Not "Dependent Property" -- Denial of Business Income Loss Claim Upheld

COMMERCIAL PROPERTY – BUSINESS INCOME LOSS CLAIM – "DEPENDENT PROPERTY" 
Cohen & Slamowitz, LLP v. Zurich Am. Ins. Co.
(2nd Dept., 1/23/2019)

Commercial property policy for the plaintiff, a former debt collections law firm, provided coverage for actual loss of "business income" sustained by the plaintiff "due to the necessary suspension of operations' caused by direct physical loss or damage by a Covered Cause of Loss to dependent property'" at a premises not owned, leased, or operated by the plaintiff. The policy further defined "dependent property" as premises operated by others on whom the plaintiff depended to "[d]eliver materials or services to you, or to others for your account (not including water, communication or power supply services)."  (Underlining added.)

Plaintiff claimed loss of business income from a disruption of its telephone service as a result of severe flooding at it telephone service provider's lower Manhattan switch center during Hurricane Sandy.  (Ironic that a debt collection firm that primarily used the telephone as its method of communicating with alleged debtors would not recognize that the switch center, which provided communication services to plaintiff, did not meet the definition of "dependent property."  Then again, debt collection firms that take no for an answer probably don't stay in business very long.)

If you've read this far, you probably know the outcome.  Summary judgment to Zurich AFFIRMED:

The defendants demonstrated, among other things, that the plaintiff's claimed business income losses resulted from damage to a property operated by a communication service provider, and, therefore, that the cause of loss was a disruption in communication services, not a "Covered Cause of Loss" to "dependent property" under the policy. In opposition, the plaintiff failed to raise a triable issue of fact. Accordingly, we agree with the Supreme Court's determination to grant the defendants' motion for summary judgment dismissing the complaint and for a judgment declaring that the defendants are not obligated to indemnify the plaintiff for its claimed business income losses pursuant to the policy (see Conlon v Allstate Veh. & Prop. Ins. Co., 152 AD3d at 489-491; ABM Mgmt. Corp. v Harleysville Worcester Ins. Co., 112 AD3d at 764-765).