Forty East Broadway Corp. v. The Charter Oak Fire Ins. Co., et. al., 2017 WL 318663, 2017 WL 375320, 2017 N.Y. Slip Op. 30131(U) (Sup. Ct. NY Co., Jan. 20, 2017) (Sup. Ct [NY Co.], Jan. 23, 2017)
This litigation concerns a first-party property insurance claim under a policy issued by MCWG client, Tower Insurance Company of New York (“Tower”), and other insurers, for damage to a building as a result of activity at a neighboring construction site. The Insured/Plaintiff, Forty East Broadway Corp., was the owner of a building that was undermined during neighboring excavating operations, which resulted in the Insured’s building leaning. Damage to the building was first noted in July 2008. By early September there had been significant movement of the Plaintiff’s building, which prompted the city to order its demolition. Thereafter, the Plaintiff made an insurance claim against Tower for the loss, but since the insurance policy only provided coverage for certain named perils, and demolition/excavation were not included in those covered perils, the claim was denied. Among other reasons for the denial, it also appeared that the loss occurred after the policy expired on June 29, 2008.
In the litigation that followed, the Plaintiff claimed that the loss was caused by the covered peril of vandalism because the neighboring contractors maliciously damaged its property by digging in conscious disregard of likely damage. Plaintiff relied on the 2013 New York Court of Appeals decision in Georgitsi Realty LLC v. Penn Star Ins. Co., 21 N.Y.3d 606 (2013) that recognized damage caused in such a manner could constitute “vandalism” under an insurance policy.
In response to Tower’s summary judgment motion, the Court in this case held that the Georgitsi decision did not apply because Plaintiff did not provide any evidence that the neighboring contractors acted with malice while the insurance policy was in force, although neighboring construction was ongoing while the policy was in force and evidence was presented of allegedly malicious conduct after the policy expired. There was no evidence that the contractors failed to obtain permits, follow regulations, etc. during the policy period and indeed, their preparations for the excavation show that the damage was not the result of malice. Accordingly, Tower’s motion was granted and the case was dismissed.