from a phone call from Jackie Cohen: "She said, you know 'Zehava, you know, if we can't sell or it can't happen, you can't wait, maybe we can rent. I have a very nice couple.'" Harary Dep. at 53, Ex. D, Def.'s Mot. The Rudles paid two months' rent as security. See id. Simon Rudle stated that Harary told him: "She cannot afford the house and everything." Deposition Tr. Simon Rudle ("S. Rudle Dep.") at 46, Ex. F, Def.'s Mot. Plaintiff stated at her deposition that she rented the house because: "I wanted to come and go freely to Israel." Harary Dep. at 41, Ex. D, Def.'s Mot. Her mother, who lived in Israel, was ill in this period and subsequently died. See id. at 43. Simon Rudle also testified: "I remember very bad she wanted to move to Israel because relative, mother was ill." S. Rudle Dep. at 47, Ex. F, Def.'s Mot. Upon renting the house plaintiff and her husband moved into "one big room" in the basement, storing "a lot of clothes and personal things . . . in the attic." Harary Dep. at 54-55, Ex. D, Def.'s Mot. The children no longer lived in the house. See S. Rudle Dep. at 46, Ex. F, Def.'s Mot. The door between the Rudles's portion of the house and that occupied by plaintiff and Ben-David had no lock, and the Rudles stated that plaintiff and Ben-David repeatedly entered their apartment despite being asked not to. See Deposition Tr. L. Rudle, page number missing, Ex. J, Def.'s Mot. Harary noted that they used the attic for storage. See Harary Dep. at 55, Ex. D, Def.'s Mot.
2. The Fire
Plaintiff states that she and her husband had planned to go to Atlantic City on the night of the fire but canceled the plan because of snow. See Harary Aff. P 5. Instead, plaintiff went to play cards at the home of a friend about 7:30 p.m. See id. Ben-David stated that he was aware that the tenants had gone abroad at least a week before the fire, and that he had "supervised" the house in their absence. See Deposition Tr. Shlomo Ben-David ("Ben-David Dep.") at 44-45, Ex. I, Def.'s Mot. Ben-David testified that he watched television that night and called to see if there was work available for him; he was a limousine driver. See Ben-David Dep. at 54, Ex. L, Def.'s Mot.
About 10:00 or 10:30 p.m., about an hour before he fell asleep, Ben-David heard some "dragging" noises upstairs. He stated that the noises lasted for about five minutes, and seemed to come from an upstairs portion of the house that had a ceramic tile floor. See id. at 56-59. Although he knew that the tenants were abroad, he did not investigate the source of the noises. See id. at 58. Ben-David was awakened about 1:00 a.m. by smoke. See id. at 64. After he became aware of the quantity of smoke, Ben-David went to the phone and, inexplicably, attempted to call his employer to find out why he had not been called for work. See id. at 66, 68, 69. After finding the phone was dead, he got dressed and went outside. See id. at 73. He saw flames coming out of the attic and went and knocked on the door of a neighbor. See id. at 77-78.
As noted, when the fire occurred the tenants (the Rudles) were abroad so that only Ben-David was present. See Ben-David Dep. at 44-45, 58, Ex. I, Def.'s Mot. When the Rudles returned from Switzerland, they found that a number of items had been stolen from their apartment, including a new 36" television that Mr. Rudle (a world class medal-winning weight lifter in Russia) estimated would require three to four people to lift, two large, heavy bronze vases, a marble table, and two heavy chairs. See Deposition Tr. L. Rudle at 51, Ex. K, Def.'s Mot.; S. Rudle Dep. at 66-67, Ex. H, Def.'s Mot. The Rudles did not file a report with the police or a claim with their insurance company for these items. See S. Rudle Dep. at 66-67, Ex. H, Def.'s Mot. Mr. Rudle questioned the feasibility of moving these pieces of furniture during the five minute period that Ben-David reported hearing noises above him or at any time without waking Ben-David. Mr. Rudle observed that the entryway was difficult for moving furniture: "Door is terrible because it got the steps and not convenient steps. Very narrow." S. Rudle Dep. at 51, Ex. K, Def.'s Mot. He also stated:
I don't understand was the fire if he sleep downstairs. You ask the weight of the TV. I weight lifter. I was Olympic gym in Russia, eight years national champion, silver, bronze and gold medal. It's impossible. Two men cannot lift this TV without something -- you know -- like the belts, special belts. It's terrible. I don't know how he sleep.
Id. at 51-52.
The New York City Fire Department Bureau of Fire Investigation filed a report on the fire listing the cause of the fire as "INCENDIARY." The report stated, in a section titled "Origin and Extension":
Examination showed that the fire originated in the [hallway closet], on the second floor, in the East hallway closet, in combustible material: TOWELS/LINENS. The fire extended to center hallway walls, ceiling, and West closet area. The fire further extended vertically, via open flame, to the floor, walls, ceiling and contents of attic area.
City of New York Fire Department, "Fire and Incident Report," Ex. C, Def.'s Mot. Plaintiff claims, without submitting either a supporting affidavit or deposition testimony: "Following the fire, plaintiff was advised by a member of the New York City Fire Department that the fire was apparently set by a burglar." Pltf. 3(g) Statement P 8. Presumably this refers to the items stolen from the Rudles and the noises heard for about five minutes by Ben-David. No criminal investigation of the alleged burglary was undertaken.
