Landsman v Dryden Mut. Ins. Co.

[*1] Landsman v Dryden Mut. Ins. Co. 2009 NY Slip Op 52708(U) [26 Misc 3d 1211(A)] Decided on December 8, 2009 Supreme Court, Broome County Lebous, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 8, 2009
Supreme Court, Broome County

Jonathan M. Landsman, Plaintiff,

against

Dryden Mutual Insurance Company, Defendant.



2008-0971



APPEARANCES:

PLAINTIFF:

JONATHAN M. LANDSMANJONATHAN M. LANDSMAN, ESQ., PRO SE

260 MADISON AVENUE, FLOOR 17

NEW YORK, NY 10016-2401

DEFENDANT:

DRYDEN MUTUAL INSURANCE COMPANY

LEVENE, GOULDIN & THOMPSON, LLP

BY:DAVID F. McCARTHY, ESQ., OF COUNSEL

P.O. BOX F-1706

BINGHAMTON, NY 13902

Ferris D. Lebous, J.

Plaintiff Jonathan Landsman brings this action alleging that defendant Dryden Mutual Insurance Company breached an insurance contract by refusing to pay a claim for property damage and lost rent involving rental premises damaged by frozen pipes. A trial without a jury was held on June 8, 2009.

BACKGROUND

Plaintiff commenced this action upon the filing of a Summons with Notice in the New York County Clerk's Office on March 6, 2006 and the case was designated as Index No. 2006-0737. The Summons named two defendants, Dryden Mutual Insurance Company and John M. Dorner Adjustment Co., Inc. Thereafter, plaintiff filed a complaint alleging three causes of action, namely breach of insurance contract, tortious interference with contract, and deceptive business practice under General Business Law § 349. Defendants interposed a verified answer on or about September 6, 2006.

In New York County (Index No. 2006-0737), defendants moved for a change of venue and plaintiff cross-moved for summary judgment. In a Decision dated December 18, 2007, the Hon. Leland DeGrasse granted the defense motion to change venue from New York County to Broome County, but denied plaintiff's cross-motion for summary judgment.[FN1] Thus, the matter was transferred to Broome County and assigned Index No. 2008-0971.

By Stipulation and Order dated August 21, 2008 the parties agreed, among other things, to discontinue the action with prejudice as against defendant John M. Dorner Adjustment Co., Inc. which included a discontinuance of the second cause of action alleging tortious interference with contract.

Thereafter, defendant moved for an order of summary judgment dismissing the complaint. By Order dated March 4, 2009, this court denied defendant's motion for summary judgment with respect to the breach of insurance contract, but dismissed the third cause of action alleging deceptive business acts and practices.

Consequently, the sole cause of action remaining for trial was plaintiff's first cause of action alleging breach of insurance contract against defendant Dryden Mutual Insurance Company. The court will review the testimony and proof presented at trial with respect to the landlord-tenant issues and the insurance policy as they relate to this claim.

THE PROOF

A.The Landlord-Tenant issues

In 1999, plaintiff who resided in the New York City area, purchased a farmhouse located [*2]at 22 Lower Hale Eddy Road, Hancock, New York for rental purposes (hereinafter the "Property"). Plaintiff insured the Property by way of an insurance policy issued by defendant effective June 23, 1999 to June 23, 2000 (hereinafter the "Policy"; Plaintiff's Exhibit 1).

On January 23, 2004, plaintiff entered into a lease agreement whereby he rented the Property to Kathy Curry and Jarod Colwell as month to month tenants for $600 per month, with utilities such as gas, water, and electric to be paid by the tenants (Pl Ex 3,¶ 6). Curry and Colwell fell behind on their September and October 2004 rental payments to plaintiff and failed to keep the Property in good repair. In October 2004, plaintiff served a Notice of Default with Notice to Cure, Notice of Cancellation of Lease, and Notice of Intent to Show Premises to Prospective Tenants upon Curry and Colwell (Pl Exs 4, 5 & 6).

In November 2004, plaintiff commenced a summary eviction proceeding against Curry and Colwell in the Justice Court in the Town of Deposit, County of Delaware, New York. Curry and Colwell attempted to resolve the eviction proceeding by forwarding to plaintiff a $2,000 bank check representing back rent.

Plaintiff accepted the check, but conditioned upon Curry and Colwell fulfilling their other obligations as set forth in a proposed Stipulation of Settlement of the eviction proceeding including that Mr. Colwell would renounce his tenancy and Ms. Curry would apply for public housing assistance (Pl Ex 11). On December 2, 2004, plaintiff sent the proposed Stipulation to Curry and Colwell by overnight delivery for signature. However, the Stipulation of Settlement was never signed and returned by Curry and Colwell.

