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Newman Myers Kreines Gross, P.C. v. Great Northern Ins. Co.

United States District Court, S.D. New York

April 24, 2014

NEWMAN MYERS KREINES GROSS HARRIS, P.C., Plaintiff,
v.
GREAT NORTHERN INSURANCE CO., Defendant

For Newman Myers Kreines Gross Harris, P.C., Plaintiff: Charles W. Kreines, LEAD ATTORNEY, Newman, Fitch, Altheim, Myers, P.C., New York, NY; Richard E. Schmedake, Goodman & Jacobs LLP, New York, NY.

For Great Northern Insurance Company, Defendant: John P. Foudy, Scott Justin Kantor, Rosner, Nocera & Ragone, LLP, NY, NY; John A. Nocera, Rosner, Nocera & Ragone, L.L.P., New York, NY.

OPINION

Page 324

OPINION & ORDER

Paul A. Engelmayer, United States District Judge.

This diversity action arises out of the widespread power outages that occurred in and around New York City during and after Hurricane Sandy. On October 29, 2012, in anticipation of storm-related flooding, utility provider Consolidated Edison

Page 325

Co. of New York, Inc. (" Con Ed" ) preemptively shut off power to certain of its service networks, to preserve the integrity of the utility system. As a result, plaintiff Newman Myers Kreines Gross & Harris P.C. (" Newman Myers" ), a law firm, was without power at its lower Manhattan office for several days. Newman Myers filed a claim under its property insurance policy (the " Policy" ), issued by defendant Great Northern Insurance Company (" Great Northern" ), for loss of business income and extra expenses occasioned by its inability to access its office during the power outage. Great Northern denied the claim on the ground that Newman Myers did not suffer a covered loss under the Policy. Newman Myers brought suit against Great Northern in New York State Supreme Court, alleging breach of the parties' insurance contract. Great Northern removed the action to this Court.

Before the Court now are the parties' cross-motions for summary judgment. For the reasons that follow, Great Northern's motion is granted and Newman Myers's motion is denied.

I. Background[1]

A. The Parties

Newman Myers is a law firm with its office and principal place of business at 40 Wall Street, New York, New York 10005 (the " 40 Wall Street Building" ). Stip. Facts ¶ ¶ 1-2.

Great Northern is an insurance company incorporated under the laws of Indiana, with its principal place of business in New Jersey. Id. ¶ 3.

B. Facts

At all relevant times, Con Edison was responsible for supplying electrical power services to the 40 Wall Street Building. In late October 2012, as Hurricane Sandy headed toward the New York metropolitan area, Con Ed identified power supply and distribution centers that potentially could be damaged by flooding. It monitored those centers as the storm approached. See Stip. Facts Ex. X2 (Con Ed Report on Preparation and System Restoration Performance: Sandy, October 29 through November 12, 2012), at 5.

At around 6:42 p.m. on October 29, 2012, floodwaters began to rise. Before the stations could flood, Con Ed preemptively shut off the power to three utility service networks, including the Bowling Green Network, which provided service to the 40 Wall Street Building. Id. at 6-7. Con Ed did so because, were power to remain on in the event of a flood at a power distribution center, the ensuing damage to Con Ed's equipment would be much worse than if the power had been shut off. Shutting off the power thus preserved the integrity of the utility system, allowing power to be restored to affected areas more quickly following the storm. See id. at 5-7.

As a result, the 40 Wall Street Building was without full power fro October 29 until November 3, 2012. During that time, there was no electricity or elevator service in the building. Stip. Facts ¶ ¶ 27-29, 35. Although access to the building was not formally blocked, id. ¶ 30, Newman Myers employees reported trying to enter the building on November 1 and 3, only to be informed that " the Building was closed due to a loss of power and that building management was waiting for Con Edison to

Page 326

fully restore electricity," id. ¶ 34; see also id. ¶ 32. Accordingly, Newman Myers treated the building " as being closed to tenants." Id. ¶ 30.

On November 3, 2012, power was partially restored to the 40 Wall Street Building, and elevator service was restored up to the eighth floor. Id. ¶ 33. Power and elevator service were fully restored to the building on November 4, 2012. Id. ¶ 35. Newman Myers resumed normal business operations on November 5, 2012. Id. ΒΆ 36. The 40 Wall Street ...


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