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Metropolitan Property and Casualty Insurance Co. v. Sarris

United States District Court, N.D. New York

July 28, 2017

GEORGE R. SARRIS, et al., Defendants.


          Lawrence E. Kahn U.S. District Judge


         Plaintiff Metropolitan Property and Casualty Insurance Company (“Met P&C”) commenced this action against defendants George and Joy Sarris, Theresa Schillaci, and Robert Newell, seeking a declaration that it is not obligated to defend or indemnify the Sarrises in connection with an ongoing lawsuit between the Sarrises and Schillaci and Newell. Dkt. No. 1 (“Complaint”). The Sarrises likewise seek, among other things, a declaration that Met P&C has a duty to defend and indemnify them in connection with the lawsuit. Dkt. No. 8 (“Joy Sarris Answer”) ¶¶ 129, 132; Dkt. No. 16 (“George Sarris Answer”) ¶¶ 129, 134. Presently before the Court are Met P&C's motion for summary judgment and judgment on the pleadings, Dkt. No. 65 (“Met P&C Motion”); see also Dkt. No. 65-33 (“Met P&C Statement of Material Facts”); Dkt. No. 65-34 (“Met P&C Memorandum”); Dkt. No. 82 (“Met P&C Responsive Statement of Material Facts”); Dkt. No. 83 (“Met P&C Response”), Joy Sarris's cross-motion for summary judgment, Dkt. No. 74 (“Joy Sarris Motion”); see also Dkt. No. 74-1 (“Joy Sarris Responsive Statement of Material Facts”); Dkt. No. 74-2 (“Joy Sarris Statement of Material Facts”); Dkt. No. 77 (“Joy Sarris Memorandum”); Dkt. No. 90 (“Joy Sarris Reply”), and George Sarris's cross-motion for summary judgment, Dkt. No. 78 (“George Sarris Motion”); Dkt. No. 91 (“George Sarris Reply”). For the reasons that follow, Met P&C's Motion is granted in part and denied in part, and George and Joy Sarris's Motions are granted in part and denied in part.


         A. Factual Background

         1. The Policies

         In December 1999, the Sarrises bought a piece of real property located at 11 Woodside Drive in Clifton Park, New York. Met P&C SMF ¶ 1; Joy Sarris Responsive SMF ¶ 1.[1] Four years later, Met P&C issued the Sarrises a homeowners insurance policy; the policy was renewed a year later, and it covered the period from December 2004 to December 2005. Met P&C SMF ¶¶ 79-80; Joy Sarris Responsive SMF ¶¶ 79-80. The policy stated that Met P&C would “pay all sums for bodily injury and property damage to others for which the law holds you responsible because of an occurrence to which this coverage applies.” Dkt. No. 65-23 (“Homeowners Policy”) at 28 (emphasis omitted). The policy defined “you” as “the person or persons named in the Declarations[, ] and if a resident of the same household[, ] the spouse of such person or persons, ” and it provided that “the responsibilities, acts and failures to act of a person defined as you will be binding upon another person defined as you.” Id. at 7-8 (emphasis omitted). It also defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions during the term of the policy.” Id. at 8. Several types of losses were excluded from coverage under the policy. For example, the policy did not cover “bodily injury or property damage which is reasonably expected or intended by [the policyholder] or which is the result of [the policyholder's] intentional and criminal acts or omissions.” Id. at 28 (emphasis omitted).[2]

         Under the policy, Met P&C was not required to provide coverage for an occurrence if the Sarrises failed to “[p]romptly notify [Met P&C] or [its] representative, in writing, stating: 1. [the policyholder's] name and policy number; 2. the date, place and circumstances of the accident; 3. the name and address of anyone who might have a claim against [the policyholder]; and 4. the names and addresses of any witnesses.” Id. at 34. Coverage for an occurrence was also contingent on the Sarrises immediately sending Met P&C “any legal papers relating to the accident.” Id. at 35.

         The Sarrises purchased a personal excess liability policy (“PELP”) from Met P&C as well. Met P&C SMF ¶¶ 91-92; Joy Sarris Responsive SMF ¶¶ 91-92. This policy “provide[d] liability coverage in excess of the ‘retained limit' for damages to others caused by an ‘occurrence' and to which the policy applies.” Met P&C SMF ¶ 93; Joy Sarris Responsive SMF ¶ 93; see also Dkt. No. 65-25 (“PELP”) at 6. Like the Homeowners Policy, the PELP defined “occurrence” as “an accident, including continuous or repeated exposure to the same condition that results during the policy period in personal injury or property damage, ” and it imposed “joint obligations on all persons defined as you.” PELP at 6, 10 (emphasis omitted). The PELP excluded coverage for “personal injury or property damage” caused by “any intentional act committed by an insured or at the direction of any insured.” Id. at 7 (emphasis omitted). And the PELP required the Sarrises to “notify [Met P&C] or any authorized agent as soon as practicable of an occurrence that may be covered by th[e] policy.” Id. at 8 (emphasis omitted).

