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Canora Family, Inc. v. Universal Underwriters Insurance Co.

June 20, 2007


The opinion of the court was delivered by: Brieant, J.

Memorandum & Order

Before the Court in this diversity case for breach of insurance contract are motions for summary judgment (Doc. Nos. 6 & 10 by Defendant) (Doc. Nos. 11, 14, 15, 16 by Plaintiff). The case was removed on December 22, 2006, from the Supreme Court of the State of New York, County of Westchester. Oral argument was heard on June 15, 2007.

The following facts are either undisputed or presumed true for purposes of these motions only. Plaintiff Canora Family, Inc., is a New York corporation that apparently owned and operated the Peekskill Lincoln Mercury Dealership at 1719 East Main Street, Peekskill, NY, and an adjoining strip mall. Defendant Universal Underwriters Insurance Company ("Universal") is a Kansas corporation.

For some period of time, including the policy period from January 1, 2002 to January 1, 2003, Universal insured the entire premises containing the automobile dealership and the adjoining strip mall. By letter dated October 29, 2002, Defendant sent to Plaintiff a "Notice of Cancellation/Non-Renewal," which stated that "your insurance will cease [on 1/1/03 at 12:01 a.m. Standard Time], pursuant to Section 3426 of the New York Consolidated Laws Service" because the portion of building at 1719 East Main Street location occupied by strip of stores not related to Auto Sales & Service business is "uninsurable with respect to Underwriting Guidelines." DX-A. There was no agent or broker, so notice was not provided to anyone other than the Plaintiff. The notice was sent by certified mail and signed for by "C.Poccia" on November 5, 2002. See Id.

On or about December 6, 2004, twenty three months after the termination date of coverage of the strip mall portion was to be effective, and more than two years after notice of cancellation/non-renewal issued, the entire property was extensively damaged by fire. Plaintiffs submitted a claim to Universal, seeking indemnification for all damages. Universal reimbursed Plaintiffs approximately $2,500,000, for the portion of the damages sustained as to the Auto Dealership portion of the premises, but has refused to provide coverage and make payment on the remaining strip-mall portion of the premises, prompting Plaintiff to commence this action.

Plaintiff claims that Defendant failed to strictly comply with §3426 of the New York Consolidated Laws by failure to properly cancel or non-renew the policy on the strip mall portion of the insured premises, and that under New York statutory law, the strip mall portion therefore remained insured through the date of the fire. Specifically, Plaintiff claims, and Defendant denies, that a second notice of cancellation or non-renewal was required. Defendant doesn't dispute that it did not send a second notice of cancellation or non-renewal, but disputes that any such second notice was needed. Plaintiff relies on Section 3426(e)(1)(C) of the New York Insurance Law, which Defendant claims has nothing to do with this non-renewal.

It should be noted that the parties have not provided any written submissions as to a change or reduction in the premium after the effective date on the notice, and during oral argument on the motion no clear proffer as to a change in premium was made.


The standards for granting summary judgment are well established. Our Court of Appeals has held:

An insurance policy, like any contract, must be construed to effectuate the intent of the parties as derived from the plain meaning of the policy's terms. See Dicola v. American S.S. Owners Mut. Protection & Indem. Ass'n, Inc. (In re Prudential Lines Inc.), 158 F.3d 65, 77 (2d Cir. 1998). If the language of the insurance contract is unambiguous, we apply its terms. Where its terms are reasonably susceptible to more than one interpretation, the policy must be regarded as ambiguous.

Andy Warhol Found. for the Visual Arts, Inc. v. Federal Ins. Co., 189 F.3d 208, 215 (2d Cir. 1999). In this case, the insurance policy in effect at the time of the fire damage is not ambiguous, and can be plainly read to cover the "Auto Dealer Portion Only" and "Auto Dealer Portion of Strip Mall Only." See DX-D. Plaintiff relies on an alleged failure to provide proper notice. "It is settled that insurance cancellation or non-renewal notice requirements are strictly construed against the insurer." See e.g. Zeman v. Zack Agency, Inc., 75 A.D.2d 261, 264 (2nd Dep't. 1980).

The New York Insurance Law §3426 provides in relevant part:

(e) (1) A covered policy shall remain in full force and effect pursuant to the same terms, conditions and rates unless written notice is mailed or delivered by the insurer to the first-named insured, at the address shown on the policy, and to such ...

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