Jury Verdict Finding Named Insured Was Residing in Insured Premises Affirmed

PROPERTY – HOMEOWNERS – RESIDENCY REQUIREMENT – POLLUTION EXCLUSION – ASBESTOS CONTROL COSTS – LOSS OF RENTS

Cotillis v. New York Cent. Mut. Fire Ins. Co.
(3rd Dept., 2/22/2018)

Last month I blogged about a Third Department case in which summary judgment was denied on the issue of the residency requirement of a homeowners insurance policy.  Last week, the Third Department affirmed a jury verdict against a homeowners insurer on the same issue.

In September 2013, a fire damaged plaintiff's two-family house, where plaintiff claimed to lived in the top-floor unit and rent the first-floor unit. NYCM disclaimed coverage on the basis that plaintiff did not reside at the insured premises on the date of loss. Following a trial, the jury found that plaintiff was a resident of the insured premises and awarded damages of $163,938.94 for the dwelling, $7,873,02 for personal property and $39,600 for additional living expenses (loss of rents).  After unsuccessfully moving to set aside the verdict, NYCM appealed.

In AFFIRMING the jury's verdict on the dwelling, the Third Department rejected NYCM's argument that the evidence was legally insufficient for the jury to conclude that plaintiff was a resident of the insured premises at the time of the loss and reiterated the relevant legal principles:

The insurance policy at issue provides coverage to a dwelling on the "residence premises." As relevant here, "residence premises" is defined as "[t]he two, three or four family dwelling where you reside in at least one of the family units." The policy, however, does not define "reside" and, therefore, "[t]he standard for determining residency for purposes of insurance coverage requires something more than temporary or physical presence and requires at least some degree of permanence and intention to remain" (Dean v Tower Ins. Co. of N.Y., 19 NY3d 704, 708 [2012]; see Sosenko v Allstate Ins. Co., 155 AD3d 1482, 1482 [2017]; Fiore v Excelsior Ins., 276 AD2d 895, 896 [2000], lv dismissed [96 NY2d 755 [2001]). Whether a person resides in any particular location is generally a fact-based determination (see Yaniveth R. v LTD Realty Co., 27 NY3d 186, 194 [2016]). 

The Third Department then recapped the trial evidence supporting the jury's residency finding:

At trial, plaintiff's daughter-in-law testified that she and her husband, plaintiff's son, approached plaintiff to see if she could watch their daughter, plaintiff's granddaughter, during the day. The daughter-in-law stated that plaintiff agreed to so "as long as it was temporary." As such, starting in April 2013, plaintiff stayed at her son's house and babysat her granddaughter in the morning. Aside from a bed and a dresser, plaintiff did not bring other household furnishings from the insured premises to her son's house. Approximately two or three times a week, when the daughter-in-law returned early from work, she would take plaintiff to the insured premises where plaintiff would check the mail and perform household chores. Plaintiff testified that she ate meals at the insured premises, stayed at the insured premises during some weekends, did not change her mailing address from the insured premises and planned to return there after her son stopped working. Plaintiff also testified that she considered the insured premises her home. Furthermore, the fire investigator who testified on behalf of defendant stated that his inspection of the unit where plaintiff lived contained items and furnishings indicative of a person living there. In our view, the foregoing proof was sufficient to establish that plaintiff's stay at her son's house was temporary in nature (see New York Cent. Mut. Fire Ins. Co. v Kowalski, 222 AD2d 859, 861 [1995]) and that she was a resident of the insured premises at the time of the loss. 

Homeowners insurers considering denying dwelling coverage based on the named insured's lack of residency would be wise to review what this jury found to be sufficient evidence of such residency:

• the insured was staying with her son and daughter-in-law temporarily; 
• she had moved only a bed and dresser to her son's house; all other household furnishings remained behind; 
• she would return to the dwelling 2-3 times a week to check mail and perform household chores; 
• she ate some meals at the insured dwelling; 
• she stayed at the insured dwelling during some weekends; 
• she had not changed her mailing address; and
• she considered the insured premises her home.  

NYCM also argued that the amount awarded for the demolition of the insured premises should have been $16,400 and not $28,900, because the latter figure, as testified to by an insurance adjuster, included asbestos control, which NYCM contended was excluded by the policy's pollution exclusion.  That exclusion negated coverage for a loss "caused directly or indirectly" by an ordinance or law requiring an insured "to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, pollutants." In rejecting that argument, the Third Department held that "[e]ven assuming that 'pollutants' in the policy at issue encompassed asbestos, the record does not demonstrate that asbestos directly or indirectly caused the loss."