         2. Schillaci v. Sarris

         On April 28, 2005, Schillaci and Newell, neighbors of the Sarrises, commenced litigation against the Sarrises in New York State Supreme Court, Saratoga County. Met P&C SMF ¶ 29; Joy Sarris Responsive SMF ¶ 29. The complaint in this case alleged that Schillaci and Newell had lived in their home on Woodside Drive for fourteen years. Dkt. No. 74-4 (“Schillaci Complaint”) ¶ 1. Before the Sarrises moved into an adjacent property in 1999, Schillaci and Newell had “enjoyed the use and quiet enjoyment of their property.” Id. ¶¶ 2, 6. Unfortunately, that changed soon after the Sarrises arrived. The Sarrises' property contained a pond that George relocated and expanded. Id. ¶¶ 8, 10-11. George's pond modifications, to which Schillaci and Newell did not consent, id. ¶¶ 14-15, “altered the water flow and run-off such that” the pond was “diverted onto Schillaci and Newell's property, ” id. ¶ 12. This in turn led to flooding in Schillaci and Newell's basement. Id. ¶ 7.

         The Schillaci Complaint further alleged that George “began raising ducks and geese in the family room of the [Sarrises'] dwelling.” Id. ¶ 18. He also “began to entice both native and domesticated ducks and geese onto his property by putting out feed for these fowl.” Id. ¶ 19. As a result of George's efforts, the number of waterfowl on the Sarrises' property “increased exponentially, ” and this “escalat[ion]” in the “fowl population” “began to interfere increasingly with Schillaci and Newell's quiet enjoyment of their property.” Id. ¶¶ 20-21. Specifically, the large population of waterfowl on the Sarrises' property “increased the noise which began at dawn or before . . . to the point [that] it disturbed both Schillaci and Newell's sleep and the use of their property.” Id. ¶ 22. Another unfortunate consequence of George's “intentional actions” in raising waterfowl on his property was an “increase[ in] the amount of guano from the birds which was naturally deposited on [Schillaci and Newell's] house, lawn, cars and other possessions.” Id. ¶¶ 23, 25. Eventually, “the noxious odor and manure” coming from the waterfowl prevented Schillaci and Newell from “us[ing] the exterior of their home or their yard during the warmer weather.” Id. ¶ 26.

         According to the Schillaci Complaint, Schillaci and Newell tried to work things out with George, but he “did nothing to abate the continuing nuisance.” Id. ¶¶ 28-29. The Schillaci Complaint detailed George's efforts to seek a variance from the Clifton Park zoning code so that he could raise waterfowl on the residential portion of his property. Id. ¶ 32. In August 2003, George applied for the variance, id., and a public hearing was held on the application around September 2, 2003, id. ¶ 33. Schillaci and Newell spoke at the hearing and “presented the Zoning Board of Appeals with a Petition signed by over fifty of Sarris'[s] neighbors opposing the . . . [a]pplication for a variance.” Id. The next month, the Zoning Board of Appeals denied George's application for a variance and gave him “sixty . . . days . . . to remove the domestic ducks and geese.” Id. ¶ 34. The Schillaci Complaint went on to describe George's refusal to obey this order, noting that he was fined in 2004 for his noncompliance. Id. ¶¶ 35-37. According to Schillaci and Newell, George's defiance showed that he “fully intend[ed] to continue to maintain his private nuisance and thereby interfere with Schillaci and Newell's right to the quiet enjoyment of their property.” Id. ¶ 43.

