State Farm Fire & Cas. Co. v Otsego Mut. Ins. Co.

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State Farm Fire & Cas. Co. v Otsego Mut. Ins. Co. 2020 NY Slip Op 35173(U) October 5, 2020 Supreme Court, Nassau County Docket Number: Index No. 606444/2019 Judge: Jack L. Libert Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. FILED: NASSAU COUNTY CLERK 10/13/2020 10:25 AM NYSCEF DOC. DOC. NO. NO. 40 40 INDEX INDEX NO. NO. 606444/2019 606444/2019 RECEIVED NYSCEF: NYSCEF: 10/07/2020 SUPREME COURT - STATE OF NEW YORK PRESENT: HON. JACK L. LIBERT; Justice. STATE FARM FIRE & CASUALTY COMPANY as Subrogee of JUNG EUN PARK, TRIAL PART 20 NASSAU COUNTY Plaintiff, -against.,. O'fSEGOMUTUAL INSURANCE COMPANY, MOTION#0l INDEX# 606444/2019 MOTION SUBMITTED: JUNE 11,2020 Defendant. XXX The ·following papers having been read on this motion: Notice of Motion/Order to Show Cause.......... l Cross.Motion/Answering Affidavits ................2 Reply Affidavits .. :"·••111:••·,_":"•·•·~•... •................ ,. ............. _-: .. ~•·3 Defendant moves for suimhary judgment pursuant to CPLR §3212 .. This subrogation action arises out ofai1 oil leak from two underground storage tanks which were located on property ofState Farm's subrogee. State Farm asserts that the. leakage began approximately 19 years before. it was discovered. During the majority of this time· (from December 7,. 2009 until March· 10, 2016} Ostego provided homeowner 1s insµrance to the subrogee. State Farm seeks reimbursement from defendant Otsego for the payments it made to its insured for the loss occasioned by the leak during the term of the Ostego policy. Defendant's Position Defendant asserts tha( the plain and. unarilbigu01.1s language of the policy _provides that .soil con4Unination from an oil leak is. not a c9vered risk. In support of this position defendant references the· following policy provisions: [* 1] _ _ _ _ L.a..........,____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ 1 of 6 INDEX INDEX NO. NO. 606444/2019 606444/2019 FILED: NASSAU COUNTY CLERK 10/13/2020 10:25 AM NYSCEF DOC. DOC. NO. NO. 40 40 RECEIVED NYSCEF: NYSCEF: 10/07/2020 A) The first unnumbered paragraph offonn ML-20,.whichstates, "This policy, subject to all of its terms, provides: insurance against loss to property, personal liability insurance and other described coverages during the policy period in return for payment of the required premium. It -consistsofthisAgreement,theDeclarations, the General Policy Provisions, Perils Section, Liability Coverage Section, and any endorsements made part of it ... " B)Subdivision a) ofparagraph7 onML-20; page 1, which describes the premises insuredas"that house, related private structures.· and grounds at the location set forth in the Declaration." C) The section entitled "Coverage A-Residence" which states "This policy covers the residence on the insurance premises including additions and built-in components and fixtures .. , [it does not cover] land, including land on which the dwelling is located.", .D) Paragraph 12 ofML-20 which defines the term residence ·stating ''residence means.a one to four family house ... "· E) The section entitled Coverage A which includes only the ''Residence1' as "the building on the insured premises''. · F) The section entitled "Coverage B" which states there is coverage for permanently installed fixtures on the grounds; but does, not include any damage to land . .G) The sections entitled ''Coverage A '' and "Coverage B" which both specifically state that "land ' ' including l~d on which the>dwelling is located," is not an included coverage. H)The section entitled"lncidental Property Coverages'' which states ''b) Debris Removal-We pay for theremovaJ ofdebtis ofcovered property following an insuredJoss. , . This coverage does not include costs to: 1) extract pollutants·froril land ot water; or 2) remove;, restore or replace polluted land or water:"' Plaintiff's Position Plaintiff contends that language of the Otsego policy is ambiguous in that it affords inconsistent meanings to certain terms. The policy includes the term "grounds" as part of the "insured premises". According to plaintiff the tenns: "grounds" and "land," are conflated within the Otsego policy and susceptible to two different meanings. Plaintiff contends that since ''grounds;' itselfis .described as "ins'l,lred premises," reasonable inihds can disagree as to whether or not land is included as part of "grounds'' or whether the two terms have the saine meaning. Plaintiffalso asserts that the oil ci:mtarnihation; was accidelital leakage coveted under paragraph 5 2 [* 2] ................................... - ............................ -. .....,.........................