Appellate Court Upholds Summary Judgment for Material Misrepresentation
East 115th Street Realty Corp. v. Focus & Struga Building Corp., Great Am. Ins. Co. et al., 2011 NY Slip Op 05125 (1st Dept., June 14, 2011).
This litigation concerned plaintiff's claim for insurance coverage under a builder's risk policy for the collapse of its building that occurred during the course of extensive structural alterations to an existing structure. The building was a 1920s five-story masonry structure with commercial space on the first floor and tenant space above. On the standard "ACORD form" application that Plaintiff submitted to obtain its insurance policy, the "No" box was checked next to the question "Any structural alterations contemplated?" Other documents were also submitted to Great American's underwriter, including a contract for the construction and a construction cost sheet that both referred to structural work; however, the broker later informed Great American's underwriter via e-mail that "there will be no structural changes." Thereafter Great American issued its builder's risk policy. Notwithstanding the representations made, the $1.9M in planned renovation work on the building included the removal and replacement of the roof, ceilings, and every floor, including joists, subfloor and finished floors.
In the litigation that followed, Great American was awarded summary judgment dismissing the complaint based on the plaintiff's material misrepresentation in the application. Great American's motion was supported with an affidavit from the underwriter, in which she stated that she would not have issued the policy had she known that structural changes would be made, and a copy of Great American's underwriting guidelines that stated: "structural alterations" are an exposure that "should be avoided."
On appeal, the First Department, Appellate Division, held that the affidavit and underwriting guidelines were sufficient to establish Great American's entitlement to summary judgment. The lower court's decision was affirmed and costs were awarded to Great American for the appeal.
Great American was represented by Philip C. Silverberg and Kevin F. Buckley of Mound Cotton.
