Willaim Vale Hotel, LLC v Fireman's Fund Ins. Co.

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Willaim Vale Hotel, LLC v Fireman's Fund Ins. Co. 2023 NY Slip Op 31297(U) April 18, 2023 Supreme Court, Kings County Docket Number: Index No. 505724/2022 Judge: Leon Ruchelsman 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. INDEX NO. 505724/2022 FILED: KINGS COUNTY CLERK 04/20/2023 02:24 PM NYSCEF DOC. NO. 56 RECEIVED NYSCEF: 04/20/2023 SUPREME COURT OF. ·THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL 8 - -..- - - - - · ---·----------- ·----· .. -·----·--.. ___ ·-·-· X THE WI~LIAM VALE HOTEL, LLC; and ESPRESSO HOSPITALITY MANAGEMENT, "LtC, Decision and ord,e.r Plaintiffs, - Index Ni:>. 50·5724/20"22 agains_t - FIREMAN' S "FUND IN SURAN.CE :cOM-PANY; ALLI1:\N:Z GLOB·AL CORPORATE AND SPECIALTY; and RSG UNDERWRITING MANAGERS OPERATING AS S_U:tTELIFE UNDERWRITH~G MANAGERS, April 18, 2023 Defendants -----· .. ---------- ·----. -----.------- -. - .-----x M_otiq.n Seq .. -#-3 PRES-ENT: HON. LEON RUCBELSMAN The plaintiffs have moved seeking a stay qf the. present lawsuit pending a determinatio n by the Coµrt of Appeals in _p:nother case that may definitively resolve the issues in this lawsuit. d_ef endants oppose·s the· motion. Papers were The subrni tteo by the parti:es and after ·revi.ewirig all the argµmentp ·this court ;no_w maKes the fpllowfng determinatio n. This lawsuit conc·eb:ts los·ses s.t.istained by the plaintLff hotel due to goy.€!-r:nrnent mandated .shut-downs imposed in the wake of the COVID-19 pandemic. due t.o the The defendants .rejected a .claim for lost income shu-.t.-dow_rp:~ lawsuit and this W,a_s then c·ortunen·ced. According to the Amended Complaint the plaintiff maintained an inl:itirance policy with the defendants which .included coverag·e. for-, among otn,e-r cl.~ims; clai:m:s- "caus.ed by· or resulting from a co.-v:ered: communicable d1sease event 0 Do:c·. No. 10]) .• [* 1] (.§.§..§., Amended Complaint, '1[14 JNYSCEF Th~- <;l.efendari.ts filed a motion to. dismiss and the 1 of 7 INDEX NO. 505724/2022 FILED: KINGS COUNTY CLERK 04/20/2023 02:24 PM NYSCEF DOC. NO. 56 RECEIVED NYSCEF: 04/20/2023 a ·cross-mot::Lon- seeking ·_plaintiffs filed complaint. 'l'he motions were adjourhed and to an amended file now the plaintiffs filed t·he instant motion seeking t.o stay t:he pr.oceeqing on the ·grounp.s . a decision of the Fi:r;·st n·e:pa~tmentI Consol_i:dated Restai.u'ant Operators corp., Inc., v. Westport Insurance. WL 104.0367 Appea-ls [2022]). 205 AD3d 76, 167 NYS:3d 15, 2022 [1st Dept., 2022] will s-oon l:>e- decided by the .Court (leave t-o appeal The plaintiffs gran,ted, assert 39 t,.JY3d 943, ·.of .1_77 .~YS2d 545 ari imminent Court of Appeals determination will resolve the motion: to: dismiss in this -c.a_se and Spe,cifically , that .a sta:y is a.pi;:,ropriate. the court of :Appeals will consider the extent ot· the "direct physi·cal loss or damage" provision which is at. the h_eart .o-f most of the ¢_6.VJ:D .in.-surance cases .. Consolidated Insurance --Co·rp. Restaurant Operators Inc., v. Westport (supra) held that the presence- of COVID-19 did not c-ause any -direct ·physi-cal less or daif!age to _,;3.-ny -property. 'J'he court stated tha.t a "policyhqlde r' s inability to fully use its p·:i:;-emises as inte.nded -because of COVI.D..-19, without any ac:tu.~l, di see rnab le, quahti f i ab..Le chan.ge cot;ist itu ting 1'ph y s i cal" di f.