-.................. ............. _. -. ______ _______________________ 2_...._...._. of 6 FILED: NASSAU COUNTY CLERK 10/13/2020 10:25 AM NYSCEF DOC. DOC. NO. NO. 40 40 INDEX INDEX NO. NO. 606444/2019 606444/2019 RECEIVED NYSCEF: NYSCEF: 10/07/2020 ofform Mh-3Tentitled "Seepage or Leakage," which states: "5. Seepage otLeakage-We do not pay for loss caused by repeated or continuous seepage or leakage of liquids or steam from within a plumbing, heating or air-conditioning system, water heater or domestic appliance. Except as provided above, we pay forloss caused by the accidental leakage; overflow, or discharge of liquids or steam from a plumbing, heating or air-conditioning system or domestic appliance." In support ofits position that the 19 year leak was an accidental leakage,plaintiffcites State v. Aetna Cas. &Sur. Co., 155 A)D.2d 740,741, 547N;Y.S.2d 452 (1989) which held: In a prior case most similar to the instant case, this court heJd that the phrase "sudden and accidental" in these policies "should be construed in its entirety, without undue reliance upon discrete definitions ofthe two operative words that make up the phrase" (Colonie Motors v Hartford Acc. & lnden1. Co., 145 AD2d 180, 182), and the phrase should always be "construed in the context ofthe facts of each particular case" (supra, at 182; see, County ofBroome v Aetna Cas. & Sur. Co,, 146 AD2d 337,341-342,]v denied). Of significance to the issue at hand, this court has also stated that the fact that a discharge is not immediately discoverable and continues for a period of time "should not move an otherwise covered occurrence within the rather shadowy perimeter of the exclusion" (Colonie Motors v Hartford Acc. & lndem. Co;, supra, at 183). Plaintiffalso cites Allstate Ins. Co. v. Klock Oil Co., 73 AD2d 486, 426 NYS2d 603 [4th Dept, . 1980 ]J. In which the court found that the word ''sudden'; as used in liability insurance need not be limited to an instantaneous happening. The court held that the negligent installation or maintenance ofa gasoline storage tankcouldresultin an accidental discharge or escape of gasolinewhichwould be both sudden and accidental, though undetected for.a substantial period oftime. Discussion 11 [C]ourts beat the responsibility of determining the rights or obligations of parties under.insurance contracts based on the specific language of the policies 11 (State ofNew· York v. Home Indem. Co., 66 N. Y.2d .669, 671, 495 N.Y .S.2d969;486N .E.2d 827; see Cali v. Merrimack¥ut Fire Ins: Co., 43 A.D.3d 415, 416, 84 lN .Y.S ~2d 128). An exclusion from coverage 0 mustbe sp~cific and clear in order to he ~nfcreed11 (Essex Ins. Co; v. Pingley,41 A.D3d 774,776, 839N.Y.S.2d 208, quotingSeaboardSur. Co. v. Gillette Co., 64 N.Y.2d 304, 3.11, 486 N.Y.S.2d 873,476 N.K2d 272; see Lee v. State Farm Fire & Cqs. Co., 32 A.D3d 3 [* 3] 3 of of. 6 6........ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ 3 FILED: NASSAU COUNTY CLERK 10/13/2020 10:25 AM NYSCEF DOC. DOC. NO. NO. 40 40 INDEX INDEX NO. NO. 606444/2019 606444/2019 RECEIVED NYSCEF: NYSCEF: 10/07/2020 902, 903, 822 N.Y.S.2d 559). An ambiguity in an exclusionary clause must be construed most strongly against the insurer (see Ace Wire &Cable Co.v. Aetna Cas. &Sur. Co., 60N.Y.2d390,J98, 469N.Y.S.2d 655, 457 N .E.2d761;Breed v. Insurance Co .. ofN.Am., 46 N. Y.2d 351, 353, 413 NS:S2d 352,385 N .E.2d 1280). However, "the plain meaning· ofthe policy's language may not be disregarded to find an ambiguity where none exists11 (Atlantic Balloon & Novelty Corp. v. American Motoristslns. Co., 62 A.D. 3d 920, 922, 880 N.Y.S.2d 112; see Ca/iv. MerrimackMut. Fire Ins. Co.; 43 A.D3d at4l7, 841 N.Y.S,2d 128). Where an insurer denies coverage based upon an exclusion, the burden is on the insurer to demonstrate that the exclusion appliesinthe particular case and that it is "subJecttono other reasonable interpretation'1 (Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d at 311,486 N.Y;S.2d 873,476 N.E.2d 272). 11 The plain language of the Ostego pqlicy stands unambiguously for the fact that the policy did not include,coverage for damage to land, The affirmative coverage provisions ofthe policy included only the residence building itself, accessory structures and fixtures located on the land. The loss occasioned by damage to the land is not covered under this language. The specific exclusion provisions of the policy include soil contamination. But there is an exception for contamination resulting from "accidental leakage ... 