Hon. Brenda K. Sannes, United States District Court Judge.
Plaintiff Robert T. Iannucci commenced this action in the Supreme Court of the State of New York, Ulster County, on February 12, 2016, alleging breach of contract after Defendant Allstate Insurance Company ("Allstate") denied his claim for coverage of the roof collapse of his building located at 221 Catherine Street in Kingston, New York. (Dkt. No. 2). On March 30, 2016, Allstate removed this action to the United States District Court for the Northern District of New York based on diversity of citizenship under 28 U.S.C. § 1332. (Dkt. No. 1). On June 19 and 20, 2018, the Court held a two-day bench trial in Albany, New York, at which six fact witnesses and four expert witnesses testified. (Dkt. Nos. 94-95). Both parties have submitted proposed findings of fact and conclusions of law. (Dkt. Nos. 96, 97, 99, 101). The Court has carefully considered the trial record, the credibility of the witnesses at trial, and the submissions of the parties. In accordance with Rule 52(a) of the Federal Rules of Civil Procedure, the
In 2005, Plaintiff purchased a parcel of land together with a building located at 221 Catherine Street in Kingston, New York. (T. 96-97). The three-story building was a multi-family residential brick structure, built in approximately 1870, with a wood-framed gable roof topped with asphalt shingles. (Ex. P-3, at 1; D-12, at 000536; Ex. D-35, at 2). Plaintiff testified that he paid $125,000 for the property. (T. 96, 391). No one resided in the building at the time Plaintiff purchased the property or afterward; Plaintiff testified that he intended to use the building as an anchor structure for a larger residential project. (T. 97, 103-104, 139). Plaintiff disconnected the building from electric, gas, and water utility lines; removed the bathrooms and kitchens; and boarded up the first-story doors and windows. (T. 97, 106, 151).
The building was not well maintained. (See, e.g., T. 100-03, 190, 206; Ex. D-28(a)-(c)). Plaintiff testified that, other than occasional exterior inspections and lawn work, he did not perform or have any work performed on the building between 2005 and 2014. (T. 113, 141, 150-151). One long-time neighbor described the building as "abandoned," "condemned," and deteriorating. (T. 190). Photos of the property from 2012, obtained from Google Street View, show damage to the bricks, mortar, gutters, and fascia of the building, as well as a small tree growing at the roofline.
One such violation notice, issued on October 17, 2013, stated that "the roof on your house needs to be replaced" and warned Plaintiff that "[f]ailure to begin work" to remedy the violation would result in a fine. (Ex. D-11). Plaintiff responded by writing to KFD Deputy Fire Chief David Allen, explaining that he had "done nothing to the property" since receiving the notice and that he believed there were "good reasons to allow the property to remain in its present condition." (Ex. D-18).
Mr. Horowitz did not testify at trial.
Plaintiff testified that, as a result of Mr. Horowitz's inspection, he intended to replace the shingles—but not the rafters, decking, or other underlying structural elements of the roof—at the end of the winter "when the weather would be more friendly." (T. 112). Before any such work was performed, however, the roof collapsed during a snowstorm on February 21, 2014. (Ex. P-1, at 000355; Ex. D-16, at 001399-401).
From the time he purchased the Catherine Street building in 2005, Plaintiff insured the property under Allstate's "New York Landlords Package Policy" (the "Policy"). (Ex. D-1, at 000677). The Policy provides a maximum of $103,000 in dwelling protection coverage and up to an additional 5% of that amount, or $5,150, for debris removal following a covered loss. (Ex. D-1, at 000645-46, 000682). The Policy states that "[l]oss to property insured by this policy ... will be settled on an actual cash value basis," and specifies, in relevant part, that "[p]ayment will not exceed the smallest of: (a) the actual cash value of the damaged [or] destroyed ... property at the time of loss; (b) the amount necessary to repair or replace the damaged [or] destroyed... property with other of like kind and quality." (Id. at 000663; T. 225-26).
The Policy under which the Catherine Street property was insured contains both "all-risk" coverages—meaning coverage for any loss or cause of loss, except those expressly excluded from coverage—and named-peril coverages that extend protection only to losses caused by specific risks. (T. 227-29). To that end, "Coverage A"—the all-risk section of the Policy—extends coverage to an insured's "dwelling, including attached structures, at the residence premises."
