Long Is. Sports Dome v CHUBB Custom Ins. Co.

[*1] Long Is. Sports Dome v CHUBB Custom Ins. Co. 2004 NY Slip Op 51593(U) Decided on October 22, 2004 Supreme Court, Suffolk County Costello, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on October 22, 2004
Supreme Court, Suffolk County

Long Island Sports Dome, &/or DDJ&W Tennis Enterprises, a/k/a DDJ&W Tennis Enterprises Inc., & Andrew M. Thaler as Trustee in Bankruptcy for Sound Beach Tennis Club, Inc. a/k/a Sound Beach Tennis, Plaintiff,

against

CHUBB Custom Insurance Company, Defendant. (Action No. 1.)



01-03783



Plaintiff's Attorney

Grundfast & Grundfast

2100 Middle Country Road

Centereach, New York 11720

Defendant's Attorney

Speyer & Perlberg, LLP

200 Broadhollow Road

Melville, New York11747

Ralph F. Costello, J.

ORDERED that this motion (002) by defendant Chubb Custom Insurance Group, for an Order pursuant to CPLR §2221 for an Order granting renewal of motion (001), which motion was brought pursuant to CPLR §3212 for an Order granting summary judgment and dismissing the complaint as against plaintiffs and which motion was denied [*2]due to the stay imposed by the United States Bankruptcy Court for the Eastern District of New York, pending under case number 898-87470-511, unopposed by plaintiffs, is hereby granted as to renewal of application (001).

This action was commenced by the filing of a Summons and Complaint March 12, 2001. Issue was joined by service of an Answer dated May 11, 2001. The action sounds in breach of contract relative to an insurance policy issued by defendant on behalf of plaintiffs. Plaintiffs allege that during the period that the insurance policy was in effect, that certain damages occurred to plaintiff's properties, real and personal, contents, and business interruption, that all losses were covered by a policy of insurance, and that plaintiffs timely complied with all the conditions precedent pursuant to the terms and conditions set forth in the policy for making claims of loss. Defendant alleges in this motion, inter alia, failure of plaintiffs to cooperate and timely comply with those terms and conditions precedent to making a claim. Defendant accordingly seeks an Order granting summary judgment and dismissal of the complaint. In the moving papers, defendant asserts that plaintiff, Sound Beach Tennis Club, Inc. a/k/a Sound Beach Tennis, filed a petition for bankruptcy in the United States Bankruptcy Court for the Eastern District of New York, pending under case number 898-87470-511. It is alleged that Andrew Thaler, Esq. has been appointed as Trustee in bankruptcy for Sound Beach Tennis Club, Inc. In that defendant has now submitted a copy of a stipulation dated December 24, 2003, between the parties whereby the automatic stay imposed by the Bankruptcy Court is vacated and is So Ordered by the Hon. Melanie L. Cyganowski of the United States Bankruptcy Court , defendant's motion for summary judgment may now be addressed on this motion for renewal of motion (001).

In reviewing the complaint, it is asserted by plaintiffs that on or about March 15, 1999, defendant issued and delivered to plaintiffs its policy of insurance for the policy period of January 6, 1999 to January 6, 2000, number 7945-72-81CCM, for coverage for certain risks, including, but not limited to, loss by reason of damage to real property, personal property, business interruption and loss of income for the premises located at 922 Route 25 A, Miller Place, New York. Plaintiffs also asserts that on or about March 15, 1999, plaintiffs had insurable interests on the property and sustained real property and personal property damage, business interruption and loss of income. Pursuant to the terms of the insurance policy, plaintiffs allege they provided notice of the claims, damages and losses to defendant and its agents, and fully performed all the conditions of the policy on its part to be performed, except as waived by defendant or by estoppel on the part of the defendant, or whereby defendant prevented and/or refused performance on the part of the plaintiffs and/or their agents, or where such performance was tolled by operation of law. Plaintiffs claim damages in the amount of $743,028.00.

The answer served by defendant asserted the following affirmative defenses:

First-that on or about July 15, 1999, defendant demanded that plaintiff, Long Island Sports Dome, submit a sworn statement in proof of loss with respect to the loss alleged in the complaint, and that plaintiff failed, refused and neglected to submit the proof of loss within the time prescribed by the policy and applicable insurance law;

Second-that on or about August 13, 1999, defendant demanded that plaintiff, Long Island Sports Dome, submit to examination under oath on September 21, 1999, pursuant to the terms and conditions of the policy, that the examination was thereafter rescheduled a number of times at plaintiff's request, and that plaintiff has wilfully failed, refused and neglected to attend the examination;

