PARK CITY ESTATES TENANTS CORP v. GULF INSURANCE COMPANY (2006)

Order, Supreme Court, New York County (Herman Cahn, J.), entered November 30, 2005, which granted defendant's motion for summary judgment dismissing the complaint and denied plaintiff's cross motion for partial summary judgment on the issue of liability, unanimously affirmed, without costs.

In this action to recover on an all-risk commercial property and general liability insurance policy issued to plaintiff, the “Ordinance or Law” endorsement in the insurance policy specifically excluded coverage for losses related to “integrity testing” on the building's plumbing and gas systems.   After a gas pipe ruptured in the apartment of a tenant in plaintiff's building, integrity testing of the system was performed, in accordance with the Building Code (Administrative Code of City of N.Y.) § 27-922.   When the gas pipes and risers failed to withstand the pressure from this testing, the system required more than $600,000 worth of repairs.   This loss was a “cost associated with the enforcement of [an] ordinance or law which require[d the] Insured or others to test plumbing, gas or other building systems for integrity,” and was thus specifically excluded from coverage under the policy (see e.g. 61 Jane St. Tenants Corp. v. Great Am. Ins. Co., 2001 U.S. Dist. LEXIS 265, 2001 WL 40774 [S.D.N.Y.] ).

In light of this determination, we need not reach the issue of whether the loss is covered under defendant's “wear and tear” exclusion as a matter of law.