Opinion
Index No.: 600170/07
11-02-2011
ELO GROUP LLC, Plaintiff, v. GREATER NEW YORK MUTUAL INSURANCE COMPANY, Defendant
Decision & Order
MARTIN SHULMAN, J.:
Defendant moves, pursuant to CPLR 3212, for summary judgment .disusing the complaint.
BACKGROUND
Defendant insurer provided insurance to plaintiff for its premises located at 48 West 48th Street, New York, New York, pursuant to an insurance policy covering the period of May 8, 2004 through May 8, 2005. The insurance policy provided coverage for physical loss and damage to the premises. Motion, Ex. C.
The premises is a 16-story commercial building with restaurants at street level and numerous jewelry manufacturers on the upper floors. According to Richard Mauro ("Mauro"), defendant's director of property claims, the jewelry makers use oxygen torches in their manufacturing processes. Mauro Aff.
Plaintiff submitted a claim under the policy on March 8, 2005 for loss caused by an explosion and/or fire, which states that a "gas meter explosion and fire caused damage to gas and electrical distribution systems and damage to structural/bldg components." Motion, Ex. D. According to the incident report, plaintiff's representatives responded to a "small fire" on the 14th floor of the premises by shutting off the main gas valve for the building, and "[t]here was no damage to the building and no one was hurt from the incident." Motion, Ex. E.
Defendant conducted an investigation of the claim and determined that the most probable cause of the fire and/or explosion was the failure of a gas check valve to restrict flame back flow through the piping to the gas meter. Mauro Aff. Defendant's investigation also revealed that the gas distribution system at the premises, which included a riser, meters and branch lines, had been installed at least 20 years before the incident in question. Id.
The initial estimate, prepared by plaintiff's representative, to repair the damage was $7,250.59. Motion, Ex. F. Plaintiff states that after the incident the New York City Department of Buildings ("DOB") and/or Consolidated Edison ("ConEd") required plaintiff to test and repair the gas system prior to restoring gas service to the building. Id. Pursuant to this test, plaintiff alleges that it was required to repair and/or replace faulty portions of the system prior to the restoration of gas service. Id. Further, plaintiff asserts that DOB required that plaintiff enclose all parts of the gas system in fire-rated enclosures, as well as install check valves and flashback arrestors to "limit oxygen pressure and the prevention of backflow into the gas distribution piping." Motion, Ex. G.
Plaintiff submitted a claim under the policy for property damage in the amount of $992,901.88 ($997,520.81 less a $5,000.00 deductible), which represents plaintiff's cost in repairing and replacing the building's gas system so that ConEd would restore gas to the premises. Motion, Ex. H.
Defendant states that, after investigating the claim, it determined that the policy afforded coverage for the replacement of those portions of the gas system that were damaged by the fire and/or explosion and were necessary to restore service only to the damaged area: the gas riser and the damaged portions of the gas system on the 14th floor. Mauro Aff. Pursuant to this determination, defendant avers that the amount due to plaintiff for repairs to the 14th floor is $94,381.07, less the deductible, and that it paid plaintiff's claim in the amount of $89,381.07. Motion, Ex. I.
Plaintiff maintains that it is entitled to the full cost of its emergency repairs, restoration and repair of all parts of the gas system, enclosure of the gas system in fire-related enclosures, cost of check valves and flashback arrestors and painting of the building in the additional amount of $836,344.53. Motion, Ex. J.
The policy in question provides, in pertinent part:
Causes of Loss—Special FormMotion, Ex. C.
* * *
B. Exclusions
* * *
2. We will not pay for loss or damage caused by fire
or resulting from any of the following:
* * *
d. (1) Wear and tear; (2) Rust, corrosion, fungus, decay, deterioration, hidden or latent defect or
any quality in property that causes it to damage or destroy itself;
* * *
Gas Systems Endorsement
* * *
1. This policy will not cover the following:
(a) costs associated directly or indirectly with the enforcement of any law or ordinance that requires the testing or a gas system for integrity or condition; or
(b) any loss to a gas system caused by testing for integrity or condition. This exclusion does not apply if the testing is required due to a direct loss causing physical damage to a covered gas system from Fire; Lightening; Explosion; Aircraft or Vehicles; Riot or Civil Commotion; Sinkhole Collapse; Volcanic Action; Falling Objects; Weight of Snow, Ice or Sleet that is covered by the Policy.
2. This exclusionary endorsement supercedes all other forms and endorsements, including endorsements that extend coverage to losses caused by the enforcement of any law or ordinance.
* * *
Causes of Loss-Special Form
* * *
B. Exclusions
* * *
1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause of event that contributes concurrently or in any sequence to the loss.
a. Ordinance or Law
The enforcement of any ordinance or law:
(1) Regulating the construction, use or repair of any property; or
(2) Requiring the tearing down of any property, including the cost of removing its debris.
