Opinion
No. 01 Civ. 8236 (LTS)
March 27, 2003
ORDER
Plaintiff Stroheim Romann ("Plaintiff") brings this action to recover under an insurance policy issued by defendant Allianz Insurance Company ("Defendant") for losses suffered as a result of damage to Plaintiff's premises at 31-11 Thompson Avenue, Long Island City, New York (the "Building"). The Building was insured by Defendant under Policy No. CLP 1032174, which was in effect from July 1, 1998 to July 1, 1999 (hereinafter the "Policy").
Before the Court is Defendant's motion for summary judgment. Defendant also has moved to strike Plaintiff's references to a 1994-1995 insurance policy and to strike Plaintiff's 56.1 Statement of Facts.
The Court has considered thoroughly all of the submissions related to these motions. For the reasons set forth below, Defendant's motion to strike is denied. Defendant's motion for summary judgment is also denied.
BACKGROUND
The following factual recitation is based on the parties' statements of material facts pursuant to Local Rule 56.1 and affidavits submitted in connection with the motion for summary judgment. The facts outlined below are undisputed except as otherwise noted.
Plaintiff is the lessee and beneficial owner of the Building. Plaintiff alleges that the Policy was a comprehensive all risk policy which insured the Building against all risks of direct physical loss or damage, except as expressly excluded by the Policy's terms and conditions.
In the Spring of 1999, while Plaintiff performed routine facade work at its facilities, cracks were discovered in the Building's concrete support columns. Plaintiff alleges that, as the facade work progressed, it discovered that (a) the Building's structural concrete frame had deteriorated; (b) its supporting columns had suffered severe damage; and (c) the damage was not localized.
In July 1999, Plaintiff notified Defendant of the damage to the Building. After completing an investigation of the loss, Defendant declined Plaintiff's claim stating in a letter, dated July 25, 2001, that "the cause of the damage were [sic] design and construction defects during the original construction . . . [s]pecifically, there were no vertical expansion joints, which allowed long-term moisture and thermal movement of the brick masonry veneer." Letter from Def. to Haber, dated July 25, 2001, Ex. 6 to Wolosky Decl.
Plaintiff filed this action on September 4, 2001.
DISCUSSION
Motion to Strike 1994-1995 Policy Defendant moves to strike portions of Plaintiff's brief and of the Wolosky Declaration filed in opposition to Defendant's motion. Specifically, Defendant argues that the Court should strike references to a 1994-95 insurance policy issued by Defendant, which is appended to the Wolosky Declaration and cited in Plaintiff's memorandum. Defendant argues that Plaintiff did not produce a copy of the this policy in response to Defendant's January 2002 request for the production of, among other things, all "historical policy materials" in the possession of Defendant as well as any documents which support its claims. Defendant argues that Plaintiff never produced the 1994-95 policy document in discovery.
Defendant's motion to strike references to the 1994-95 policy is denied. Even if the 1994-95 policy document was within the scope of Defendant's requests, the extreme sanction of precluding proffer of the evidence is not warranted because no prejudice has been shown and Defendant has not even represented that it was unaware of existence of this policy.
Precluding evidence "that was not disclosed in discovery is a drastic remedy and will apply only in situations where the failure to disclose represents a flagrant bad faith and callous disregard for the rules," Johnson Electric North America, Inc. v. Mabuchi Motor America Corp., 77 F. Supp.2d 446, 458 (S.D.N.Y. 1999); McNerney v. Archer Daniels Midland Co., 164 F.R.D. 584, 587 (W.D.N.Y. 1995), and is a matter within the trial court's discretion, Johnson Electric North America, Inc., 77 F. Supp.2d at 458; Ventra v. United States, 121 F. Supp.2d 326, 332 (S.D.N.Y. 2000). Here, because there is no evidence of bad faith on Plaintiff's part in failing to produce a copy of the 1994-95 policy and for the reasons explained above, Defendant's motion to strike references to the 1994-95 policy and preclude the evidence is denied.
Plaintiff must produce any further documents responsive to Defendant's First Set of Requests numbers 7, 8 and 9 within 20 days from the date hereof. See Def.'s First Set of Requests for Production, served on Jan. 3, 2002, Request Nos. 7, 8, 9, Ex. A to Def.'s Mot. to Strike.
Local Rule 56.1 Statement of Facts Defendant further asserts that Plaintiff's Local Rule 56.1 fact statement "does not comport with Rule 56.1 and must be stricken in its entirety." Def.'s Mot. to Strike Pl.'s Fact Stmt ¶ 9.
