Breach of Insurance Policy; Declaratory Judgment; Summary Judgment
By: George Alissandratos | Staff Writer
John Parauda and Gretchen Walsh (“Plaintiffs”) owned a home located in Pleasantville, NY, which they occupied as their residence. Encompass Insurance Company of America (“Defendant”) issued an insurance policy covering the home. Plaintiffs commenced an action in Westchester County Supreme Court after Defendant denied a claim covered by the policy. Defendant moved for summary judgement to dismiss the claim. Plaintiff moved for a declaratory judgment that the collapse was covered by the terms of the policy.
The policy covered property damage to the premises for “collapse” of the building or “any part” of it caused by “hidden decay of the structure.” An amendment to the policy defined “collapse” as “an abrupt falling down or caving in of a building or any part of a building with the result that the building cannot be occupied for its current intended purposed.” The policy had an exclusion for loss caused by “freezing, thawing, . . . wear and tear, . . . [and] faulty, inadequate, or defective maintenance.”
Plaintiffs submitted a claim to Defendant for damage to the brick facade of their home. Defendant hired an engineer to inspect the home and issue a report. The engineer concluded that the damage was caused by, among other things, “water infiltration . . . over a several year period” and “a lack of maintenance.” Defendant denied the claim based on the exclusions for “freezing, thawing,” “wear and tear,” and “inadequate maintenance.” Plaintiffs later hired Diego Fernandez, a general contractor, to do unrelated work on the house. Fernandez found that the upper half of the house was dangerously supported by the decorative brick rather than the wooden frame. Further, he found that the wooden studs and plates that comprised the supporting frame of the house were in a severe state of decay. Plaintiffs asked Defendant to reconsider their original claim. An insurance adjuster performed an inspection on behalf of Defendant. Defendant again denied the claim, based upon largely the same exclusions.
Plaintiffs sought a declaratory judgment holding that the collapse of their home was due to “interior hidden decay,” and, thus, was a loss covered by the terms of the policy. Defendant then moved for summary judgment to dismiss the complaint. In their opposition, Plaintiffs argued that the loss was covered by the policy, and that Defendant had failed to show that any of the policy exclusions applied.
The Court held in favor of the Plaintiffs. The Court stated that, on a motion for summary judgment, if a prima facie showing of entitlement to judgment as a matter of law is made, the burden then shifts to the opposing party to produce sufficient evidentiary proof to establish the existence of material issues of fact which would require a trial. Here, the Court found that the affidavit of Fernandez (submitted by Plaintiffs) established prima facie that the collapse (albeit a partial one, which was deemed to be sufficient to be give rise to a claim) was caused by hidden decay. The burden thus shifted to Defendant to show that the collapse was not caused by hidden decay, or that any other policy exclusion applied. Defendant’s experts believed that the damage was due to improper home maintenance, but they failed to explain how more regular maintenance would have uncovered the decay.
The Court denied Defendant’s motion for summary judgement because Defendant failed to show evidence of a triable issue as to whether the collapse of the supporting studs was caused by hidden decay. Additionally, the Court granted summary judgment to the Plaintiffs to the extent of holding that the loss was covered by the policy. Both sides were directed to appear before the Court at a later date for the purposes of scheduling a trial to determine damages.
Parauda v. Encompass Ins. Co. of Am., Index No. 61128/15, 1/25/2018 (Bucaria, J.)