Plaintiff testified that based upon the failure of Curry and Colwell to sign and return the proposed Stipulation he rescheduled the eviction proceeding in the Town of Deposit Justice Court (Pl Ex 12).

On January 23, 2005, plaintiff testified that Curry left him a voice message complaining that there was a problem with the furnace at the Property. Plaintiff also testified that Colwell left a voice mail stating they wanted to remain as tenants and would deliver $1,200 to him by Wednesday, January 26, 2005 (Pl Exs 14 & 15). Plaintiff testified that as of these January 23, 2005 messages, he believed that both tenants were in possession of the Property.

On Sunday, January 30, 2005, plaintiff traveled from New York City to check on the Property. Plaintiff testified that the tenants were not present when he arrived at the Property, but he could see some of their personal property through the windows. Plaintiff returned to the Property again on Monday, January 31, 2005, and again observed that some of the personal property was still present. Plaintiff testified he did not enter the Property on either January 30 or January 31 out of privacy concerns.

Later on Monday, January 31, 2005, plaintiff testified that he drove home to New York City. Plaintiff testified that upon his return he had a telephone message from New York State [*3]Electric and Gas indicating that the power at the Property had been turned off for nonpayment. Plaintiff stated he attempted to contact Curry and Colwell again by telephone but to no avail. Plaintiff called NYSEG and asked that the power be restored under his name. According to plaintiff, NYSEG informed him that since the power had been turned off at the pole, power could not be turned back on without an inspection of the interior of the Property. Plaintiff testified that he elected not to make the long drive back to Hancock to provide NYSEG access into the Property. Plaintiff testified that his decision not to return to the Property was partly based on the fact that the Warrant of Eviction was being processed by the Deposit Town Court.

On February 1, 2005, the Hon. Douglas S. Card, Town of Deposit Justice, issued a Warrant of Eviction and Final Judgment against Curry and Colwell directing that the "eviction is to occur on the earliest possible date after February 4, 2005" (Pl Ex 23).

On February 5, 2005, plaintiff returned to the Property to inspect the same and again saw some personal property he assumed belonged to Curry and Coleman. This time, however, plaintiff entered the property and showed the same to a prospective new tenant. On February 17, 2005, the new tenant took possession and the heat and utilities were reinstated. Once the utilities were back on, however, the new tenants immediately reported damaged pipes and leaking from various fixtures in the Property.

Thus, it is clear from this record that the pipes froze sometime between January 31, 2005 (when NYSEG turned off the power) and February 17, 2005 (when the power was restored). Plaintiff immediately notified defendant of the property damage and subsequently submitted a claim under his Policy.

B.The Policy and the Claim

Defendant contacted an independent adjustor, John Dorner, to investigate plaintiff's claim. Dorner's reports concluded the damage was due to freezing pipes (Pl Exs 21 & 22). Moreover, one of Dorner's reports also noted it would have been impossible to occupy the premises after the utilities were turned off on January 31, 2005 given the cold temperatures in February and that the pipes likely froze within a day or two of that termination date (Pl Ex 22, p 2).

On May 10, 2005, defendant denied coverage on the basis that "[o]ur investigation has shown that proper heat was not maintained in this property and was the ultimate cause of the freezing of pipes and water damage" (Pl Ex 33). More specifically, defendant's denial was based upon paragraph 17 of the subject Policy which states as follows:

CAUSES OF LOSS

We insure under Coverage A (and Coverage C when applicable) against direct physical loss or damage by these causes of loss:

*** 17. Freezing of Plumbing, Heating, Air Conditioning Systems, Automatic Fire [*4]Protective Sprinkler Systems or Domestic Appliances - excepting loss or damage on the insured premises while the residence is vacant, unoccupied or being constructed.We do cover such loss or damage if an insured has used reasonable care to maintain heat in the residence or to shut off all water and to completely drain the system and domestic appliances.

(Pl Ex 1, ¶ 17; bold and italics in original; underline emphasis added).

DISCUSSION

As a general legal principle, an insurance contract should be strictly construed against the insurer (Miller v Continental Ins. Co., 40 NY2d 675, 678 [1976]). Any ambiguity in the insurance policy should be construed in favor of the insured (Charles F. Evans Co., Inc. v Zurich Ins. Co., 95 NY2d 779 [2000]). This Policy states that damage caused by "Freezing of Plumbing, Heating, Air Conditioning Systems" is a covered loss, except if the premises are left vacant and unoccupied. However, vacant and unoccupied premises do not automatically negate coverage if the insured has used "reasonable care to maintain heat in the residence or to shut off all water and to completely drain the system and domestic appliances."

