Residential Management (NY) Inc. v. Federal Insurance Company
MEMORANDUM AND ORDER: Plaintiff has not established the event resulting in the loss is covered by the Policy. Plaintiff fails to meet the requirements under the Additional Coverage for Collapse provision of the Policy: (1) the occurrence does not me et the definition of collapse, and (2) the alleged collapse is not the result of a specified cause of loss, including hidden decay. Accordingly, this Court GRANTS Defendant's Motion for Summary Judgment and DENIES Plaintiff's motion for summary judgment. The complaint is dismissed in its entirety with prejudice. Ordered by Judge William F. Kuntz, II on 8/10/2012. (Brucella, Michelle)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
RESIDENTIAL MANAGEMENT (NY) INC.,
-againstFEDERAL INSURANCE COMPANY,
KUNTZ, United States District Judge
Plaintiff Residential Management (NY) Inc. d/b/a 611 West 158th Street Corp.
action against Defendant Federal
("Defendant") in the Supreme Court of the State of New York for the County of Kings on
February 17, 2011. The action was removed to this Court on March 14, 2011. Plaintiff owns
and operates the subject premises located at 611 West 158th Street in New York, New York (the
"Building"). Plaintiff brings this action for an alleged breach of an insurance policy arising out
of the denial of its claim for the alleged collapse of a steel frame that supported a water tank at
the BUilding. The parties filed cross-motions for summary judgment. For the reasons set forth
below, Defendant's motion for summary judgment is granted, and Plaintiffs motion for
summary judgment is denied.
Defendant issued an insurance policy naming Plaintiff as the insured, effective June 29,
2010 to June 29, 2011 (the "Policy"). Pl.'s Ex. B (Policy 79593183-02). A location schedule to
the Policy designates the Building as Location No. 60, Building No.1 and indicates it is insured
for special causes of loss to limits of $7,078,240 for real property, $10,000 for personal property,
and $537,960 for rental value. Id. A named insured schedule to the Policy names the Building
as insured. Id. The Building has nine (9) stories and forty-four (44) apartments. Pl.'s Ex. E
(Dep. ofR. Diaz), Tr. 9:8-19. There is one tank located on the roof of the Building; the tank is
wooden and is supported by a steel frame. The tank contains water for use in a fire suppression
system. Id. at 20:9-24. In June 2010, Mr. Ramon Diaz was the superintendent of the Building,
where he had worked for approximately sixteen (16) years as an employee of Plaintiff. His
manager was Mr. Sam Becker. Id. at 7:14-10:25. Mr. Diaz testified the steel support frame had
been present sixteen (16) years earlier when he began his employment at the Building. Id. at
A. Alleged Collapse
On June 23, 2010 and June 28, 2010, Richard Pacheco, an employee of Plaintiffs
plumber George Bomzer & Sons, and a helper named "Sean" performed work on the roof of the
Building underneath the water tank in response to a report of a leak. PI. 's Ex. C (Dep. of R.
Pacheco), Tr. 18:18-21:16; 51:10-53:12. Mr. Pacheco inspected an apartment and the roof. He
determined the tank was not the source of the leak, but rather the leak originated in a four-inch
pipe extending from the tank into the interior of the building. Id. at 19:3-26:20.
On June 28, 2010, Mr. Pacheco was removing debris from the area where the leaking
pipe penetrated the roof and observed "the tank felt closer to [his] back." Id. at 35:20-25. He
was kneeling down beneath the tank when he "noticed the tank leaned a little bit." Id. at 36: 1437:14.
Mr. Pacheco estimated the space between the tank and the surface of the roof had
diminished by approximately two (2) inches. He explained a part of the tank in the area of the
parapet wall was not "sitting properly" and "the tank was leaning." He notified his boss Alan
Bomzer and Mr. Diaz. Subsequently, he drained the tank. Id. at 42:3-43:12; 47:11-48:19.
Both Mr. Diaz and Mr. Bomzer notified Mr. Becker about the condition of the tank. Pl.'s
Ex. E, Tr. 46:20-47:4; Def.'s Ex. M (Dep. of S. Becker), Tr. 61 :8-12. Mr. Becker called the
Rosenwach Tank Company and asked to have someone respond immediately to the Building. Id
at 68:13-69:3. In response to Mr. Becker's call, Joseph Smizaski, Director of Operations of
Rosenwach Tank Company, went to the Building at some point in June 2010. Def.'s Ex. 0
(Dep. of J. Smizaski), Tr. 12:25-13:4; 20:6-12. Mr. Smizaski went up to the roof and "saw the
tank structure that supported the wood tank leaning and the tank was leaning .... " Id at 24:610. He observed a beam had "collapsed or had dropped," and, as he got closer, he "could see
that the beam was like just almost sawed in half from rust over a period of time." Id at 24: 1116; 27:1-7. Mr. Smizaski testified the wooden tank appeared to be intact, and he did not observe
any damage to the wooden tank. Id at 29:10-14.
