The opinion
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
1283
CA 16-01136
PRESENT: WHALEN, P.J., SMITH, CARNI, DEJOSEPH, AND CURRAN, JJ.
RONALD J. PAPA AND THERESA M. PAPA, DOING
BUSINESS AS MUIR LAKE ASSOCIATES,
PLAINTIFFS-RESPONDENTS,
V MEMORANDUM AND ORDER
ASSOCIATED INDEMNITY CORPORATION AND D&D
POWER, INC., DEFENDANTS-APPELLANTS.
(ACTION NO. 1.)
-----------------------------------------
NATIONAL FIRE ADJUSTMENT CO., INC.,
PLAINTIFF-RESPONDENT,
V
D&D POWER, INC., DEFENDANT-APPELLANT.
(ACTION NO. 2.)
HURWITZ & FINE, P.C., BUFFALO (STEVEN E. PEIPER OF COUNSEL), FOR
DEFENDANT-APPELLANT ASSOCIATED INDEMNITY CORPORATION.
RUPP BAASE PFALZGRAF CUNNINGHAM LLC, BUFFALO (SEAN W. COSTELLO OF
COUNSEL), FOR DEFENDANT-APPELLANT D&D POWER, INC.
DUKE, HOLZMAN, PHOTIADIS & GRESENS LLP, BUFFALO (ELIZABETH A. KRAENGEL
OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.
Appeals from an order and judgment (one paper) of the Supreme
Court, Erie County (Diane Y. Devlin, J.), entered February 23, 2016.
The order and judgment denied the motions of defendant D&D Power, Inc.
for summary judgment dismissing the complaints against it, denied the
motion of defendant Associated Indemnity Corporation for summary
judgment dismissing the complaint against it, and granted the cross
motion of plaintiffs Ronald J. Papa and Theresa M. Papa, doing
business as Muir Lake Associates for partial summary judgment against
defendant Associated Indemnity Corporation.
It is hereby ORDERED that the order and judgment so appealed from
is modified on the law by granting the motion of defendant Associated
Indemnity Corporation and dismissing the complaint against it, and
denying the cross motion, and as modified the order and judgment is
affirmed without costs.
Memorandum: Plaintiffs Ronald J. Papa and Theresa M. Papa, doing
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business as Muir Lake Associates (Muir Lake), commenced action No. 1
against, inter alia, defendant D&D Power, Inc. (D&D) seeking to
recover for water damage they experienced in the basement of their
commercial property. Plaintiff National Fire Adjustment Co., Inc.
(NFAC), a company that leased space within that commercial property,
commenced a separate action against D&D (action No. 2). Muir Lake and
NFAC alleged in their complaints that D&D was negligent in its
replacement of a utility pole outside of the building, causing an
underground conduit leading from the pole to the basement to break.
During a heavy rain three weeks later, the broken conduit flooded with
groundwater and channeled the water into the basement.
Muir Lake had an all-risk insurance policy with defendant
Associated Indemnity Corporation (AIC), which contained an exclusion
for water damage caused by “[w]ater under the ground surface pressing
on, or flowing or seeping through . . . [f]oundations, walls, floors
or paved surfaces . . . [or] [d]oors, windows or other openings.”
Muir Lake and AIC also executed a water damage endorsement, which
reinstated liability for such damages, but limited coverage to
$25,000. Following the flooding, AIC issued a check to Muir Lake for
$25,000 based on the water damage endorsement. Muir Lake thereafter
commenced action No. 1, contending that the damage to their property
is not covered by the water damage exclusion and endorsement and, as a
result, that they are entitled to full coverage. Muir Lake asserts,
inter alia, a cause of action for breach of contract against AIC, and
a claim of negligence against D&D. In action No. 2, NFAC asserts a
single cause of action for negligence against D&D.
Following discovery, D&D moved for summary judgment dismissing
the complaints against it, arguing that the damage to the conduit was
the result of long-term corrosion and not the result of its allegedly
improper installation of the utility pole. AIC also moved for summary
judgment dismissing the complaint against it in action No. 1, arguing
that the plain terms of the insurance contract limit Muir Lake’s
coverage to $25,000, which AIC had already paid. Muir Lake cross-
moved for summary judgment on their second cause of action, for AIC’s
alleged breach of contract, arguing that the ambiguous language of the
insurance policy requires AIC to cover their full loss. Supreme Court
denied D&D’s motions, denied AIC’s motion, and granted Muir Lake’s
cross motion.
