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Edward W. Gardner and v. Travelers Property Casualty Company of America

June 29, 2011

EDWARD W. GARDNER AND LYNNE C. GARDNER, PLAINTIFFS,
v.
TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Mae A. D'Agostino, U.S. District Judge:

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

On June 24, 2010, plaintiffs filed the present action against defendant*fn1 seeking, among other things, a declaration that defendant must defend and indemnify plaintiffs in Susan M. Brewer v. Edward W. Gardner, Lynne C. Gardner and Alderbrook Lodge, filed in New York State Supreme Court, Warren County (the "underlying action").

Currently before the Court is defendant's motion for summary judgment seeking the following relief: (1) a declaration that defendant is not obligated to defend or indemnify plaintiffs in the underlying action because the plaintiff's injury in the underlying action occurred on a rental property that is excluded from coverage under the policy; and (2) a declaration rescinding the policy ab initio based upon plaintiffs' material misrepresentations in the application for insurance. See Dkt. No. 14-4 at 5-12.*fn2

II. BACKGROUND

In 2001, plaintiffs acquired the Alderbrook Lodge at 275 Hendricks Road, Bolton Landing, and the "A-frame guest Chalet" at 272 Hendricks Road, Bolton Landing. See Dkt. No. 18-1 at 2. In September of 2008, plaintiff Edward Gardner completed a Homeowner Application seeking insurance coverage for his property. Defendant issued a Homeowner Policy, Policy No. 983707362-633-1, for the period from September 15, 2008 to September 15, 2009 (the "Policy"). See Dkt. No. 18-2 at ¶ 8 (citing Exhibit "A"). The Policy provided that the "Location of Residence Premises" was 272 Hendricks Road (the A-frame guest Chalet), and that the sections entitled "Personal Liability" and "Medical Payments to Others" were extended to include the property at 275 Hendricks Road (the Alderbrook Lodge), subject to certain exceptions. See id. at ¶ 7; see also Dkt. No. 14-3 at ¶ 14 and Exhibits "D-E." On the Homeowner Application, plaintiffs indicated that the Alderbrook Lodge was owner occupied, but also provided that it "rents out occasionally." See Dkt. No. 14-10.

Plaintiffs marketed the Alderbrook Lodge for rental 365 days per year. See Dkt. No. 14-3 at ¶ 15 (citing Exhibit "I"). The "A-frame" was also listed on plaintiffs' website as available for rental, but it was not rented as frequently as the Alderbrook Lodge. See Dkt. No. 14-14; see also Dkt. No. 18-2 at ¶ 9. The Alderbrook Lodge was actually rented numerous times, comprising in excess of 323 rental days and generated revenues in excess of $200,000. See Dkt. No. 14-3 at ¶¶ 16-17 (citing Exhibit "I"). In fact, in 2008, plaintiffs rental income totaled $42,550, with $34,300 of it being earned before September. See Dkt. No. 14-14 at 51.

On December 26, 2008, Susan Brewer, a guest who was visiting a friend who was staying at the Alderbrook Lodge, fell somewhere on one of plaintiffs' properties. "The premises at 275 Hendricks Road was leased to John Lemp from 12/20/08 to 12/29/08 with the occupancy of 272 available for additional people if necessary." See Dkt. No. 18-3 at ¶ 13. Plaintiffs contend that Ms. Brewer "fell on the entrance walking to the premises of 272 Hendricks Road[.]" See id. at ¶14. Plaintiffs contend that Ms. Brewer was a guest at 272 Hendricks Road, not the Alderbrook Lodge. See Dkt. No. 18-2 at ¶ 2. Defendant, however, alleges that Ms. Brewer was a guest of the Alderbrook Lodge and that she injured herself at the Alderbrook Lodge. See Dkt. No. 14-3 at ¶¶ 2, 7 (citations omitted).

III. DISCUSSION

A. Summary judgment standard

A court may grant a motion for summary judgment only if the court determines that there is no genuine issue of material fact to be tried and that the facts as to which there is no such issue warrant judgment for the movant as a matter of law. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 36 (2d Cir. 1994) (citations omitted). When analyzing a summary judgment motion, the court "'cannot try issues of fact; it can only determine whether there are issues to be tried.'" Id. at 36-37 (quotation and other citation omitted). Moreover, it is well-settled that a party opposing a motion for summary judgment may not simply rely on the assertions in its pleading. See Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) (quoting Fed. R. Civ. P. 56(c), (e)).

In assessing the record to determine whether any such issues of material fact exist, the court is required to resolve all ambiguities and draw all reasonable inferences in favor of the nonmoving party. See Chambers, 43 F.3d at 36 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 2513-14, 91 L. Ed. 2d 202 (1986)) (other citations omitted). Where the non-movant either does not respond to the motion or fails to dispute the movant's statement of material facts, the court may not rely solely on the moving party's Rule 56.1 statement; rather, the court must be satisfied that the citations to evidence in the record support the movant's assertions. See Giannullo v. City of N.Y., 322 F.3d 139, 143 n.5 (2d Cir. 2003) (holding that not verifying in the record the assertions in the motion for summary judgment "would derogate the truth-finding functions of the judicial process by substituting convenience for facts").

B. The Policy's exclusions

In the present matter, the Policy excludes liability coverage for bodily injury or property damage "arising out of business pursuits of any insured or the rental or holding for rental of any part of any premises by any insured." See Dkt. No. 14-9 at 30. This exclusion, however, does not apply if "the rental or holding for rental of an insured location . . . [occurs] on an occasional basis if used only as a residence[.]" See id. Defendant asserts that this exclusion excuses them from indemnifying and defending ...


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