Opinion
005379/08.
Decided April 8, 2009.
Brad A. Schlossberg, Esq., Quadrino Schwartz, Esq., Attorney for Plaintiff, Garden City, NY.
Robert D. Becker, Esq., Ginsberg, Becker Weaver, LLP, Attorney for Defendant, New York, NY.
Motion pursuant to CPLR 3212 by the plaintiff Bread Butter, LLC, d/b/a, BK Sweeney's for summary judgment.
Cross motion by the defendant Certain Underwriters at Lloyds of London for: (1) summary judgment dismissing the plaintiff's complaint; or alternatively (2) an order pursuant to CPLR 3124 compelling the plaintiff to respond to certain interrogatories and other stated discovery demands.
In March of 2000, the plaintiff Bread Butter, LLC, d/b/a BK Sweeney's ["the plaintiff"], purchased for the sum of $560,000.00, an already established "BK Sweeneys" restaurant/bar located on Sunrise Highway in Lynbrook, New York.
The purchase price included, inter alia, the "stock in trade, fixtures, equipment and good will" of the business. In addition, plaintiff took an assignment of predecessor tenant's interest in the lease that had originated in 1991 (Seelig Aff., ¶¶ 6-8; Exh., "2"). At the time of the assignment, eight years remained in the term. As modified by the Lease Rider, all immovable "improvements, alterations and/or additions made by the Tenant" were to become "the property of the Landlord upon the termination of the Lease * * *" (Seeling Exh., "5." Lease Rider, ¶ 34).
In March 2005, the plaintiff purchased a certain commercial property/general liability insurance policy from the defendant, Lloyds of London ["Lloyds" or the "defendant"], which was to be effective for the one-year period commencing March 28, 2005 (Ptff's Exh., "5"). Insofar as is relevant, the subject policy provided for $500,000.00 in "business personal property" coverage; $75,000.00 for losses attributable to "business income loss; and $10,000.00 in coverage for injury to the "personal property of others" (Pltff's Exh., "5").
Significantly, the "Business Personal Property" portion of the subject policy provides coverage for, inter alia, "[ y]our Business Property located in or on the building described in the Declarations page * * * consisting of the following * * * [6] Your use interest as tenant in Improvements and Betterments". "Improvements and Betterments" are further defined under the policy as "fixtures, alterations, installations or additions: (a) Made a part of the building or structure you occupy but do not own; and (b) You acquired or made at your expense but cannot legally remove; * * *" (Building and Personal Property Coverage Form, ¶ A[1][b][6], at 1; Ptff's Exh., "5")[emphasis added][bolding in original].
In December of 2005, a fire took place at the premises which completely destroyed the property (Seelig Aff., ¶¶ 16-17). The plaintiff's adjuster, Joseph Ortado, thereafter submitted to the defendant's adjuster, Raphael Associates ["Raphael"], an inventory of damaged equipment and machinery; a repair estimate "to repair and make good" lost betterments and fixtures in the sum of $365,404.05 and a separate repair estimate which had been provided to the landlord (Ortado Aff.,¶¶ 6-8, Exhs., "7"-"9").
While the discussions concerning the plaintiff's claim between the parties' respective adjusters continued, the plaintiff moved forward with the repairs and allegedly expended over $500,000.00 of its own funds including $196,966.92 in replacement costs for betterments to restore the restaurant, which reopened in November of 2006 (Seelig Aff., ¶¶ 21-22; Ortado Aff., ¶¶ 22-23; Pltff's Brief at 9-10).
In February 2007, Ortado resubmitted to Raphael the plaintiff's "entire claim" which totaled over $580,000.00 and which now included actual replacement costs of all furniture, fixtures, betterments, etc.(Ortado Exh., "20"; Pltff's Brief at 9).
With respect to the betterments portion of the claim, Raphael had initially made various requests for supporting documents, including bills, receipts, checks, etc., "for the original installation of improvements and betterments" (Def's Exh., "5"; Ortado Exh., "10"). Raphael further advised Ortado that although "[w]e have received many some [sic] documents from this list, * * * "[b]ecause the business is rental space, the building is insured by the landlord" and therefore "only the improvements made by our insured would be covered under the policy"(Ortado Exh., "10").
Ortado replied by letter dated July, 2006 noting, inter alia, that "documentation for the original installation" of the improvement and betterments was "no longer available" (Ortado Exh., "12", at 4-5). Ortado argued, however, that the restaurant equipment, booths, equipment and related betterments, had been conveyed as part of the underlying sale transaction and thereby "acquired" by the plaintiff as part of the original purchase (Coverage Form, ¶ A[1][6][b]).
Subsequently, in August of 2007, Raphael withdrew its previous requests for stated betterment documents, informing Ortado that these documents were now "not needed" in light of its own conclusion that "any improvements * * * are the property of the landlord * * *" (Pltff's Exh., "14").
