Firm Wins Summary Judgment for Insurer Excluding Coverage after 15 Years of Water Seepage Damaging Floor Structure

Bella-Vita LLC v. Tower Ins. Co. of New York, Index No. 104059/09 (Sup. Ct., N.Y. Cty., Dec. 1, 2010). Plaintiff claimed under a first-party property insurance policy for damage to the basement floor structure of its commercial premises in lower Manhattan from an allegedly recently ruptured pipe beneath the flooring that was discovered in May 2008. Tower denied the claim and plaintiff sued.  Justice Louis York granted Tower's motion for summary judgment dismissing the complaint.  The court found, grounded in the affidavit of Tower's engineer, that "the 'wood joists, beams and subfloor' in the basement were deteriorating, due 'to high levels of moisture within the damp and unventilated crawl space,'" and held that "[d]ecay and decomposition is clearly excluded from coverage."  It also held that "an unventilated crawl space is faulty design, because it is readily apparent that decay will ensue," and found recovery barred because "the policy's coverage does not include property damage deriving from defective design."  Next, the court noted the opinion of Tower's expert that "the source of the damage to the wooden floors" was "extreme exposure of 'water seepage to the crawl space' for a period over 15 years," and held that the policy "also excludes damage caused by '[c]ontinuous or repeated seepage or leakage of water that occurs over a period of 14 days or more.'"  Moreover, implicitly adopting an injury-in-fact rather than a manifestation coverage trigger, the court held that "conditions created prior to the policy's inception are excluded from recovery."  Finally,the court held that although "losses with respect to the collapse of buildings" were covered under the policy, that provision did not apply to this loss, as under the policy language, "a standing building is not in a collapsed state, 'even if'" - as here - "'it shows evidence of cracking . . . [or] sagging.'"  Tower was represented by Kevin F. Buckley and Daniel M. O'Connell of Mound Cotton Wollan & Greengrass.

The decision was reported in the December 17, 2010 issue of the New York Law Journal, the January 19, 2011 issue of Mealey's Litigation Report: Insurance, and is also reported in the New York Official Reports at 2010 NY Slip Op 52132(U); 29 Misc. 3d 1233A; 920 N.Y.S.2d 239; and 2010 N.Y. Misc. LEXIS 5952.