This exclusion, Ordinance or Law, applies whether the loss results from:
(1) An ordinance or law that is enforced even if the property has not been damaged; or
(2) The increased costs incurred to comply with an ordinance or law in the course of construction, repair, renovation, remodeling or demolition of property, or removal of its debris, following a physical loss to that property.
* * *
Blanket Ordinance or Law Coverage Endorsement
* * *
G. Under this Endorsement we will not pay for loss due to any ordinance or law that:
(1) You were required to comply with before the loss, even if the building was undamaged; and
(2) You failed to comply with.
Defendant retained the services of John R. Urinyi ("Urinyi"), a licensed professional engineer, who opined that the cause of the damage sustained by plaintiff by failing the integrity testing was due to wear and tear, including building movement and tenant activities over time. Urinyi Aff. Further, Urinyi found pre-existing unsafe conditions in violation of the New York City Building Code ("Building Code"), in that the distribution piping was not in fire-rated enclosures. Id.
Defendant also retained Cornelius F. Dennis ("Dennis"), a licensed professional engineer, to investigate whether the premises' gas system was in compliance with the applicable laws and ordinances. Dennis opined that the placement of the gas riser, branch lines and associated gas meters was not a legal installation under the Building Code and were conditions that should have been corrected prior to the date of the incident. Dennis Aff.
Christopher Santulli ("Santulli"), the DOB deputy borough commissioner for Manhattan, was deposed in this matter and averred that the gas lines in a means of egress, which were not enclosed, was a violation of the Building Code and presented fire safety issues. Santulli EBT, at 21-22, 59-61.
Sebby Crapanzano ("Crapanzano"), who performed the testing and repair of the gas system at the premises, was also deposed in this matter and testified that the gas system was in "poor" condition and that the steel gas riser was scaling. Crapanzano EBT, at 16, 22 and 90-91.
Prior to the date of the incident, the New York City Board of Standards and Appeals ("BSA") issued a variance to the Building Code in which BSA noted that the existing gas piping and meters were "located within the existing stair enclosure of the building," and permitted the premises to relocate the gas piping and meters to "open air platforms leading to the fire tower enclosures." Motion, Ex. N. This variance contained the condition that "construction shall be substantially completed within one year of the date of the adoption of this resolution," which was adopted on March 22, 1983. Id. Further, the variance was also conditioned on the gas system being constructed in accordance with drawings dated January 25, 1983 and February 23, 1983, which included relocation of the gas riser from the interior of the fire tower stair to the open-air fire tower court within a fire-rated enclosure. Motion, Exs. O and R.
According to Dennis, who performed a record search, no permit application was ever filed nor was any permit issued for the work called for by the variance and drawings. Dennis Aff. However, Emanuel A. Triose, Jr. ("Triose"), a master licensed plumber engaged by plaintiff, investigated the DOB history of the building and made a physical inspection on February 23, 2006, and opined that the installation of the gas system prior to the incident was a legal installation. Triose Aff. Triose's investigation also covered the condition of the building after a fire in 1985, in which the gas system was found to still be within the internal stair. Id. According to defendant, Triose's investigation supports defendant's contention that the variance expired on March 22, 1984 because the construction was not substantially completed within one year of March 22, 1983.
Hence, defendant argues that the requisite Building Code enclosure of the gas system was not met as of the date of the incident that is the subject of this litigation. Defendant maintains that it is not liable to plaintiff for the costs of repairing or replacing the premises' gas system to meet the Building Code's requirements.
In opposition to the instant motion, plaintiff states that there has been no question that the fire and/or explosion was a covered event since defendant has already paid for a portion of plaintiff's damages and defendant cannot establish why the gas riser failed the pressure testing. Such failure to pass the pressure testing, says plaintiff, could be the result of the fire/explosion and, as such, the "wear and tear" exclusion of the policy does not apply.
Plaintiff contends that the gas system exclusion does not exclude coverage for costs incurred as a result of testing that was required due to a direct loss causing physical damage to a covered system. Plaintiff asserts that the original gas system was legal and in full compliance with the Building Code, and requests that the court "search the record" to award summary judgment in its favor.
Ronald Ogur ("Ogur"), a professional engineer, provided an affidavit in which he opines that the gas system at the premises was legal and in full compliance with the Building Code, and he disagrees with Dennis' expert opinion on defendant's behalf. Ogur Aff. Plaintiff also provides an affidavit from Triose in which he refutes defendant's claim that his affidavit indicates that the variance terminated in 1984, and states that the work demanded by the variance was "substantially" completed prior to the 1985 fire. Triose Aff. Plaintiff has also provided an affidavit from Crapanzano, in which Crapanzano states that he does not know what caused the gas riser to leak. Crapanzano Aff.
