United States District Court, E.D. New York
For Paul Fabozzi, Annette Fabozzi, Plaintiffs: Eric R. Breslin, LEAD ATTORNEY, Eric R Breslin, Melissa Samantha Geller, Duane Morris, LLP, Newark, NJ.
For Lexington Insurance Company, Defendant: Michael S Leavy, LEAD ATTORNEY, Gennet,Kallmann, Antin & Robinson PC, New York, NY; Brian Jeffrey Bolan, Gennet Kallmann Antin & Robinson P.C., Parsippany, NJ; Donald George Sweetman, Gennet, Kallmann, Antin & Robinson, Parsippany, NJ.
MEMORANDUM & ORDER
MARGO K. BRODIE, United States District Judge.
Plaintiffs Paul and Annette Fabozzi commenced the above-captioned action against defendant Lexington Insurance Company (" Defendant" ), John Does 1-10 and ABC Corps. 1-10, on October 29, 2004, alleging that Defendant breached the terms of a homeowner's insurance policy covering the Fabozzi home in Staten Island by failing to pay for property damage. Plaintiffs alleged breach of contract and breach of the implied covenant of good faith and fair dealing claims. Defendant moved for summary judgment and on January 8, 2009, the Honorable Sandra Townes granted Defendant's motion for summary judgment, holding that the action was barred by the statute of limitations. On April 8, 2010, the Second Circuit vacated the decision and remanded the case to the district court. (Docket No. 39.) On November 22, 2011, Defendant again moved for summary judgment, arguing Plaintiffs failed to give " prompt" notice of the claim as required by the policy, that Plaintiffs' cause of action alleging a breach of the duty of good faith and fair dealing should be dismissed as a matter of law, and that the policy does not cover Plaintiffs' loss. On March 26, 2012, Judge Townes granted in part and denied in part Defendant's motion for summary judgment (the
" March 2012 Decision" ). (Docket Entry No. 60.) Judge Townes dismissed Plaintiffs' breach of the duty of good faith and fair dealing claim but denied Defendants' motion as to the breach of contract claim.
On October 26, 2012, Defendant filed a motion in limine to preclude the testimony of Plaintiffs' experts, and to dismiss the Complaint for Plaintiffs' inability to offer prima facie proof of a covered loss or damages absent such expert testimony. At a conference on February 20, 2013, the Court precluded Plaintiffs from offering expert testimony but requested briefing as to the admissibility of lay opinion testimony by Plaintiffs' witnesses as to conclusions drawn from their observations. (Minute Entry dated February 20, 2013.) At oral argument on June 5, 2013, the Court held that Plaintiffs' witnesses would be permitted to testify regarding their personal factual knowledge based on their observations but would not be permitted to offer any conclusions or opinions. (Minute Entry dated June 5, 2013.) The Court requested additional briefing on Defendant's argument that, absent expert testimony, Plaintiffs could not establish a prima facie breach of contract claim warranting dismissal of the Complaint. ( Id.) For the reasons discussed below, Defendants' motion to dismiss the Complaint is denied.
The Court assumes familiarity with the underlying facts, as set forth in the March 2012 Decision. Only the facts necessary for the resolution of the instant motion are included below.
a. Damage to Plaintiffs' Property
Plaintiffs own a beachfront home (the " Property" ) located on the Raritan Bay of Staten Island, New York. (Pl. 56.1 ¶ 11; Def. Reply 56.1 ¶ 11.) In 2002, Plaintiffs renewed their insurance policy (the " Insurance Policy" ) with Defendant for a twelve month term from April 1, 2002 to April 1, 2003 for the Property. (Insurance Policy, annexed to the declaration of Brian J. Bolan dated Aug. 30, 2012 (" Bolan Decl." ) as Ex. F.)
At some point between September 2001 and May 2002, Plaintiffs noticed that their home suffered from " serious structural problems." (March 2012 Decision 3.) The parties dispute the date that Plaintiffs discovered these problems. ( Id.) Plaintiffs allege that in April 2002, they noticed damage to the Property, including cracks in the walls, and that the floors were pitched toward the rear of the house. (Pl. 56.1 ¶ 13.) In April 2002, the Property was " propped up for support to prevent it from collapsing." ( Id.) In May 2002, portions of the foundation were exposed.
By mid-May 2002, the structural problems forced Plaintiffs to leave their home. (March 2012 Decision 4.) On May 13, 2002, Plaintiffs made a claim under the Insurance Policy, (Pl. 56.1 ¶ 15; Def. Reply 56.1 ¶ 15), which Defendant denied by letter sent to Plaintiffs on July 24, 2004, (March 2012 Decision 4). Defendant stated that the losses claimed by Plaintiffs were caused by " wear and tear, deterioration, inherent vice, latent defect, wet and/or dry rot, as well as earth movement, and the settlement, shrinking, bulging or expansion of [the P]roperty, leading to cracking of structural components thereof." (Docket Entry No. 47 Ex. H.)
b. The Insurance Policy
According to Plaintiffs, Defendant used a form policy from Insurance Services Office, Inc. (" ISO" ), an industry organization. (Plaintiffs' Memorandum in Opposition to Defendant's Motion to Dismiss (" Pl. Opp'n
Mem." ) 2, Docket Entry No. 94.) The form policy used is the " HO-3 Special Form Policy," available on the ISO policy forms database. ( Id.) The National Association of Insurance Commissioners (" NAIC" ), a trade organization, identified the HO-3 form as the most commonly used insurance form, at the time Plaintiffs purchased the Insurance Policy. ( Id.) The New York State Department of Financial Services and the NAIC have characterized the HO-3 form as covering " all-risks of physical loss except those that are specifically excluded." ( Id.) According to Defendant, the relevant provision of the Insurance Policy concerning collapse is properly understood as " named peril coverage." (Defendant's Reply Memorandum in Further Support of its Motion to Dismiss (" Def. Reply Mem." ) 2, Docket Entry No. 96.)
The Insurance Policy is comprised of several schedules and endorsements. Under " Coverage A -- Dwelling," Plaintiffs' residence was insured in the amount of $1,511,200 for all direct physical loss. (Insurance Policy 2, Declarations Page.) However, Coverage A specifies that it did not cover loss " involving collapse, other than that provided in Additional Coverage 8," loss caused by " wear and tear, marring, deterioration," " settling, shrinking, bulging or expansion," or loss " [e]xcluded under Section I -- ...