£ e.r ence to the property from what f a:ils ·to state ~: cause it was befo--re· exposure to the virus; qf action for a coveretl, los-s" ( id) . Likewise, in this case, the defendant denied plaintiff's claims on the -grounds mere loss. of us:e did not constitute any physical d,c;1mage anp has moved $.eek:i,pg to dism,i.ss the. lawsuit oh. that basis_.. The plaintiff's seek a stay of this proceeding awaiting the decision 2 [* 2] 2 of 7 INDEX NO. 505724/2022 FILED: KINGS COUNTY CLERK 04/20/2023 02:24 PM NYSCEF DOC. NO. 56 RECEIVED NYSCEF: 04/20/2023 rU:_ling the: de_finitive as Court ·of App.ec1_J_s ·from the regarding wpethe.r the mere l.oss of usEi! is _covered under a policy providing for the co;verage of physical the oppos.e the· motion defendants damage i t ha·$ arg.uing property. to The :ri:o merit .and t;he r.eqt1est fo a stay shou_ld be denied.. Conclusions of Law CPLR §2201 permits a court to stay proceedings "in a proper -c,·ase, lipori such terms as may be just" _(id). In Assenzio v. A ... o.. [Supreme C:Ourt New York County 2:·01s] to -appropriate determination stay :an in 2015 w:i;,. .52\3~301 Smith Water Produ:.cts, the court held that. it was while acti9.ri waiting a dif.ferent case that would have. impact';. in _the ·current case •. Thus, an appellate f o.r in Islay v. a. "significant Garde., 2022 WL 1.7 4 7 5:6-7 6 [Supreme Court New York Cdun ty .2 022] the court s t-a__yed the proceedings while waiting for a decision in another case pend,ing .before ·the Cotrrt o.f Appeals. argu:rnent:s before dispo,sitive. the Court-. Trie· _c-ourt ·.explained that wh_ether the Appeal!$ of was imminent not Rather, the key· issue was: whethe·r that ·.deteYminatitm Again.,, _iri would have a sigti:.i.ficant imp.act upoI). the_ -stayed acti.o.n. Castillo v.. was Saheet Construction Corp., 2022 WL 6409689 [Supreme Court Qu.ee.ns County 2-022] the court n·oted th.at stayi.ng a proce.eding; while w-a.iting_ for the Co.urt c;i.f App.e;als to reqde ..r a cieci$ior1 in. another matter that woul_d impact the current litigation should b.e 3 [* 3] 3 of 7 INDEX NO. 505724/2022 FILED: KINGS COUNTY CLERK 04/20/2023 02:24 PM NYSCEF DOC. NO. 56 RECEIVED NYSCEF: 04/20/2023 done sparingly and only when the decision is imminent. The court in Castillo (supra) stayed the action because the Court of Appeals decision would bind the parties in the present litigation . While the timing of any decision in Consolida ted Restauran t (supra) is, of course, Operators Inc. , v. Westport Insurance Corp. unknown a determina tion in that .case may resolve this action as The plaintiff points out that precisely for this ve-ry r~ason well. at least five determina tion courts in stayed have proceedin qs Restauran t Consolida ted Operators pending Inc. , a v. (see, Memorandum of Law in Support, page Westport Insurance Corp. 11 [NYSCEF Doc. No. the 41]) The defendant s note that the plaintiff s have failed to satisfy the strict procedura l requiremen t.s necessary to warrant a stay; Substantiv ely, assert defendant s the that a decision in Consolida ted Resta:uran t Operators Inc., v. Westport Insurance corp .. would not even resolve the issues presented in this action, Thus, an examinatio n of the specific claims must be examined. The crux o.f the claims in this lawsuit are expressed in Paragraph 12 .of second proposed plaintiff 's amended The complaint . plaintiffs allege five distinct losses they sustained as a result of the COVID-19 pandemic. and sanitizing the First, expenses incurred disinfecti ng hotel. closure .of the hotel. prohibitio ns regarding Second, of income due to the loss o.f income due to governmen tal Third, Fourth, travel. 4 [* 4] loss 4 of 7 loss of income due to INDEX NO. 505724/2022 FILED: KINGS COUNTY CLERK 04/20/2023 02:24 PM NYSCEF DOC. NO. 56 RECEIVED NYSCEF: 04/20/2023 Lastly, loss governmen tal lim.:Ltatio ns regarding public gathering . of income due to governmen tal mandated quarantin es (see, Proposed Second Amended Cbrriplai:rit , CJ[l2 [NYSCEF Doc. No. 32]). While those claims do not contain rrruch elaboratio n they are all rooted ih the fact the inability to remain operation al during the C0VID-19 ciefendant s shut-down s moved those dismiss to them caused to claims on The losses. suffer the the grounds plaintiff s failed to establish any direct physical loss or damage and that coverage; the therefore