On July 29, 2010, Michael Davis, a York Risk Services Group Senior Adjuster, was
assigned to certify the cause of the alleged tank collapse at the Building. Def.' sEx. N (Dep. of
M. Davis), Tr. 13:14-14:13. On August 5, 2010, Mr. Davis inspected the tank and its support
Id at 31:9-19; Def.'s Ex. I (Davis Report).
He observed that the tank was
undamaged, but that rust on a joint of the support structure had caused the structure to separate
from a parapet wall and shift out of alignment. Def.'s Ex. N, Tr. 32:2-12; Def.'s Ex. 1. "Due to
the rusted joint, the water tank was slightly tilted out of alignment, but the unit remained
standing, and the tank did not sustain any damage." Def. 's Ex. 1.
In September 2010, York Risk Services Group assigned Edward M. Deegan, Jr., M.S.,
P.E., of Engineering Design and Testing Corp., to prepare a report assessing what had caused the
displacement of the steel frame supporting the water tank at the Building. Deegan Aff., at
see Ex. D (Deegan C.V.). On September 21,2010, Mr. Deegan went to the Building. He was
able to observe the steel support frame, but not the water tank because it had been drained and
removed. Deegan Aff., at ~ 5. Based on his education and experience as a professional engineer
and his own observations of the steel support frame, Mr. Deegan made the following findings:
(1) Displacement of a steel support frame for a rooftop water tank
at [the Building] is the result of inadequate support at the
(2) Inadequate support at the northeast corner is the result of
corrosion of an L-shaped column at the northeast corner of the
(3) Corrosion of the L-shaped column at the northeast corner of the
support frame is the result of a lack of maintenance on the part
of the building owner.
(4) The cause of displacement of the support structure of the steel
support frame for a rooftop water tank at [the Building] is a
lack of maintenance on the part of the building owner.
(5) Corrosion of the steel support frame is long-term in nature, as
indicated by the loss of section to the L-shaped column.
Ex. E, at 3 (Deegan Report).
Despite the alleged collapse, the Building remained fully occupied and domestic water
service was unaffected. No tenant vacated the building. Pl.'s Ex E, Tr. 55:20-22; Def.'s Ex. M,
Tr. 99:12-22. At some point, employees of the Rosenwach Tank Company removed the water
tank from the steel support frame. PI.'s Ex. E, Tr. 81:13-20. The steel support frame was still
standing as of September 21, 2010. Deegan Aff., at
16. After completing its investigation,
Defendant determined the damage was not a covered loss under the Policy and denied Plaintiffs
claim in a letter dated November 4,2010. Def.'s Ex. K (Letter from H. Master to H. Roth).
B. Relevant Policy Provisions
The Policy provides Defendant "will pay for direct physical loss of or damage to Covered
Property ... caused by or resulting from any Covered Cause of Loss." PI.'s Ex. B. A Covered
Cause of Loss includes risks of direct physical loss, unless the loss is excluded under Section B
of the Policy (Exclusions) or limited under Section C of the Policy (Limitations). Sections
B.2.d.(1)-(2) exclude coverage for "[w]ear and tear" and "[r]ust or other corrosion, decay,
deterioration, hidden or latent defect or any quality in property that causes it to damage or
destroy itself." Section B.2.k excludes coverage for "[c]ollapse, except as provided below in the
Additional Coverage for Collapse."
The Additional Coverage for Collapse section adds back coverage for collapse, but only
to the extent the Policy defines "collapse" and only when due to one of the causes specified in
Section D. Section D.l.a defines "collapse" as an "abrupt falling down or caving in of a building
or any part of a building with the result that the building or part of the building cannot be
occupied for its intended purpose." Sections D.1.b-d further define what is not considered to be
in a state of collapse as "[a] building or any part of a building that is in danger of falling down or
caving in," "part of a building that is standing," or "[ a] building that is standing or any part of a
building that is standing . . . even if it shows evidence of cracking, bulging, sagging, bending,
leaning, settling, shrinkage, or expansion." Section D.2 provides Defendant will pay for direct
physical loss or damage if the collapse is caused by one or more of the following: breakage of
building glass, hidden decay, insect or vermin damage, weight of people or personal property, or
use of defective material or methods in construction.
