Opinion
E2019003583
01-23-2020
WRIGHT WISNER DISTRIBUTING CORP. d/b/a Wright Beverage Distributing, Wright Real Estate LLC, Plaintiffs, v. REPUBLIC-FRANKLIN INSURANCE COMPANY, Defendant.
For Plaintiff: BARCLAY DAMON, LLP, By: Mark T. Whitford, Jr., 100 Chestnut Street Suite 2000, Rochester, NY 14614 For Defendant: RUPP BAASE PFALZGRAF CUNNINGHAM, LLC, By: Marco Cercone, Esq; Sean M. Esford, Esq., 1600 Liberty Building, Buffalo, NY 14202
For Plaintiff: BARCLAY DAMON, LLP, By: Mark T. Whitford, Jr., 100 Chestnut Street Suite 2000, Rochester, NY 14614
For Defendant: RUPP BAASE PFALZGRAF CUNNINGHAM, LLC, By: Marco Cercone, Esq; Sean M. Esford, Esq., 1600 Liberty Building, Buffalo, NY 14202
Christopher S. Ciaccio, J.
In this action for a declaratory judgment and/or damages, the plaintiffs Wright Wisner Distributing Corp. D/B/A Wright Beverage Distributing, and Wright Real Estate LLC (referred collectively hereafter as "Wright Wisner") move for a judgment declaring that defendant Republic-Franklin Insurance Company ("Republic-Franklin") has an obligation under a "Backup Endorsement" to provide coverage in the amount of $25,000.00, which is the limit of the applicable coverage, for damage to a commercial property caused by the overflow of drains following a heavy rainstorm.
For the reasons below, the motion is granted, with costs.
The following facts are not in dispute.
On August 8, 2018 an unusually heavy rainstorm caused drains on the roof of Wright-Wisner's building to backup and overflow. The resulting spillover of rainwater then seeped down into the building and damaged the interior, with the losses totaling over $200,000.
Wright Wisner promptly notified its property insurer Republic-Franklin of the loss and its intent to make a claim. The insurer sent an engineer to the site to examine the roof and the damage, and in a report (made a part of the defendant's submissions but referenced by the Denial letter submitted by the plaintiffs), she concluded that the damage to the interior was caused by
"Roof leaks at the office building (which) were caused by an intense rainstorm on the DOL (date of loss) that overwhelmed the roof drains allowing water to back up on the roof and leak through openings around roof penetrations located above the roof plane."
The insurer denied coverage, arguing that the damage to the roof was not a covered loss, referring its insured to "Section C." of the policy, titled "Limitations," which reads that the insurer will not pay for damage to the interior of a building "caused or resulting from rain " (Section C. [1][c] ). The insurer also stated that coverage would not be afforded because any loss due to "faulty workmanship" was excluded.
However, Wright Wisner was not making a claim under the main body of the insurance policy but under a "Backup Endorsement" it had purchased, which provided $25,0000 of coverage in the event a loss to "covered property" is caused "solely by water that backs up through or overflows from a drain."
In response to Wright Wisner's claim under the Backup Endorsement, Republic-Franklin followed up with an email to Wright-Wisner's CEO Jeri Rippon, in which Republic-Franklin denied coverage under the Backup endorsement as well, citing two arguments: one, that the loss was not caused "solely" by the backup, and two, that the loss was caused by a "concurrent" event which was excluded from coverage "under Section D" of the Backup Endorsement. The exclusion in Section D of the Backup Endorsement provides that
"the coverage provided by this endorsement is not flood Insurance and does not apply to any loss or damage that is induced by or caused directly or indirectly by flood, surface water, waves (including tidal wave and tsunami), tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind (including storm surge)"
This action ensued.
It is well-settled that a party seeking summary judgment bears the initial burden of demonstrating its entitlement to judgment as a matter of law by submitting evidentiary proof in admissible form (see Zuckerman v. City of New York, 49 NY2d 557, 562 [1980] ).In the context of a dispute over insurance coverage, "[C]ourts bear the responsibility of determining the rights or obligations of parties under insurance contracts based on the specific language of the policies" ( Sanabria v. Am. Home Assur. Co. , 68 NY2d 866, 868 [1986], quoting State of New York v. Home Indem. Co., 66 NY2d 669, 67 [1985] ) and unambiguous provisions must be given their plain and ordinary meaning ( United States Fid. & Guar. Co. v. Annunziata, 67 NY2d 229, 232 [1986] ).
To the extent there is any ambiguity, the standard rules of insurance contract interpretation apply. Where "a contract is ambiguous, its interpretation remains the exclusive function of the court unless determination of the intent of the parties depends on the credibility of extrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsic evidence" ( Ames v. County of Monroe , 162 AD3d 1724, 1725-26 [4th Dept 2018] [internal quotations and citations omitted] ).