By a disclaimer letter dated April 12, 2007, the defendant denied the plaintiff's betterments claim in its entirety, advising that the plaintiff had "not produce[d] any evidence that * * * [it] purchased the improvement or betterments at the location on the date of closing or had the improvements and betterments installed after the date of closing" (Ortado Exhs., "22"). In a separate letter of that date, offers were made for certain "non-betterment" portions of the losses.
Thereafter, in June of 2007, the plaintiff through its counsel submitted its own sworn proof of loss statements claiming a total loss of $589,149.88, which included the sums of: (1) $347,030.44 for "building and business personal property," incorporating $196,996.92 in replacement costs for improvements and betterments; (2) $36,453.90 for business income losses; and (3) $7,000.00 for losses to personal property of others (Ortado Exhs., "23").
Counsel requested payment of the entire claim amount, or alternatively, and at the very least, payment of the partial amounts the defendant had already agreed to pay.
When payment was not forthcoming, and within the two-year contractual limitations period imposed under the policy, the plaintiff commenced an action in the United Stated District Court for the Eastern District of New York, alleging breach of the policy (Schlossberg Aff., Exhs., "26-27"). That action was subsequently discontinued without prejudice since diversity jurisdiction was arguably lacking, but recommenced days later in this Court albeit after the expiration of the two-year period (Schlossberg Aff., Exhs.,"28"-"30").
The newly served complaint interposes two causes of action alleging entitlement to a sum of $479,00.00 in business personal property losses; $36,453.90 in lost business income; and $7,000.00 in losses to the business property of others for a total net loss of at least $522,453.90 (Complt., ¶¶ 14-19). The second cause of action demands consequential damages attributable to Lloyd's alleged failure to timely and properly remit payment on the claim (Cmplt., ¶¶ 21-22).
An e-mail which had been transmitted by plaintiff's counsel to defense counsel in mid-January of 2008 memorialized an understanding the parties' had reached relative to the foregoing federal discontinuance.
The e-mail provides, in part, that, "[t]his letter will confirm our telephone conversation wherein we reached the following agreement. 1) Plaintiff consents to withdraw the proceeding currently pending in the District Court * * * without prejudice * * * after receiving an affidavit from Defendants identifying an individual [Lloyds] member * * * who presently resides in New York. Plaintiff will then recommence the action in state court. 2). Thereafter, defense counsel will finalize his review of the file, secure the requisite settlement authority * * and attend a settlement conference in good faith" (Pltff's Exh., "28)[emphasis added].
The record confirms that subsequently, defense counsel wrote to the Magistrate presiding over the federal action and requested an adjournment which referenced this agreement (Pltffs' Exh., "28"; Brief in Opp., at 4). It is undisputed that upon receipt of the confirmatory e-mail, defense counsel never questioned or in anyway disputed the terms of the alleged agreement referenced by plaintiff's counsel, and in fact, attached the e-mail to a letter which he had sent to the Magistrate (Pltff's Brief in Opp., at 4).
The defendant has since answered in this action, denied the material allegations of the complaint, and interposed a number of affirmative defenses, including defenses based on: (1) the statute of limitations (1st Aff. Def); (2) the plaintiff's alleged failure to comply with policy conditions pertaining to replacement cost recovery (8th-10th Aff., Defs); and (3) an unelaborated claim that the plaintiff committed fraud and concealment of "material fact[s]" in violation of the subject policy (Schlossberg Aff., Exh., "32" Ans.,¶¶ 11-12 [3rd Aff. Def]).
Currently, payment of the agreed upon portion of the claims referenced in Raphael's April 2007 letter has yet to be made (except for a $20,000.00 advance) although Lloyds contends that only "valuation" issues as opposed to coverage disputes still exist with respect to portions thereof ( see, Def's Reply Brief at 27).
The parties now move and cross move for summary judgment on their respective claims.
The plaintiff contends, inter alia: (1) that it is entitled to coverage on its betterments claim inasmuch as it "acquired" the involved betterments upon its purchase and assumption of the underlying lease (Coverage Form A1[b][6][b]); and (2) that its evidentiary submissions prima facie demonstrate its entitlement to summary judgment on its first cause of action to recover all claimed losses under the policy.
The defendant opposes the application and argues, among other things, that the within action is time-barred; that there is no betterments coverage upon the facts presented inasmuch as the plaintiff failed to demonstrate that it either affirmatively made or separately purchased and added the subject improvements; and that dismissal is warranted pursuant to policy's cooperation clause (Commercial Property Conditions, ¶ D[1], [2]). The defendant alternatively argues that issues of fact exist with respect to its variously interposed affirmative defenses.