11 • In Notthvillelndustries Corp. v. National UnionFire Insurance Co. ofPittsburgh, PA., 218 A.D.2d 19636 N. Y .S2d 359 (2nd Dept. 1995) the court gave adetailed analysis of a "sudden and accidental" leakage exclusion. The court held, "Northville urges that any inquiry into the suddenness·ofa particular discharge should foci.ls upon an ''expectation;' element, so as to render ''sudden'; any release of pollutants which is "µnexpected." The contention is not without some support in NewYork case law. For example, in Allstate Ins. Co; v. Klock Oil Co. (73 A.I).2d 486,426 N.Y,S.2d 603), the Appellate Division, Fourth Department, observed in dicta thatan allegedgasoline leak from an underground tankatan automobile.dealership could have been both "sudden and accidental" because it was unexpected and unintended, even though it went undetected for a substantial period of time. Similarly, in Colonie Motors v. Hartford Acc. &Jndem\ Co. (14$ A.t>.2d 180, 538N,Y.S.2cl630),theAppellateDivisiori, ThirdDepartinertt, reasoned that waste oil emanating from ac.rack in an u:ndetgrourid pipe was."sudden and. accidental'' where it was unexpected; unintended, and was not readily discoverable; In State of New York v.. 4etnq .Cas. & Sur. Co: (155 A.D2d 740, 547 N~Y:S.2d 452), the Appellate Division, Third Department, concluded that a leak from an underground gasoline tank which occurred over many years could never:theless .be· "sudden and accid!.:l11tal'' because it remahted wide:tected and because 4 [* 4] 4. of of. ... 6 6. ..... ____________________ 4 FILED: NASSAU COUNTY CLERK 10/13/2020 10:25 AM INDEX 606444/2019 NO. 606444/2019 INDEX NO. 10/07/2020 RECEIVED NYSCEF: NYSCEF: 10/07/2020 40 NYSCEF DOC. NO. 40 DOC. NO. neither the owner of the storage tank nor the owners of the property in which the tank was situated had been aware of the leak. Likewise, in Pett-All Petroleum Corp. v. Fireman's Ins. Co. (188 A.D .2d 139, S93 N. Y.S .2d 693), the Appellate Di vision, Fuurth Department, found that a gasoline leak could be "sudden and accidental" whetethe underlying complaintcould be interpreted to allege an accidental and unexpected leak from a subsurface pipe or tank which continued undetected for a period of time. Furthermore, to the· extent that Northville.relies upon the Appellate Division, Fourth Department, cases to read a discovery rule into the 11sudden and accidenta.1 11 exception, we·. note that the exceptions in the policies at issue contain no language indicating that an insured's awareness of or ability to reasonably detectthe discharge of pollutants has any impact uponwhether that dischargeis 11 sudden."· We refuse to vary the unambiguous tennsofthe subject clauses in this case by reading such a provision into them (see, TechniconElecs. Corp. v. American HomeAssur, Co,, ;supra, at 140, affd_74 N.Y.2cl 66, 76, 544 N.Y.S.2d531, 542 N.E.2d 1048, supra); Hence, we do not consider the decisions inA/lstatelns. Co; v; Klock Oil Co. (73 A.D.2d 486, 426N.Y.S.2d 603, supra) andPetr-AllPetroleum Corp. v. Fireman's Ins. Co, (188 A.D.2d 139, 593 N.Y.S.2d 693, supra) to constitute persuasive authority on the issue ofsuddenness. While Northville, (supr,a )primarilyaddressed the policytetm. 11 sudden"the Second Department made it clear that accidental is a separate term, which applies to an unexpected occurrence, even ifit is One that occurs over a long period of time. ''Moreover,while.the Appellate Division, Fourth Department, a,dheresto an expectation analysis irt evaluating whether a given teleaSe of pollutants is 'sudden,' we find that such an analysis ignores· any meaningful distinction between the independent requirements of 'sudden' and 'accidental;' and instead suggests that both elements are satisfied where the discharge i's merely 'unexpected/ regardless of the length of time over which it occurs. In our view, such an approach contradicts the plain meaning of the ten'n "sudden" and reduces it to a superllUous requirement in contravention of the set!led principle that every term in aninsurance agreement is deemed to have some meaning and Should not be assumed to have been idly inserted."Id, (emphasis supplied). In the case at bar, the term 11 sudden11 is notatissue. The Ostego policy covets leakage emanating from a heating system that is "accidental'\ the meaning ofwhich is that the occurrence is unexpected even ifit was not discovered for along time, Itis, DECLARED and DECREED thatOSTEGO MUTUALINSURANCE COMPANY, is obHgatecl to 5 [* 5] of 6 _ _~ - - - - - - - - - - - - - · - - - 5__.o_L__fic___ ................. ________________5 FILED: NASSAU COUNTY CLERK 10/13/2020 10:25 AM NYSCEF DOC. DOC. NO. NO. 40 40 INDEX INDEX NO. NO. 606444/2019 606444/2019 RECEIVED NYSCEF: NYSCEF: 10/07/2020 defend an<iindemnify plaintiff, as subtogee of the Insured, pursuant to the terms of defendant's policy with respect to the oil spill that occurred on the Property during the time that defendant's policy was in effect; and it is ORDERED, that plaintiffis awardedjudgmentin the sum of$44, 171.69 together with the costs and disbursements. of this· action. Settlejudgment on notice. ENTER DATED: October 5, 2020 ENTERED Oct 13 2020 NASSAU COUNTY COUNTY CLERK"S OFFICE 6 [* 6] .. ······················-·--··--··-·······--- - - - - - - - - - - - -6 of 6 ____________________ -""-"'-..,._

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