Insured Failed to Establish Actual Cash Value under New York's "Broad Evidence Rule" to Warrant Summary Judgment

PROPERTY – BROAD EVIDENCE RULE – ACTUAL CASH VALUE – MOTION TO AMEND ANSWER
Tyson v. Tower Ins. Co. of N.Y.
(2nd Dept., decided 12/15/2009)

While the plaintiff's 2-family house was under contract to sell, it was badly damaged by a fire. Nevertheless, plaintiff allegedly sold the property after the fire at the original, pre-fire contract price. On plaintiff's insurance claim, the parties disputed the amount due under plaintiff's policy. Plaintiff commenced this action seeking damages for breach of contract, and eventually moved for summary judgment.  Tower opposed plaintiff's motion and cross-moved for leave to amend its answer to assert an affirmative defense that the plaintiff had breached the policy's concealment or fraud condition.  Supreme Queens denied the motion and the cross motion, and later denied plaintiff's motion for leave to reargue and renew her prior motion for summary judgment.

In affirming the denial of plaintiff's motion, the Second Department ruled that plaintiff had not established the actual cash value of her loss, which she was required to do since the fire damage had not been repaired:

Contrary to the plaintiff's contentions, the Supreme Court properly denied her motion for summary judgment on the complaint because she failed to meet her initial burden of establishing her prima facie entitlement to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320, 324; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853). Under the so-called "broad rule of evidence" applicable here, the plaintiff failed to establish the "actual cash value" of the loss, a burden she was required to carry under the policy since the fire damage had not been repaired (see Gervant v New England Fire Ins. Co., 306 NY 393, 398; McAnarney v Newark Fire Ins. Co., 247 NY 176, 184; Mazzocki v State Farm Fire & Cas. Corp., 1 AD3d 9, 12; Incardona v Home Indem. Co., 60 AD2d 749, 750). Further, the Supreme Court properly denied the plaintiff's motion for leave to renew her motion, since she did not offer a reasonable justification for failing to present in her initial motion the documentary evidence offered in support of renewal (see CPLR 2221[e]; Renna v Gullo, 19 AD3d 472).

In MODIFYING the order appealed from to grant Tower's cross motion to amend its answer, the Second Department held:

The Supreme Court erred, however, in denying the defendant's cross motion for leave to amend its answer. Motions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, unless the proposed amendment is palpably insufficient or patently devoid of merit (see CPLR 3025[b]; Lucido v Mancuso, 49 AD3d 220, 222). The defendant sought to amend its answer to include as an affirmative defense that the plaintiff had breached the policy's "[c]oncealment or fraud" condition. Contrary to the plaintiff's contention, the proposed amendment was not patently devoid of merit. Therefore, with no showing of prejudice or surprise resulting directly from the defendant's delay in seeking leave, the court should have granted the defendant's cross motion for leave to amend its answer.

It's not often that we see a reference to the Court of Appeals' 1928 decision in McAnarney v. Newark Fire Ins. Co. and its "broad evidence rule" in a reported decision.  Thirty-six years later, in Gervant v. New England Fire Ins. Co., the Court of Appeals stated:

[T]he "actual cash value" of premises under a standard fire insurance policy in this State cannot be arrived at by receiving evidence of replacement cost less depreciation only. Rather, the trier of fact should listen to all pertinent evidence on the subject."

With actual cash value being derived from "all pertinent evidence" on the issue, one wonders what quantum of evidence would suffice to warrant summary judgment.  Evidently some amount more than plaintiff submitted on her initial motion for summary judgment in this case.