Insurance Company Cannot Disclaim Coverage Following Fire Deaths
In Waddy v Genessee Patrons Coop. Ins. Co., 2018 NY Slip Op 05794 (3rd Dep’t Aug. 16, 2018), the defendant had issued a homeowners insurance policy to two individuals who operated a certified respite home for the elderly and special needs adults out of their home.
In July 2013, the insureds’ son, who was 11 years old at the time, was with his cousin and his friend in the garage attached to the insureds’ home. They were playing with a gas grill lighter and accelerants. A fire subsequently ignited and spread to the home. Three of the residents were not evacuated in time, and died as a result.
The plaintiffs brought this action alleging that the defendant was responsible for providing coverage up to the maximum policy limit issued to the insured. The defendant moved for summary judgment on the basis that coverage was properly disclaimed under a business pursuits exclusion and that the nonbusiness exception thereto was inapplicable. The plaintiffs crossed moved for summary judgment, and won at the trial level. The trial court reasoned that there were two causes of decedents’ deaths, one of which fell within the exception to the business pursuits exclusion, and one of which did no. Therefore, the exclusion did not apply to bar coverage.
On appeal, the Third Department set forth that Court’s pervious holding with respect to ambiguous policy language concerning business pursuits exclusions, stating, “as a general rule, if the injury was caused by an act that would not have occurred but for the business pursuits of the insured, said act is beyond the scope of the policy; however, if the injurious act would have occurred regardless of the insured’s business activity, the exception applies, and coverage is provided even though the act may have had a causal relationship to the insured’s business pursuits.”
The defendant argues that the decedent’s deaths occurred because the insureds failed to have a safe fire evacuation route for their business. The plaintiffs argued that the deaths occurred because of the fire, which was started by the insureds’ son, and would have occurred regardless of the business pursuits of the insureds.
The Third Department agreed with the plaintiffs, holding, “Because the record discloses that decedents’ deaths were not caused solely by acts that fell wholly within the business pursuits exclusion, defendant cannot escape its indemnity obligations with respect to decedents’ deaths.” The decision of the trial court was affirmed.
Summary Judgment Affirmed for Insurance Carrier
In Hefty v Paul Seymour Ins. Agency, 2018 NY Slip Op 05547, (3rd Dep’t Jul. 26, 2018), the plaintiffs purchased real property for $33,000, along with a homeowner’s insurance policy through Paul Seymour Insurance Agency with a replacement cost limit of $92,000. Following extensive renovations and investment of over $200,000 in the subject property, it was destroyed by a fire in 2013, three years after it was purchased by the plaintiffs.
The plaintiffs then commenced an action alleging that the defendant was negligent in failing to secure higher coverage limits for the subject property. The trial court granted the defendant’s summary judgment motion, and the plaintiffs appealed.
On appeal, the Third Department noted that the defendant could not be liable for failing to direct the client to obtain additional coverage unless one of three “exceptional situations” existed. The Court listed the “special exceptions” as follows: (1) the agent receives compensation for consultation apart from payment of the premiums; (2) there was some interaction regarding a question of coverage, with the insured relying on the expertise of the agent; or (3) there is a course of dealing over an extended period of time which would have put objectively reasonable insurance agents on notice that their advice was being sought and specially relied on.
The Third Department held that none of the exceptions applied in this case, finding that “the record in the instant case evinces nothing more than the standard consumer-insurance broker relationship.” The Third Department affirmed the lower court’s holding, which granted defendant’s summary judgment motion.
Question of Fact Found as to Whether Insurer Acted in Bad Faith
In Roemer v Allstate Indem. Ins. Co., 2018 NY Slip Op 05392, (3rd Dep’t Jul. 19, 2018), the plaintiff’s home was destroyed by a fire in March 2010. Plaintiff’s residence was one of two structures on the parcel of property, the other consisting of a lodge that plaintiff used as a rental accommodation during the summer tourist season. The homeowners insurance policy for the property was maintained through Allstate, with the plaintiff listed as the named insured.
Following the fire, the plaintiff promptly notified Allstate of the loss and an investigation ensued. The parties’ subsequent attempts to reach a settlement with respect to the amount of loss proved unsuccessful, and the plaintiff thereafter initiated the appraisal process as set forth in the terms of the insurance policy. Although the independent appraisers hired by the parties ultimately agreed upon the amount of loss in June 2011, no payment was subsequently forthcoming from defendant.
Rather, on July 1, 2011, Allstate issued the plaintiff a written disclaimer of coverage, stating that the plaintiff lacked an insurable interest in the property, as the titled owner of the property was Roe Management and Development, Inc., and not the plaintiff.
Plaintiff then brought suit against Allstate seeking a declaratory judgment that he had an insurable interest in the property, that he was entitled to the agreed-upon settlement offer, that the disclaimer of coverage was improper and wrongful, and that Allstate had acted in bad faith.
Allstate moved for partial summary judgment, seeking dismissal of the plaintiff’s claims for consequential damages, as well as plaintiff’s claim alleging that defendant failed to act in good faith in adjusting plaintiff’s insurance claim. The trial court partially granted defendant’s motion by dismissing the plaintiff’s claim for counsel fees, but otherwise denied the motion, finding that Allstate’s alleged conduct created a question of fact as to whether it breached the covenant of good faith and fair dealing.