The Third Department did agree, however, with NYCM that the loss of rents award was double what it should have been, modifying the judgment to reduce it by $19,800.  The trial evidence established that plaintiff intended to derive rental income from only the downstairs unit.  Moreover, to the extent that the jury awarded this amount for monies expended by plaintiff for alternative housing, plaintiff failed to establish that she "incurred" any such expenses as required under the policy.

Homeowner's Suit for Additional Living Expenses Commenced Two Days After Two-Year Anniversary of the Insured Home's Fire Loss Found Timely

PROPERTY – HOMEOWNERS – ADDITIONAL LIVING EXPENSE CLAIM – TWO-YEAR CONTRACTUAL SUIT LIMITATIONS PERIOD
Villa v. Sterling Ins. Co.
(App. Term, 2nd Dept., 9th & 10th Dists., decided 7/16/2010)

New York property insurers haven't been faring well lately in seeking to enforce their policies' two-year suit limitations period.  In Fabozzi v. Lexington Ins. Co., the Second Circuit US Court of Appeals ruled that the term "date of loss" as used in a homeowner policy's Suit Against Us condition did not mean the date of physical loss, but the date when the insured's claim for loss accrued.  Later that same month, in Dail v. Merchants Mut. Ins. Co., the Appellate Division, Fourth Department, held that the one-year tolling period of CPLR 210(a) for an insured's post-loss death extends the policy's two-year suit limitations period.

This is another case in which a suit commenced more than two years after the date of the covered physical loss to insured property was held to be timely, notwithstanding the policy's two-year suit limitations period.

On April 12, 2006, plaintiff's home was damaged by fire, and she submitted a claim for damage to her residence and personal property, as well as additional living expenses while she was unable to occupy her home, to the defendant, her homeowners insurer.  Defendant eventually settled plaintiff's dwelling claim and her home was repaired. She incurred additional living expenses (ALE), however, until April 2007, when she moved back into her home. Sterling paid some, but not all, of her ALE claim.

The policy contained a contractual period of limitations on the time within which the insured could sue Sterling, specifying that for Property Coverages,

No suit to recover for any property claim may be brought against us unless . . . the suit is commenced within 2 years after the loss.  (Bold added.)

After demanding payment and filing complaints with the New York State Insurance Department concerning Sterling's failure to pay the disputed ALE claim, plaintiff commenced this action on April 14, 2008, two years and two days after the date of the fire, to recover the principal amount of $8,750, representing unpaid additional living expenses.  Sterling moved for summary judgment dismissing the complaint on the ground that it was time barred. The District Court denied Sterling's motion, concluding that there existed a question of fact as to when plaintiff's cause of action accrued.  Sterling appealed.

In AFFIRMING the District  Court's denial of Sterling's motion for summary judgment, the Appellate Term held that by not defining "the loss", the policy's contractual suit limitations period was ambiguous:

In support of its motion for summary judgment dismissing the complaint, defendant relied entirely on the contractual period of limitations contained in the insurance policy. That provision required that actions be brought within two years "after the loss," but failed anywhere to define the term "loss," although it did define "occurrence." Also, for "additional living expenses," covered expenses were to be paid on a monthly basis upon submission of reasonable proof of the insured's expenses. The policy's coverage for these items was open-ended, specifying that it was "not limited by the policy period."

Exclusions from, or limitations of, coverage must be in clear and unmistakable language which is capable of no other reasonable interpretation or implication (see e.g. Pioneer Tower Owners Assn. v State Farm Fire & Cas. Co., 12 NY3d 302, 307 [2009]).  Ambiguities in insurance policies are required to be construed against the insurer, particularly when found in clauses that exclude or limit coverage (see Breed v Insurance Co. of N. Am., 46 NY2d 351, 353 [1978]). In the absence of a specific provision regarding accrual in a contract of insurance, the statute of limitations generally begins to run upon the insurer's breach of contract by its failure to pay (see Medical Facilities v Pryke, 62 NY2d 716 [1984]; see also Fabozzi v Lexington Ins. Co., 601 F3d 88 [2010]; cf. Costello v Allstate Ins. Co., 230 AD2d 763 [1996]; 815 Park Ave. Owners v Fireman's Ins. Co. of Washington, D.C., 225 AD2d 350 [1996]). Here, we conclude that the insurance policy was ambiguous as to the applicable limitations period respecting actions seeking additional living expenses. Thus, the statute of limitations on these items did not begin to run until after defendant's breach of contract, and had not run at the time this action was commenced. Accordingly, the Civil Court correctly denied defendant's motion for summary judgment, and we affirm the order.