3. Allstate Investigation
Learning that the Fire Department found the fire was incendiary in origin, Allstate began an investigation of Harary's claim. Allstate retained an expert, Charles L. Casale of O'Neil Associates, who confirmed that the fire was incendiary in origin. See Lambrianides Aff. PP 6-7, attached to Def.'s Mot. Allstate also learned that Harary had put the house up for sale in summer 1992, and had then let it to the Rudles in September 1992, moving into what was essentially a studio apartment in the basement. See id. PP 8-10.
Allstate further learned that the tenants were in Europe and that Ben-David was home by himself in the basement apartment at the time of the fire. Allstate also asserts that it learned that there were no signs of forcible entry into the upstairs portion of the house, but it has presented no affidavit or testimony to support this statement. See id. PP 11-12.
It also learned that it was snowing heavily on the night of the fire. See id. P 13. Although Harary and Ben-David made Allstate aware of their view that the fire was set in the course of a burglary, Allstate questioned this explanation on the basis of the heavy snow on that night, the absence of evidence of forcible entry, and the presence of two vehicles in the driveway of the house. See id. P 14.
Based on the information obtained from this investigation, Allstate determined that Examinations Under Oath (EUOs) were necessary; Allstate conducted EUOs of Harary on August 16 and 26, 1993 and Ben-David on December 10, 1993. See id. P 15. During her depositions, Harary stated that she did not file tax returns in 1991 and 1992, the two years prior to the fire, and had no copy of her 1990 return. See Harary Dep. at 31-33, Ex. M, Def.'s Mot. After Harary testified that she had not filed tax returns in 1991 and 1992, Allstate requested that she provide her 1990 tax return and an estimate of her 1991 and 1992 income. Harary testified that since 1993 she had been earning $ 180 per week. See id. at 31-35. Ben-David estimated that he earned between $ 45-55,000 in 1992, but admitted that he had been dismissed from his job for undisclosed reasons in 1993. See Deposition Tr. Shlomo Ben-David at 15-16, Ex. A, Pltf.'s Mot. At her subsequent EUO Harary testified that Ben-David was making $ 5,000 per month in 1993. See Harary Dep. at 34, Ex. M, Def.'s Mot. During the EUO, Allstate twice reiterated its request to Harary to provide the 1991 and 1992 income figures for Ben-David and Harary. See Harary Dep. at 32, Ex. M, Def.'s Mot.; Harary Dep. at 9, Ex. N, Def.'s Mot.
Allstate reiterated its request for the 1991 and 1992 income figures to Harary, in letters to her then-attorney, Barbara Matarazzo, Esq., on August 23, 1993 and on August 31, 1993, warning "that [Harary's] obligations under the terms and conditions of her policy of insurance with Allstate cannot be fulfilled unless and until she . . . has provided our office with all of the information and documentation called for during her Examination Under Oath." Letter from Markowitz to Matarazzo of 8/23/93, Ex. O, Def.'s Mot.; Letter from Markowitz to Matarazzo of 8/31/93, Ex. P, Def.'s Mot. Allstate extended this warning with respect to its requests at Ben-David's EUO in a letter dated December 17, 1993. See Letter from Markowitz to Carrozza of 12/23/93, Ex. Q, Def.'s Mot. However, as plaintiff points out, in response to a question from Allstate during his deposition, Ben-David had estimated his income for 1992 as $ 45-55,000. See Deposition Tr. Shlomo Ben-David at 15, Ex. A, Pltf.'s Mot. Ben-David does not, however, appear to have provided an estimate of his 1991 income.
Harary's attorney, Ernest Carrozza, Esq., responded to Allstate's requests in a letter dated March 2, 1994. This letter provided, inter alia, information about the renovations to the home, as well as Harary's credit card account information, and documents relating to the lease with the Rudles. See Letter from Carrozza to Matarazzo of 3/2/94, Ex. R, Def.'s Mot. The letter stated "to be supplied" for the following inquiries: "money earned '92 for Harary," (item 13), "money earned '91 for Harary" (item 14), and "Income in 1991 & 1992 for Mrs. Harary and Mr. Ben-David," (item 46). Id. The letter stated "do not have" to the following requests: "Tax returns, 1990" (item 4), "Checking account, Greenpoint Savings 2/92-2/93," (item 5), "Appraisal of house" (item 6), "Credit card statements 2/92-2/93," (item 10). Id. In a letter dated March 23, 1994, Allstate objected to both the form of this response and the missing material. Allstate's letter also stated that a "failure to provide all of the information and documentation called for during their . . . [EUOs] would be a material breach of the terms and conditions of their policy . . . ." Letter from Matarazzo to Carrozza of 3/23/94, Ex. S, Def.'s Mot.
Harary replied by affidavit dated May 3, 1994, again asserting: "My income for 1992 [and 1991] will be supplied," and that "1991 and 1992 income for Mr. Ben-David is unknown to me at this time." Ex. T, Def.'s Mot. On June 13, 1994, her [then] attorney, Ernest O. Carrozza, wrote:
Mrs. Harary has now provided you with all requested documents in her possession and authorizations for anything she does not have, with the exception of tax returns. I have been advised that her accountant is working on the returns, but I do not know when he will have them completed. It is our position, however, that Allstate's decision with respect to coverage cannot be delayed indefinitely, regardless of the filing of the tax returns.