Standard Of Review
A court "shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.
R. Civ. P. 56(a). "The role of the court is not to resolve disputed issues of fact but to assess
whether there are any factual issues to be tried. In determining whether summary judgment is
appropriate, this Court will construe the facts in the light most favorable to the non-moving party
and must resolve all ambiguities and draw all reasonable inferences against the movant." Brod v.
Omya, Inc., 653 F.3d 156, 164 (2d Cir. 2011) (internal citations and quotations omitted). No
genuine issue of material fact exists "where the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party." Lovejoy-Wilson v. NOCO Motor Fuel, Inc., 263
F.3d 208,212 (2d Cir. 2001) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986)).
If the moving party satisfies this burden, the non-moving party must "make a showing
sufficient to establish the existence of [each] element to that party's case ... since a complete
failure of proof concerning an essential element of the non-moving party's case necessarily
renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-323 (1986).
Importantly, if the evidence produced by the non-moving party "is merely colorable, or is not
significantly probative, summary judgment may be granted." Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249-250 (1986) (internal citations omitted).
Cross-motions for summary judgment do not alter the basic standard, but simply require
the court to determine whether either of the parties deserves judgment as a matter of law on facts
that are not in dispute. Morales v. QUintel Entm 't, Inc., 249 F.3d 115, 121 (2d Cir. 2001) (citing
Terwilliger v. Terwilliger, 206 F.3d 240, 244 (2d Cir. 2000)). Thus, even if both parties move
for summary judgment and assert the absence of any genuine issues of material fact, "a district
court is not required to grant judgment as a matter of law for one side or the other." Heublein,
Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993). "Rather, each party's motion must be
examined on its own merits, and in each case all reasonable inferences must be drawn against the
Morales, 249 F.3d at 121 (internal citation
party whose motion is under consideration."
Under New York law, an insurance policy must be interpreted so that a clear and
unambiguous policy provision is given its plain and ordinary meaning.
Annunziata, 67 N.Y.2d 229, 232, 501 N.Y.S.2d 790 (1986).
Fid & Guar. Co. v.
"[C]ourts should refrain from
rewriting the agreement." Id Ambiguities are generally resolved in the insured's favor. Id
The issue before this Court is whether the Policy in question covers the type of loss sustained by
Plaintiff argues the water tank and steel support frame collapsed on or about June 30,
2010 and, consequently, is a covered loss within the meaning of the Policy. PI's Mem. of Law in
Supp. of its Mot. for Summ. J. ("PI's Mot."), at 5. Defendant argues there was no collapse
because Plaintiff's motion only establishes the steel support frame shifted or tilted; Plaintiff does
not establish the event was a "collapse" as the Policy defines the term. Def.'s Mem. of Law in
Opp'n to Pl.'s Mot. for Summ. J. ("Def.'s Opp'n"), at 2. Even if Plaintiff is able to demonstrate
the displacement of the steel support frame and water tank constitutes a collapse under the
Policy, Defendant argues Plaintiff has failed to prove the steel support frame tiled because of
"hidden decay." Id
A. Plaintiff Has Not Established There Was A Collapse As Defined Under The
The Policy provides Defendant will not pay for loss or damage caused directly or
indirectly by "[c]ollapse, except as provided '"
in the Additional Coverage for Collapse."
Section B.2.k. Consequently, the Additional Coverage for Collapse section provides the source
of coverage for any so-called collapse.
The Court agrees with Defendant's reading of the
Additional Coverage for Collapse section as imposing a two-prong test: (1) there must be an
event that meets the Additional Coverage for Collapse definition of "collapse;" and (2) the
purported collapse must result from one of the causes of loss specified in the Additional
Coverage for Collapse section.
Sections D.l.a-d of the Policy define "collapse
a) Collapse means an abrupt falling down or caving in of a
building or any part of a building with the result that the
building or part of the building cannot be occupied for its
b) A building or any part of a building that is in danger of falling
down or caving in is not considered to be in a state of collapse;
c) A part of a building that is standing is not considered to be in a
state of collapse even if it has separated from another part of
d) A building that is standing or any part of a building that is
standing is not considered to be in a state of collapse even if it
shows evidence of cracking, bulging, sagging, bending,
leaning, settling, shrinkage or expansion.