(Id. at 00675-78). Subsection 24 of the "Losses We Do Not Cover" exclusion section contains a predominant cause exclusion, which states that, in the event that "there are two or more causes of loss to the covered property" and the "predominant cause(s) of loss is (are) excluded," Allstate will not cover the loss. (Id. at 000678).
In addition to all-risk coverage subject to specified exclusions, the Policy also contains a "Section I—Additional Protection" section listing named-perils covered beyond those encompassed by Coverages A, B, and C. (Id. at 000682). These "Additional Protection[s]" include, for example, the cost of removing debris resulting from a covered loss and certain specified collapses. (Id.; T. 227). The collapse provision in the "Additional Protection" section ("Additional Protection 6") provides that Allstate "will cover: (a) the entire collapse of a covered building structure; (b) the entire collapse of part of a covered building structure; and (c) direct physical loss to covered property caused by (a) or (b) above." (Ex. D-1, at 000682). For such coverage to apply, however, the Policy specifies that any such collapse must "be a sudden and accidental direct physical loss caused by one or more" of six named causes. (Id.). In relevant part, these causes include "(b) hidden decay of the building structure [or] ... (e) weight of rain or snow which collects on a roof." (Id. at 000682-83).
On March 3, 2013, the KFD issued a "violation notice and order to remedy," directing Plaintiff to demolish the Catherine Street building because the "roof ha[d] collapsed[,] causing an unsafe environment to the safety of the public." (Ex. D-16, at 001403). Multiple documents in the City of Kingston's "street file" on the Catherine Street property indicated that the collapse of the roof was caused by "heavy accumulation
Plaintiff notified Allstate of the collapse on March 4, 2014; Allstate began its investigation of the collapse immediately thereafter, scheduling an inspection of the Catherine Street property for March 7, 2014. (T. 233; Ex. P-1, at 000355). John Kirk, an Allstate claims adjuster,
On April 22, 2014, Allstate denied Plaintiff's claim based on the conclusion of Mr. Reid's EFI Global report that the "cause of the roof collapse [was] ... a lack of adequate and timely maintenance that resulted in hidden and long term deterioration of the roof rafters, decking and inadequate restraint for the lateral thrust at the ends of the rafters." (Ex. D-6, at 000539 (Reid's March 2014 report); see also Ex. D-2, at 000588 (Allstate's denial of coverage letter using same language)). According to the denial letter, the weakness resulting from Plaintiff's failure to maintain the roof ultimately caused "the rafters to fail under snow load conditions well below that which the building framing should have been designed and constructed to withstand." (Ex. D-2, at 000588). In support of its conclusion that Plaintiff's claim was excluded from coverage, Allstate cited several Policy provisions excluding losses caused by or consisting of enforcement of
On May 5, 2014, Plaintiff requested that Allstate reconsider its denial and review a May 2, 2014 report authored by Timothy Lynch, a structural engineer, regarding the cause of the collapse. (T. 233-34). Mr. Lynch's report stated that, upon inspection of the collapsed roof, he concluded that the "loss was the result of a collapse of a portion of the structure caused by the weight of snow or hidden damage." (Ex. P-3, at 2). Allstate reviewed Lynch's report but reaffirmed its denial on May 15, 2014, (Ex. D-3), and issued a final determination of denial on October 15, 2014, (Ex. D-4).
At trial, all of the witnesses who gave testimony relevant to the issue expressed similar theories as to the mechanics of the collapse. The consensus view, generally stated, was that: (i) under the weight of the snow, the top plates
Plaintiff's expert structural engineer, Timothy Lynch, testified that he inspected the Catherine Street building in April 2014 after the roof collapsed. (T. 24). Mr. Lynch stated that the weakening in the roof structure was "likely wood rot or deterioration from water intrusion," and also that he observed fire damage to the rafters.
