Opinion
No. 2011–0864.
01-04-2017
Diane HERBERT and Yamin Chevallard, Plaintiffs, v. DRYDEN MUTUAL INSURANCE and Larkin Agency, Inc., Defendants.
Holmberg Galbraith, LLP, by Dirk A. Galbraith, Esq., Ithaca, Attorneys for Plaintiff Diane Herbert. Seth J. Peacock, Esq., Ithaca, Attorney for Plaintiff Yamin Chevallard. Barclay Damon, LLP, by Mark T. Whitford, Jr, Esq., Rochester, Attorneys for Defendant Dryden Mutual Insurance. Williamson, Clune & Stevens, by Robert J. Clune, Esq., Ithaca, Attorneys for Defendant Larkin Agency, Inc.
Holmberg Galbraith, LLP, by Dirk A. Galbraith, Esq., Ithaca, Attorneys for Plaintiff Diane Herbert.
Seth J. Peacock, Esq., Ithaca, Attorney for Plaintiff Yamin Chevallard.
Barclay Damon, LLP, by Mark T. Whitford, Jr, Esq., Rochester, Attorneys for Defendant Dryden Mutual Insurance.
Williamson, Clune & Stevens, by Robert J. Clune, Esq., Ithaca, Attorneys for Defendant Larkin Agency, Inc.
PHILLIP R. RUMSEY, J.
This is an action for breach of contract upon a policy of liability insurance issued to plaintiffs Diane Herbert and Yamin Chevallard by Dryden Mutual Insurance Company (herein Dryden or defendant), which they obtained through the Larkin Agency, Inc. In October 2008, plaintiffs purchased a three-story, six-unit dwelling located at 117–119 East Spencer Street in Ithaca (the property) from the lending institution that had acquired it as a result of a mortgage foreclosure action. When plaintiffs purchased the property, it was vacant and in a state of disrepair. Plaintiffs, acting as their own general contractor, commenced substantial repairs and renovations to the property. In the fall of 2008, they hired Yaman Contracting to remove a three-story front porch and replace it, on the same foundation, with a one-story porch; this project was completed in the spring of 2009. Plaintiffs hired an architect, replaced windows, doors and siding, and installed new plumbing. In August 2009, plaintiffs hired J.D. Ferro Roofing, LLC (J.D. Ferro Roofing) to tear off and dispose of the existing roof on the entire house, with the exception of the newly-completed one-story porch, and install additional roof decking and new shingles. J.D. Ferro Roofing began work in the fall of 2009 and completed installation of the new roof by May 2010.
Plaintiffs commenced this action on September 1, 2011, asserting five causes of action; the first through third causes of action were asserted only against Dryden, and the fourth and fifth were asserted against Dryden and the Larkin Agency, Inc. By order dated May 11, 2012 (Mulvey, J.), this court dismissed all but the third cause of action against Dryden for breach of contract. Although the caption was not been amended to delete the Larkin Agency, Inc. as a defendant, there is no basis for imposing liability against it on the sole remaining cause of action.
On October 20, 2010, plaintiffs were served with a summons and complaint in Dann v. Herbert, Sup Ct, Tompkins Co., Index No.2010–1068, in which plaintiff Kurt Dann alleged that he was injured on November 16, 2009 at the property while in the employ of J.D. Ferro Roofing (the underlying action). Specifically, he alleges that while he was working at ground level to remove debris that resulted from removal of the old roof, he was struck by a sheet of plywood that fell during installation of the new roof. Plaintiffs, who aver that they had no prior notice of Dann's claim, immediately delivered copies of the summons and complaint to the Larkin Agency, Inc., which, in turn, forwarded them to defendant. By letter dated December 2, 2010, defendant disclaimed coverage for defense or indemnification of plaintiffs in the underlying action. This court granted summary judgment to plaintiffs in the underlying action on the issue of liability by decision and order dated July 18, 2012 (Mulvey, J.), and, after an inquest, judgment was entered against Herbert and Chevallard in the total sum of $661,880.95. On the breach of contract claim, Herbert now moves for summary judgment against Dryden, which cross-moves for summary judgment dismissing that claim.
Defendant disclaimed coverage based on the contention that coverage was precluded by the following exclusion:
"D. EXCLUSIONS
Exclusions that apply to Bodily injury and Property damage:
We do not pay for loss resulting directly or indirectly from the following, unless specific coverage is added to your policy.
WE DO NOT PAY FOR:
...
s) bodily injury or property damage arising out of structural alterations which involve changing the size of or moving buildings or other structures, new construction or demolition operations performed by or on behalf of the named insured [.]"
Policy, LS–1, Ed. 1/88, pp. 5, 7 (emphasis in the original). Defendant has conceded that renovations conducted at the property by plaintiffs, including replacement of the roof, did not consist of structural alterations changing the size of, or moving, the building, and that they did not constitute new construction (see Affidavit of Dirk A. Galbraith, sworn to September 8, 2015, Exhibit E [Examination Before Trial of Sam Crisalli], pp. 22–24; see also defendant's memorandum of law dated October 18, 2016 [the only argument advanced is that coverage is precluded on the basis that replacement of the roof involved "demolition activities"] ).
