[977 N.Y.S.2d 158] The Dweck Law Firm LLP, New York City (Jack S. Dweck and Christopher Fraser of counsel), for appellant.
Miranda Sambursky Stone Sklarin Verveniotis LLP, Mineola (Steven Verveniotis of counsel), for respondent.
[999 N.E.2d 521] The United States Court of Appeals for the Second Circuit has asked us two questions relating to a property insurance policy covering acts of " vandalism." We answer that: (1) malicious damage within the coverage of such a policy may be found to result from acts not directed specifically at the covered property; and (2) to obtain coverage under such a policy the insured must show malice, defined as such a conscious and deliberate disregard of the interests of others that the conduct in question may be called willful or wanton.
Plaintiff is the owner of a four-story apartment building in Park Slope, Brooklyn. It obtained from defendant a " named perils" policy of property insurance, covering " direct physical loss ... or damage ... caused by or resulting from" any of 14 kinds of events. The only peril relevant here is described in the policy as: " Vandalism, meaning willful and malicious damage to, or destruction of, the described property."
Armory Plaza, Inc., the owner of the lot next to plaintiff's building, decided to build a new building that would include an underground parking garage. It hired contractors to do the excavation. According to plaintiff, the excavation caused cracks in the walls and foundations of plaintiffs building; the cracks became more pronounced, the building began to settle, and plaintiff feared the building would collapse. Plaintiff complained to the New York City Department of Buildings, which issued a series of violations and " stop work" orders. Plaintiff alleges that the violations resulted in guilty pleas or defaults and fines totaling more than $36,000, but that the stop work orders were
ignored and the contractors kept working. Plaintiff obtained a temporary restraining order from Supreme Court, directing Armory and its contractors " to cease all construction and/or excavation work." This order too, plaintiff says, was ignored.
Plaintiff made a claim under its policy which defendant rejected, and plaintiff brought suit in Supreme Court. The case was removed to the United States District Court for the Eastern District of New York, which granted summary judgment for defendant, holding that the alleged conduct of Armory and its contractors was not " vandalism" within the meaning of the policy ( Georgitsi Realty, LLC v. Penn-Star Ins. Co., 2011 WL 4804873, 2011 U.S. Dist LEXIS 116854 [E.D.N.Y., Aug. 30, 2011, No. 08-CV-4462 (DLI)(RML) ] [Report and Recommendation of Magistrate Judge]; Georgitsi Realty, LLC v. Penn-Star Ins. Co., 2011 WL 4889251, 2011 U.S. Dist LEXIS 114800 [E.D.N.Y., Sept. 30, 2011, No. 08-CV-4462 (DLI)(RML) ] [adopting Report and Recommendation] ). Plaintiff appealed to the Second Circuit Court of Appeals, which certified to us the following two questions:
[977 N.Y.S.2d 159] [999 N.E.2d 522] " For purposes of construing a property insurance policy covering acts of vandalism, may malicious damage be found to result from an act not directed specifically at the covered property?"
" If so, what state of mind is required?" (Georgitsi Realty, LLC v. Penn-Star Ins. Co.,702 F.3d ...