Plaintiff's roofing expert, Ian Horowitz, was the only witness who testified that he observed the condition of the roof and its supporting elements before the collapse on February 21, 2014. (Ex. P-17, at 15-22). Following the collapse, he reported observing "classic signs of collapse by live load," including "[c]racked and split rafters as well as main ridge pole and beams completely severed due to weight." (Ex. P-2). Based on his pre- and post-collapse observations of the roof, Mr. Horowitz opined that, despite some deterioration, "the only factor involved" in the collapse of the roof was "heavy snow." (Id.). Since, however, the Court does not credit Mr. Horowitz's testimony regarding his pre-collapse inspection, the Court does not credit his opinion regarding the cause of the roof collapse.
The Court credits the testimony of the Defendant's witnesses on this issue. John Kirk, the property adjuster assigned to Plaintiff's claim, testified that, although the snow may have been the triggering event, the building had deteriorated to the point that "it was inevitable that this building was goin[g] to collapse ... a bird could have done it, too, by landin[g] on it." (T. 258). He testified that the wooden structural components of the roof showed indications of long-term exposure to the elements and described their condition as "almost like a piece of driftwood, it [was] just crumbly." (T. 259). Morris Reid testified that his inspection of the property revealed that all aspects of the building, not just the roof, were inadequately maintained and structurally impaired. (T. 321-26). Mr. Reid stated that this lack of maintenance led to deterioration of the roof over time, until the "roof was in a condition [such that] it would not support the snow load for which it was originally designed." (T. 328). Although Mr. Reid stated that he believed the roof "collapsed because of the weight of the snow," he further testified that it "collapsed under snow load conditions far below which it should have been designed to withstand" due to "inadequate maintenance of the roofin[g] systems." (T. 338). Finally, Herbert Cannon, Allstate's architectural and roofing expert, concluded that, although "the presence of the snow load is what caused the structure to give," (T. 369), there "was enough damage to the structure" that "it was inevitable that ... the roof would have collapsed." (T. 382). Mr. Cannon noted that, over the course of its
Plaintiff argues that the evidence presented at trial demonstrates that the claimed loss is within coverage because it consisted of a sudden collapse caused by the weight of snow and/or hidden decay. (Dkt. No. 96, at 26, 29-30). Allstate, on the other hand, argues that Plaintiff failed to carry his burden of proving any of the requisite elements under the Policy, (Dkt. No. 97, at 58), and that, in any event, it carried its own burden of proving that the collapse was predominantly attributable to an excluded cause, (id. at 60).
Under New York law, courts interpret insurance policies like any other contract, J.P. Morgan Sec. Inc. v. Vigilant Ins. Co., 21 N.Y.3d 324, 334, 970 N.Y.S.2d 733, 992 N.E.2d 1076 (2013), giving unambiguous provisions of a policy their "plain and ordinary meaning," White v. Cont'l Cas. Co., 9 N.Y.3d 264, 267, 848 N.Y.S.2d 603, 878 N.E.2d 1019 (2007).
Under New York law, an insurance policy containing both all-risk and named-perils coverage is commonly known as a "hybrid" policy. Fabozzi v. Lexington Ins. Co., 639 F. App'x 758, 761 n.1 (2d Cir. 2016). Under a hybrid policy, an all-risk section provides coverage subject to certain excluded losses or causes of loss; a named-perils section, on the other hand, requires the occurrence of certain conditions or the presence of some expressly described circumstance for a loss to come within coverage. Id. at 760. Under either an all-risk or a named-perils policy, the insured carries the burden of demonstrating that the loss claimed is within coverage. See Int'l Multifoods Corp., 309 F.3d at 83 (describing an insured's "relatively light" burden of demonstrating coverage under an all-risk policy); Fabozzi, 639 F. App'x at 760 (explaining that the insured must prove that loss claimed satisfies conditions of named-perils coverage). Once an insured demonstrates that their loss is covered, the insurer has the burden of showing that an exclusion applies. See Miller Marine Servs. v. Travelers Prop. Cas. Ins. Co., No. 04-cv-5679, 2005 WL 2334385, at
As described above, the Allstate Policy excludes "collapse" from coverage under the all-risk section, (Ex. D-1, at 000676), except where the conditions described under a relevant named-perils provision, (id. at 000682), are met. Thus, Plaintiff carries the burden of proving that his claim is within coverage under Additional Protection 6. See Fabozzi, 639 F. App'x at 761. Assuming Plaintiff satisfies that burden, the claim is within coverage unless Allstate proves that an exclusion, including the predominant loss exclusion, is applicable. Finally, Plaintiff must prove damages.