The Court turns first to the statute of limitations defense. Pursuant to CPLR 205[a], a party whose timely commenced action has been dismissed subsequent to the expiration of the applicable limitations period, may recommence the action, provided that the original dismissal was not predicated upon, inter alia, a voluntary discontinuance, neglect to prosecute or a final judgment on the merits. Campbell v. City of New York , 4 NY3d 200 , 209-210 (2005); Carrick v. Central General Hospital, 51 NY2d 242, 247 (1980); George v. Mt. Sinai Hospital, 47 NY2d 170, 180-181 (1979); Montgomery v. Minarcin, 245 AD2d 920, 921(3d Dept. 1997); see also, Elite Associates, Inc. v. Board of Educ., Longwood Cent. School Dist., 284 AD2d 298, 299 (2d Dept. 2001).
CPLR 205(a) which has been applied to contractually shortened periods of limitation ( e.g., E L, Inc. v. Liberty Mut. Fire Ins. Co., 227 AD2d 303, 304 91st Dept. 1996] cf., Wydallis v. U.S. Fidelity Guar. Co., 63 NY2d 872, 874-875) — is "redemptive" and "ameliorative in nature," since it functions to "lessen the harsh effects of the Statute of Limitations" where "a defendant has been timely served with process" and thus timely apprised of the asserted claim. Dreger v. New York State Thruway Authority, 177 AD2d 762, 763 (3d Dpt. 1991), affd, 81 NY2d 721 (1992); George v. Mt. Sinai Hospital, supra, at 177 see, Morris Investors, Inc. v. Commissioner of Finance of City of New York, 69 NY2d 933, 935-936 (1987); Gaines v. City of New York, 215 NY 533, 537-538 (1915); Freedman v. New York Hosp. Medical Center of Queens , 9 AD3d 415 , 416 (2d Dept. 2004); Winston v. Freshwater Wetlands Appeals Bd., 224 AD2d 160, 164 (2d Dept. 1996), fn 2 see also, Fillas v. Hyon Mun Cho, 296 AD2d 356 (1st Dept. 2002).
In construing the statute's application, the Court of Appeals has cautioned against undue reliance on "talismatic catchwords" such as the term "nullity," which might "becloud the issues" and thereby "fritter[ ] away the statute's liberal effect" ( George v. Mt. Sinai Hospital, supra, at 175-176 accord, also, Carrick v. Central General Hospital, supra, 51 NY2d at 247 (1980); Gaines v. City of New York, supra, at 537 see, Montgomery v. Minarcin, 245 AD2d at 921 (3d Dept. 1997).
Although CPLR 205[a] nominally excludes from its reach, terminations by "voluntary discontinuance," the Court of Appeals in George, supra, declined to dismiss an action as time-barred where the discontinuance provided that the voluntary dismissal was intended to be without prejudice to the recommencement of a new action pursuant to CPLR 205. George v. Mt. Sinai Hospital, supra, at 180-181.
In so holding, the Court concluded that the agreed-upon purpose of the discontinuance was obviously to preserve whatever recommencement rights the plaintiff would have otherwise possessed had the matter been involuntary terminated. George v. Mt. Sinai Hospital, supra, at 181.
Here, while the so-ordered stipulation itself does not expressly state that its objective was to preserve "whatever [recommencement] rights the plaintiff would have possessed" had the District Court dismissed the action ( George, supra, at 181), it is clear from the factual context in which it was executed that this was indeed its contemplated purpose. In re Walter, 29 AD3d 598,599 (2d Dept. 2006); Montgomery v. Minarcin, supra see also, Bailey v. Brookdale University Hosp. and Medical Center, 292 AD2d 328, 329 (2d Dept. 2002).
Specifically, the confirmatory e-mail forwarded to defense counsel recited that an agreement had been reached and that among its terms, was the understanding that upon discontinuance of the federal action, the plaintiff would "then re-commence the action in state court" (Pltff's Exh., "28," ¶ 1). The facts further establish that the discontinuance did not evince an intent to forego prosecution of the action, but was based on the probability that federal diversity jurisdiction was lacking and that dismissal was therefore likely.
Morever, there is no dispute that defense counsel received and raised no objection to the confirmatory e-mail, which included a clear, prefatory statement that all the terms later recited were part of the "agreement" reached between the parties (Def's Reply Brief at 1-2). Further, counsel plainly regarded the e-mail as a reliable summary of the parties' agreement, since he forwarded it to a Federal Magistrate in further support of his request for an adjournment (Schlossberg Aff., ¶ 10; Pltff's Brief in Opp., at 8). Contrary to the defendant's contentions, the confirmatory e-mail's plainly recited recommencement term does not read as an extraneous or unilaterally inserted addition, but rather, fully comports with the prevailing factual context and is no less conspicuously featured than the other terms listed as comprising the parties' agreement.
