Forty E. Broadway Corp. v Charter Oak Fire Ins. Co.

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Forty E. Broadway Corp. v Charter Oak Fire Ins. Co. 2017 NY Slip Op 30131(U) January 20, 2017 Supreme Court, New York County Docket Number: 601072/09 Judge: Saliann Scarpulla Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] 4 . SUPREME COURT OF THE STATE'!OF NEW YORK COUNTY OF NEW YORK: PART 3~ ----------------------------------------------+----------------------)( FORTY EAST BROADWAY CORP., ,, Plaintiff; I Index No.: 601072/09 -against"! THE CHARTER OAK FIRE INSURANCE COMPANY, TOWER INSURAN~E COMPANY OF NEW YORK and FIRST MERCURY INSURANCE COMPANY, Defendants. :J ---------------------------------------------~~-------------------)( HON. SALIANN SCARPULLA, J.lS.C: 1i I ,, In this declaratory judgment: action seeking first party insurance coverage, defendant Tower I ii :1 Insurance Company of New York C"Tower") moves for summary judgment dismissing the I " complaint of plaintiff Forty East Broadway Corp. ("FEBC"). II ;I :! Background !! This action arises out of a bailding that was demolished at 89 Bowery ("89 Bowery") after 1i 11 the New York City Department of Buildings ("NYCDOB") issued an Emergency Declaration !I i! " declaring 89 Bowery a hazardous condition. NYCOB issued the Emergency Declaration because 11 ,, I 89 Bowery leaned too far into the donstruction site at 93 Bowery ("93 Bowery"). The general .I ; contractor responsible for the 93 Bbwery construction commenced an action against FEBC, and II FEBC thereafter filed a third party ;:complaint against the owners of 93 Bowery and its contractors i! Ii for damages to 89 Bowery (collectively "the underlying action"). In relation to the underlying 11 . ' action, FEBC commenced this declaratory judgment action against Tower and other named insurers . ' seeking coverage for all damages ~nd losses in connection with 89 Bowery and also for defense and 11 indemnification in connection witJ the underlying action. At various junctures, the parties in the underlying action and the other named insurers in this action have resolved their respective claims ,, i and/or defenses, leaving FEBC anq Tower the only remaining parties in this action. 11 601072/2009 FORTY EAST BROADWAY VS. CHARTER OAK FIRE INSURANCE Page 1 of B [* 2] " Tower issued FEBC property insurance, effective June 29, 2007 to June 29, 2008, which provided coverage for 89 Bowery for certain "Covered Causes of Loss" and in relevant part I , " I: includes "[v]andalism, meaning wdlful and malicious damage to, or destruction of, [89 Bowery]." :I 11 'I The policy further provides covera&e for "loss or damage commencing ... [d]uring the policy II ' period [i.e., June 29, 2007 to June 29, 2008]." ,, 89 Bowery was demolished! in early October 2008 and prior to its demolition, 93 Bowery was in the process of being renovat.ed. 93 Bowery received the necessary permits, hired contractors and engineers to perform the construction, and also contracted with 89 Bowery to set out their ,, ·' .I relationship during the constructiotl period. Part of the construction project eventually required 93 i Bowery to excavate deeper, necess~tating ij calculations for underpinning work of 89 Bowery's north : wall to maintain the insured building's structural integrity. Records show that further excavation ~ " and underpinning work commenceSI sometime in June 2008, and that 89 Bowery started to lean around that time. ,, Records also show that effe9ts related to the underpinning work started surfacing in July, i 2008, when 89 Bowery started logging complaints from tenants about various signs of damage. I! ,, These complaints eventually prom~ted 89 Bowery's owner to request its engineer, John Nakrosis ,; ("Nakrosis"), to inspect the buildin'.;g. On or around July 31, 2008, Nakrosis noted movement of less than .25 inches, which he believed did not present a dangerous condition to 89 Bowery but should be remediated with additional bracing. •I