United States District Court, E.D. New York
For the Plaintiffs: Gerard J. McCreight, Esq., Port Jefferson Station, New York.
For the Defendant: Michael A. Troisi, Esq., Sean F. McAloon, Esq., Of Counsel, Rivkin Radler, LLP, Uniondale, NY.
For the Defendant: Peter E. Kanaris, Esq., Jefferson D. Patten, Esq., Of Counsel, Fisher Kanaris PC, Chicago, IL.
MEMORANDUM OF DECISION AND ORDER
ARTHUR D. SPATT, United States District Judge.
On or about July 6, 2012, the Plaintiffs The Wingates, LLC (the " Wingates" ) and Matrix Realty Group, Inc. (" Matrix" )(collectively the " Plaintiffs" ) commenced this action in New York State Supreme Court as a result of an insurance coverage dispute with the Defendant Commonwealth Insurance Company of America (" Commonwealth" ). This action was thereafter removed to this Court by Commonwealth.
This action stems from a fire on November 10, 2011 which damaged certain buildings owned by the Wingates and insured
by Commonwealth. Distilled to its essence, the Plaintiffs claim that Commonwealth failed to pay the insurance proceeds to them arising as a result of the fire. On the other hand, Commonwealth claims that no final coverage determination was ever made due to the Plaintiffs' failure to cooperate with its investigation.
Following the close of discovery, on December 16, 2013, Commonwealth moved pursuant to Federal Rule of Civil Procedure (" Fed. R. Civ. P." ) 56 for summary judgment dismissing the complaint in its entirety.
On March 21, 2014, the Plaintiffs filed their opposition papers to Commonwealth's motion for summary judgment. As part of this opposition, the Plaintiffs filed an affidavit executed by their public adjuster, Steven G. Hess, who at times purported to provide expert opinions regarding common insurance claim standards and practices.
On April 21, 2014, Commonwealth moved to strike Hess's affidavit on the basis that the Plaintiffs failed to disclose him as an expert pursuant to Fed.R.Civ.P. 26(a)(2).
On April 29, 2014, the Plaintiffs filed a letter motion, addressed to United States Magistrate Judge Arlene R. Lindsay, seeking to re-open discovery for the purpose, among others, of designating two witnesses, including Hess, as experts.
For the following reasons, the Court (1) denies the Plaintiffs' letter motion to reopen discovery and designate the two witnesses as experts; (2) grants in part and denies in part Commonwealth's motion to strike Hess's affidavit; and (3) grants Commonwealth's motion for summary judgment dismissing the complaint.
Unless stated otherwise, the following facts are drawn from the parties' Rule 56.1 statements. Triable issues of fact are noted.
A. The Parties and the Properties
Matrix is a New York corporation headquartered in Long Island. The Wingates is a District of Columbia limited liability company that owns an apartment complex in Columbus, Ohio, commonly known as the Wingates LLC and/or Oakbrook Manor (the " Complex." )
At all relevant times, the sole member of the Wingates was Glen Nelson, who is also the sole shareholder of Matrix.
The parties dispute whether Matrix has an ownership in the Wingates or the Complex. The Plaintiffs concede that Matrix does not have any memorialized membership interest in Wingates.
Commonwealth is an insurance company that is licensed and registered to conduct business in New York State and headquartered in Washington State.
Included within the Complex were two apartment buildings located at 4540 and 4530 Longest Drive South (the " Primary" and " Secondary" Building, respectively and collectively the " Buildings" ). The Complex consists of more than 130 buildings.
From September through November 2011, non-party Mark Rumney was the construction manager at the complex; non-party Nestor Valadez was the assistant construction manager at the Complex; and non-party Sue Mollotte was the property manager at the Complex. Until September 2011, non-party Edwin LaChapelle was the Regional Manager of the Complex.