         The Schillaci Complaint contained three causes of action: private nuisance resulting from the “rais[ing] and feed[ing] of both domestic and wild fowl on [the Sarrises'] property, ” trespass caused by the noise and guano coming from the waterfowl, and trespass “in the form of water appearing in [Schillaci and Newell's] basement for the first time in . . . fifteen years.” Id. ¶¶ 44-54. Schillaci and Newell requested an injunction ordering the Sarrises to “cease operating a feeding station and raising both domestic and wild ducks and geese, ” $250, 000 in damages, and attorney's fees. Id. at 8.[3]

         Though it began over a decade ago, the Schillaci litigation appears to be ongoing. See Dkt. No. 75 (“George Sarris Declaration”) ¶ 86 (“Of utmost importance to me as a defendant is that the underlying Schillaci matter is still ongoing and unadjudicated.”). The parties have engaged in extensive pretrial motion practice. The details are irrelevant to the pending motions, but in March 2009, Justice Stephen A. Ferradino denied the parties' motions for summary judgment, see Dkt. No. 65-12 (“May 2009 Hearing Transcript”) at 1:1-4 (“This case has been sitting for an awfully long time, and I recently in March issued a decision denying both parties['] motions for summary judgment.”), and in October 2012, Justice Thomas D. Nolan, Jr. (to whom the case had been reassigned) dismissed the trespass claim relating to the flooding of the basement, Dkt. No. 65-14 (“October 2012 Decision”) at 11-12. But Justice Nolan declined to grant summary judgment on Schillaci and Newell's other causes of action, id. at 14, and the Appellate Division affirmed that ruling in November 2014, Schillaci v. Sarris, 997 N.Y.S.2d 504, 509 (App. Div. 2014).

         3. The Sarrises' Interactions with Met P&C

         George Sarris received service of the Schillaci lawsuit on May 11, 2005. George Sarris Decl. ¶ 57. He says that “within days of May 11, 2005, ” he informed “MetLife Agent Vincent DeMidio of the underlying Schillaci lawsuit.” Id. ¶ 58. George and DeMidio allegedly met for over an hour, and George gave him “a copy of the underlying suit, which . . . DeMidio copied[] and returned to me.” Id. ¶ 59. DeMidio told him that “MetLife would provide defense and coverage on the Schillaci suit, ” id. ¶ 60, and he left DeMidio's office thinking that he had fulfilled his obligation to provide notice of the lawsuit to his insurer, Dkt. No. 65-16 (“George Sarris Deposition”) at 60:11-15. DeMidio, for his part, testified that he could not recall George Sarris providing him a copy of the complaint and summons in the Schillaci case. Dkt. No. 65-19 (“DeMidio Deposition”) at 35:4-11. DeMidio did recall George visiting him in his office on several occasions, id. at 35:12-15, and he remembered George mentioning “some problem with the town, ” id. at 36:1, but he insisted that he had no recollection of George talking about his neighbors suing him over the waterfowl on his property, id. at 45:8-11. George says that, per DeMidio's instructions, he “routinely notified DeMidio of the progress of the underlying lawsuit over the next six years, . . . [and] would provide DeMidio with the latest papers in the . . . lawsuit.” George Sarris Decl. ¶ 120.

         DeMidio explained at his deposition that his practice was to tell customers who wanted to file a claim that they “ha[d] to call claims to make [a] claim, because I only represent the company. I don't represent claims.” DeMidio Dep. at 76:19-77:3. DeMidio also said that he would typically tell such a customer that if she did not file her claim through “the claims reporting procedure, ” Met P&C could deny coverage for lack of timely notice. Id. at 77:5-13. According to DeMidio, he “always left [customers attempting to make claims] a card with [a] customer service number” so that they could call Met P&C and report their claims, and he never reported claims on behalf of customers. Id. at 78:9-20. Again, DeMidio testified that he could not recall telling George or Joy Sarris that he would report the claim on their behalf. Id. at 78:21-79:6.

         After DeMidio retired in 2011, id. at 6:22-7:1, George claims he met with MetLife agent Kevin Eberz to discuss the Schillaci lawsuit, George Sarris Dep. at 74:3-14. George apparently “needed the big guns of Met-Life” because he “couldn't reason with the judges” and “it was a very complex case and not everybody understands or appreciates the subtleties of the law.” Id. at 75:2-3, 75:11-13.[4] According to George, Eberz “didn't know who to contact, but he was going to have them call me, somebody from legal call me.” Id. at 75:14-16. A month went by and George had yet to receive a call from legal, so he went back to the MetLife office. Id. at 75:17-18. But Eberz was not there, and George had to speak to someone else at the office, who took a copy of recent papers related to the Schillaci case and told George that “legal [would] contact [him].” Id. at 75:18-76:4. Again, nobody from legal contacted him, and in November 2012, he wrote a letter to Eberz “memorializing the prior contact [he] had with [Eberz].” Id. at 77:2-5, 78:4-12. Eberz testified that he could not remember talking with George about the Schillaci case or receiving the letter. Dkt. No. 65-20 (“Eberz Deposition”) at 13:18-23, 14:16-20, 16:11-21.