The undisputed evidence before this Court establishes the steel support frame and water
tank remained standing, although in a leaning condition, and did not abruptly fall down or cave
in at any point. The Building remained fully occupied for its intended purpose as an apartment
building throughout the events as described supra.
New York courts have reviewed identical policy language and determined the language is
unambiguous as to what constitutes a "collapse." In Rector St. Food Enterprise, LTD. v. Fire &
Casualty Insurance Co. of Connecticut, the court found the collapse language was unambiguous
and held there was not a collapse because, although the building was sinking and leaning, it was
still standing. 35 A.D.3d 177, 827 N.Y.S.2d 18 (1st Dept. 2006).
The operative policy
specifically provided additional coverage for collapse and defined the term as "an abrupt falling
down or caving in" and further provided that "[a] building that is standing is not considered to be
in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning,
settling, shrinkage or expansion." Id. Given the policy's definition, a building that had large
cracks in its fa9ade and was sinking, out of plumbing, and leaning, but nevertheless indisputably
standing in the hours before its demolition, had not "collapsed" for purpose of the policy's
additional coverage provision. Id. Likewise, in Rapp B. Properties, LLC v. RLI Insurance Co.,
the court held the collapse provision was unambiguous and did not cover imminent collapse
where building was still standing. 65 A.D.3d 923, 885 N.Y.S.2d 283 (1st Dept. 2009); see also
Bella-Vita LLC v. Tower Ins. Co. o/New York, 29 Misc. 3d 1233(A), 920 N.Y.S.2d 239 (Sup. Ct.
2010) (granting summary judgment in favor of defendant-insurer, having determined "a building
in danger of collapsing is not covered under the policy . . . 'even if it shows evidence of
cracking, bulging, sagging [or] bending. "').
Here, the Policy supplies a clear definition of "collapse" to clarify any potential
ambiguity. See Dalton v. Harleysville Worcester Mut. Ins. Co., 557 F.3d 88, 93 (2d Cir. 2009).
The Second Circuit in Dalton, confronted with different policy language, determined it to be
ambiguous and susceptible to two reasonable interpretations.
However, the court expressly
noted that "other insurers in New York have used forms that speak much more directly to the
dispute involve here." Id. (citing Rector St., 827 N.Y.S.2d at 18). The court proceeded to
discuss the application of Rector St. in a footnote:
The holding . . . in Rector St., . . . is not useful in resolving the
meaning of the policy in the present case because the policy in
Rector St. contained express definitional terms . . .. It provided,
for example, that a collapse was "an abrupt falling down or caving
in" and that "a building that is standing is not considered to be in a
state of collapse even if it shows evidence of cracking, bulging, ...
or expansion." Id. Because the Rector St. policy provided a
definition of collapse agreed to by the parties, which addresses the
ambiguity, the court's ruling is not a useful indicator of how the
New York courts would rule in the absence of an agreed definition.
Dalton, 557 F.3d at 92 n.l. New York courts have held the specific policy language at issue
in this case to be unambiguous. The Court agrees and finds Plaintiff fails to meet the first
requirement under the Additional Coverage for Collapse section of the Policy. The event
that occurred on or about June 30, 2010 does not constitute a "collapse" as defined by the
B. Plaintiff Fails To Demonstrate The Alleged Collapse Was Caused By One Of
The Specified Causes Of Loss Under The Policy
Even if Plaintiff had established the occurrence of a collapse as defined under the Policy,
Plaintiff failed to meet the second prong of the two-part test under the Additional Coverage for
Collapse section. Plaintiff offered no evidence the alleged collapse was caused by "[d]ecay that
is hidden from view" or any other causes of loss as provided under the Additional Coverage for
Under the Section D.2 of the Policy, Defendant agreed to pay for direct physical loss or
damage caused by a collapse of a building, or any part of a building, if the collapse was caused
by one or more of the following:
a) The "specified causes ofloss" or breakage of building glass, all
only as insured against in this Coverage Part;
b) Decay that is hidden from view, unless the presence of such
decay is known to an insured prior to collapse;
c) Insect or vermin damage that is hidden from view, unless the
presence of such damage is known to an insured prior to
d) Weight of people or personal property;
e) Weight ofrain that collects on a roof;
f) Use of defective material or methods in construction,
remodeling or renovation if the collapse occurs during the
course of construction, remodeling or renovation. However, if
the collapse occurs after construction, remodeling or
renovation is complete and is caused in part by a cause of loss
listed in 2.a. through 2.e., we will pay for the loss or damage
even if use of defective material or methods, in construction,
remodeling or renovation, contributes to the collapse.
