Third Department Considers Coverage Issue Regarding Business Interruption Insurance
In Binghamton Precast & Supply Corp. v Liberty Mut. Fire Ins. Co., 2020 NY Slip Op 02214 (3rd Dep’t Apr. 9, 2020), the plaintiff maintained business interruption insurance through defendant Liberty Mutual. Plaintiff was a manufacturer, seller and distributor of precast concrete products. Plaintiff’s concrete mixer broke down, causing an interruption of production until the mixer was repaired and restored to operation two days later. Shortly thereafter, plaintiff filed a claim for loss of business income. Liberty Mutual declined to pay the claim, asserting that the plaintiff had not demonstrated an actual loss of business income within the meaning of the policy.
The plaintiff brought suit for breach of contract. The defendant moved for summary judgment, and the plaintiff cross-moved for summary judgment. The trial court denied the defendant’s motion and granted the plaintiff’s cross-motion.
On appeal, the Third Department noted that the plaintiff’s business was to make custom-ordered concrete products for the construction industry. The plaintiff argued that because of the seasonal nature of the construction industry, the plaintiff would not be able to recoup two days of lost production from the early summer later in the year. Liberty Mutual conceded that the plaintiff had lost production, but argued that the plaintiff failed to show that it lost any specific sales as a result of the breakdown within the requisite time period after the breakdown occurred.
The policy issued by Liberty Mutual stated, “We will consider the experience of your business before the ‘breakdown’ and the probable experience you would have had without the ‘breakdown’ in determining the amount of our payment.” “Business income” was defined to mean “net income (net profit or loss before income taxes) that would have been earned or incurred,” as well as normal operating expenses.
The Court opined, “The purpose of business interruption insurance is to indemnify the insured against losses arising from inability to continue normal business operation and functions due to the damage sustained as a result of the hazard insured against.” The Third Department held that the language of the policy was not ambiguous, and that the plaintiff’s demonstration that it lost profits as a result of the two days of lost production was adequate to establish a loss of business income within the meaning of the policy. The Third Department affirmed the decision of the lower court in favor of the plaintiff.
Fourth Department Modifies Lower Court’s Decision on Denial of Coverage
In Armstrong v United Frontier Mut. Ins. Co., 2020 NY Slip Op 02013 (4th Dep’t Mar. 20, 2020), the plaintiff owned a house insured by United Frontier. After the plaintiff’s house was destroyed by two fires that occurred within 12 hours of each other, United Frontier denied the plaintiff’s claim for coverage.
The plaintiff commenced suit, alleging that United Frontier had breached its contract by failing to pay benefits on the claim. United Frontier asserted several affirmative defenses, including that the plaintiff failed to submit a sworn proof of loss as required by the policy, that the fires were the result of arson, and that the plaintiff failed to cooperate as required by the policy.
United Frontier moved for summary judgment on the ground that the plaintiff’s failure to submit a sworn proof of loss constituted a complete defense to an action on the complaint. The plaintiff cross-moved for summary judgment on her breach of contract cause of action, to strike the affirmative defenses of arson and failure to cooperate, and to amend her complaint to add causes of action for anticipatory breach of contract and waiver.
Erie County Supreme Court Justice E. Jeanette Ogden granted the defendant’s motion and denied plaintiff’s cross motions in their entirety. The plaintiff appealed, and the Fourth Department modified the order.
First, the Fourth Department considered the defendant’s motion. While the plaintiff had not submitted a sworn proof of loss form, the defendant’s own submissions showed that the plaintiff had submitted an unsworn proof of loss. The issue was then whether the use of a sworn form was required under the policy and Insurance Law § 3407 (a). The Court held that absent any requirement in the policy or the Insurance Law (the policy required the plaintiff to submit “an acceptable proof of loss, within 60 days after our request”), the defendant could not require a sworn proof of loss form from the plaintiff. However, as there was a triable issue of fact as to what proof of loss the plaintiff had submitted, the Fourth Department held that both the defendant’s motion and plaintiff’s cross motion for summary judgment should be denied on the breach of contract claim.
The Fourth Department then turned to the plaintiff’s motion to amend her complaint to assert a claim of anticipatory breach of contract. The Court opined that repudiation of a policy exists only where a plaintiff establishes that the insurer has committed an anticipatory breach by disclaiming the intention or the duty to shape its conduct in accordance with the provisions of the contract. In this case, the Court found that the defendant had not repudiated the contract or committed an anticipatory breach, as the insurer was acting within the provisions of the contract when it evaluated and denied the plaintiff’s claim, based on the belief that plaintiff had failed to comply with the policy. Therefore, the Fourth Department found the plaintiff’s claim for anticipatory breach lacked merit, and allowing the amendment would have been improper.