Nor is the absence of express reference to CPLR 205 determinative. In Montgomery v. Minarcin, supra a factually analogous case recently cited by the Second Department the Court expressly held that the ""[i]nclusion of the phrase without prejudice, on the grounds that there is a lack of complete diversity between the parties' in the stipulation dismissing the Federal action constitutes an express statement' of intent that the action would be recommenced in another forum and the failure to insert an explicit reference to CPLR 205(a) should not be fatal to recommencement". Montgomery v. Minarcin, supra, cited with approval by, In re Walter, supra, see also, Brookdale University Hosp. and Medical Center, supra; Baird, Patrick Co., Inc. v. Epstein, 244 AD2d 155, 156 (1st Dept. 1997) cf., Kourkoumelis v. Arnel, 238 AD2d 313 (2d Dept. 1997); Barlow v. Sun Chemical Co. , 15 Misc 3d 953 , 964 (Supreme Court, Westchester County 2007).
Accordingly, dismissal based on the running of the statue of limitations is denied.Turning to the key element of plaintiff's motion, the Court finds that the plaintiff has not carried its burden of demonstrating that coverage exists with respect to the "betterment" items. Plaintiff has not submitted proof that these items were "acquired" or "made" by the plaintiff or its assignee during the term of the lease, which began in 1991. See, American Mfrs. Mut. Ins. Co. v. Quality King Distributors, Inc. , 16 AD3d 607 (2d Dept. 2005), i.e. It thus has not shown that it affirmatively "acquired" the subject betterments within the meaning of the applicable coverage form ( see, Def's 4 th Aff., [Def Ans.,¶ 14]).
It is settled that "[i]n determining a dispute over insurance coverage, we first look to the language of the policy" and * * * "construe * * * [it] in a way that affords a fair meaning to all of the language employed by the parties in the contract and leaves no provision without force and effect". Raymond Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa. , 5 NY3d 157, 162 (2005); Consolidated Edison Co. of NY v Allstate Ins. Co., 98 NY2d 208, 221-222 (2002); Sanabria v. American Home Assur. Co., 68 NY2d 866, 868 (1986); Labate v. Liberty Mut. Ins. Co. ,45 AD3d 811, 812 (2d Dept. 2007); Empire Fire and Marine Ins. Co. v. Eveready Ins.Co., 48 AD3d 406 (2d Dept. 2008).
Policy terms and provisions "must be read in the context of the entire agreement" since" [t]he meaning of a writing may be distorted where undue force is given to single words or phrases". Westmoreland Coal Co. v. Entech, Inc., 100 NY2d 352, 358 (2003), quoting from, Empire Props. Corp. v Manufacturers Trust Co., 288 NY 242, 248 (1942) see, South Road Associates, LLC v. Intern. Business Machines Corp., 4 NY3d 272, 277 (2005).
"Improvements and betterments" policies generally cover only "improvements added during the lease term" and are "designed to provide protection to tenants against loss from destruction of or damage to alterations and improvements made by them to the leased premises" ( 97 A.L.R.2d 1243, "Improvements and betterments insurance"][emphasis added]; 2 Couch on Insurance, Betterments and Improvements, §§ 20: 27, 14:33, 12 Couch on Insurance, Betterments and Improvements, § 178.71;74 NY Jur2d, Landlord and Tenant § 160; Bank of Taiwan New York Agency v. Granite State Ins. Co., ___ F.Supp2d ___, 2003 WL 21540664 (S.D.NY 2003); U. S. Fire Ins. Co. v. Martin, 222 Va. 301, 303, 282 S.E.2d 2, 4 Supreme Court, Virginia (1981); Ron Henry Ford, Lincoln, Mercury, Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 667 P2d 907, 910 (Kan.App. 1983), see generally, Vendriesco v. Aetna Cas. Sur. Co., 68 AD2d 946 (3d Dept. 1979); C-Suzanne Beauty Salon, Ltd. v. General Ins. Co. of America, 574 F.2d 106, 114-115 (2nd Cir. 1978); Modern Music Shop, Inc. v. Concordia Fire Ins. Co., 131 Misc. 305 (NY Mun. Ct. 1927); 10A Couch on Insurance, § 148:33; 68A NY Jur2d, Insurance, Betterments and Improvements, §§ 631, 940.
A betterment policy's reference to a tenant's underlying "use interest" primarily reflects the unique manner in which betterments are valued and insured by virtue of their immovable character. See, C-Suzanne Beauty Salon, Ltd. v. General Ins. Co. of America., supra, 114-115; SR Intern. Business Ins. Co. Ltd. v. World Trade Center Properties, LLC, 445 F.Supp.2d 320, 339 (S.D.NY 2006); Vendriesco v. Aetna Cas. Sur. Co., supra, 68 AD2d at 947; Daeris, Inc. v. Hartford Fire Ins. Co., supra; 12 Couch on Insurance, Improvements and Betterments, § 178.71; 70A NY Jur2d, Insurance, § 2033. This is because where immovable "betterments and improvements pass to the lessor on termination of the lease" the lessee, upon their destruction, can generally recover only the value of their use "for the balance of the lease term, since that measures his or her insurable interest" (12 Couch on Insurance, Betterments and Improvements, supra, § 178.71 see also, Bank of Taiwan New York Agency v. Granite State Ins. Co., supra; C- Suzanne Beauty Salon, Ltd. v. General Ins. Co. of America, supra, at 112-115; SR Intern. Business Ins. Co. Ltd. v. World Trade Center Properties, LLC, supra, at 331 see also, Daeris, Inc. v. Hartford Fire Ins. Co., 105 N.H. 117, 122, 193 A.2d 886, 890 (Supreme Court, New Hampshire 1963), see generally, 10A Couch on Insurance, supra, § 148:33; 97 A.L.R.2d 1243,"Improvements and betterments insurance," supra, § 5.