The relevant provision, Additional Protection 6, states that Allstate insures the "direct physical loss to covered property caused by" the "entire collapse of a covered building structure" or "the entire collapse of part of a covered building structure." (Ex. D-1, at 000682). The policy further provides that any such collapse must have been a "sudden and accidental direct physical loss caused by one or more of the following," then lists six causal events that trigger coverage. (Id.).
The parties both acknowledge that the loss at issue was an "entire collapse," but dispute the extent of the collapse. Plaintiff argues that the loss was an "entire collapse of a covered building structure" because it "rendered the structure unsafe and beyond repair," eventually requiring total demolition. (Dkt. No. 96, at 33). Allstate contends that, while there was an entire collapse of the roof—"part of a covered building structure"—there was not an entire collapse of the building structure itself. (Dkt. No. 97, at 68).
The Policy does not define "entire collapse."
To the extent "entire collapse" means an actual collapse, there was not an actual collapse of the building following the snowstorm. On February 22, 2014, the morning after the roof collapsed, KFD examined the building and noted that "the building appeared stable" and the "risk of further collapse did not seem likely." (Ex. D-16, at 001401). It was not until March 3, 2014—more than a week later—that the City of Kingston determined that the roofless structure was a public hazard, at risk of additional collapse. (Ex. D-16, at 001403).
To the extent "entire collapse" can be interpreted to mean a comprehensive or complete "substantial impairment to the structural integrity of the building," that is a harder question. There was conflicting testimony regarding the structural integrity of the building.
On the other hand, other witnesses—including Deputy Fire Chief Tiano and Defendant's expert electrical engineer, Mr. Reid—testified that it was not safe to enter
In any event, the Court need not decide whether there was an "entire collapse" under an expanded definition of that term because, as discussed below, Plaintiff failed to prove that any structural impairment of the building that might constitute an "entire collapse" occurred "suddenly" or as a result of a coverage-triggering event, such as the weight of snow. The Court thus finds that there was an "entire collapse of part of a covered building structure"—the roof—within the meaning of the Policy.
Allstate argues that Plaintiff's claim was not within coverage because Plaintiff failed to adduce evidence proving that the collapse of the roof was a "sudden and accidental" loss within the meaning of the Policy. (Dkt. No. 97, at 58).
The two terms—"sudden" and "accidental"—have separate meanings. Northville Indus. Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 89 N.Y.2d 621, 632, 657 N.Y.S.2d 564, 679 N.E.2d 1044 (1997). A "sudden" loss is "an abrupt happenstance" that occurs "abruptly, precipitantly or brought about in a short time." Id. at 632, 657 N.Y.S.2d 564, 679 N.E.2d 1044 (emphasis omitted). Here, the loss of the roof was sudden: it collapsed abruptly overnight on February 21, 2014. (Ex. P-16, at 001401); see also Agosti, 279 F.Supp.3d at 378 (examining a similar "Additional Protection" collapse provision and concluding that "it is clear from the language of the policy that it is the loss, not the cause of the loss that must be `sudden and accidental'").