As to plaintiff’s cross motion to strike the two affirmative defenses, with respect to the affirmative defense of noncooperation, the Court concluded that there were triable issues of fact whether plaintiff failed to submit truthful disclosures in her inventory statement. The defendant had submitted the deposition testimony of the plaintiff’s roommate, who testified that some of the items on plaintiff’s list either never existed or belonged to the roommate. Inasmuch as a party’s failure to make fair and truthful disclosures in reporting the loss constitutes a breach of the cooperation clause of the insurance policy as a matter of law, the Fourth Department held that the trial court properly denied plaintiff’s cross motion insofar as it sought dismissal of that affirmative defense.
Finally, with respect to plaintiff’s cross-motion to strike the affirmative defense of arson, the Court found that the evidence in the record established that both fires were intentionally set, and there were triable issues of fact as to whether the plaintiff herself had participated in the arson. The Fourth Department agreed with the lower court that the plaintiff’ cross-motion was properly denied on that issue.
Fourth Department Affirms Denial of Summary Judgment on Serious Injury Threshold
In Latini v. Barwell, 2020 NY Slip Op 01982 (4th Dept. Mar. 20, 2020), the plaintiff brought suit seeking damages for injuries that she allegedly sustained when the vehicle she was driving was rear-ended by a vehicle operated by defendant. The plaintiff alleged that, as a result of the motor vehicle accident, she sustained injuries to her cervical spine and head under the significant limitation of use, permanent consequential limitation of use, and 90/180-day categories as defined in Insurance Law § 5102 (d).
The defendant moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury. Supreme Court Justice Joseph R. Glownia denied defendant’s motion, and the Fourth Department affirmed.
With respect to the plaintiff’s alleged cervical spine injury, the Fourth Department concluded that the defendant met his initial burden on the motion by submitting evidence that the plaintiff sustained only a temporary cervical strain, rather than any significant injury to her nervous system or spine, as a result of the accident. With respect to the plaintiff’s alleged head injury, the Fourth Department found that the defendant met his initial burden by submitting the affirmed report of an expert physician who examined the plaintiff on the defendant’s behalf, and opined that the plaintiff did not sustain a concussion in the accident or have postconcussion syndrome.
However, the Court held that plaintiff’s submissions in opposition to the motion raised issues of fact as to whether she sustained a serious injury under the permanent consequential limitation of use and significant limitation of use categories. The Court based this finding on the affirmation of plaintiff’s treating physician, who opined that plaintiff sustained cervical spine “sprain/strains” as a result of the accident, as well as examinations of the plaintiff conducted almost four years after the accident, which revealed “severe muscle spasms.”
Plaintiff’s treating physician also opined that the plaintiff continued to suffer from post-concussive syndrome four years after the accident. The Fourth Department stated that it is well settled that postconcussion syndrome, posttraumatic headaches, and cognitive dysfunction as a result of a collision can constitute a significant limitation. Finally, plaintiff testified at her deposition, which occurred three years after the accident, that she continued to suffer from her accident-related injuries. The Court held that testimony created a question of fact as to whether plaintiff’s injuries were permanent. The Court held that each of these constitute objective evidence of injury requiring a denial of the defendant’s summary judgment motion as to the significant limitation of use and permanent consequential limitation of use categories.
As to the 90/180 day category, the Court found that the defendant’s submissions established the plaintiff was out of work for nine months after the accident due to her injuries. The Court held that the trial court had properly denied defendant’s motion on that issue, as the defendant had failed to meet his initial burden.
Fourth Department Affirms Denial of Summary Judgment in Storm in Progress Case
In Taylor v. Kwik Fill – Red Apple, 2020 NY Slip Op 01992 (4th Dept. Mar. 20, 2020), the plaintiff brought suit seeking damages for injuries that she allegedly sustained when she fell in a snowy parking lot in the Village of Medina. The parking lot was owned by defendant Kwik Fill – Red Apple.
The defendant moved for summary judgment dismissing the complaint on the ground that there was a storm in progress at the time of the plaintiff’s fall, and the defendant therefore had no duty to clear snow and ice until a reasonable time after the cessation of the storm.
The defendant submitted the affidavit of a meteorologist, who used weather data from Buffalo, Rochester, Niagara Falls, Lyndonville, Albion, and Lockport to conclude that it was snowing in Medina at the time of the plaintiff’s fall. The plaintiff’s expert meteorologist submitted an affirmation stating that based on the available data, there was no way to state within a reasonable degree of professional certainty that it was snowing in Medina at the time of the fall.
Niagara County Supreme Court Justice Frank Caruso denied the defendant’s motion, and on appeal, the Fourth Department affirmed. The Fourth Department held that the defendant had failed to meet its initial burden, as there was no evidentiary support in the record for the claim made by the defendant’s expert that it was not snowing at the location of the accident when the accident occurred.
Prepared by Eric W. Marriott