Third-that on August 13, 1999, defendant's attorneys sent plaintiff, Long Island Sports Dome, a demand for various records and documents with respect to plaintiff's claim pursuant to the terms and conditions of the policy, that those records and documents were to be produced by September 21, 1999, and that plaintiff wilfully failed, refused and neglected to attend the examination;

Fourth-that no legal action may be brought against us unless there has been full compliance with all the terms of this insurance;

Fifth-that plaintiff intentionally concealed and misrepresented material facts and circumstances relating to how the loss occurred, the nature and extent of the loss, and the circumstances surrounding the loss for which coverage is claimed to induce defendant to play the claim;

Sixth-that the loss and damage alleged in the complaint resulted from fraudulent and dishonest acts of the plaintiff, its partners, directors, trustees and employees in that they wilfully caused the insured sports [*3]dome to collapse or they acted intentionally by failing to remove snow and ice from the sports dome, as they had always done in the past, with knowledge that such omission would cause the collapse;

Seventh-that defendant is entitled to the deductible being deducted from the damages claimed;

Eighth-that plaintiff lacked an insurable interest in the property;

Ninth-that plaintiff is limited to actual cash value unless the property is repaired or replaced; and

Tenth-that there is no privity of contract between defendant and plaintiff Andrew M. Thaler as Trustee in Bankruptcy for Sound Beach Tennis Club, Inc., and as such plaintiffs have no standing to sue defendant.

The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case. To grant summary judgment it must clearly appear that no material and triable issue of fact is presented (Sillman v. Twentieth Century-Fox Film Corporation, 3 NY2d 395, 165 NYS2d 498). The movant has the initial burden of proving entitlement to summary judgment (Winegrad v. N.Y.U. Medical Center, 64 NY2d 851, 487 NYS2d 316). Failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers, (Winegrad v. N.Y.U. Medical Center, supra ). Once such proof has been offered, the burden then shifts to the opposing party, who, in order to defeat the motion for summary judgment, must proffer evidence in admissible form...and must "show facts sufficient to require a trial of any issue of fact." (CPLR 3212(b); Zuckerman v. City of New York, 49 NY2d 557, 427 NYS2d 595 ).The opposing party must present facts sufficient to require a trial of any issue of fact by producing evidentiary proof in admissible form (Joseph P. Day Realty Corp. v. Aeroxon Prods., 148 AD2d 499, 538 NYS2d 843), and must assemble, lay bare and reveal his proof in order to establish that the matters set forth in his pleadings are real and capable of being established (Castro v. Liberty Bus Co., 79 AD2d 1014, 435 NYS2d 340). Summary judgment shall only be granted when there are no issues of material fact and the evidence requires the court to direct a judgment in favor of the movant as a matter of law (Friends of Animals v. Associated Fur Mfrs., 46 NY2d 1065).

In support of the instant application, defendant Chubb has submitted an attorney's affirmation; copies of the summons and complaint and answer served by defendant; the affidavit of Amy Brown, claims adjuster for defendant; an unsigned, undated, reference copy of the purported insurance policy at issue; envelope and certified mail card addressed to L.I. Sports Dome, stamped unclaimed, dated July 20, 1999; letter dated August 13, 1999 to plaintiffs advising of September 21, 1999 date for examination under oath with demand for documents including the policy of insurance, application for insurance, correspondence with broker, inter alia; receipt for certified mail dated August 13, 1999; envelope and certified card addressed to L.I. Sports Dome, stamped unclaimed, dated August 13,1999; letter of October 14 from Chubb consenting to adjournment of examination under oath from October 18, 1999 to November 17, 1999; letter dated November 16, 1999 confirming adjournment of the examination under oath, with no new scheduled date for the same; letter of November 16, 1999 to defendant advising Sound Beach filed a Chapter 11 petition converted to a Chapter 7, Case No. 898-87470-511 and that the assets and claims are under the control of Thaler & Gertler, Esq. as the appointed trustee of the debtor estate; letter of disclaimer of July 24, 2000 to the attention of Mr. Dougal at the L.I. Sports Dome from defendant; letter of February 16, 2001 from the law office of Grundfast & Grundfast to defendant's attorney, referring to the letter of August 13, 1999 addressed to Long Island Sports Dome and the reply letter dated November 16, 1999, notifying defendant that their appointment as special counsel has been confirmed and also the engagement of the services of Affiliated Adjustment Group, Ltd. as insurance adjusters approved and ordered by the Bankruptcy Court, and now being prepared to submit to the requested examination under oath; and letter of February 26, 2001 advising receipt of the letter of February 16, 2001 and advising that coverage was denied by letter dated July 24, 2000 .