The defendant appealed to the Third Department. On appeal, the Court found that Allstate’s disclaimer of coverage was “unexpected,” and that while Allstate had been making payments to the plaintiff under the terms of the policy for additional living expenses and debris clearing, Allstate failed to present any admissible evidence to explain why, after 16 months of investigation, it only disclaimed coverage after the parties’ independent appraisers had reached a mutual agreement as to the amount of loss incurred. Allstate had never previously indicated to the plaintiff that coverage may be denied because he was not the owner of the property, even though the plaintiff had made Allstate aware of that fact when he purchased the policy.
The Third Department held that Allstate failed to meet its prima facie burden on appeal, and that the lower court had properly denied that part of Allstate’s motion requesting summary judgment on the issue of bad faith.
Source of Water Essential to Coverage Question, Question of Fact Found
In Wickline v New York Cent. Mut. Fire Ins. Co., 2018 NY Slip Op 05253 (3rd Dep’t Jul. 12, 2018), the plaintiff purchased a homeowners insurance policy from New York Central Mutual in 2013. In February 2014, he discovered a crack in his basement wall and reported the issue to New York Central Mutual. New York Central Mutual disclaimed coverage based on its engineer’s conclusion that the damage was caused by pressure from thawing and freezing ground water.
The plaintiff retained a contractor to repair the damage and to improve ground water drainage on his property. During the course of this work, the plaintiff discovered water had been leaking into the foundation fill from a ‘failed frost protected hose bib’ located within the brick wall between the water supply and an outdoor spigot. Upon his engineer’s opinion that it was water from that leak and not ground water that caused the damage, the plaintiff requested that New York Central Mutual reopen the claim. New York Central Mutual declined, stating they continued to rely on their engineer’s report.
The plaintiff brought suit, alleging breach of the insurance contract and to recover the cost of the work undertaken in response to the engineer’s report. New York Central Mutual brought a motion for summary judgment, which the trial court denied.
On appeal, the Third Department affirmed, holding that there was a question of fact as to the source of the water, which was important under the language of the policy. Although the policy provided that the defendant did not provide coverage for a “bulging foundation,” there was an exception if the condition was caused by “an accidental discharge or overflow of water from within a plumbing system.”
Fraud Claim Dismissed Against Insurer
In Carr v Haas, 2018 NY Slip Op 05244 (3rd Dep’t Jul. 12, 2018), the plaintiff’s car was damaged when it was struck by a tractor trailer owned by defendant Brenntag Northeast, Inc. and driven by its employee, defendant Michael Haas.
The plaintiff brought suit, first seeking to recover property damage, and also for fraud, alleging that several of the named defendants, including the insurance claims manager and insurance broker, had conspired to withhold the true identity of the tractor trailer’s insurance carrier.
The defendants moved for summary judgment, which the trial court granted. On appeal, the Third Department found that the plaintiff’s claims were without factual support. The plaintiff’s fraud claim was based on the fact that the insurance card produced by Haas did not state the name of the insurance company on it, and when the plaintiff attempted to contact the insurance company, he had a difficult time getting through to anyone.
The Third Department affirmed the lower court’s decision, holding that there was no admissible evidence of “a material misrepresentation of an existing fact, made with knowledge of the falsity, an intent to induce reliance thereon, justifiable reliance upon the misrepresentation, and damages” resulting therefrom.
Question of Fact as to Fraud in Dog Bite Case
In Battisti v Broome Coop. Ins. Co., 2018 NY Slip Op 04992 (3rd Dep’t Jul. 5, 2018), the plaintiff was visiting her friend, Sheryl Deiter, at Deiter’s home when Deiter’s dog bit the plaintiff. Deiter had homeowners insurance through defendant Broome Cooperative Insurance Company, and submitted a claim regarding the dog bite.
Five months later, the defendant learned that the dog had also bitten Deiter’s mother the month prior to biting the plaintiff, and disclaimed coverage, specifically citing a policy provision entitled “Misrepresentation, Concealment or Fraud,” which stated that the policy does “not provide coverage if, whether before or after a loss: a. An insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance; or b. There has been fraud or false swearing by an insured regarding any matter relating to this insurance or the subject thereof.”
Deiter brought suit against the defendant, and later assigned her claim to the plaintiff, seeking a declaratory judgment that the defendant must provide coverage. The plaintiff moved for summary judgment, the defendant cross-moved, and the trial court granted the defendant’s cross-motion.
On appeal, the Third Department modified the order of the trial court by denying the defendant’s cross-motion for summary judgment, holding that there were questions of fact as to the denial of coverage based on Dieter’s alleged misrepresentation, concealment or fraud.
The defendant’s claims manager averred that when she talked to Dieter a few days after the incident, she asked Dieter whether the dog had previously bitten anyone and Dieter answered “no,” stating that she was aware that the dog had been abused but was not aware of any history of biting. The defendant submitted records from a hospital, the county public health department and the town dog control officer, as well as an affidavit from Dieter’s mother, indicating that the mother was bitten by the dog approximately one month before the dog bit the plaintiff.
Therefore, the Court found that a question of fact existed, and the trial court should not have granted the defendant’s summary judgment cross-motion.