D.K. Property, Inc. v. National Union Fire Insurance Company of Pittsburgh

          For Plaintiff: D.K. Property, Inc. HOGUET NEWMAN REGAL & KENNEY, LLP By: Andrew N. Bourne, Esq.

          For Defendant: National Union Fire Insurance Company of Pittsburgh, PA, MOUND COTTON WOLLAN & GREENGRASS, LLP, By: Constantino P. Suriano, Esq.

          ROBERT R. REED, J.

         This is an action to recover first-party insurance proceeds for alleged property damage to a building owned by plaintiff D.K. Property, Inc. (plaintiff or D.K. Property). Defendant National Union Fire Insurance Company of Pittsburgh, Pa. (National Union) moves, pursuant to CPLR 3211 (a) (7), for partial dismissal of the amended complaint.

         FACTUAL ALLEGATIONS, CLAIMS AND PROCEDURAL HISTORY

         Plaintiff is the owner of a building located at 40 Prince Street in Manhattan that was allegedly damaged by a neighboring construction project in or around October 2014. Plaintiff alleges that the rear wall of the neighboring building provided lateral support to the east exterior wall of plaintiff's building, and when that rear wall was demolished, plaintiff's building suffered structural movement and damage.

         Defendant National Union issued a property insurance policy, Policy No. BB014917749-02 (Policy), providing coverage for "direct physical loss of damage to" plaintiff's premises. Plaintiff alleges that it made a claim for coverage under the Policy and that it has otherwise complied with all of the Policy's terms and conditions for coverage, but that National Union has acted in bad faith by making unreasonable and burdensome requests for information and by failing to provide a coverage determination. Plaintiff alleges that National Union's actions have forced it to incur substantial costs and expenses, including attorneys' fees.

         The original complaint alleged a cause of action for breach of the Policy and a second cause of action for breach of the covenant of good faith and fair dealing, by which plaintiff sought to recover consequential damages

"including, without limitation, prejudgment interest on the amount owed under the Policy, and the attorneys' fees, costs and disbursements incurred by DK Property in enforcing its rights as a consequence of National Union's bad faith conduct"

(Cmplt., ¶ 36). National Union moved to dismiss the second cause of action, arguing that it was duplicative of the breach of contract claim. The carrier also argued that the complaint contained insufficient allegations to support plaintiff's demand for consequential damages, particularly the request for attorney's fees, costs and disbursements. By order dated June 16, 2017, this court granted the motion. The dismissal, however, was "without prejudice, specifically for plaintiff to replead allegations that are specific in nature as to the consequential damages being sought and the legal underpinning for bad faith claims with respect to the insurer's investigation thus far."

         Plaintiff filed an amended complaint on July 14, 2017. The amended complaint retains the same two causes of action for breach of contract and breach of the covenant of good faith and fair dealing. However, the pleading provides much greater detail regarding the efforts made by plaintiff to obtain coverage for its alleged loss between October 2014 and the filing of this action in February 2017, and details National Union's handling of the claim. Plaintiff now alleges that National Union undertook unreasonable claims handling in bad faith, for the purpose of making the claim too expensive for plaintiff to pursue and, thereby, allegedly, inducing plaintiff to abandon its claim for coverage (Am. Cmplt., ¶ 19). In a November 2016 meeting between the engineers hired by both sides, National Union's engineer is alleged to have "expressed agreement that the negligent renovation design and construction" of the neighboring building was the source of distress to plaintiff's building (id., ¶ 31). Plaintiff says that it has been "abandoned" by National Union, forcing it to sue the tortfeasors in a separate action in this court (id., ¶ 20).

         The amended complaint also alleges that National Union's delay and unreasonable demands for information and inspections of the premises has caused plaintiff to incur certain other expenses. In this regard, the amended complaint alleges:

"37. What is more, DK Property expended significant monies responding to National Union's requests for information. Such expenses include: (a) legal fees amounting to date to tens of thousands of dollars; and (b) engineering and monitoring services in excess of $150, 000.

38. Additionally, because National Union has failed to provide coverage, DK Property has incurred costs and additional damages in temporarily fixing the 40 Prince Building to prevent further damage, including: (a) approximately $30, 000 to mitigate the water intrusion as a result of the damage to the east wall of the 40 Prince Building; (b) approximately $8, 500 in painting repairs; and (c) continued loss of rents and inability to increase ...