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Bamundo, Zwal & Schermerhorn, LLP v. Sentinel Insurance Company, Ltd.

United States District Court, S.D. New York

March 27, 2015



RICHARD J. SULLIVAN, District Judge.

Plaintiff Bamundo, Zwal & Schermerhorn, LLP - a law firm located in lower Manhattan - brings this breach of contract action against Defendant Sentinel Insurance Company, LTD., in connection with Defendant's denial of coverage for Plaintiff's loss of business income following Superstorm Sandy ("Sandy") in October 2012. Now before the Court are the parties' cross-motions for summary judgment. For the reasons stated below, Defendant's motion for summary judgment is granted, and Plaintiff's cross-motion for partial summary judgment is denied.


A. Facts

Plaintiff is a New York law firm which leases office space at 111 John Street in Manhattan. (Defendant's Rule 56.1 Statement, Doc. No. 23 ("Def. 56.1"), ¶ 1.) Defendant issued insurance coverage to Plaintiff for one year beginning on February 15, 2012 (the "Policy"). (Id. ¶ 26.) Under the relevant provisions of the Policy, Defendant agreed to pay for "the actual loss of Business Income you sustain when access to your scheduled premises' is specifically prohibited by order of a civil authority as the direct result of a Covered Cause of Loss to property in the immediate area of your scheduled premises[2]'" (the "Civil Authority provision"). (Id. ¶ 27.) The Policy provided that coverage for business income under the Civil Authority provision "will begin 72 hours after the order of a civil authority, " and that such coverage ends "at the earlier of: (a) when access is permitted to your schedule premises'; or (b) 30 consecutive days after the order of the civil authority." (Id. ) A Covered Cause of Loss is further defined as a "risk of direct physical loss unless the loss is" excluded. (Id. ) The Policy excluded payment of any "loss or damage caused directly or indirectly by" water, including flooding (the "Flood Exclusion"). (Id. ¶ 28.)

On October 28, 2012, in anticipation of Sandy and "weather conditions [that] are likely to cause heavy flooding [and] power outages, " the Mayor of New York City (the "Mayor") issued Executive Order 163, which ordered the public to evacuate all homes and businesses located in Zone A, an evacuation zone covering parts of lower Manhattan. (Doc. No. 25-9, at 2-4 ("Order 163").) Plaintiff's office was located in Zone A in October 2012.[3]

On October 29, 2012, Sandy made landfall, reaching "its full intensity" that evening when "never-before-seen flood levels" began to surge over Manhattan. ( See Con Edison's "Report on Preparation and System Restoration Performance - Sandy - October 29 through November 12, 2012, " Doc. No. 35, Ex. 15 ("Con Edison Performance Report"), at 5.) On October 31, 2012, after recognizing that "a severe storm hit New York City... causing heavy flooding, " the Mayor issued Executive Order 165, which continued the evacuation order in Order 163 and stated that the public may reoccupy buildings in Zone A "only upon [a] determination by the Department of Buildings that re-occupation is permitted." (Doc. No. 25-9, at 5-8 ("Order 165").) On November 1, 2012, the New York City Buildings Commissioner issued a press release which stated that the public would not be permitted to reoccupy buildings in Zone A until either the Department of Buildings inspected and authorized reentry or a licensed professional engineer certified that the building was safe to occupy, had no standing water, and had electricity, among other things. (Doc. No. 17-42.) In light of the flooding of parts of lower Manhattan, the Mayor subsequently issued fourteen more executive orders between November 5, 2012 and January 4, 2013, which continued the evacuation of Zone A. ( See Doc. Nos. 25-9, 25-10, 25-11 (attaching Executive Orders 168, 171, 176, 177, 181, 184, 189, 192, 195, 198, 201, 204, 208, and 211).)

On December 21, 2012, licensed engineer David Glickman told the Department of Buildings that 111 John Street was "structurally sound" and "safe to occupy." (Def. 56.1 ¶ 21.) Subsequently, the tenants of 111 John Street were told that the building would be "fully available for occupancy" on December 24, 2012. (Id. ¶ 22.) Nevertheless, Plaintiff did not reenter its office until January 4, 2013. (Id. ¶¶ 2-3.) As a consequence of the evacuation orders, Plaintiff submitted an insurance claim to Defendant for its loss of business income spanning almost the entire evacuation period, from October 30, 2012 to January 4, 2013.[4] (Id. ¶¶ 3-4.) In response, Defendant denied coverage, asserting that Plaintiff "incurr[ed] a business interruption as the result of flooding conditions." (Doc. No. 17-35.) Plaintiff responded to the denial of coverage and noted that 111 John Street "did not suffer any flood damage" and that Plaintiff was entitled to coverage under the Civil Authority provision. (Doc. No. 17-36.) Defendant never responded to that letter. (Pl. Mem. at 3.)

B. Procedural History

On August 25, 2013, Plaintiff commenced this action in New York State Supreme Court, New York County, seeking payment of its business income losses from October 30, 2012 until January 4, 2013 as allegedly required under the Policy. (Doc. No. 1.) On September 20, 2013, this action was removed to federal court on diversity grounds. (Id. ) On October 13, 2013, Plaintiff filed an amended complaint, asserting claims against Defendant for breach of contract, bad faith and unfair claim settlement practices, and a violation of New York General Business Law § 349. (Doc. No. 5 ("First Amended Complaint" or "FAC").) Plaintiff voluntarily dismissed the New York General Business Law claim on December 6, 2013. (Doc. No. 16.)

On August 28, 2014, Defendant moved for summary judgment to dismiss the First Amended Complaint. On September 26, 2014, Plaintiff filed its own cross-motion for partial summary judgment, arguing that the Policy requires Defendant to pay for Plaintiff's loss of business income.[5] The motions were fully briefed on October 24, 2014.


Pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment should be rendered "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). There is "no genuine dispute as to any material fact" where (1) the parties agree on all facts (that is, there are no disputed facts); (2) the parties disagree on some or all facts, but a reasonable fact-finder could never accept the nonmoving party's version of the facts (that is, there are no genuinely disputed facts), see Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); or (3) the parties disagree on some or all facts, but even on the nonmoving party's version of the facts, the moving party would win as a matter of law (that is, none of the factual disputes are material), see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

In determining whether a fact is genuinely disputed, the court "is not to weigh the evidence but is instead required to view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party, and to eschew credibility assessments." Weyant v. Okst, 101 F.3d 845, 854 (2d Cir. 1996). Nevertheless, to show a genuine dispute, the nonmoving party must provide "hard evidence, " D'Amico v. City of N.Y., 132 F.3d 145, 149 (2d Cir. 1998), "from which a reasonable inference in [its] favor may be drawn, " Binder & Binder PC v. Barnhart, 481 F.3d 141, 148 (2d Cir. 2007) (internal quotation marks omitted). "Conclusory allegations, conjecture, and speculation, " Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir. 1998), as well as the existence of a mere "scintilla of evidence in support of the [nonmoving party's] position, " Anderson, 477 U.S. at 252, are insufficient to create a genuinely disputed fact. A moving party is "entitled to judgment as a matter of law" on an issue if (1) it bears the burden of proof on the issue and the undisputed facts meet that burden; or (2) the nonmoving party bears the burden of proof on the issue and the moving party "show[s]' - that is, point[s] out... - that there is an absence of evidence [in the record] to support the nonmoving ...

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