United States District Court, N.D. New York
LAUREN KILEY SALEEBY, ESQ., MARIA E. LISI-MURRAY, ESQ., LEVENE GOULDIN & THOMPSON, LLP, Vestal, NY, Counsel for Plaintiffs.
STEPHEN M. LAZARE, ESQ., YALE H. GLAZER, ESQ., COURTNEY A. LANZALOTTO, ESQ., LAZARE POTTER & GIACOVAS, LLP, New York, NY, Counsel for Defendant.
GLENN T. SUDDABY, District Judge.
Currently before the Court, in this breach-of-contract action filed by Sam Davis and Amira Davis ("Plaintiffs") against the Standard Fire Insurance Company ("Defendant"), are Defendant's motion for summary judgment, and Plaintiffs' motion for summary judgment. (Dkt. Nos. 17, 18.) For the reasons set forth below, Defendant's motion for summary judgment is denied, and Plaintiffs' motion for summary judgment is granted in part and denied in part.
I. RELEVANT BACKGROUND
A. Plaintiffs' Claims
Generally, liberally construed, Plaintiffs' Verified Complaint alleges as follows. (Dkt. No. 1, at 7-14.) On or before September 7, 2011, a sewer pipe located in the street near Plaintiffs' home broke or kinked, causing an increase in pressure in the plumbing in Plaintiffs' home. ( Id. ) As a result, on September 7, 2011, the main water pipe in Plaintiffs' basement burst, releasing sewage into their home during the following two days, and causing extensive damage to both the home and personal property contained therein. ( Id. ) However, their insurer, Defendant, refused to fulfill its contractual duty to provide coverage for the damage to the home (up to $196, 000), the damage to the personal property therein (up to $137, 200), and the loss of use of that property (up to $58, 800). ( Id. ) Based on these factual allegations, Plaintiffs assert two claims against Defendant: (1) a claim for a declaratory judgment; and (2) a claim of breach of contract. ( Id. ) Familiarity with the remaining factual allegations supporting these claims is assumed in this Decision and Order, which is intended primarily for the review of the parties.
B. Parties' Briefing on Defendant's Motion
Generally, in support of its motion for summary judgment, Defendant argues that it is not liable to Plaintiffs as a matter of law because the current record establishes, without any genuine dispute, the following two facts: (1) while Plaintiffs' homeowners policy excludes coverage for damage from "water or water borne material which... backs up through sewers or drains" (referred to as the "anti-concurrent water exclusion"), the policy contains an endorsement that pays "up to $5, 000 for direct loss caused by water which did not result from the negligence of the insured which backs up through sewers or drains or water..." (which amount Defendant has already paid); and (2) here, the damage resulted from a break in a municipal sewer line in a street, which caused water and water-borne material to back up into Plaintiffs' basement through their lateral line. ( See generally Dkt. No. 17, Attach. 20 [Def.'s Memo. Of Law].)
Generally, in response to Defendant's motion for summary judgment, Plaintiffs argue as follows: (1) Defendant has not met its burden on its motion because it has ignored (a) the provision of the homeowner's policy (contained in the "58065-NY Endorsement") that provides coverage for Plaintiffs' loss in the event of a "mechanical breakdown [of the sewer main]" that "cause[s] water to suddenly escape from a plumbing... system, " or in the event of "[s]ettling, cracking, ... [or] bulging... of roadways... [or] pavements" that "cause[s] water to suddenly escape from a plumbing... system, " (b) the provision of the homeowner's policy (contained in the "HA-300 NY Endorsement") that provides coverage for Plaintiffs' loss in the event of "[d]irect loss by... explosion [of the lateral line]... resulting from water damage, " and (c) the testimony of John Lavo, an experienced insurance agent, that the policy as written is ambiguous and vague as to the coverage in this matter; and (2) the "anti-concurrent water exclusion" relied on by Defendant must be construed against Defendant because it creates an ambiguity in Plaintiffs' homeowner's insurance policy (in that reading the clause together with the HA-300 NY Endorsement would render the latter meaningless, and/or reading the clause together with the 58065-NY Endorsement would render the latter meaningless). ( See generally Dkt. No. 20, Attach. 13 [Plfs.' Opp'n Memo. of Law].)