A tenant can possess a "use interest" in immovable improvements it makes which are formally titled in third parties ( see, e.g., Bank of Taiwan New York Agency v. Granite State Ins. Co., supra, at 8, fn 17; Daeris, Inc. v. Hartford Fire Ins. Co., supra, at 887 cf., Scarola v. Insurance Co. of North America, 31 NY2d 411, 412; 68A NY Jur2d, Insurance, supra, § 940; Corpus Juris Secundum, Lessees, § 346), and also those which technically it owns at least temporarily pursuant to the commonly encountered lease provision temporarily vesting title to such improvements in the tenant until the expiration of the pending lease term. Modern Music Shop, Inc. v. Concordia Fire Ins. Co., supra, SR Intern. Business Ins. Co. Ltd. v. World Trade Center Properties, LLC, supra, at 339; Corpus Juris Secundum, Insurance, § 1579;70A NY Jur2d, Insurance § 2033 see, C-Suzanne Beauty Salon, Ltd. v. General Ins. Co. of America, supra, at 114-115 cf., Alexandra Restaurant v. New Hampshire Ins. Co. of Manchester, 272 App. Div. 346, 347, affd, 297 NY 858 (1948).
With these principles in mind, and applying the interpretive criteria of" common speech' and the reasonable expectations of a businessperson" ( Belt Painting Corp. v. TIG Ins. Co., 100 NY2d 377, 383; Ace Wire Cable Co., Inc. v. Aetna Cas. Sur. Co., 60 NY2d 390, 398), the Court finds that the plaintiff has failed to sustain its burden of establishing coverage in the first instance with respect to its betterment claim. See, e.g., American Mfrs. Mut. Ins. Co. v. Quality King Distributors, Inc. , 16 AD3d 607 (2d Dept. 2005).
Preliminarily, the Court does not agree with the plaintiff's foundational assumption that Raphael's formal April, 2007 disclaimer letter construed the policy as literally mandating formal or current "tenant" ownership of the improvements and betterments ( e.g., Pltff's Brief at 27, 30).
Rather, Raphael's statements were more to the effect that since the plaintiff was a tenant and did not own the building allegedly some sixty years old by then an inference arose that the landlord may well have owned the improvements, in the sense that there was no proof that the betterments were ever separately "acquired" or "made" by the plaintiff during the current lease term (Ortado Aff., Exh., "22" cf., Lease Rider, ¶ 34). Indeed, if the plaintiff had "made"or separately purchased and/or installed the betterments in accord with the defendant's construction of the policy as expressed in the April 2007 disclaimer then those betterments would necessarily have been owned by the plaintiff not the landlord until the lease terminated pursuant to Lease Rider paragraph 34.
It should be noted at this juncture, however, that the lease did not terminate with the assignment; rather, plaintiff simply "stepped into the shoes" of its seller, as discussed below.
Turning to the governing policy language, the Coverage Form's prefatory caption heading generally defines "Covered Property" as "the type of property [later] described in this Section, A1 * * *", which section then lists two distinct categories of policy coverage, including: (a)"building" coverage not purchased here and (b) "business personal property" coverage, which is then divided into seven, separately numbered paragraphs.
Significantly, section A1[b] the section governing "business personal property" is headed with the introductory phrase, " Your Business Personal Property * * *," after which are listed the various subparagraphs of covered property items, including the insured's "use interest" in leasehold acquired or made improvements and betterments [bolding in original] (Coverage Form, ¶ A1[b][6]).
Although the foregoing provision initially refers to the insured tenant's "use interest" in leasehold betterments (Coverage Form, ¶ A[1][b][6], it immediately thereafter narrows the scope of coverage solely to "use interests" in those betterments which the insured has " acquired or made at * * * [its] expense * * *"[emphasis added](Coverage Form, ¶ A[1][b][6][b]).
Accordingly, the fact that an insured tenant may possesses a "use interest" in leasehold betterments will not alone suffice to establish coverage. Rather, the policy contemplates something more, i.e., it requires, inter alia: (1) a "use" interest in immovable improvements; (2) which have been "acquired or made at your [the insured's] expense * * *". It is the acquisition or making of the betterment not the existence or securing of a "use interest" or insurable interest therein which the policy clearly requires. White v. Aron Kaufman Company, Inc., 243 AD2d 255 (1st Dept. 1997); C-Suzanne Beauty Salon, Ltd. v. General Ins. Co. of America, supra, at 114-115 see, U. S. Fire Ins. Co. v. Martin, supra, 282 S.E.2d at 3-4.