Plaintiff contends the alleged collapse was the result of hidden decay, and therefore, it is
entitled to coverage. Pl. Decl. in Opp'n to Federal's Mot. for Summ. J. ("PI's Decl."), at ~ 8. To
support this contention, Plaintiff offers the testimony of Mr. Diaz who, "prior to the loss, [ ] did
regularly visit the roof and inspect the water tank, and noticed no evidence of corrosion, sagging
or collapse of said tank." Pl.'s 56.1, at, 6; Pl.'s Decl., at, 5. The Court does not find this
testimony substantiates a finding that hidden decay in fact caused the steel support frame to shift
out of alignment. Mr. Diaz testified part of his job was to check the drains on the roof once per
week. Pl.'s Ex. E, Tr. 16:17-19. He testified he had "to look at the roof completely, that
everything is okay." Id. at 17:2-6. Mr. Diaz did not testify he regularly "inspect[ed] the water
tank" as Plaintiff states in its Rule. 56.1 Statement, at , 6. Mr. Diaz did not describe any sort of
regular examination of the steel support frame and water tank. Other than asserting Mr. Diaz
denied noticing any corrosion, Plaintiff offers no evidence to support its claim that hidden decay
resulted in the so-called collapse. This Court finds a dearth of evidence that rust and corrosion of
the steel support frame was hidden.
Plaintiff also indicates the water tank was two (2) years old at the time of the loss. Pl.'s
56.1, at , 6; Pl.'s Decl., at , 5. In doing so, Plaintiff attempts to argue this fact supports the
conclusion the water tank was in good condition. The Court notes it was not the water tank that
allegedly collapsed, but the steel support frame which became displaced. In fact, Mr. Deegan
explains in his sworn affidavit that the use of rivets and square-shaped nuts to join the steel
frame's components indicate it was several decades old. Deegan Aff., at, 6. Additionally, Mr.
Diaz testified the steel support frame was approximately sixteen (16) years old because it had
been there since he began working at the Building. Pl.'s Ex. E, Tr. 22:7-14. The Court does not
find the age of the water tank to be indicative of the condition and maintenance of the steel
Defendant rebuts the arguments of Plaintiff by presenting evidence that rust and
corrosion led directly to the shifting and misalignment of the steel support frame. Pursuant to the
exclusions to the policy, the parties agreed Defendant "will not pay for loss or damage caused by
or resulting from ... [r]ust or other corrosion, decay, deterioration, hidden or latent defect or any
quality in property that causes it to damage or destroy itself ...." Section B.2.d.(2). Defendant
offers the sworn affidavit and report of Mr. Deegan who concluded corrosion developed over a
lengthy period of time and led ultimately to the leaning condition of the steel frame. Deegan
Aff., at ~ 15. Direct observations of the steel support frame and water tank by Mr. Davis support
Mr. Deegan's conclusion. Mr. Davis stated he observed open and obvious rust on sections of the
steel support frame that had no roof sealant coating during his August 5, 2010 inspection. Davis
Aff., at ~ 8. Furthermore, the presence of extensive rust and corrosion is apparent in photographs
of the steel support frame. Def.'s Exs. F, H.
The undisputed facts show the water tank and steel support frame did not collapse as
defined in the Policy. The event cannot be described as an "abrupt falling down or caving in ...
with the result that the building or part of the building [could] not be occupied for its intended
purpose." Section D.1.a. New York courts have reached the same conclusion when confronted
with identical policy language. Having established there was no collapse, the causation of the
loss is immaterial. Nevertheless, the Court does not find hidden decay resulted in the leaning
condition of the water tank and steel support frame. Rather, evidence produced by Defendant
indicates rust and corrosion led to the shifting of the steel support frame, and therefore any loss is
excluded under the Policy.
Plaintiff has not established the event resulting in the loss is covered by the Policy.
Plaintiff fails to meet the requirements under the Additional Coverage for Collapse provision of
the Policy: (1) the occurrence does not meet the definition of collapse, and (2) the alleged
collapse is not the result of a specified cause of loss, including hidden decay. Accordingly, this
Court GRANTS Defendant's Motion for Summary Judgment and DENIES Plaintiffs motion for
summary judgment. The complaint is dismissed in its entirety with prejudice.
Dated: Brooklyn, New York
August 10, 2012
HON. WILLIAM .
United States Dist .
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