Generally in its reply, Defendant argues as follows: (1) Plaintiffs have failed to refute Defendant's prima facie showing that the loss was excluded under the policy, because (a) Plaintiff does not dispute that the "anti-concurrent water exclusion" applies but merely argues that the policy is ambiguous when the clause is considered with other provisions (which does not constitute an ambiguity under New York insurance-coverage law), (b) in any event, the policy is not ambiguous, under any reasonable interpretation of it, and (c) moreover, Plaintiffs' "explosion" argument (i.e., arising from the HA-300 NY Endorsement) fails in that it misreads the relevant policy provision (so that the ensuing-loss provision covers losses caused by the excluded peril, rather than merely covering losses caused to other property wholly separate from the defective property itself) and, in any event, there is no admissible evidence establishing that there was an explosion; and (2) Plaintiffs' reliance on an exception to two exclusions contained in the policy's 58065-NY Endorsement is unfounded, because (a) this language in the Policy is limited to a claim for damaged personal property (as opposed to damage to the dwelling or other structures), (b) an exception to an exclusion cannot provide the basis for coverage, and should not be read so broadly as to swallow the exclusion, (c) there is no admissible record evidence establishing that there was a "mechanical breakdown, " or a "[s]ettling, cracking, ... [or] bulging... of roadways... [or] pavements" that caused water to "suddenly escape from a plumbing... system, " and (d) in any event, Paragraph A of the 58065-NY Endorsement (providing that "[w]e do not cover any loss that results from a peril excluded or limited by this policy, even if a covered peril is a concurrent cause of loss") precludes coverage for this loss. ( See generally Dkt. No. 22, Attach. 2 [Def.'s Reply Memo. of Law].)
C. Parties' Briefing on Plaintiffs' Motion
Generally, in support of their motion for summary judgment, Plaintiffs argue as follows: (1) Plaintiffs have established their prima facie entitlement to summary judgment (thus shifting the burden to Defendant) by establishing (a) the existence of an "all risk" insurance policy and (b) physical damage to their premises; (2) Defendant have not met their resulting burden of establishing that Plaintiffs' loss is not covered under the insurance policy, because they have not established that, when strictly and narrowly construed against Defendant (and when construed together with the other provisions of the insurance policy), the exclusion for "water or water borne material... which backs up through sewers or drains" (referenced by Defendant as the "anti-concurrent water exclusion") clearly and unambiguously applies to the particular facts of this case; and (3) rather, the damage was caused by incidents that are covered by provisions contained in the 58065-NY Endorsement and the HA-300 NY Endorsement; and (4) based on the current record, it is undisputed that Plaintiffs incurred $105, 309.77 of damages as a result of the incident of September 7, 2011, at their home. ( See generally Dkt. No. 18, Attach. 27 [Plfs.' Memo. of Law].)
Generally, in opposition to Plaintiffs' motion for summary judgment, Defendant argues as follows: (1) Plaintiffs' motion must be denied because Defendant has already demonstrated its entitlement to summary judgment as a matter of law through the policy's unambiguous "anticoncurrent water exclusion, " which bars coverage where the loss is caused by water damage, whether directly, indirectly and regardless of any other cause of event; and (2) under no circumstances are Plaintiffs entitled to summary judgment, because (a) merely establishing the "existence of an insurance policy and damage" to covered premises does not entitle an insured to judgment as a matter of law, (b) Plaintiffs' reliance on an exception to exclusions contained within the policy's 58065-NY Endorsement is unfounded (for the reasons set forth above in Part I.B. of this Decision and Order), and (c) Plaintiffs are not entitled to summary judgment on damages in that (a) they are not entitled to the amounts sought as a matter of law, (b) they are not entitled to recovery of attorneys' fees or costs of suit under the policy, and (c) they have not proven the value of the allegedly damaged personal property as a matter of law. ( See generally Dkt. No. 21, Attach. 12 [Def.'s Opp'n Memo. of Law].)
Generally in their reply, Plaintiffs argue as follows: (1) Plaintiffs' motion for summary judgment must be granted, because Defendant has deemed admitted numerous factual assertions contained in Plaintiffs' Rule 7.1 Statement of Material Facts by (a) failing to deny those factual assertions and/or (b) supporting denials with specific citations to the record; (2) Plaintiffs' motion for summary judgment must be granted because Defendant has failed to rebut the opinion of Plaintiffs' expert witness, Robert Harner (a licensed professional engineer), as to the cause of loss, because Defendant's insurance claims adjuster, Alexander Charlanow, is not qualified to provide an opinion as to the cause of that loss, under Fed.R.Evid. 702; (3) Plaintiffs have met their burden entitling them to summary judgment with regard to the insurance policy, because it was an "all risk" policy (in that the policy's "named peril language" was deleted and replaced with coverage "against risk of direct physical loss to property described in coverage C"), shifting the burden to Defendant to show that an exclusion contained in the policy defeats the claim (which Defendant has failed to meet); and (4) the "anti-concurrent water exclusion" clause creates an ambiguity, because (a) as explained by experienced insurance agent John Lavo, to determine if there is coverage for a loss under the policy, a reasonable person has to "go back and forth" between provisions, (b) reading the clause together with the HA-300 NY Endorsement would render the latter meaningless, and reading the clause together with the 58065-NY Endorsement would render the latter meaningless. ( See generally Dkt. No. 24 [Plfs.' Reply Memo. of Law].)