In the Southern District of New York, parties moving for summary judgment must submit 56.1 Statements. LOCAL CIV. R. 56.1(a). Nonmoving parties must respond with separate statements of material fact as to which they contend there is a genuine issue for trial. Id. 56.1(b). Any facts posited by the moving party that are not controverted by the nonmoving party are deemed admitted. Id. 56.1(c). Both parties must cite to admissible evidence following each statement of fact for that statement itself to be admissible. Id. 56.1(d).
Defendant's motion to strike Plaintiff's 56.1 Statement is denied. Although it does not comport strictly with the particulars of the local rule in all respects, Plaintiff's 56.1 Statement is sufficient to identify factual issues warranting trial. Motion for Summary Judgment Defendant seeks summary judgment, contending that the Policy does not afford coverage to Plaintiff. Defendant argues that a fortuitous loss did not occur during the Policy period and that Plaintiff did not meet the Policy's immediate notice requirements or the Policy's two-year statute of limitations to file suit.
Summary judgment shall be granted in favor of a moving party where the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the burden of establishing the absence of any genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). When considering a motion for summary judgment, the Court does not engage in fact-finding or weighing of credibility, but determines whether any material questions of fact are in dispute after resolving all ambiguities and drawing all justifiable inferences in favor of the nonmoving party. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 250; Carlton v. Mystic Transportation Inc., 202 F.3d 129, 133 (2d Cir. 2000). Conclusory allegations, conjecture and speculation will not, however, create a genuine issue of fact. Kerzer v. Knigly Manufacturing, 156 F.3d 396, 400 (2d Cir. 1998). A genuine issue of material fact exists if "a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248; Converse v. General Motors Corp., 893 F.2d 513, 514 (2d Cir. 1990).
The pertinent Policy provision reads as follows:
This policy insures against all risks of direct physical loss or damage, except as excluded, to covered property while on Described Premises, provided such physical damage occurs during the term of this policy.
Policy, at AU 00019, Ex. 21 to Heiss Decl.
Defendant's Policy also contains a two-year limitations provision which requires that any suit be filed within two years "after inception of the loss" and a notice provision which requires "immediate written notice" to Plaintiff of any loss. Policy at AU 00006-7.
To demonstrate its entitlement in the first instance to coverage for a loss under this all-risks policy, Plaintiff need merely "prove the existence of the policy and a fortuitous loss of the covered property." Allied Van Lines v. Centennial Ins. Co., 685 F. Supp. 344, 345 (S.D.N.Y. 1988). A loss is fortuitous unless it "results from an inherent defect, ordinary wear and tear, or intentional misconduct of the insured." Ingersoll v. M/V Bodena, 829 F.2d 293, 307 (2d Cir. 1987). As the Policy is an all risk policy, the burden falls upon the insurer, Defendant, "to prove by a preponderance of the evidence that the loss occurred through a specifically excluded peril." Abi Asset Corp. v. The Twin City Fire Ins. Co., No. 96 Civ. 2067 (AGS), 1997 WL 724568, at * 1 (S.D. N.Y., Nov. 18, 1997), citing Pan American World Airways v. Aetna Casualty Surety Co., 505 F.2d 989, 999 (2d Cir. 1974). Such "exclusions will be given the interpretation which is most beneficial to the insured." Pan American, 505 F.2d at 999. Where, as here, its legal position is based on an exclusion provision of the Policy, the insurer bears the burden of demonstrating that its interpretation is the only reasonable one. Pan American, 505 F.2d at 999-1000.
Here, material issues of fact preclude summary judgment. Plaintiff has come forward with sufficient evidence to demonstrate that there are questions of fact as to whether an excluded peril was the proximate cause of the loss and, further, whether the damage occurred during the Policy period. See Pan American, 505 F.2d at 1006. New York courts give a narrow scope to the inquiry of proximate cause in this context. Id.; Great Northern Ins. Co. v. Dayco Corp., 637 F. Supp. 765, 778 (1986). Thus, "the causation inquiry stops at the efficient physical cause of the loss; it does not trace events back to their metaphysical beginnings." Pan American, 505 F.2d at 1006 (rejecting arguments that politically-motivated hijacking came within war risk exclusion to all-risk policy). Yet, courts are not constrained "to settle upon the cause nearest the loss without regard to other factors." Id. New York courts determine causation by "`follow[ing] the chain of causation so far, and so far only as the parties meant that [the Court] should follow it.'" Album Realty v. American Home Assurance Co., 80 N.Y.2d 1008 (1992) (quoting Goldstein v. Standard Acc. Ins. Co., 236 N.Y. 178, 183 (1923)). Thus, "absent an explicit policy declaration of the parties' intention," the Court looks at "all the circumstances surrounding the loss, including whether a peril insured against came directly or indirectly within such proximity to the property insured that the damage it sustained fairly can be considered `within the compass of reasonable probability.'" Continental Ins. Co. v. Arkwright Mut. Ins. Co., 102 F.3d 30, 36 (1st Cir. 1996) (quoting Bird v. St. Paul Fire Marine Ins. Co., 224 N.Y. 47 (1918) (Cardozo, J.)).
