STARR INDEMNITY LIABILITY COMPANY v. Great American Insurance Company, Defendant. (2021)

Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered April 4, 2019, which denied plaintiff's motion for summary judgment and defendants-respondents' cross motion for summary judgment dismissing the complaint and on its first two counterclaims, unanimously modified, on the law, defendants-respondents' cross motion granted and it is declared that the subject insurance policy remains in full force and effect and plaintiff must indemnify defendants-respondents for losses at 599 and 621 Front Street, Hempstead, New York, arising as a result of Hurricane Sandy on October 29, 2012 and for losses arising at 9–17 St. Paul's Road, North, Hempstead, New York, arising as a result of a fire on February 9, 2013, and otherwise affirmed, without costs.  The Clerk is directed to enter judgment so declaring.

A misrepresentation in an insurance application is material, voiding the policy ab initio, if, had the true facts been known, either the insurer would not have issued the policy or would have charged a higher premium (Interested Underwriters at Lloyd's v. H.D.I. III Assoc., 213 A.D.2d 246, 247, 623 N.Y.S.2d 871 [1st Dept. 1995] ).  Even an innocent misrepresentation is sufficient to void the policy (see 128 Hester LLC v. New York Mar. & Gen. Ins. Co., 126 A.D.3d 447, 5 N.Y.S.3d 69 [1st Dept. 2015];  Feldman v. Feldman, 241 A.D.2d 433, 434, 661 N.Y.S.2d 9 [1st Dept. 1997] )).  However, “an answer to an ambiguous question on an insurance application cannot be the basis for a claim of misrepresentation” in procuring insurance (Bleecker St. Health & Beauty Aids, Inc. v. Granite State Ins. Co., 38 A.D.3d 231, 232, 834 N.Y.S.2d 1 [1st Dept. 2007] ).

Here, on defendants-respondents' insurance application submitted to plaintiff, Question 9, which asked “Any uncorrected code violations?” is ambiguous.  While the plain language asks whether there are “any uncorrected fire code violations” and not uncorrected fire code notices of violation, different witnesses provided five different understandings as to what the question was asking.  In any event, this Court has used the term “violation” to mean the issuance of a citation (Shannon v. New York Times Bldg., LLC, 170 A.D.3d 600, 601, 97 N.Y.S.3d 23 [1st Dept. 2019] [“the City of New York had issued a violation relating to the elevator”] ).  Indeed, the question is not even posed as a complete sentence but a sentence fragment lacking a verb, which could have clarified the question.

Accordingly, defendants are entitled to summary judgment on their first two counterclaims (Bleecker St., 38 A.D.3d at 232, 834 N.Y.S.2d 1 Fanger v. Manhattan Life Ins. Co. of N.Y., N.Y., 273 A.D.2d 438, 439, 709 N.Y.S.2d 622 [2d Dept. 2000], lv dismissed 96 N.Y.2d 754, 725 N.Y.S.2d 279, 748 N.E.2d 1075 [2001] ).