Defendant has waived two additional grounds originally asserted for disclaiming coverage—that it received late notice of the claim and that an answer was served in the underlying action by plaintiff's personal attorney—by failing to raise them on the present motions (see Affidavit of Mark T. Whitford, Jr., Esq., sworn to October 18, 2016 [Whitford Affidavit], ¶¶ 25–27; defendant's memorandum of law dated October 18, 2016, pp. 2–3).
Crisalli was produced for examination before trial by defendant and testified that he was, at all relevant times, vice-president and claims manager who reported directly to defendant's chief executive officer. Accordingly, Crisalli possessed the requisite authority to speak on behalf of defendant in this matter and, therefore, his statements are admissions binding upon defendant (see Johnson v. Hallam Enters., 208 A.D.2d 1110, 1111 [1994] ).
"[T]o gain the benefit of an exclusion clause in an insurance policy, the insurer has the burden of demonstrating that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case" (Nova Cas. Co. v. Central Mut. Ins. Co., 59 AD3d 777, 778 [2009] [quotation and citations omitted]; see also Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 311 [1984] ). Moreover, "[i]t is settled that where the provisions of an insurance policy are clear and unambiguous, they must be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement" (Fulmont Mut. Ins. Co. v. New York Cent. Mut. Fire Ins. Co., 4 AD3d 724, 725 [2004] [quotation omitted] ).
When construing exclusionary clauses in liability insurance policies, the Appellate Division has held that the plain meaning of "demolition" is the "complete tearing down, razing or destruction of [an] entire building" (Corcoran v. Dairyland Ins. Co., 170 A.D.2d 243, 244 [1991] ; U.S. Underwriters Ins. Co. v. Manhattan Demolition Co., 204 A.D.2d 714 [1994], quoting Corcoran ). The determination of the Appellate Division is wholly in accord with the generally-accepted plain meaning of "demolition," which is the "deliberate destruction of a building or other structure" (see Merriam–Webster Dictionary, http://www.merriam-webster.com/dictionary/demolition [accessed January 4, 2017]; id., h ttp://www.merriam-webster.com/dictionary/demolish [accessed January 4, 2017] [definition of "demolish" is to "destroy," "raze," or "tear down" a building] ).
It is undisputed that the building on plaintiffs' property was not completely torn down, removed or razed, and defendant has completely failed to meet the high burden of establishing that its definition of "demolition operations" as including the removal of the old roof covering is the only reasonable interpretation of the exclusion. In that regard, defendant erroneously asserts that "it is undisputed that the roof on the plaintiffs' property was demolished and a new roof constructed" (Whitford Affidavit, ¶ 24; see also ¶¶ 6, 7, 10, 17). Plaintiffs contend that no demolition occurred at the property. Moreover, the undisputed evidence establishes that the old roof was removed only down to the existing wooden roof deck, leaving the structure of the roof intact. A new layer of 3/8? plywood was then installed on the existing deck prior to installation of new roof shingles. It is obvious that removal of the old roof, down to the layer of the existing roof deck, was not done for the purpose of destroying or permanently removing any part of the building, much less the entire building; rather, it was done for the specific purpose of improving the building by permitting proper replacement of a worn-out component of the structure. Simply put, as a matter of law, routine tear off and replacement of a roof does not constitute demolition.
Based on the foregoing, Herbert's motion is granted, defendant's cross-motion is denied, and both plaintiffs are granted summary judgment on the breach of contract claim. Inasmuch as the policy obligated defendant to provide plaintiffs a defense and indemnification in the underlying action, defendant shall indemnify them for any damages sustained therein, in accordance with the provisions of the policy. In the present record, there is no proof of plaintiffs' actual damages, which may be affected by any post-judgment settlement of the underlying action, and which may include interest and the cost of defending the underlying action (see 31 N.Y. Prac, New York Insurance Law § 31:35 [2015–2016 ed] ). Accordingly, plaintiffs may make application for entry of judgment against defendant upon proof of their damages and costs.
Although Chevallard did not seek summary judgment, defendant cross-moved for summary judgment against him. Where, as here, it appears that a nonmoving party is entitled to summary judgment, the court may grant such judgment on the same issue without the necessity of a cross-motion (see CPLR 3212[b] ). In that regard, it bears noting that Chevallard is in precisely the same situation as Herbert, inasmuch as he is also an owner of the property, was a named insured on the liability policy providing coverage to the owners for claims arising at the property, and had judgment entered against him in the underlying action. Accordingly, the court has also awarded summary judgment to Chevallard.
This decision constitutes the order of the court. The transmittal of copies of this decision and order by the court shall not constitute notice of entry (see CPLR 5513 ).
The following documents were filed with the Clerk of the County of Tompkins:
Notice of motion dated September 8, 2015.
Affidavit of Dirk A. Galbraith, sworn to September 8, 2015, with Exhibits A—P.
Affidavit of Mark T. Whitford, Jr., Esq., sworn to October 18, 2016, with Exhibits A—I.
Original Decision and Order dated January 4, 2017.