Initially, based upon the credible proof at trial, the court finds that the property damage at issue was caused by freezing pipes at the Property after NYSEG turned off power on January 31, 2005. Thus, the court finds that two questions are presented for resolution under the terms of paragraph 17 of the Policy. First, was the Property vacant and unoccupied which would allow defendant to deny coverage. Second, did the insured use "reasonable care to maintain heat in the residence or to shut off all water and to completely drain the system and domestic appliances." If so, then coverage may not be denied on the basis that the Property was vacant and unoccupied. The court finds that the burden of proof shifts to defendant on these questions.

With respect to the question of whether the Property was vacant and unoccupied, the proof establishes that the Property was vacant and unoccupied as of January 31, 2005. Plaintiff had commenced eviction proceedings against Curry and Colwell which culminated in a Warrant of Eviction and Final Judgment ordering Curry and Colwell to be evicted as of February 4, 2005.

Curry and Colwell never responded to plaintiff's subsequent phone calls attempting to finalize the settlement. In short, plaintiff knew the eviction was effective on February 4, 2005 and the settlement never finalized. Further, plaintiff visited the Property on January 30 and 31, 2005 and did not see either Curry and Colwell. Plaintiff's decision not to enter the Property for further investigation was misguided in view of the lease which allows the landlord entry for inspection purposes (Pl Ex 3, ¶ 15). Most importantly, however, plaintiff was on notice from NYSEG that the utilities to the Property were terminated as of January 31, 2005. In this court's view, plaintiff could not have reasonably believed that Curry and Colwell were residing in the Property in the dead of winter without heat after the utilities were turned off on January 31, 2005. Consequently, the court finds that defendant properly deemed the Property to be vacant and unoccupied at the time of the loss. [*5]

The next question is whether defendant properly found that plaintiff did not use "reasonable care to maintain heat in the residence or to shut off all water and to completely drain the system and domestic appliances". Again, the facts elicited at trial answer the question. As noted hereinabove, plaintiff knew on January 31, 2005, in the dead of an upstate New York winter, that there was no heat or electric utility to the Property and did not return to the Property that day or the next. In and of itself, the court finds this knowledge on behalf of plaintiff to be a basis for concluding that plaintiff did not use reasonable care to maintain heat in the Property. Plaintiff's argument that he could not access the Property because Curry and Colwell had until February 4, 2005 to vacate is unpersuasive. As noted above, there was no reasonable basis for plaintiff to believe that Curry and Colwell were in the Property since they had never finalized the settlement agreement and were not present at the Property on either January 30 or 31, 2005.

Consequently, the court finds that once NYSEG had shut off the heat as of January 31, 2005, plaintiff knew or should have known that he should return to the Property without delay to make sure that the heat and utilities were reinstated or to drain the pipes and other plumbing fixtures. Moreover, the court finds that a reasonable landlord in plaintiff's position would have entered the premises on January 30 or 31, 2005 under the provision of the lease permitting inspections. The court finds that plaintiff's failure to do so is unreasonable when faced with this winter scenario. Quite simply, plaintiff's failure to act in this situation was the equivalent of ignoring the obvious and burying one's head in the sand. Finally, what the court found most telling was plaintiff's own testimony when explaining why he did not return to Hancock after he received the call from NYSEG on January 31, 2005 which was as follows:

Q:You didn't make arrangements to go have NYSEG turn it [the power] on.

A:I did. They said no - - I said, put it on in my name.

Q:They said we'll do it if you are there to let us in. And you wouldn't drive up there to let them in.

A:I was just there.

(Trial Transcript, pp 39-40).

Based on the credible evidence and documentary proof submitted, the court is satisfied that defendant has met their burden of proof that the Property was vacant and unoccupied at the time of this loss and that plaintiff failed to use reasonable care to maintain heat in the residence or to shut off all water and to completely drain the system and domestic appliances.

CONCLUSION

For the reasons given, the court finds that plaintiff's complaint must be dismissed in its entirety.

This decision shall constitute an order of the court. [*6]

Dated:December 8, 2009

Binghamton, New York

s/ Ferris D. Lebous

Hon. Ferris D. Lebous

Justice, Supreme Court Footnotes

Footnote 1:Justice DeGrasse found that issues of credibility on whether the premises were vacant at the time of the loss prevented a finding of liability as a matter of law.