Indeed, a support of motion to plaintiffs review of the were not defendant ; s highlight s this dismiss entitled memorandum legal argue that in impedimen t repeatedly (§__§§_, Memorandum of Law [NYSCEF Doc. No. 12]). current motion the defendant s any to In the even if the Court of Appeals were to hold that the presence of C0VID-19 constitute s a direct physical loss there is still no need for a stay because the plaintiff will still be unable to establish their claims. This is true because the complaint never alleges any physical loss at all. The proposed second amended complaint alleges losses as a result of "respirato ry dropl,ets (Le,.; droplets larger thah 5 10 pm) were expelled from infected individua ls and have landed on, that arid theri adhered to, surfaces and objects at the Vale property, si.ith as doqrs, beds, windows and furniture, thereby structura lly changing said surf aces and objects and/or causing damage thereto by becoming a pi;!rt of said sut.faces and objects, 5 [* 5] 5 of 7 rendering them unusable as INDEX NO. 505724/2022 FILED: KINGS COUNTY CLERK 04/20/2023 02:24 PM NYSCEF DOC. NO. 56 RECEIVED NYSCEF: 04/20/2023 potential physic:al contact with said surfaces ahd objects would be hazardous " (see, Proposed Second Amended Complaint , [NYSCEF il2 First, it is difficult to discern how the C0VID-19 Doc; No. 321). virus structura lly changed any surfaces or objects. the passing reference to Moreover:, even 'causing damage' within the above noted paragraph does not really allege physical damage as a result of the virus. Rather, it alleges damage resulted by the virus "becoming a part of sa:i.d surfaces and objects, rendering them unusable as potential physical contact with said surfaces. arid objects would be hazardous " (id) . Thus, the proposed second amended complaint only alleges damage in the context of the hazard the virus may cause as a result of physical contact and not any physical loss or damage by the virus itself. Tri any event, the proposed second amended complaint is not the governing pleading at this j uricture. Amended Complaint , the operative pleading at this time, even allege this vague claim of loss. Rather, The does not the Amended Complaint only contains claims for the cost of cleaning and losses sustained as a result of governmlc'! ntal shut-down s, wi.thout any reference to any physical damage or loss at all. It must be emphasize d that these cohclusior is do not addre~s the merits Of the motion to dismiss or the motion to amend the complaint . These cori_clusio ns merely confirm that the Court of Appeals decis.iOn in Consolida ted Restauran t Operators Irie. , v. Westport Insurance Corp. (supra) would not even resolve the issues presented in this action. 6 [* 6] 6 of 7 INDEX NO. 505724/2022 FILED: KINGS COUNTY CLERK 04/20/2023 02:24 PM NYSCEF DOC. NO. 56 RECEIVED NYSCEF: 04/20/2023 Thus, the only issues to be decided in this lawsuit is whether the plaintiff s may pursue claims against the defendant s fox the loss of business as a result of governmen tal shutdowns and expenses incurred for cleaning and disinfecti on. Appeals will not be those deciding Restauran t Operators Inc. , issues The Court of in Consolida ted v. Westport Insurance Corp. (supra) '. That case will decide whether an insured can claim losses without any direct physical loss or While damage. the overwhelm ing consensus of cases throughou t New York state as well as the coµntry concluded have that COVI0:--19 not does constitute : any direct physical damage or loss the Court of Appeals will now address this issµe. That issue, as noted, has no relevance to this case cit all. Therefore , there is no basis to stay this proceedin g. Consequen tly, the motion seeking a stay is denied. So ordered. ENTER: DATED: April 18, 2023 Brooklyn N.Y. Hon. Leon Ruchelsma n JSC 7 [* 7] 7 of 7

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