Plaintiff maintains that, from the date that it first purchased the insurance in 1989 through the date of the incident, there have been 17 plumbing applications filed with DOB for modifications to the gas piping and there has never been a single violation issued regarding the location, construction and/or design of the original gas system. Opp., Ex. D. Further, ConEd and other insurance companies regularly inspected the original gas system and no one informed plaintiff that the gas system was illegal or unsafe. Moreover, on June 16, 2003, Kathy Hopkins ("Hopkins"), an underwriter associated with defendant, issued an inspection report which noted certain deficiencies with two of the restaurants, but did not mention any problems with the gas system. Opp., Ex. E.
It is plaintiff's position that the repairs that were required were the direct result of the fire and/or explosion, a covered event, and were not the result of pre-existing Building Code violations. Further, since defendant cannot conclusively establish the cause of the damage to the gas system, it cannot base its defense on the "wear and tear" policy exclusions.
In reply, defendant asserts that the damage to the riser is not in issue, but that the issue is whether the policy extends coverage to repair, replace and/or enclose meters, branch lines and valves on 15 floors of the building that were not directly damaged by the incident. Defendant argues that plaintiff has failed to offer any evidence that the damage to the branch lines was caused by the fire and/or explosion on the 14th floor.
In addition, defendant maintains that, even if there had not been a fire and/or explosion, plaintiffs claim is not covered by the policy because plaintiff was required to comply with all ordinances and laws even if no loss had occurred. Defendant provides a portion of Hopkins' deposition in which she testified that her inspection of the building did not include an inspection of any utilities servicing the premises. Reply, Ex. E. Defendant also submits a reply affidavit from Dennis, who states that nothing in plaintiff's opposition indicates that any work was performed at the building prior to the 1986 fire, meaning that plaintiff has failed to substantiate its claim that the work mandated by the variance had been "substantially completed" before the variance expired.
DISCUSSION
"The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case [internal quotation marks and citation omitted]." Santiago v Filstein, 35 AD3d 184, 185-186 (1st Dept 2006). The burden then shifts to the motion's opponent to "present evidentiary facts in admissible form sufficient to raise a genuine, triable issue of fact." Mazurek v Metropolitan Museum of Art, 27 AD3d 227, 228 (1st Dept 2006); see Zuckerman v City of New York, 49 NY2d 557, 562 (1980). If there is any doubt as to the existence of a triable fact, the motion for summary judgment must be denied. See Rotuba Extruders, Inc. v Ceppos, 46 NY2d 223, 231 (1978).
Defendant's motion is denied. Not only have both sides presented conflicting expert affidavits as to the cause of the damage to the gas system on the 14th floor, and whether the entire gas system was in compliance with Building Code requirements, but they have also provided reply affidavits from some of the experts refuting the opposing opinions. As stated in Gleeson-Casey v Otis El. Co., 268 AD2d 406, 407 (2d Dept 2000):
The conflicting affidavits of the parties' experts raise an issue of fact as to whether [the loss was the result of the fire and/or explosion, the result of a Building Code violation,] or due to wear. Since 'the weight to be afforded the conflicting testimony of experts is a matter particularly within the province of the jury,' the defendant's ... motion for summary judgment [is] properly denied [internal citation omitted].
Neither side has established the cause of the damage to the gas system on the 14lh floor, whether it was due to wear and tear of the entire system or something else, and so that remains a question of fact preventing an award of summary judgment to either party. See, e.g., Lynch v Liberty Mut. Fire Ins. Co., 58 AD3d 939 (3d Dept 2009); Caristo v Standard Fire Ins. Co., 18 AD3d 690 (2d Dept 2005).
The court is unpersuaded by Park City Estates Tenants Corp v Gulf Ins. Co. (2005 NY Slip Op 30218(U), 2005 WL 6069493 [Sup Ct, NY County 2005], a/ft/33 AD 3d 484 [1st Dept 2006]), cited by defendant, in which the court granted the insurer's dispositive motion. In that case, a tenant pierced a two-inch gas line while attempting to remove a concrete step in which the gas pipe was embedded and the gas company came to the premises and locked the gas valve. Before the gas was turned back on, the owner was required to have the gas pipe system tested in accordance with the Building Code. The gas pipe system failed the test and had to be repaired. The court held that the insurer was not responsible to the owner for the costs of the testing and repairs and that such costs were excluded by the ordinance or law endorsement exclusion in the policy.
However, in the Park City case, there were no conflicting expert affidavits nor was an issue raised as to the cause of the damage to the gas pipe system, normal wear and tear or something directly or indirectly associated with the puncture, which might have produced a different result. Such questions, which exist in the case at bar, preclude summary judgment in the instant matter. Based on the foregoing, it is hereby
ORDERED that defendant's motion for summary judgment is denied.
Counsel for the parties are directed to proceed to mediation.
The foregoing constitutes this court's decision and order. Courtesy copies of this decision and order have been provided to counsel for the parties.
Dated: November 2, 2011
New York, New York
HON. MARTIN SHULMAN, J.S.C.