         Met P&C claims that it did not receive notice of the Schillaci case until December 23, 2014, when George Sarris called the “MetLife 1-800 claim reporting number.” Dkt. No. 65-21 (“Burnep Affidavit”) ¶¶ 9-10. And Met P&C allegedly did not receive the complaint and summons in the Schillaci case until December 29, 2014, when Joy Sarris sent the two documents in an email. Id. ¶ 11. On January 1, 2015, George sent Met P&C a “thumb-drive containing a 3, 000 page Record on Appeal evidencing the protracted, and at that time ten-year, litigation history in the Schillaci Action.” Id. ¶ 12. On January 23, 2015, Cynthia J. Burnep, a senior claim adjuster at Met P&C, wrote a letter to the Sarrises informing them that Met P&C would not provide coverage for the Schillaci case because it was “not given timely notice of this loss as required by both the Policy and PELP.” Dkt. No. 65-28 (“January 23, 2015 Letter”) at 1. One month later, Burnep sent another letter to the Sarrises, this time to let them know that it would not provide coverage because, in addition to the lack of timely notice, “the alleged ‘property damage, ' if any, was not caused by any ‘occurrence' as that term is defined, ” and the intentional act exclusion barred coverage. Dkt. No. 65-29 (“February 2015 Letter”) at 7.[5]

         Met P&C attempts to bolster its version of events by providing an affidavit from MetLife associate general counsel Charles Cavas. Dkt. No. 65-32 (“Cavas Affidavit”). Cavas notes that MetLife's legal department uses a management system named “Law Manager, ” in which a file is created if legal “receives any requests for legal advice, inquiries into any substantial issues, or notices of significant litigation.” Id. ¶¶ 6-7. In February 2015, the legal department searched Law Manager “using the name ‘Sarris, ' the claim number, and the policy number, ” and was unable to “find any file or record evidencing any inquiries made by George or Joy Sarris or any prior communication had as between the MetLife Legal Department and George or Joy Sarris.” Id. ¶¶ 9-10.

         B. Procedural History

         Met P&C filed its Complaint in this action on June 25, 2015. Compl. It seeks a declaratory judgment that it has no obligation to defend or indemnify the Sarrises in connection with the Schillaci case. Id. at 14. In their answers, the Sarrises brought counterclaims against Met P&C seeking a declaration that Met P&C in fact has a duty to defend and indemnify them in the Schillaci action. Joy Sarris Answer ¶¶ 129, 132; George Sarris Answer ¶¶ 129, 134. Joy Sarris also brought counterclaims against Met P&C for violations of New York General Business Law section 349, New York Insurance Law section 2601, and New York insurance regulations. Joy Sarris Answer ¶¶ 135-143. George Sarris brought counterclaims for breach of the implied duty of good faith and fair dealing and violations of New York Insurance Law section 2601 and New York insurance regulations. George Sarris Answer ¶¶ 126-40.

         On February 6, 2017, Met P&C moved for summary judgment and for judgment on the pleadings. Met P&C Mot. Met P&C argues that the Schillaci action did not trigger its duty to defend or indemnify the Sarrises under the Homeowners Policy or the PELP. Met P&C Mem. at 4-10, 13. It also argues that the intentional loss exclusion in the Homeowners Policy and the intentional act exclusion in the PELP preclude coverage for the Schillaci action. Id. at 10-13. Met P&C next claims that coverage was defeated by the Sarrises' failure to provide timely notice of the Schillaci action. Id. at 14-18. Finally, Met P&C moves for judgment on the pleadings, seeking dismissal of the Sarrises' counterclaims alleging violations of New York state law. Id. at 22-25.

         Joy and George Sarris separately cross-moved for summary judgment on May 15, 2017. Joy Sarris Mot.; George Sarris Mot. Nonetheless, the Sarrises' briefs in support of their cross-motions are substantively identical. Compare Joy Sarris Mem., with Dkt. No. 78-3 (“George Sarris Memorandum”). The Sarrises argue that the Homeowners Policy and the PELP provide coverage for the Schillaci action, and that Met P&C in fact received timely notice of the lawsuit. Joy Sarris Mem. at 2-23. They also argue that Met P&C's request for a declaration that it has no duty to indemnify is “not ripe for summary judgment.” Id. at 1. Tacked onto the end of the Sarrises' briefs are requests that the Court, among other things, “[f]ind that plaintiffs' complaint is barred by the statute of limitations” and “find that Melife [sic] breached their [sic] implied duty of good faith and fair dealing.” Id. at 23-24. The Sarrises do not attempt to support these requests with arguments or citations to relevant authority.


         A. Motion for ...

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