& CINELLI, LLP, WILLIAMSVILLE (DAVID P. MARCUS OF
COUNSEL), FOR PLAINTIFF-APPELLANT.
BAASE PFALZGRAF CUNNINGHAM LLC, BUFFALO (ANTHONY G. MARECKI
OF COUNSEL), FOR DEFENDANT-RESPONDENT.
PRESENT: PERADOTTO, J.P., CARNI, LINDLEY, CURRAN, AND
from an order of the Supreme Court, Erie County (Diane Y.
Devlin, J.), entered December 16, 2015 in a breach of
contract action. The order denied the motion of plaintiff for
partial summary judgment and granted the cross motion of
defendant for partial summary judgment.
hereby ORDERED that the order so appealed from is unanimously
modified on the law by granting the motion in part and
dismissing defendant's seventh affirmative defense, and
by denying the cross motion, and reinstating plaintiff's
claim for full replacement cost, and as modified the order is
affirmed without costs.
Plaintiff commenced this breach of contract action seeking,
inter alia, a determination that he is entitled to full
replacement cost coverage under the liability policy issued
to him by defendant for the loss sustained when a property
that he owned was destroyed by a fire. Three days after the
fire, plaintiff, through his agent, advised defendant that he
"elect[ed] to exercise any replacement cost options,
which are or may become available." Plaintiff moved for
partial summary judgment seeking, inter alia, dismissal of
defendant's seventh affirmative defense, that plaintiff
is not entitled to replacement cost value because he did not
make a claim for replacement costs within 180 days of the
loss and thus that any claim would be untimely, and that the
terms of the policy do not entitle plaintiff to full
replacement cost value. Defendant cross-moved for partial
summary judgment dismissing the complaint to the extent that
plaintiff alleges that he is entitled to full replacement
cost value of the property. Supreme Court denied
plaintiff's motion in its entirety and granted
defendant's cross motion. We conclude that the court
erred in denying that part of plaintiff's motion seeking
dismissal of defendant's seventh affirmative defense and
in granting defendant's cross motion, and we therefore
modify the order accordingly.
agree with plaintiff that the provision requiring that a
claim for indemnification of costs of repair or replacement
be made within 180 days is ambiguous and therefore must be
construed against defendant (see White v Continental Cas.
Co., 9 N.Y.3d 264, 267; Harrington v Amica Ins.
Co., 223 A.D.2d 222, 228, lv denied 89 N.Y.2d
808). "If an ambiguity exists, the insurer bears the
burden of establishing that the construction it advances is
not only reasonable, but also that it is the only fair
construction..., viewed through the eyes of the average
[person] on the street" (Harrington, 223 A.D.2d
at 228 [internal quotation marks omitted]; see Lachs v
Fidelity & Cas. Co. of N.Y., 306 NY 357, 364,
rearg denied 306 NY 941). Section five of the
replacement cost provision of the policy provides: " You
may make a claim for the actual cash value amount of the loss
before repairs are made. A claim for any additional amount
payable under this provision must be made within 180 days
after the loss." The term "claim" is not
defined in the policy. Plaintiff contends that he made a
claim in compliance with the replacement cost provision by
advising defendant three days after the loss that he would
seek replacement costs for the premises. Defendant contends
that plaintiff did not comply with that provision because it
required that plaintiff make a "bona-fide" claim by
"actually replacing and actually spending money in
excess of the actual cash value within 180 days of the
loss." We conclude that defendant failed to establish as
a matter of law that its interpretation of the replacement
cost provision of the policy is the "only fair
construction" of the provision (Harrington, 223
A.D.2d at 228).
further agree with plaintiff that, because he sustained a
total loss rather than a partial loss, the coinsurance
provisions in the policy providing for full replacement cost
value only in the event that "the limit of liability on
the damaged building is at least 80 percent of its
replacement cost at the time of loss" do not apply.
Instead, we agree with our colleagues in the Third Department
in Magie v Preferred Mut. Ins. Co. (91 A.D.3d 1232,
1235, quoting New York Life Ins. Co. v Glens Falls Ins.
Co., 184 Misc. 846, 849, affd274 A.D. 1045,
affd 301 NY 506), that, "in New York, a
coinsurance clause results in reducing the recovery in case
of a partial loss, though in case of a total loss, the
insurer is liable for the amount named in the policy.'
" As the Court of Appeals explained with respect to a
coinsurance clause, "[w]here either the loss or the
insurance equals or exceeds 80 per cent of value, the clause
has no effect, but when both are less, the insured and the
insurer bear the loss in certain proportions. The amount of
the insurance is not the variable factor, but the amount of
loss. The amount of insurance is at all times the same, but
when the loss ...