Plaintiff failed to prove, however, that any purported "entire collapse" of the building—by virtue of its compromised structural integrity—was sudden. Instead, the evidence at trial established that the building's structural impairment was caused by long-term deterioration and predated the February 21, 2014 collapse of the roof. The Court credits the testimony of Timothy Lynch, John Kirk, and Herbert Cannon, all of whom explained how the deterioration of the roof, including the presence of the tree at the roofline, resulted in water damage to the walls of the building structure over time before the collapse. (T. 48, 255-58, 261, 265, 374-75). John Kirk pointed to disintegrating bricks as an indication that, before the roof collapsed, the building's "structural integrity was already compromised." (T. 284-85). Morris Reid's property condition assessment also noted structural damage to the building that predated the collapse of the roof, including "structural cracks in the sidewall" superstructure and "deteriorated masonry pointing and loose bricks." (Ex. P-6, at 000538). He further identified cracked bricks in the façade reflecting "deterioration over time" that was "totally
"Accidental" means "not done `on purpose'" and is the "antonym of `purposely.'" Wolk v. Royal Indem. Co., 27 Misc.2d 478, 484, 210 N.Y.S.2d 677 (2d Dep't 1961). Whether the insured's actions were "negligent, wanton, willful, or even violative of a criminal statute, if the result of such act was not intended then it is accidental." McGroarty v. Great Am. Ins. Co., 36 N.Y.2d 358, 365, 368 N.Y.S.2d 485, 329 N.E.2d 172 (1975) (affirming ruling that damages caused by insured's "calculated risk" were unintended and therefore accidental); see also Olin Corp. v. Ins. Co. of N. Am., 221 F.3d 307, 316-17 (2d Cir. 2000) ("[T]he key to whether the environmental damage ... was `caused by accident' turned here on whether the resulting property damage was caused by [Plaintiff] intentionally."). "The Second Circuit [has] stated, `Recovery will be barred only if the insured intended the damages or if it can be said that the damages were, in a broader sense, "intended" by the insured because the insured knew that the damages would flow directly and immediately from its intentional act.'" Travelers Indem. Co. v. Northrop Grumman Corp., 3 F.Supp.3d 79, 101-02 (S.D.N.Y. 2014) (quoting City of Johnstown, N.Y. v. Bankers Standard Ins. Co., 877 F.2d 1146, 1150 (2d Cir. 1989)).
There was no evidence at trial indicating that Plaintiff intended for the loss to occur. The Court finds that, although Plaintiff neglected the Catherine Street building by, inter alia, failing to maintain and repair the roof, the roof collapse on February 21, 2014 was an unintended and accidental loss. See McGroarty v. Great Am. Ins. Co., 43 A.D.2d 368, 377, 351 N.Y.S.2d 428 ("If the consequences are not adverted to, however willful the preceding acts, the supervening outcome is unintentional within the definition of an accident." (internal quotation marks omitted)).
Finally, Plaintiff adduced evidence at trial sufficient to prove that the collapse of the roof was caused by "weight of ... snow which collect[ed] on [the] roof." (Ex. D-1, at 000682). Every witness who testified to the issue, including Allstate's, acknowledged that the collapse was caused, at least in part, by the weight of snow. (T. 27, 203, 271, 328, 369). Allstate's post-trial submission acknowledges that the roof "collapsed because of the weight of snow on the roof." (Dkt. No. 97, at 58). Accordingly, Plaintiff has satisfied his burden of demonstrating that the collapse of the roof was within coverage under Additional Protection 6.
Plaintiff argues that the building "was razed because it was irreparably damaged due to the roof collapse," and the loss of the entire building is covered as a "direct physical loss" under Additional Protection 6(c). (Dkt. No. 96, at 33).
"The Second Circuit has defined `physical loss or damage' in the insurance context as `strongly impl[ying] that there was an initial satisfactory state that was changed into an unsatisfactory state.'" Channel Fabrics, Inc. v. Hartford Fire Ins. Co., No. 11-cv-3483, 2012 WL 3283484, at *9, 2012 U.S. Dist. LEXIS 113867, at *26 (S.D.N.Y. Aug. 13, 2012) (quoting City of Burlington v. Indem. Ins. Co. of N. Am., 332 F.3d 38, 44 (2d Cir.2003) (collecting cases and concluding that court was "aware of no cases adopting a contrary interpretation of the term")). "The requirement that the loss be `physical,' ... is widely held to ... preclude any claim against the property insurer when the insured merely suffers a detrimental economic impact unaccompanied by a distinct, demonstrable, physical alteration of the property." 10A Couch on Ins. § 148:46. "When the structure of the property itself is unchanged to the naked eye ... and the insured alleges that its usefulness for its normal purposes has been destroyed or reduced, there are serious questions whether the alleged loss satisfies the policy trigger." Id.