Throughout August, 2008, Nakrosis monitored 89 Bowery's movement and attempted to :1 work with 93 Bowery to ensure that no further movement occurred. Despite those efforts, events II 11 precipitously shifted in early Septe.mber when significant movement took place, i.e., approximately !i 4 inches of movement, triggering NYCDOB's active involvement. On September 16, 2008, 1! NYCDOB issued an Immediate Emergency Declaration, ordering that 89 Bowery be vacated . ., 601072/2009 FORTY EAST BROADWAY VS. CHARTER OAK FIRE INSURANCE i Page 2 of a [* 3] Thereafter, Nakrosis and 93 Bowery's engineers, in conjunction with NYCDOB, discussed I remedial measures, which were ultimately unsuccessful. NYCDOB ordered for 89 Bowery's demolition on or around SeptembeJ 30, 2008. ! In consolidation with the underlying action, extensive discovery has been completed in this action. The parties do not dispute various expert findings that the loss of 89 Bowery was caused by 93 Bowery's neighboring construct~on, specifically the failed underpinning work. 1 It is further undisputed that Tower's policy does not provide coverage for any loss or damage caused by negligence or neighboring constru9lion activities. On February 3, 2009, Tower denied coverage for FEBC's property claim because: 1) the loss was not caused by a named peril; 2) the loss occurred outside the policy period; 3) FEBC failed to timely notify Tower of the claim; 41) and the policy's Ordinance of Law exclusion barred coverage. ! Tower asserts these coverage denial reasons here, moves for summary judgment for lack of " coverage, and also seeks dismissal pfFEBC's claim for defense and indemnification of the underlying action. :I FEBC argues in opposition ~hat Tower improperly denied its coverage claim because: 1) the loss is covered under the policy's vandalism provision; 2) the loss commenced prior to the policy's 11 expiration; 3) FEBC provided timely notice of its claim; and 4) the Ordinance Exclusion does not apply to FEBC's claim. FEBC doe~ not address Tower's argument in support of dismissal of ' FEBC's claim for defense and ind~Fnification of the underlying action. Discussion "On a motion for summary judgment, the moving party[] has the burden to establish 'a !I primafacie showing of entitlement'!to judgment as a matter oflaw, tendering sufficient evidence to 1 Rather, as will be discussed belmy, the parties dispute how plaintiff characterizes this undisputed cause. 1 [1 601072/2009 FORTY EAST BROADWAY VS. CHARTER OAK FIRE INSURANCE Page 3 of a [* 4] demonstrate the absence of any material issues of fact."' Voss v Netherlands Ins. Co., 22 NY3d 728, 734 (2014) (citation omitted) (italics added). Summary judgment is granted "then only if, upon the moving party's meeting of this burden, the non-moving party fails 'to establish the existence of material issues of fact which require a trial of the action'" Vega v. Restani Const. Corp., 18 N.Y.3d 499, 503 (2012) (citation omitted). The insurance policy at issue here provides coverage for "[v ]andalism, meaning willful and malicious damage to, or destruction of the described property." FEBC argues that 93 Bowery's conduct during construction constit:Utes vandalism as provided and covered under the policy. In 1i I support, FEBC cites Georgitsi Realty, LLCiv. Penn-Star Ins. Co., 21N.Y.3d606, (2013), in which !I I the Court of Appeals held that vandalism "relating to a property insurance policy" may include I ;1 "malicious damage .. ."result[ing] from acts not directed specifically at the covered property" such as "an excavator who is paid to dig a hole, and does so in conscious disregard of likely damage to the building next door." Georgitsi, 21 N.Y.3d at 608 - 11. Here, the damage to and/or loss of the insured building clearly resulted from 93 Bowery's neighboring construction activities, specifically the failed underpinning work to support 89 Bowery. =i Because 93 Bowery's conduct may constitute vandalism under Georgitsi Realty, LLCI, I must determine whether there is a material issue of material fact for trial regarding malice. "Conduct is 'malicious' for these purposes when it reflects 'such a conscious and deliberate disregard of the interests of others that [it] may be called willful or wanton[.]" Georgitsi, 21 N.Y.3d 11 I at 611 (citations omitted). This "st~te of mind is the same that would be required to award punitive damages[.]" Georgitsi, 21 N.Y.3d lt 609. FEBC proffers three excerpts from Nakrosis' testimony 11 I I as evidence showing 93 Bowery's foalice: ! 