Here, Plaintiff has come forward with sufficient evidence in the form of submissions by experts to frame a question of fact as to what caused the damage to the Building and, thus, when the damage occurred. The conclusion of Defendant's expert, Wiss, Janney, Elstner Associates, Inc. ("WJE") that the damage to the Building is attributable to long term moisture and thermal movement is controverted by Plaintiff's experts. According to Plaintiff's expert, LZA Technology, there are several possible causes for the damage which WJE was aware of but did not address in its report to Defendant. See LZA Technology's Letter to Haber, dated January 25, 2001, Ex. 13 to Decl. in Opp'n to Summ. J. Plaintiff's other experts, Future Tech Consultants of New York, concluded that "the type and degree of damage observed could not possibly have resulted solely from the expansion of the brick veneer between the frame columns" and further suggests that the damage could have resulted form vehicular usage. FutureTech Consultants of NY's Letter to Rizzo, dated January 23, 2001, Ex. 12 to Decl. in Opp'n to Summ. J. Thus, there is a question of fact as to the proximate cause of the damage sufficient to defeat summary judgment.
Defendant further argues that Plaintiff's claims did not comply with the Policy's notice provision, which requires "immediate written notice of any loss." Prompt notice provisions "require that notice be give within a reasonable time under all the circumstances," and courts have adhered strictly to such provisions, "even for losses `which appear insubstantial or which in the insured's estimation may not ultimately ripen into a claim. '" Myers v. Cigna Property and Casualty Insurance Co., 953 F. Supp. 551, 556 (S.D.N.Y. 1997) (citations omitted); see also Alvorada Insurance Co. v. Julius Chavis, 150 A.D.2d 332, 333 (2d Dep't 1989). Although "where there is no excuse for the delay and mitigating considerations are absent, the issue may be disposed of as a matter of law in advance of trial," here Plaintiff has come forward with explanations and mitigating considerations for its delay in notifying Defendant of its loss, including the assertion that Plaintiff was not aware of extent of the damage until July 1999. Power Authority of the State of New York v. Westinghouse Elec. Corp., 117 A.D.2d 336, 339-40 (1st Dep't 1986). There is therefore an issue of fact as to whether notice was given within a reasonable time under the circumstances. Further, Defendant has not asserted or established that the alleged failure to give timely notice resulted in any prejudice to it.
Finally, Defendant claims that this action is time barred by the Policy's limitation provision, which requires that an action against the insurer be commenced within 2 years "after inception of the loss." Defendant argues that this action is time-barred because Plaintiff cites the date of loss as June 1, 1999 and the complaint was filed in this Court on September 4, 2001.
Here, there is evidence in the record that, on or about January 21, 2001, Defendant made Plaintiff aware that it was willing to settle the matter, specifically, that the Defendant would maintain an open mind and that further documentation of the cause of the loss would be considered in determining Defendant's position as to the claim. See Rizzo Report to Kennedy, dated Jan. 31, 2001 at pp. 1-2, Ex. 14 to Decl. in Opp'n to Mot. for Summ. J.; Khasawneh Dep. pp. 79, Ex. 3 to Decl. in Supp. of Mot. for Summ. J. Plaintiff has presented sufficient evidence to establish that genuine issues of fact exist as to whether Defendant is estopped from asserting the limitations provision of the Policy. See Insurance Co. of North America v. UNR Industries, Inc., Nos. 92 Civ. 4236, 92 Civ. 8182 (KTD), 1994 WL 10606, at *3 (S.D.N.Y. Jan. 11, 1994).
Defendant's motion for summary judgment in this matter is thus denied.
CONCLUSION
For the reasons stated above, Defendant's motion to strike is denied. Plaintiff must produce any further documents responsive to Defendant's First Set of Requests numbers 7, 8 and 9 within 20 days.
Defendant's motion for summary judgment is also denied.
The parties are directed to meet promptly with Judge Fox for settlement purposes.
A final pre-trial conference shall be held in this matter on June 19, 2003 at 3:00 p.m. Pre-conference submissions shall be made in accordance with the schedule set forth in the Pre-Trial Scheduling Order entered in this action on or about December 18, 2001.
SO ORDERED.