It follows that absent proof that the betterments themselves were either "acquired" or made at a tenant's expense, a "use interest" alone will "not fall[ ] within the definitional boundaries set by the [involved] insurance policy". Citigroup, Inc. v. Industrial Risk Insurers, 421 F.3d 81, 83 (2nd Cir. 2005); Stainless, Inc. v. Employers Fire Ins. Co., 69 AD2d 27, 31 (1st Dept. 1979), affd, 49 NY2d 924 (1980); White v. Aron Kaufman Company, Inc., supra see also, U. S. Fire Ins. Co. v. Martin, supra, 282 S.E.2d at 3-4.
At bar, the plaintiff therefore would have to prove, prima facie that either it, or its assignor either "acquired" or "made" the betterments during the lease term, inasmuch as plaintiff stands in the shoes of plaintiff's seller/assignor with regard to rights in property covered by that lease. See generally, Citibank, N.A. v. Tele/Resoures, Inc., 724 F2d 266 (2d Cir. 1983); Arena Constr. Co. v. J. Sakaris Sons, Inc., 282 AD2d 489 (2d Dept. 2001); Richard T. Blake Assocs., Inc. v. Aetna Cas. And Surety Co., 255 AD2d 569 (2d Dept. 1998). If this can be accomplished, the policy term regarding "betterments" may be seen as satisfied. That, however, has not been done.
The lease dates from 1991, but is silent as to what improvements to the property plaintiff's assignor either acquired or was expected to make during the lease term. No other proof is presented by the plaintiff regarding what may have been acquired or built by its assignor since 1991, or what the plaintiff itself may have done.
Specifically, there are no installation records or purchase documents; no annexed leasehold history or chronology describing the installation of the improvements; and no express reference to the disputed betterments in the underlying purchase agreement in short, there is nothing of a probative nature which would establish that the plaintiff acquired anything more than a tenant's use interest in the improvements already existing at the time of the original lease transaction. Upon these facts, it is just as likely that the improvements were installed or purchased during a prior lease term (that is, prior to the assignor's term) and, therefore, became the property of the landlord well before the current lease term began in 1991. See, U. S. Fire Ins. Co. v. Martin, supra, 282 S.E.2d at 3-4 cf., Cohen v. Republic Ins. Co., 131 Misc 2d 483, 484 (Supreme Court, Appellate Term 1985).
Nor does the record establish that the plaintiff acquired the subject betterments as opposed to a "use interest" therein upon its purchase of the restaurant's "stock in trade, fixtures, equipment and good will".
Here, the rider to the plaintiff's purchase agreement particularizes the main agreement's reference to "stock in trade, fixtures, and equipment," by specifying that only stated items were to be conveyed by the prior tenant, including among them, "all of Transferor's inventory and equipment, including but not limited to, the ovens, stoves, microwaves, fixtures stables, furniture, chairs, stools, cooking and eating utensils * * * which are located at the business premises * * * as more fully described in schedule A' attached hereto * * *" (Pltff's Exh., "1", sales contract, ¶ 1; Rider, ¶ 19)[emphasis added]. The plaintiff concedes that there is no reference to the alleged conveyance of any additional, immovable betterments beyond the listed items ( see, Pltff's Brief at 28-29).
While the parties to the sales transaction may well have intended that any immovable object was being sold, the claim that this establishes that the plaintiff purchased and thereby "acquired" the improvements integral to its business — again raises the same underlying deficiency in the plaintiff's submissions; namely, that there is absent evidence that the plaintiff's predecessor actually "made" or acquired/purchased the improvements during the subject lease term. Thus, there is no proof that it ever possessed any relevant interest in the betterments which the plaintiff could purchase. Cf., Ron Henry Ford, Lincoln, Mercury, Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa., supra, 667 P2d at 910.
The plaintiff's reliance upon Lease Rider paragraph 34 is also unavailing (Pltff's Brief at 30). While, as noted earlier, paragraph 34 does provide that title to permanent improvements would remain with the tenant until the conclusion of the lease term, the improvements to which it refers are only those " made by the Tenant" (Pltff's Exh., "3"; Pltff's Brief at 31)[emphasis added]. Here, again, there is no evidence that the plaintiff or its predecessor "made" the involved, improvements during the current leasehold, and thus no evidence that it possessed an ownership interest in the improvements pursuant to paragraph 34 which it could thereafter convey to the plaintiff.
Under these circumstances, the Court cannot conclude that the plaintiff has made a prima facie showing on its claim for coverage for betterments and improvements, and the burden thus does not shift to the defendant with regard to this issue. See Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851 (1985).
