The opinion of the court was delivered by: Wexler, District Judge.
Presently before the court is Allstate's motion to dismiss. For the
reasons set forth below, the motion is granted and the case is dismissed
in its entirety.
I. The Parties and the Policies of Insurance
Plaintiff is currently a resident of Locust Valley, New York. Prior to
relocating to Locust Valley, Plaintiff owned a home located in Bay
Shore, New York (the "Bay Shore Home"). Beginning in 1995 and including
the time period until Plaintiff sold the Bay Shore Home, he was the named
insured under a homeowner's policy of insurance issued by Allstate.
Plaintiff also held a personal umbrella policy issued by Allstate. The
court refers to these policies collectively as "the Policies."
II. The Sale of Plaintiffs Home and the Buyer's Claims
On March 17, 1999, Plaintiff sold the Bay Shore Home to Sam Leno and
Elizabeth York (the "Buyers") for $900,000. After the sale, the Buyers
informed Plaintiff of structural damage to the Bay Shore Home. The Buyers
attributed the damage to a moisture condition within the structure of the
house. According to the Buyers, the water damage was directly
attributable to renovations undertaken by Plaintiff in 1991 involving
faulty re-cladding of the house with an exterior insulation and finish
system. Correspondence written by the Buyers to Plaintiff indicated that
the damage to the Bay Shore Home was so great that they intended to
demolish the home.
In a letter dated September 13, 1999, Plaintiff advised Allstate of the
Buyers' contentions regarding the damage to the Bay Shore Home and told
the insurer of the Buyer's intention to demolish the house on September
20, 1999. It appears to the court that the Bay Shore Home was demolished
without Allstate having made any inspection of the structure.
III. Prior State Court Litigation
As discussed below, the factual scenario described above has led to the
institution of three separate lawsuits that are presently pending in New
York State Court.
A. The Buyers' Action Against Plaintiff
After becoming aware of the water damage, the Buyers made a claim for
damages directly to Allstate. In a letter dated October 1, 1999, Allstate
denied payment of the claim on the ground that their insured was not
responsible for the occurrence. Thereafter, on March 27, 2000, the Buyers
commenced an action against Plaintiff in New York State Supreme Court,
Nassau County. The lawsuit seeks rescission and damages for actual and
constructive fraud and alleges that Plaintiff knew of and concealed the
water damage to the Bay Shore Home. In their lawsuit, the Buyers seek
damages of at least $700,000.
B. Allstates Declaratory Judgment Action
After declining coverage, Allstate commenced a State Court declaratory
judgment action in Supreme Court, Nassau County, (the "DJ Action")
seeking a declaration of the rights of the parties under the Policies.
The DJ Action seeks a declaration that Allstate has no duty to defend or
indemnify Plaintiff in the action commenced by the Buyers.
C. Plaintiffs Action Against Allstate
Prior to Allstate's institution of the DJ Action, Plaintiff commenced a
State Court action directly against Allstate in Supreme Court, Nassau
County. In this action, which, essentially, sought to require Allstate to
defend Plaintiff in connection with the Buyers' action, Plaintiff alleged
twelve separate causes of action against Allstate. The causes of action
alleged by Plaintiff in his action against Allstate are set forth in the
State Court complaint as follows:
(1) Allstate has refused to pay for Plaintiffs loss
and has denied liability under the policies;
(2) Allstate has failed to fulfill its obligations to
Plaintiff to act in good faith and with fair dealing;
(3) Allstate has failed to properly or timely
investigate the claim;
(4) Allstate acquiesced in the spoliation of
(5) Allstate failed to assist in the presentation of
the claim in accordance with New York law;
(6) Allstate failed to provide proof of loss to
(7) Allstate failed to disclose the existence
of property ...