Plaintiff cites only to the City's demolition notice as evidence of loss caused by the roof's collapse. There was, however, no evidence indicating how the City of Kingston concluded that the building required demolition one week after reporting that the building appeared stable and unlikely
Both the interior and exterior of the building were in poor condition after the collapse. (Ex. D-6, at 000602-04). But Plaintiff failed to prove what new damage or additional impairment—beyond the destruction of the roof—was directly caused by the collapse. For example, Mr. Lynch testified that the extent of the roof collapse was limited "to the attic level or the ceiling joists at the top of the masonry walls." (T. 26). Photographs included in Mr. Reid's property assessment show that the decking of the roof slid outward, lying flat on top of the masonry walls of the building. (Ex. D-6, at 000569). Having considered all of the evidence and the credibility of all of the witnesses, the Court finds that Plaintiff failed to prove that the collapse of the roof caused additional damage that might have arguably been within coverage, such as new damage to the building's interior, superstructure, or foundation; the development of water damage that was not there previously; or damage to property inside the building.
Having found that Plaintiff met his burden of demonstrating that the collapse of the roof was a sudden and accidental entire collapse of part of a covered building structure, the Court must next determine whether Plaintiff's claim is excluded from coverage under Additional Protection 6 by the predominant cause exclusion contained within the "Losses We Do Not Cover" section of the Policy. That clause provides that Allstate does "not cover loss to covered property ... when: (a) there are two or more causes of loss to the covered property; and (b) the predominant cause(s) of loss is (are) excluded" from coverage. (Ex. D-1, at 000678). Allstate carries the burden of showing that an exclusion applies, and argues that, "[u]nder Fabozzi, if Allstate is able to show that an excluded peril was the predominant cause of the collapse, Allstate will win." (Dkt. No. 97, at 61 (citing Fabozzi, 639 F. App'x at 763 n.3)).
The clause on which Allstate relies does not bar coverage where an excluded cause simply contributed to the loss, but only where an excluded cause was the predominant cause of the loss.
Here, the evidence at trial did not show that any cause was predominant to the weight of snow in directly bringing about the collapse of the roof. Rather, the preponderance of the evidence indicated that the most direct and obvious cause of the collapse of the roof was the weight of approximately 37.5 inches of snow that had accumulated over the course of the winter. (T. 344-45). While other causes—including deterioration or inadequate maintenance—likely "set the stage" for the collapse during the snowstorm, Allstate failed to prove that any of these causes—considered separately or together—predominated over the weight of the snow as the efficient cause of the collapse. Gravino, 73 A.D.3d at 1448, 902 N.Y.S.2d 725 (holding that, even though plaintiff's drainage of the pool was a precondition to the loss, pressure from groundwater was "predominant cause" of damaged caused by pool's rise from ground level).
As noted above, the Policy provides that covered losses "will be settled on an actual cash value basis," further specifying that "[p]ayment will not exceed the smallest of: (a) the actual cash value of the damaged [or] destroyed ... property at the time of loss; (b) the amount necessary to repair or replace the damaged [or] destroyed ... property with other of like kind and quality." (Id. at 000663). Although the Court has determined that Plaintiff carried his burden of proving coverage under Additional Protection 6 for the collapse of the roof, Plaintiff failed to establish the value of his loss under the Policy.
"The purpose of an action on a[n] ... insurance policy is to attempt to put the insured in as good a position as he would have been had no [loss] occurred, by awarding him the actual cash value of the property lost or damaged. Actual cash value (ascertained with proper deductions for depreciation) means actual value expressed in terms of money." Incardona v. Home Indem. Co., 60 A.D.2d 749, 749, 400 N.Y.S.2d 944 (1977) (interpreting similarly worded fire insurance policy that provided "that the amount recoverable is `the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss'"). "The determination of actual cash value is made under a broad rule of evidence which allows the trier of fact to consider every fact and circumstance which would logically tend to the formation of a correct estimate of the loss." Cass v. Finger Lakes Co-op. Ins. Co., 107 A.D.2d 904, 905, 483 N.Y.S.2d 849 (3d Dep't 1985) (internal quotation marks omitted). "[T]o recover damages for breach of contract," an insured is
For the reasons discussed above, Plaintiff's loss under the Policy is limited to the collapse of the roof. Plaintiff failed to adduce any evidence regarding the value of the roof or from which to infer its value, e.g., the market value of the building before and after the collapse or the cost of replacing the roof with one of like kind or quality.
Because Plaintiff has failed to prove the amount of damages resulting from the collapse of the roof, he may not recover under the Policy.
Accordingly, it is