Conversely, the defendant's cross motion regarding this claim suffers from the same deficiency; it has advanced no substantive proof that neither the plaintiff nor its predecessor "acquired" or "made" any of the improvements that underlie the betterments claim. Without proof that the items claimed were already in place prior to 1991, and became the landlord's property under a prior lease or other instrument before the plaintiff's assignor became the tenant, the burden of proof does not shift to the plaintiff to demonstrate that issues of fact exist with regard thereto. Winegrad, supra. Accordingly, dismissal of this claim is unwarranted on these papers.
However, the Court agrees that upon the papers submitted, the plaintiff has demonstrated its prima facie entitlement to judgment as a matter of law on its first cause of action to recover those amounts referenced in the defendant's April, 2007 settlement offer (Cmplt., ¶¶ 13-20).
More particularly, the plaintiff has submitted, inter alia, the affidavit of its public adjuster who was personally involved in the pre-litigation betterments claim process, together with attached proofs, including replacement cost estimates and other relevant materials which had been provided to the defendant's adjuster, Raphael.
The plaintiff's submissions also include Raphael's April 12, 2007 letter demonstrating that without interposing objections or defenses, the defendant had already agreed to pay the sums of: (1) $163,102.10 in connection with the "business personal property" claim (reflecting a $1,000.00 deductible and a $20,000.00 advance); (2) $2,500.00 (later adjusted to $7,000.00), for losses to "property of others;" and (3) $26,244.19 for business income losses (Ortado Exh., "21"; Pltff's Brief 17-18).
These submissions, taken together with the other materials produced by the plaintiff, shifted to the defendant the burden of producing "evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action". Alvarez v. Prospect Hosp., 68 NY2d 320, 324 (1986); Zuckerman v. City of New York, 49 NY2d 557 (1980); O'Lear v. Boy Scouts of America , 33 AD3d 685 (2d Dept. 2006); St. Claire v. Empire General Contracting Painting Corp ., 33 AD3d 611 (2d Dept. 2006). The defendant has failed to do so.
While defense counsel now suggests that a dispute remains as to valuation with respect to the sums offered in the April, 2007 letter, there has been no competent evidence submitted establishing that the defendant's adjuster (Rahpael) discerned a material valuation issue with respect to those amounts. S ee, Tarzia v. Brookhaven Nat. Laboratory, 247 AD2d 605, 606 (2d Dept. 1998).
Indeed, in its April, 2007 letter, Raphael expressly noted that it had "accepted" the "invoices submitted by the plaintiff "as proof of the replacement of the Business Personal Property" (Ortado Aff., Exh., "21"). Nor did Raphael request additional documentation in connection with the offer made, raise defenses or otherwise advise that the documents submitted were insufficient to demonstrate the plaintiff's entitlement to the specific sums offered.
Further, and in the absence of properly supportive evidentiary submissions, the Court agrees that the record fails to generate triable issues of fact as to the defendant's cryptically pleaded fraud/concealment affirmative defense and its unpleaded non-cooperation claim (Ans., ¶ 12; 2nd Aff., Def.).
With respect to the latter, non-cooperation theory, the Court finds that the defendant has not carried its "very heavy burden" of demonstrating that factual issues exist with respect to claim. State Farm Indem. Co. v. Moore , 58 AD3d 429 (1st Dept. 2009); New York Cent. Mut. Fire Ins. Co. v. Salomon , 11 AD3d 315 (1st Dept. 2004), see, Continental Cas. Co. v. Stradford , 11 NY3d 443 , 450 (2008); General Acc. Ins. Group v. Cirucci, 46 NY2d 862, 863-864 (1979); Thrasher v. United States Liab. Ins. Co., 19 NY2d 159, 168-169 (1967).
Neither the events which transpired prior to the commencement of the action, nor the post-ligation sparring which ensued between opposing counsel during failed settlement discussions, demonstrates that the plaintiff displayed" willful and avowed obstruction'" Thrasher v United States Liab. Ins. Co., supra, at 168-169, quoting from, Coleman v. New Amsterdam Cas. Co., 247 NY 271, 276, involving "a pattern of non-cooperation for which no reasonable excuse [is] offered'". Argento v Aetna Cas. Sur. Co., 184 AD2d 487, 488 (2d Dept. 1992); General Acc. Ins. Group v. Cirucci, supra; Country-Wide Ins. Co. v. Henderson , 50 AD3d 789, 790 (2d Dept. 2008); State Farm Mut. Auto. Ins. Co. v. Campbell , 44 AD3d 1059 (2d Dept. 2007), see, Thrasher v United States Liab. Ins. Co., supra.
