V & D Properties, LLC v. Security National Ins. Co., Index EFC-2017-1805 (Oswego Co. Sup. Ct. June 7, 2019)

This case involved an insurance claim for water damage that occurred in a commercial building located in Oswego, New York, caused by an overflowing floor drain. Specifically, water overflowed from drains located on the building’s lower level, near a nurse’s station in a medical office. While the applicable policy excluded coverage for damage caused by water that “backs up, overflows, or is otherwise discharged from a sewer, drain or related equipment,” it provided $25,000 in “Additional Coverage” for such losses. The insurer paid under the “Additional Coverage” and denied the remainder of the claim because it was excluded.

The parties moved for summary judgment. The insured argued that there was insufficient proof that the damage was caused by water backing up or overflowing from a sewer or drain. However, its public adjuster reported that “the loss stemmed from an on-premises clog that resulted in an overflow, with water overflowing from floor drains and toilets in the lower level.” In addition, it submitted a sworn proof of loss that represented there was water on the floor that eventually went down the drain after the drain was “snaked.” Finally, the insured relied on Pichel v. Dryden Mut. Ins. Co., 117 A.D.3d 1267, (3d Dept. 2014), which found coverage under similar circumstances because the exclusion in that case, coupled with that policy’s coverage for “accidental discharge of a plumbing system,” created an ambiguity.

The insurer distinguished Pichel, pointing out that the result in that case did not apply here because the provision that created the ambiguity (accidental discharge coverage) was not in the policy at issue.

The court agreed with the insurer and held that Newlo Realty Co. v. U.S.F. & G. Corp., 213 A.D.2d 295 (1st Dept. 1995), controlled. Newlo found the word “drain” to be unambiguous and, therefore, no coverage was available.

Security National Insurance Company was represented by partner Kevin F. Buckley.