1. Nakrosis testified that around July 30, 2008 when he first recognized that 89 Bowery moved, he met with 93 Bowery's lead engineer to discuss remedial steps, and both 601072/2009 FORTY EAST BROADWAY VS. CHARTER OAK FIRE INSURANCE Page 4 of 8 [* 5] parties agreed that 93 Bo,,\Very would insert addition~! bracing. Despite this conversation ,I and repeated status inquities thereafter, neither the bracing agreed to nor alternative remedial measures were taken. 2. Nakrosis testified that aft;er noticing further movement on September 9, 2008, he contacted 93 Bowery to discuss stabilizing the building and recommended bracing for the third and fourth floor. Nakrosis further testified that 93 Bowery's lead engineer decided 'I i against his recommendation because "it would have interfered with the construction of 93 :1 I [Bowery] and would have been too expensive." 3. Nakrosis testified that after receiving NYCDOB's vacate order on September 16, 2008 but before the NYCDOB issued an order to demolish the building on September 29, 2008, 93 Bowery's lead yngineer concluded 89 Bowery had to be demolished because it encroached onto 93 Bolery's projected square footage without providing additional objective engineering re~sons. The insurance policy at issue here expired on June 29, 2008. Because all of the testimony FEBC proffers relates to alleged malicious conduct after the policy expired, it is irrelevant to the coverage ,, issue in this action. Further, after reviewing the submitted affidavits and evidence, none of 93 Bowery's conduct I during the policy period . constitutes~ vandalism or raises an issue of material fact regarding ! vandalism as defined in Georgitsi. · When a definition of malice for purposes of a claim of vandalism under an insurance policy, the Court of Appeals in Georgitsi dted Marinaccio v. Town of Clarence, 20 N.Y.3d 506 (2013) [hereinafter Marinaccio]. In Marinaccio, the Court of Appeals vacated a punitive damages award ! I involving a developer who intentiohally diverted storm water to the landowner's property because the developer "complied with all f~eral, state and local planning and development laws and 601072/2009 FORTY EAST BROADWAY VS. CHARTER OAK FIRE INSURANCE Page 5 of e [* 6] regulations, and worked closely with [government engineers] to secure all required permits and 'i approvals; it hired [experts] to assist in those regards." Marinaccio, 20 N.Y.3d at 511. Similarly, here FEBC has not submitted evidence to show that during the policy period, 93 I . Bowery failed to comply with applicable laws and regulations; or failed to work collaboratively with 89 Bowery or the NY COB; or inappropriately withheld information from the NYCDOB: or 1 11 failed to hire experts to assist with construction; or even that 93 Bowery's construction activity was performed in a malicious manner. I In contrast, 93 Bowery submits an expert loss investigation report showing that 1) a preconstruction survey of 89 Bowebr's condition was completed; 2) geotechnical investigation of 93 Bowery was completed; 3) 93 Bowery hired a third party to monitor 89 Bowery's wall movement; 4) 93 Bowery retained bngineer firms to design and calculate the underpinning and bracing work for 89 Bowery; 5) those engineers were responsible for the diligent discharge of their 1i duties and communicating with the,NYCDOB. "Clearly, those measures were ultimately unsuccessful in preventing damage, to surrounding property" and certainly 93 Bowery's conduct in 1 relation to FEBC's property after the Tower policy period was not ideal. Marinaccio, 20 N.Y.3d at 511. However, this planning show$ that "[93 Bowery'] actions [during the policy period] could not be considered 'wanton and reckless or malicious."' Marinaccio, 20 N.Y.3d at 511. In opposition, FEBC argues \that covered loss or damage commenced during the policy period because movement occurred as soon as underpinning work started in June, which relates, 11 'I however remote, to the vandalism issues FEBC raises after the policy period expired. 