We reject D&D’s contention that the court erred in denying its
motions. In support of its motions, D&D tendered the affidavit of an
expert metallurgist, who opined that soil conditions and environmental
factors caused severe corrosion to the conduit at issue. As a
preliminary matter, we note that D&D’s expert did not aver that he has
any expertise in mechanical engineering, dynamics, or a related field
that would qualify him to give an opinion with respect to the effect
of mechanical forces operating on the conduit (see Hileman v Schmitt’s
Garage, 58 AD2d 1029, 1029-1030). His opinion with respect to such
mechanical forces is therefore of no probative value. In any event,
we conclude that the affidavit is too speculative to meet D&D’s
initial burden on its motions (see generally Van Ostberg v Crane, 273
AD2d 895, 896). Notably, the metallurgist did not test the soil
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around the conduit, and he did not establish any factual basis for his
opinion that road de-icing salt contributed to the corroded condition
of the conduit. Thus, D&D failed to establish as a matter of law that
only environmental factors were at the root of the damage to the
property, and that its own conduct in replacing the utility pole was
not a contributing cause thereof (see generally Winegrad v New York
Univ. Med. Ctr., 64 NY2d 851, 853). Contrary to D&D’s further
contention, we conclude that it is not entitled to summary judgment on
the ground that the damage to the property was unforeseeable as a
matter of law (see generally Di Ponzio v Riordan, 89 NY2d 578, 583).
We agree with AIC, however, that the court erred in denying its
motion and granting Muir Lake’s cross motion, and we therefore modify
the order and judgment accordingly. It is well-settled that insurance
contracts are construed “in light of ‘common speech’ and the
reasonable expectations of a businessperson” (Belt Painting Corp. v
TIG Ins. Co., 100 NY2d 377, 383). “[U]nambiguous provisions of an
insurance contract must be given their plain and ordinary meaning”
(White v Continental Cas. Co., 9 NY3d 264, 267). We conclude that the
contract language at issue here is not ambiguous. By its plain terms,
the contract limits coverage to $25,000 for damage caused when ground
water enters the basement through a gap, hole, or opening in the wall,
and the conduit clearly falls within the water damage exclusion and
endorsement (see Commerce Ctr. Partnership v Cincinnati Ins. Co., 2006
WL 1236745, *3 [Mich Ct App 2006]).
All concur except WHALEN, P.J., and SMITH, J., who dissent in part
and vote to affirm in accordance with the following memorandum: We
respectfully dissent in part. We agree with the majority that Supreme
Court properly denied the motions of defendant D&D Power, Inc. seeking
summary judgment dismissing the complaints against it. Contrary to
the majority, however, we conclude that the exclusion on which
defendant American Indemnity Corporation (AIC) relies to limit
coverage does not apply to the loss of plaintiffs Ronald J. Papa and
Theresa M. Papa, doing business as Muir Lake Associates (Muir Lake).
In our view, therefore, the court properly denied the motion of AIC
seeking summary judgment against Muir Lake and granted Muir Lake’s
cross motion for partial summary judgment on liability against AIC on
its second cause of action for breach of the commercial property
insurance policy issued to Muir Lake by AIC. We would therefore
affirm the order and judgment.
“Where an insurer relies on an exclusion to avoid coverage, it
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’ ” (Pichel v Dryden
Mut. Ins. Co., 117 AD3d 1267, 1268, quoting Continental Cas. Co. v
Rapid-American Corp., 80 NY2d 640, 652). AIC failed to meet that
burden with respect to the exclusion for water damage caused by
“[w]ater under the ground surface pressing on, or flowing or seeping
through . . . [f]oundations, walls, floors or paved surfaces . . .
[or] [d]oors, windows or other openings.” Giving the language of the
exclusion “the meaning that an ordinary reader would assign to [it]”
(Pioneer Tower Owners Assn. v State Farm Fire & Cas. Co., 12 NY3d 302,
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307), we conclude that the loss, which is undisputedly the result of
water entering the premises through a broken electrical conduit, was
not within the exclusion for damage caused by water pressing on, or
flowing or seeping through foundations, walls, floors or paved
surfaces.
With respect to the exclusion for damage caused by water flowing
through “[d]oors, windows or other openings,” we agree with Muir Lake
that the electrical conduit does not unambiguously constitute an
“other opening.” Under ejusdem generis, a rule of construction
applicable to, inter alia, exclusions like the one at issue here, “the
meaning of a word in a series of words is determined ‘by the company
it keeps’ ” (242-44 E. 77th St., LLC v Greater N.Y. Mut. Ins. Co., 31
AD3d 100, 103-104, quoting People v Ilardo, 48 NY2d 408, 416; see Lend
Lease [US] Constr. LMB Inc. v Zurich Am. Ins. Co., 136 AD3d 52, 57).
Pursuant to that rule, “a series of specific words describing things
or concepts of a particular sort are used to explain the meaning of a
general one in the same series” (Matter of Riefberg, 58 NY2d 134,
141). Application of the rule of ejusdem generis here leads to the
conclusion that “other openings” should be construed as openings that
are akin to doors and windows, such as a portal or a vent, not a
broken electrical conduit. Inasmuch as “other openings” is undefined
and ambiguous, and Muir Lake’s interpretation of that term is not
unreasonable, we are bound to adopt Muir Lake’s interpretation,
inasmuch as that interpretation narrows the exclusion and results in
coverage (see Pioneer Tower Owners Assn., 12 NY3d at 308).
Entered: February 10, 2017 Frances E. Cafarell
Clerk of the Court