" ‘[E]xclusions are subject to strict construction and must be read narrowly’ " ( Georgetown Capital Group, Inc. v. Everest Nat. Ins. Co. , 104 AD3d 1150, 1152, 961 NYS2d 622 [4th Dept 2013], quoting Automobile Ins. Co. of Hartford , 7 NY3d 131, 137 [2006] ). In order to establish that an exclusion defeats coverage, the insurer has the "heavy burden" of establishing that the exclusion is expressed in clear and unmistakable language, is subject to no other reasonable interpretation, and is applicable to the facts (Georgetown Capital Group, Inc. at 1150)
"[A]mbiguities in an insurance policy are to be construed against the insurer" ( Dean v. Tower Ins. Co. of New York , 19 NY3d 704, 708 [2012], citing Breed v. Insurance Co. of North America , 46 NY2d 351, 353 [1978] ).
Here, Wright Wisner established its entitlement to summary judgment by submitting the policy in question, including the "Backup Endorsement," and the affidavit of its CEO, Jeri Rippon, who states that the damage to the building was due to heavy rains that in turn caused drains to become "overwhelmed." According to Mr. Rippon, water then backed up out of those drains and entered the building through ventilation openings six to twelve inches above the roof line, an event that had never before occurred since the building was constructed by Wright Wisner in 1964. He further states that no defect in the design or construction of the building contributed to the damage, and at no time since the construction of the building had any defect ever been identified or pointed out.
The "Backup Endorsement" issued by Republic-Franklin provides coverage:
"for direct physical loss of or damage to Covered Property solely caused by or resulting from water or waterborne material that backs up through or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment."
Thus, Wright Wisner has established its entitlement to a judgment finding coverage under the "Backup Endorsement."
Republic-Franklin's does not defeat Wright Wisner's claim, as it runs contrary to the plain and unambiguous language of the endorsement. It asserted that the loss was not a "covered" loss, because the overflowed drains did not "solely" cause the damage, and in support, it submitted the engineering report of Sarah Byer, P.E., which concluded that an "intense rainstorm" caused water to backup and flow into the building, which is the same conclusion offered by the insured. While the report mentions "undersized scuppers," it merely suggests that the owner of the building "may" want to enlarge them which "may" aid in preventing a future similar occurrence. She renders no opinion that a defective design caused or contributed to the loss.
Republic-Franklin also asserted that the loss was caused by a concurrent cause that is an exclusion under Section D of the Backup Endorsement. None of the exclusions listed there were remotely involved in the causing the water to backup.
In its submissions in opposition to the plaintiff's motion, Republic-Franklin repeats and refines the disclaimer argument that its engineer's report left open the possibility that the cause of the water seeping into the building may have been a design defect, presumably the "undersized scuppers," thus, entitlement to summary judgment has not been established.
That argument is rejected. As indicated above, the engineer's report reference to the "undersized scuppers" is not the equivalent of an opinion that a design defect caused the seepage and cannot defeat the motion.
Even if the engineer had opined that a design defect was a contributing factor, that would not defeat the motion or provide a basis for the disclaimer. The policy covers a loss "solely caused by or resulting from (emphasis added) water that backs up or overflows a drain." To the extent that there is any ambiguity in the language of the Endorsement, the court finds, construing the language against its maker, that "solely" is not negated by a design defect but is only affected by those causes set forth in the exclusionary clause ("flood, surface water, waves [etc.] ). Moreover, "solely" is not to be read as modifying "resulting from;" rather, "resulting from" stands on its own. In other words, if a loss "is resulting from" an overflowed drain, regardless of whether some other agent was involved, it is a covered loss.
No external or extrinsic evidence has been presented to render the meaning of the endorsement more clear, thus, the court finds under a strict reading of the contract, the exclusions do not apply and that "solely" is not negated by the existence of a design defect, nor does it modify the phrase, "resulting from."
Republic-Franklin also argues that there are material issues of fact precluding summary judgment as to whether a defective design contributed to the loss. As noted above, defective design is not an excluded event under the Backup Endorsement, nor does it negate coverage because the event was not caused "solely" by the rain overflow. Even if it was (or even if defective design is an exclusion under the main body of the policy [Section B.3 (2) ], the report of defendant's own engineer fails to raise an issue of fact sufficiently to defeat a motion for summary judgment.
Finally, defendant argues that this motion is premature, in that discovery may provide information relating to the defective design of the building, and that the plaintiff is engaging in "gamesmanship."
A party opposing a motion for summary judgment on the ground that he needs additional time to conduct discovery is required to submit "affidavits" demonstrating that "facts essential to justify opposition may exist but cannot be stated." ( Civil Practice Laws and Rules 3212 [f] ). Here, defendant has submitted no affidavits to demonstrate the existence of any facts which may exist, but rather, has proposed conducting what amounts to a fishing expedition to flush out possible design defects which may have contributed to the loss. Its own engineer has already inspected the building, so the "facts" are known, and in any event, as noted above, her report makes no reference to a design defect. Even if it did, as discussed above, a design defect is not an exclusion and is not a basis to believe that the loss was not caused solely by the overflow.
Accordingly, coverage under the Backup endorsement should have been afforded to the plaintiff.
The motion is granted, and plaintiff is awarded judgment, as requested, in the amount of $25,000 with interest and costs, dating back to the date the claim was denied, or January 31, 2019.
SO ORDERED.