Motion to Dismiss; Contractual Interpretation; Contractual Ambiguity; Policy Exclusions
By: Kelsey Dougherty Howard | Staff Writer
Plaintiff purchased a piece of real property to operate as a restaurant in 2009. Prior to Plaintiff’s purchase, the property was operated as a dry cleaning business with chemical tanks buried underground. Plaintiff maintained an insurance policy from Defendant. After the purchase, the New York Sate Department of Environmental Conservation (“DEC”) notified Plaintiff in September 2015 that there was a documented release of hazardous substance in the property. Plaintiff, however, refused to cover the cost of both remediation and DEC’s investigation of the issue, and also refused to sign the consent order. Plaintiff sought indemnification from Defendant, its insurance company which it maintained coverage from December 2014 through December 2015, and Defendant’s agent, the claims administrator. The claims administrator denied Plaintiff’s claim on two grounds: (1) the claim was excluded under the policy of coverage, and (2) the claims arose from events which occurred prior to the policy of coverage. In response to Plaintiff’s motion seeking indemnification, both Defendants, the insurance company and claims administrator, filed motions to dismiss pursuant to CPLR 3211(a)(7). Plaintiff only opposed the insurance company’s motion.
The insurance company sought to dismiss Plaintiff’s claim under two theories: (1) the company has no obligation to defend or indemnify under the policy because the policy is unambiguous in its exclusion of coverage for any allegations of pollution; and (2) the events occurred prior to the time coverage began and the policy only covers claims for events that take place during the coverage period. Plaintiff contended that the insurance company’s motion should be denied because (1) the language regarding the pollution exclusion is ambiguous; and (2) the date of the release of the hazardous substance is at issue.
The Court found the pollution exclusion language of the insurance policy to be unambiguous in its exclusion of coverage. While there was a clause that would negate the pollution exclusion if the release of the chemicals were “sudden and accidental,” the Court, relying on the information from the DEC, did not find the release of the hazardous chemicals to be sudden or accidental. Finally, the Court agreed that the Plaintiff was not at fault for the spill; however, the Court did not find this issue of culpability to be relevant to the application of the pollution exclusion.
The Court, therefore, granted both Defendants’ motions to dismiss.
Jung Sook Choi v. AmTrust North American et al., Index No. 26455/2016, 11/03/2016, (Rosenbaum, J.).