B. The Insurance Policy
In June 2011, Commonwealth issued an insurance policy to Matrix in connection
with the Complex, with effective dates of June 23, 2011 through June 23, 2012 (the " Policy" ). The Policy insured against various losses at the Complex, including those caused by fire. Under the terms of the Policy, in the event coverage existed, any recovery was limited to the actual cash value of the damage to the Buildings caused by the fire; i.e. replacement cost less depreciation. The Policy excluded from coverage any loss caused by wear and tear or gradual deterioration. Finally, the Policy insured other properties in different states owned by different entities that have the same management and ownership as the Plaintiffs.
The Policy defined the " Named Insured" as including " all subsidiary, affiliated, related, or allied companies, corporations, firms or organizations (as they now are or may hereafter be constituted) or persons for which the insured has the responsibility for placing insurance and for which more specific coverage does not otherwise exist." The Plaintiffs contend that the interrelationship between the Wingates and Matrix leads to the conclusion that Matrix, as well as Wingates, have an insurable interest in the Complex under the Policy.
In this regard, the Plaintiffs admit that there is no written agreement or similar document detailing that Matrix assumed liability for the Complex. The Plaintiffs maintain that no such documents were required by the terms of the Policy for Matrix to qualify as a " Named Insured" under the Policy.
Endorsement 4 to the Policy was a Statement of Values for property desired to be insured under the Policy (the " Statement of Values" ). The Endorsement, effective as of June 23, 2011, was signed by Nick Tambakis, the managing director and controller of Matrix, and identified the replacement cost of the Primary and Secondary Buildings to be $1,313,700 each.
Further, pursuant to the terms of the Policy, the " Named Insured" was required to provide documentation " showing the interest of the Insured and of all others in the property" as well as " any changes in occupation, location, possession, exposures, title or use of the property since the issuance of th[e] Policy." Of further importance, the Policy provided that:
The Insured, as often as may be reasonably required ... shall submit, and insofar as is within his or their power cause his or their employees, members of the household and others to submit, to examinations under oath ... and, as often as may be reasonably required, shall produce for examination all writings, books of account, bills, invoices and other vouchers, or certified copies thereof if originals be lost.
Additionally, the " Insured" was required to " keep accurate books, records and accounts," and to " produce for examination by the Company or its duly authorized representative all the books and records, inventories and accounts" relating to the Complex.
The Misrepresentation and Fraud provision of the Policy provided:
This entire Policy shall be void if, whether before or after a loss, the Insured has concealed or misrepresented any material fact or circumstance concerning this Insurance or the subject thereof, or the interest of the Insured therein, or in case of any fraud or false swearing by the Insured relating thereto.
The deductible applicable to any loss at the Complex under the Policy was $100,000 per occurrence. Finally, the Policy contained a provision limiting a claimant's time to commence litigation on a claim to one year from the date claim arose.
C. The Events Leading up to the Fire
During 2011 and prior to the fire, Rumney and Valedez conducted a unit by unit walkthrough of vacant buildings at the Complex to develop a budget for potential repairs to each unit and building to make them tenantable. Some photographs of the vacant buildings and units were also taken at that time. The Plaintiffs insist that no inventory or itemization of personal property or fixtures was ever made regarding the Buildings.
Meanwhile, on September 22, 2010, Commonwealth conducted a loss prevention inspection of the Complex. Commonwealth contends that its loss prevention inspection provided general information and made no reference to any specific building or the condition of either the Primary or Secondary Buildings.
Also, prior to the fire, certain appliances and fixtures were removed from vacant units in the Buildings as part of the Plaintiffs' plan for renovating buildings in the Complex. LaChapelle and Mollette testified that anything useful and operational, including furnaces, hot water heaters, toilets, sinks, range ovens, refrigerators, and doors had been previously removed from almost all of the vacant buildings at the Complex, including the Primary and Secondary Buildings.
D. The Fire and the Respective Investigations
On November 10, 2011, the Primary Building caught fire and ultimately was destroyed. During the course of the fire, the Secondary Building incurred exterior damages to heat from the Primary Building. Matrix notified Commonwealth regarding the loss in a prompt manner.
At the time of the fire, the Buildings were vacant and boarded up. On the day of the fire, in order to prevent unauthorized entry into the area, a six foot chain-link fence was ...