Defendant has not served a copy of this motion upon Andrew M. Thaler as trustee in bankruptcy for Sound Beach Tennis Club (Sound Beach Tennis) (Vanek v. Mercy Hospital, 522 NYS2d 607 {135 AD2d 707} ), nor does defendant claim it served demands upon defendants Sound Beach Tennis or DDJ & W Tennis Enterprises, Inc. for records and documents, examination under oath, or any other condition precedent which defendant asserts plaintiffs have failed to comply with. Accordingly, defendant's application must be denied as to defendants Sound Beach Tennis Club or DDJ & W Tennis Enterprises, [*4]Inc.

Turning to the remainder of the application for an Order granting summary judgment against defendant LI Sports Dome, it is determined that there are material, factual issues concerning defendant's claim that it served demands upon defendant LI Sports Dome. It is the alleged failure of plaintiff LI Sports Dome to respond to these demands upon which defendant premises its entitlement to an Order granting summary judgment and dismissal of the complaint. It is further determined that defendant has not established prima facie entitlement to an Order granting summary judgment in that defendant has failed to establish by admissible evidence that it is entitled to the same. The reference copy of the purported contract is unsigned and undated, and is not a certified copy of the original document and thus not in admissible form. This Court is unable to determine that plaintiff received copies of the letters making a demand for documents and examination under oath via certified mail. The certified mailings of July 20, 1999 and August 13, 1999, were not claimed by plaintiff LI Sports Dome for Plaintiff. By way of affidavits, plaintiffs dispute having received copies of those letters by even regular mail.

Brus Azus, an associate of Affiliated Adjustment Group, LTD., adjusters retained by plaintiffs for losses sustained in the within incident, avers in his affidavit that he has dealt with, from the inception, Roy Proboyahn, the independent adjuster for defendant, and Dorothy DeScala, claims adjuster for the defendant, and further avers that Amy Brown never dealt with the insured plaintiffs or him. Azus further avers that he supplied defendant with itemized claims for the damages due to the losses sustained, and any proof of loss would have been the same as the claims submitted by him. The documents which defendant claims it demanded, could not be released until Affiliated's commission agreement was approved by the Bankruptcy Court, and retention as adjuster for Sound Beach Tennis was approved, which was not until February 2001.

Wayne Dougal, a principal with plaintiffs, was examined by the agent Kruesser from defendant Chubb, and a recorded statement was given to defendant. Dougal avers that Sound Beach was the owner of the real property; DDJ&W was a corporation comprised of four stockholders and was the original owner of the collapsed bubble, leaving Dougal as the sole stockholder. The operation of the sport entity, until on or about March 12, 1999, was conducted by Power Play in a joint venture with LI Dome. On March 14-15, 1999, due to a snow/ice storm, the bubble collapsed resulting in the claimed damages. Dougal avers that at no time did he or LI Sports Dome fail, refuse or neglect to furnish defendant with a proof of loss, or provide documents or submit to an examination under oath as either the demands were not received, and were not sent to plaintiffs/insureds DDJ&W and Sound Beach Tennis. Dougal further avers that his interest is the interruption

of the business. When the bubble collapsed, there was allegedly immense water damage, and at the time of the purported mailings of July 15, 1999, the premises was vacant, had been vandilized numerous times, the mail receptacle was damaged and apparently no mail was being delivered to the premises and was not received by plaintiffs. As to providing requested documents, such records and/or documents were destroyed with the collapse of the bubble, subsequent fires, break-ins, vandilism, water damage, or were not in possession of plaintiff or were in possession of others whom plaintiff had no control over. Delay in any examination under oath was also due to bankruptcy filings, appointment of a trustee, and the delay of the appointment of special counsel and Affiliated Adjustment Group, Ltd. Plaintiff asserts that as soon as the appointments were approved, the last being in February, 2001, that special counsel notified defendant's counsel that plaintiff(s) were prepared to go on the examination under oath by letter dated February 16, 2001, however, such offer was allegedly rejected and special counsel was informed for the first time that defendant had denied plaintiffs' claims on July 24, 2000 and that no examination would be rescheduled.

Based upon the material, triable issues of fact as set forth in the affidavits submitted by plaintiffs, and the failure of defendant to establish prima facie entitlement to an Order granting summary judgment based upon defendant's claims that it notified plaintiffs with its demands, and failure to establish that plaintiffs were indeed notified of those demands and wilfully failed to comply with such demands, defendant's application for summary judgment must be denied. It is further

ORDERED that all parties are directed to appear for a Preliminary Conference on October 19, 2004, Supreme Court, DCM-J Part, Room 200, Griffing Avenue, Riverhead, New York at 10 o'clock in the a.m. It is further

ORDERED that the attorneys for defendant shall serve a copy of this Order with notice of entry upon plaintiffs within thirty days of the date of this Order.

Dated: October 22, 2004

__________________________

Ralph F. Costello, J.S.C.