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Devoe Properties LLC v. Atlantic Casualty Insurance Co.

October 4, 2011


The opinion of the court was delivered by: Glasser, United States District Judge:

Memorandum and Order

Plaintiff Devoe Properties, LLC ("plaintiff" or "Devoe") filed this action against Atlantic Casualty Insurance Company ("defendant" or "Atlantic") pursuant to New York State Insurance Law § 3420(b), which provides, in substance, that any person who has obtained a judgment against an insured may maintain an action against the insurer, if the judgment against the insured remains unsatisfied for more than thirty days. Devoe, as explained hereafter, obtained a default judgment against Lexus Construction, Inc. ("Lexus"),*fn1 Atlantic's insured. Pending before the Court is Atlantic's motion for summary judgment, dismissing the case. Despite four extensions of time to respond to the motion, Devoe has not submitted one. For the following reasons, the defendant's motion is GRANTED.


I.Construction at the Devoe Property

The following facts are undisputed, unless otherwise noted. On or about March 27, 2006, plaintiff hired Fung Shung Dee Construction, Inc. ("Fung Shung Dee") as a general contractor and supervisor for the demolition of a pre-existing structure and the construction of a new condominium on land Devoe owned at 291 Devoe Avenue, Brooklyn, New York ("the Devoe Property"). Statement Pursuant to Rule 56.1 ("R. 56.1") ¶¶ 6-7 & Ex. L, ¶ 7. Immediately adjacent to the Devoe Property was a building at 293 Devoe Street, Brooklyn, New York, (the "Neighboring Property") owned by Vincent Ragone ("Ragone"). R. 56.1 ¶ 13.

Lexus was hired to perform part of the construction work at the Devoe Property.

R. 56.1 ¶ 9 & Ex. P, at 11-12, 31. This work consisted of excavating an old foundation and removing soil to create a hole approximately 20 feet wide, 60 feet long, and ten feet deep to prepare the site for the new condominium's concrete foundation. R. 56.1 Ex. L, ¶ 8; Ex. N, at 20, 23-29; Ex. C, at 39. To accomplish this work, Lexus used an excavator*fn2 and trucks to remove the soil. R. 56.1, Ex. N, at 28-29, 72. Another company, Europa Construction Corp. ("Europa"), was hired to pour the new foundation. R. 56.1, Ex. N, at 20. Together, Lexus and Europa also performed underpinning work, removing supporting soil from under the Neighboring Property and replacing it with concrete. R. 56.1, Ex. Q, at 14-16. Lexus also completed the "backfilling," regrading soil against the concrete underpinnings. Id.

II.Underlying Litigation

On July 12, 2006, the New York Department of Buildings ("NYDB") issued a stop-work order, finding there was a "failure to protect adjoining structure during excavation operations" and that "due to unsafe excavation and underpinning work," the Neighboring Property was damaged. R. 56.1 ¶ 24 & Ex. R. Ragone subsequently filed suit against Devoe for property damage and other relief (the "Underlying Action"). Ragone v. Devoe Properties, LLC, 035209/2006 (N.Y. Sup. 2006). The complaint in the Underlying Action (the "Underlying Complaint") alleged that during the course of the excavation, Devoe caused extensive damage to Ragone's foundation wall and interior walls. R. 56.1 ¶¶ 15-16 & Ex. K. This damage included cracks in the foundation and basement floor, mud and water seeping through those cracks, and movement of the foundation wall towards the excavation. Id.

On December 27, 2006, Devoe filed a Third-Party Summons and Verified Complaint against Fung Shung Dee, Lexus, and Europa (the "Third-Party Action"). R. 56.1 ¶ 17 & Ex. L. The Third-Party Action alleged that the damage to the Neighboring Building was "solely as a result of the negligence of third party defendants . . . in performing their obligations at the [Devoe Property] during the course of the excavation and the construction of the foundation. . . ." R. 56.1, Ex. L ¶ 14. Devoe sought contribution for any damage for which it was held liable in the Underlying Action. Id. at ¶ 19. Subsequently, Devoe settled the Underlying Action, purchasing the Neighboring Property for approximately $850,000. R. 56.1, Ex. N, at 60.

III.Reporting of the Occurrence to Atlantic

Prior to construction at the Devoe Property, Atlantic issued to Lexus commercial general liability insurance, Policy L044000966, for the period of February 6, 2006 to February 7, 2007 (the "Policy"). R. 56.1 ¶ 1 & Ex. A. Among other things, the Policy obligated the insured to notify Atlantic "as soon as practicable" of any "occurrence" that might result in a claim. R. 56.1, Ex. A, at § IV(2)(a). The parties dispute when Lexus first became aware that the Neighboring Property had been damaged or that the damage might result in a claim against Lexus. In any event, Atlantic did not become aware of the Third Party Action until March 15, 2007. R. 56.1 ¶ 18 & Ex. B; Ex. C,at 183. Following an investigation, Atlantic disclaimed the Policy's coverage of Lexus's work at the Devoe Property on the ground that Lexus failed to make a timely report of the occurrence and for the additional reason that the Policy did not insure excavation work.

R. 56.1 ¶ 26 & Ex. D.

IV.Entry of Default ...

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