D. Undisputed Material Facts
Generally, the following facts are asserted in the parties' Statements of Material Fact ("Rule 7.1 Statements") and either expressly admitted or denied without supporting record citations by the non-movants in their Responses thereto ("Rule 7.1 Responses"). ( Compare Dkt. No. 17, Attach. 1 [Def.'s Rule 7.1 Statement] with Dkt. No. 20, Attach. 14 [Plfs.' Rule 7.1 Response]; compare Dkt. No. 18, Attach. 28 [Plfs.' Rule 7.1 Statement] with Dkt. No. 21, Attach. 13 [Def.'s Rule 7.1 Response].)
1. Defendant issued a policy (No. XXXXXXXXX 633 1) to Plaintiff Sammy Davis effective January 31, 2011, to January 31, 2012 (the "Policy") for the residence premises located in Endicott, New York (the "Premises").
2. The Policy is 51 pages in length and is comprised of, inter alia, five different documents.
3. Three of these five documents address water damage: (1) the "Homeowners 3 - Special Form" ("HO-3 Form"); (2) the Special Provisions New York Endorsement ("HA-300 NY Endorsement"); and (3) the Value Added Package-Plus NY Endorsement ("58065-NY Endorsement").
Relevant Provisions of the Policy
4. More specifically, the "HO-3 Form" provides as follows, in pertinent part:
SECTION I - PERILS INSURED AGAINST
COVERAGE A - DWELLING AND
COVERAGE B - OTHER STRUCTURES
We insure against risks of direct physical loss to property described in
COVERAGE A and B, EXCEPT :
A. WE DO NOT COVER ANY LOSS THAT RESULTS FROM A PERIL EXCLUDED OR LIMITED BY THIS POLICY, EVEN IF A COVERED PERIL IS A CONCURRENT CAUSE OF LOSS.
B. WE DO NOT COVER ANY LOSS OR DAMAGE TO YOUR DWELLING OR OTHER STRUCTURE CAUSED DIRECTLY OR INDIRECTLY, CONTRIBUTED TO, OR AGGRAVATED BY DEFECTIVE, INADEQUATE, OR FAULTY PLANNING, CONSTRUCTION, OR MAINTENANCE OF ANY PROPERTY WHETHER ON OR OFF THE insured location RESULTING FROM:
DEFECTIVE, INADEQUATE, OR FAULTY :
1. DEVELOPMENT, SUBDIVIDING, SURVEYING, OR SITING; INCLUDING GRADING, EXCAVATION, AND SOIL COMPACTION;
2. SPECIFICATIONS, BUILDING CODES OR THEIR ENFORCEMENT OR ZONING REQUIREMENTS;
3. ALTERATION, CONSTRUCTION, REPAIRS, RENOVATION, OR REMODELING;
4. MATERIALS RECOMMENDED, SELECTED, SUPPLIED, OR USED IN ALTERATION, CONSTRUCTION, REPAIRS, RENOVATION OR REMODELING;
C. WE DO NOT COVER:
1. LOSSES EXCLUDED UNDER SECTION I-EXCLUSIONS.
7. LOSS CAUSED BY:
a. WEAR AND TEAR, MARRING, DETERIORATION, AND FAILURE TO MAINTAIN;
b. INHERENT VICE, LATENT DEFECT, MECHANICAL BREAKDOWN;
c. SMOG, RUST, MOLD, WET OR DRY ROT;
f. SETTLING, CRACKING, SHRINKING, BULGING OR EXPANSION OF DRIVEWAYS, ROADWAYS, WALKWAYS, PAVEMENTS, PATIOS, FOUNDATIONS, WALLS, FLOORS, ROOFS OR CEILINGS;
If any of these cause water to suddenly escape from a plumbing... system..., we cover loss caused by the water. ...
5. The language contained in Paragraphs C.7.b. and C.7.f. of the HO-3 Form with regard to dwellings (i.e., "COVERAGE A") and other structures (i.e., "COVERAGE B") is also contained verbatim in Paragraphs C.7.b. and C.7.f. of 58065-NY Endorsement with regard to personal property (i.e., "COVERAGE C").
6. The HO-3 Form also contains a provision covering loss of use (labeled as "COVERAGE D - LOSS OF USE").
7. The term "mechanical breakdown" is not defined in the Policy.
8. The term "plumbing" is not defined in the Policy.
9. The HA-300 NY Endorsement (which amends the HO-3 Form and is itself amended by the 58065-NY Endorsement) ...