Earth Movement Exclusion
Sholosh v. National Union Fire Ins. Co. of Pitt. PA, et al, 519825/2018 (Sup. Ct., Kings Co. April 25, 2022)
This litigation involves Plaintiff’s insurance claims for alleged damage to its building from neighboring excavation and underpinning work. Plaintiff was aware of the alleged damages in August and September 2017, but did not report the claims to National Union until May 31, 2018. National Union moved for summary judgment based on Plaintiff’s breach of policy Conditions requiring claims to be reported “promptly” and “as soon as possible” and because the complained damage falls within the policy exclusion for earth movement.
In opposition, Plaintiff relied on numerous liability decisions to argue that the issue of whether notice was late presented an issue of fact for a jury to decide and that National Union had failed to establish it was prejudiced by the delay. Additionally, Plaintiff argued that the earth movement exclusion did not apply because the damage was caused by purported impact from an excavator and, even if it was not, the exclusion does not apply to man-made cause of earth movement such as excavation work.
The Court granted National Union’s motion in its entirety finding that Plaintiff breached the policy’s notice conditions and that the earth movement exclusion barred coverage. With regard to late notice, the Court ruled that Plaintiff’s delay in reporting both claims barred coverage inasmuch as the excuse offered, that Plaintiff was attempting to recover from its neighbor, was unreasonable as a matter of law.
The Court also interpreted the exclusionary language in the earth movement exclusion “caused by an act of nature or is otherwise caused” to mean that it applies to man-made causes such as the neighboring excavation. As for Plaintiff’s claim that the damage was caused by impact from an excavator, the Court enforced the exclusion based on its anti-concurrent causation language because it was undisputed that the excluded peril of earth movement at least contributed to the loss.
This decision is significant inasmuch as it equates the language “caused by an act of nature or is otherwise caused” with exclusionary language that the Court of Appeals previously held applies to man-made causes in Bentoria Holdings, Inc. v. Travelers Indem. Co., 20 NY3d 65,  (“whether naturally occurring or due to man-made or other artificial causes”). Thus, in New York either version of the earth-movement exclusion bars coverage for damage caused by excavation work on adjacent lots. It also adds to the growing body of New York case law holding that insurers do not need to show prejudice to successfully invoke a late notice defense in the first-party context and that a delay in providing notice is not excused because the insured believes another party is to blame.
The decision can be read here.