As to the defendant's fraud/concealment defense, it is settled that when an alleged "misrepresentation goes to proof of loss" the insurer must carry the burden of demonstrating the insured's intent to defraud and/or its "willful and intentional" conduct. Deitsch Textiles, Inc. v. New York Property Ins. Underwriting Ass'n, 62 NY2d 999, 1000-1001 (1984); Jonari Management Corp. v. St. Paul Fire Marine Ins. Co., 58 NY2d 408, 417 (1983); Saks Co. v Continental Ins. Co., 23 NY2d 161 (1968); Chang v. General Acc. Ins. Co. of America, 193 AD2d 521 (1st Dept. 1993) cf., C-Suzanne Beauty Salon, Ltd. v. General Ins. Co. of America, supra, at 111.
Here, the defendant's fraud defense is pleaded as a one-line conclusion of law, "bereft of factual data" which does allege or make reference to, the plaintiff's purported fraudulent intent or willful conduct. Deitsch Textiles, Inc. v. New York Property Ins. Underwriting Ass'n, supra, at 1001 cf., Glenesk v. Guidance Realty Corp., 36 AD2d 852, 853 (2d Dept. 1971).
None of the defendant's remaining defenses is sufficient to defeat that branch of the plaintiff's motion which is for summary judgment in connection with amounts set forth in the April, 2007 letter. However, questions of fact exist with respect to those remaining portions of the plaintiff's claim, i.e., those claims which exceed the amounts referenced by the defendant in its April, 2007 letter.
Initially, the Court disagrees with the plaintiff's claim that the April, 2007 betterment disclaimer letter constitutes a waiver of defenses which have been raised in connection with other claims not affected by the disclaimer (Pltff's Brief in Opp., 15-17)(Pltff's Brief in Opp., 15-17). Cf., Estee Lauder Inc. v. OneBeacon Ins. Group, LLC, ___ AD3d ___, 2009 WL 398879 (1st Dept. 2009); Adames v. Nationwide Mut. Fire Ins. Co. , 55 AD3d 513, 515 (2d Dept. 2008). The strained notion that a disclaimer letter solely applicable and relevant to the betterment portion of loss, can create a waiver of defenses as to a different set of claims, for which coverage was not denied, is unpersuasive.
Notwithstanding submission of a large volume of supporting materials, the plaintiff's principal affiant Joseph Ortado does not address with particularity and make comprehensible to the reader the precise manner in which the documents produced suffice to defeat the remaining, policy-grounded defenses and claims interposed by the defendant. Indeed, the Court notes that plaintiff has not disputed that the policy does, in fact, impose certain of the obligations and conditions referenced in the various affirmative defenses interposed by the defendant ( e.g., 8th-10th Aff. Defs.). Cf., Seward Park Housing Corp. v. Greater New York Mut. Ins. Co. , 43 AD3d 23 , 30-32 (1st Dept. 2007).Nor have the plaintiff's opposing submissions supplied the requisite evidentiary material. Rather, these papers primarily advance, in general terms, the purely legal claim that the defendant's submissions are defective, in toto, since they have been supported primarily by attorney affirmations ( see, Pltff's Brief in Opp., 21-24).Accordingly, to the extent the plaintiff's motion seeks dismissal of these defenses, it is denied.
That branch of the defendant's cross motion which is to dismiss the plaintiff's second cause of action for consequential damages is similarly denied. The Court of Appeals has recently upheld a claim for consequential damages made against an insurance carrier ( see generally, Panasia Estates, Inc. v. Hudson Ins. Co. , 10 NY3d 200, 203; Bi-Economy Market, Inc. v. Harleysville Ins. Co. of New York , 10 NY3d 187 ), and here, factual questions remain which preclude summary resolution of the foregoing cause of action at this juncture (Cmplt.,¶¶ 21-22).
Finally, in light of the Court's determination, that branch of the defendant's cross motion which is to compel the plaintiff to respond to certain interrogatories and/or other stated discovery demands is granted, there being no substantive opposition thereto. Plaintiff shall respond within 35 days of the date of this order.
In sum, the motion pursuant to CPLR 3212 by the plaintiff Bread Butter, LLC, d/b/a, BK Sweeney's, for summary judgment on its first cause of action is granted to the extent set forth in the defendant's settlement offer dated April, 12, 2007, for a total of $196,346.29, with interest from that date, and the motion is otherwise denied.
The cross motion by the defendant Certain Underwriters at Lloyds of London for: (1) summary judgment dismissing the plaintiff's complaint; or alternatively (2) an order pursuant to CPLR 3124 compelling the plaintiff to respond to certain interrogatories and other stated discovery demands as currently attached to its motion papers, is granted to the extent that plaintiff is to respond to all outstanding demands within 35 days of the date of this order, and is otherwise denied.
All parties shall appear at a preliminary conference at the Supreme Courthouse, 100 Supreme Court Drive, Mineola, NY, on May 29, 2009, at 9:30 a.m. No adjournments of this conference will be permitted absent the permission of or Order of this Court. All parties are forewarned that failure to attend the conference may result in Judgment by Default, the dismissal of pleadings (see 22 NYCRR 202.27) or monetary sanctions ( 22 NYCRR 130-2.1 et seq.).
This shall constitute the Decision and Order of this Court.