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Penna v. Peerless Insurance Co.

September 24, 2007


The opinion of the court was delivered by: Marian W. Payson United States Magistrate Judge



On March 17, 2006, plaintiffs Kara Penna and Ronald Penna, M.D., filed suit in New York State Supreme Court against Peerless Insurance Company ("Peerless"). (Docket # 15, Ex. A). Invoking diversity jurisdiction, Peerless removed the matter to this Court pursuant to 28 U.S.C. § 1441. (Docket # 1). Pursuant to 28 U.S.C. § 636(c), the parties have consented to have a United States magistrate judge conduct all further proceedings in this case, including the entry of final judgment. (Docket # 18). Currently before this Court is Peerless's motion for summary judgment. (Docket # 14). For the reasons discussed below, Peerless's motion is granted.


The following recitation of the factual background to this case is derived from the parties' undisputed statements of material facts submitted pursuant to Rule 56.1 of the Local Rules of Civil Procedure for the Western District of New York.*fn1

At all times relevant to this action, plaintiff Ronald Penna owned a condominium located at 58 Ellington Circle, Rochester, New York. (Docket # 15-1 at ¶ 3; # 22-6 at ¶ 1). A homeowner's insurance policy had been issued for that property by Excelsior Insurance Company, a member underwriting company of Peerless.*fn2 (Docket # 15-1 at ¶ 4; # 22-6 at ¶ 1). The policy was issued to "Kara Penna, LT c/o Ronald Penna" and contained a provision entitled "Suits Against Us," which provided, "No action can be brought unless the policy provisions have been complied with and the action is started within two years after the date of loss." (Docket # 15-1 at ¶¶ 4-5, Ex. B).

On July 9, 2003, a plumbing break occurred at the condominium, resulting in significant water damage to the basement and first floor. The flood also caused the proliferation of mold. (Docket # 15 at ¶ 3; # 22-6 at ¶ 2). That same day plaintiffs contacted their insurance agent and informed him of the flood. (Docket # 22-6 at ¶ 3).

A Peerless claims representative spoke with plaintiffs on July 14, 2003, took a recorded statement and advised plaintiffs that they would be contacted by another representative, Stephen Scott of North Coast Claims, to schedule an inspection of the property. Plaintiffs were further advised that no work could be performed on the property unless approved by Scott. (Docket # 22-6 at ¶ 4). During the ensuing seven months, plaintiffs communicated frequently with Scott and other Peerless representatives to arrange structural and environmental inspections of the property in order to determine the scope of necessary repairs and remediation. (Docket # 22-6 at ¶¶ 5-18).

Also during that period, Peerless issued two checks to plaintiffs in connection with the claim: the first in the amount of $1,489.89 as reimbursement for, among other things, one of the property inspections; the second in the amount of $4,230.73 as reimbursement for the initial cleanup. (Docket # 22-6 at ¶ 20). Peerless neither paid, nor denied the remainder of plaintiffs' claim, consisting of approximately $67,000 in expenses incurred for mold remediation and property rehabilitation and approximately $18,000 in lost rental income. (Id.). In the Spring of 2004, plaintiffs retained counsel to assist them in obtaining reimbursement for the flood damage from Peerless, as well as from the manufacturer, supplier and installer of the plumbing part that failed. (Docket # 22-6 at ¶ 19).

After they retained counsel, Peerless requested from plaintiffs proofs of loss, photographs, additional documentation regarding the repairs and remeditation work and their expenses, and an examination under oath ("EUO") of Ronald Penna. (Docket # 22-6 at ¶¶ 22-27). Certain information was provided by Penna,*fn3 and his EUO was scheduled for July 7, 2005, two days before the expiration of the two-year contractual limitations period. At plaintiffs' request, the EUO was rescheduled and conducted on July 14, 2005. (Docket # 22-6 at ¶¶ 29-30; # 23 at ¶ 6). During the EUO, counsel for Peerless requested that plaintiffs produce various additional documents -- a request that plaintiffs' counsel asked to be made in writing. No written request was forthcoming, nor was the examination transcript forwarded by Peerless to plaintiffs.

Plaintiffs commenced suit in New York State Supreme Court on March 17, 2006, seeking a declaratory judgment that defendant is obligated to cover plaintiffs' losses from the plumbing break. (Docket # 15-1 at ¶ 2, Ex. A; # 22-6 at ¶¶ 32-33).


Peerless moves for summary judgment on the grounds that plaintiffs failed to commence this action within the requisite two-year limitations period provided for in the insurance policy. (Docket # 14-6). Plaintiffs do not dispute that their claim was filed more than two years after the date of loss. Rather, they argue that triable issues of fact exist as to whether Peerless waived or is estopped from asserting the limitations defense as a result of its actions during the pre-suit investigation of plaintiffs' claim. Alternatively, plaintiffs contend that the limitation provision is ambiguous and unenforceable. (Docket # 22-7).

A. Standard for Summary Judgment

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In reaching this determination, the court must assess whether there exist any disputed material facts and, in so doing, must resolve all ambiguities and draw all reasonable inferences against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986); Coach Leatherware Co., Inc. v. AnnTaylor, Inc., 933 F.2d 162, 166-67 (2d Cir. 1991).

A fact is "material" only if it has some effect on the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. at 248; Catanzaro v. Weiden, 140 F.3d 91, 93 (2d Cir. 1998). A dispute regarding a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248; ...

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