2 "Under New York law, [however,] the loss date is the date of 'the occurrence of the casualty or event insured 11 against." Lichter Real Estate Number Three, L.L.C. v. Greater New York Ins. Co., 43 A.D.3d 366, 2 FEBC cites no case law to support this construction. 1, 601072/2009 FORTY EAST BROADWAY VS. CHAR;J"ER OAK FIRE INSURANCE Page 6 of 8 [* 7] (1st Dept't 2007) (emphasis added)~ see also Margulies v. Quaker City Fire & Marine Ins. Co., 276 i' A.D.695, 700 (1st Dep't 1950) (concluding that '"{i]nception means the beginning, the commencement, the origination .. -i[and] 'inception of the loss' [means] the occurrence of the casualty insured against[.]") (emphasis added). :1 ;: The fact that the insured buiJding marginally moved during the Tower policy period only :I shows damage or loss caused by ordinary negligence at best, and the standard here must "serve to distinguish between acts that may fairly be called vandalism and ordinary tortious conduct." Georgitsi Realty, LLCI v. Penn-Star Ins. Co., 21 N.Y.3d 606, 611 - 12 (2013). The conduct and ti related loss or damage, if any, that ?ccurred and commenced during the policy period does not ,, constitute or stem from malicious conduct, as that term is defined in Georgitsi. Looking at the applicable pdlicy provisions "in the light of the obligation as a whole and the intention of the parties as manifested thereby ... "leads me to reach the same conclusion. William ' C. Atwater & Co. v. Panama R. co:., 246 N.Y. 519, 523 (1927); see also Schloss v. Fidelity Mut. Life Ins. Co., 193 Misc. 121, 122 (Sup. 1948), judgment aff d 274 A.D. 924 (1st Dep't 1948) (stating that "[i]n construing the coptracts of insurance [J, every part of the policies should be considered in arriving at a proper interpretation."). Because the insurance policy will provide coverage "for direct physical loss df or damage to [89 Bowery] ... caused by or resulting from 1! [vandalism]," the policy period, in tum, similarly limits coverage to vandalism that causes "loss or damage commencing ... [d]uring ~he policy period." To give it any other meaning would convert insurance against vandalism "into ~pproaching general coverage for property damage." Georgitsi, 21 N.Y.3d at 612. Because no vandalism "co~menc[ ed] [d]uring the policy period" and because the damage that did commence during the poli~y period, if any, was caused at best by ordinary negligenee, ·I which is not a covered cause of los'.s, there is no coverage for the loss and damage under this 601072/2009 FORTY EAST BROADWAY VS. CHARTER OAK FIRE INSURANCE Page 7 of 8 [* 8] !i insurance policy. FEBC in opposit1on has failed to raise an issue of fact regarding vandalism during the policy period, thus Tower's motion for summary judgment dismissing the action is granted. FEBC's claim for defense and indemnification in the underlying action is moot in light of ·J underlying action's dismissal. Further, in light of the foregoing, I do not reach Tower's alternate grounds for dismissal. In accordance with the foregoing, it is ORDERED that the motion for summary judgment, pursuant to CPLR § 3212, by defendant Tower Insurance Company of New.: York (motion seq. no. 005) is granted. ., " Settle judgment. Dated: January 20, 2017 ENTER ~~(AlUHON:SALI NNS RP ULLA J.S.C. 601072/2009 FORTY EAST BROADWAY VS. CHARTER OAK FIRE INSURANCE Page 8 of 8

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