JAHIER v. LIBERTY MUTUAL GROUP (2009)

In an action to recover damages for breach of contract and for a judgment declaring that the defendants are obligated to provide coverage for certain damage to the plaintiffs' property pursuant to a homeowners insurance policy issued by them to the plaintiffs, the defendants appeal from an order of the Supreme Court, Suffolk County (Jones, J.), entered October 15, 2008, which denied their motion for summary judgment dismissing the first cause of action alleging breach of contract and declaring that they were not so obligated, and granted the plaintiffs' cross motion for summary judgment on the issue of liability on the first cause of action alleging breach of contract and declaring that the defendants are obligated to provide coverage under the subject homeowners insurance policy for the loss sustained by the plaintiffs.

ORDERED that the order is reversed, on the law, with costs, the plaintiffs' cross motion for summary judgment on the issue of liability on the first cause of action alleging breach of contract and declaring that the defendants are obligated to provide coverage for certain damage to the plaintiffs' property pursuant to a homeowners insurance policy issued to them is denied, the defendants' motion for summary judgment dismissing the first cause of action alleging breach of contract and declaring that they are not so obligated is granted, and the matter is remitted to the Supreme Court, Suffolk County, for the entry of a judgment, inter alia, declaring that the defendants are not obligated to provide coverage pursuant to the homeowners insurance policy issued by them to the plaintiffs, for the loss sustained by the plaintiffs.

The defendants, Liberty Mutual Group and The First Liberty Insurance Corporation (hereinafter together Liberty), issued a Deluxe Homeowners Insurance Policy (hereinafter the policy) insuring, inter alia, the plaintiffs' residence and other structures located on their property.   In April 2007, during the coverage period, the plaintiffs' in-ground swimming pool, the surrounding patio area, and the plumbing which serviced the pool sustained damage when the pool lifted up several inches out of the ground.   At the time of the loss, the pool was not filled with water, as it had been drained by a contractor hired by the plaintiffs to perform maintenance work.   During the time that the pool was empty, and shortly before the plaintiffs discovered the damage, heavy rains had fallen in the area.   The plaintiffs made a claim pursuant to the policy, but Liberty disclaimed coverage based upon clauses in the policy which excluded losses due to “Earth Movement” and “Water Damage.”

In July 2007 the plaintiffs commenced this action against Liberty, alleging breach of contract, and for a judgment declaring that Liberty was obligated to provide coverage under the policy for the claimed loss.   The Supreme Court denied Liberty's motion for summary judgment dismissing the breach of contract cause of action and declaring that it was not so obligated and granted the plaintiffs' cross motion on the issue of liability on the breach of contract cause of action and declaring that Liberty was so obligated. We reverse.

 “[C]ourts bear the responsibility of determining the rights or obligations of parties under insurance contracts based on the specific language of the policies” (State of New York v. Home Indem. Co., 66 N.Y.2d 669, 671, 495 N.Y.S.2d 969, 486 N.E.2d 827;  see Cali v. Merrimack Mut. Fire Ins. Co., 43 A.D.3d 415, 416, 841 N.Y.S.2d 128).   An exclusion from coverage “must be specific and clear in order to be enforced” (Essex Ins. Co. v. Pingley, 41 A.D.3d 774, 776, 839 N.Y.S.2d 208, quoting Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 311, 486 N.Y.S.2d 873, 476 N.E.2d 272;  see Lee v. State Farm Fire & Cas. Co., 32 A.D.3d 902, 903, 822 N.Y.S.2d 559).   An ambiguity in an exclusionary clause must be construed most strongly against the insurer (see Ace Wire & Cable Co. v. Aetna Cas. & Sur. Co., 60 N.Y.2d 390, 398, 469 N.Y.S.2d 655, 457 N.E.2d 761;  Breed v. Insurance Co. of N. Am., 46 N.Y.2d 351, 353, 413 N.Y.S.2d 352, 385 N.E.2d 1280).   However, “the plain meaning of the policy's language may not be disregarded to find an ambiguity where none exists” (Atlantic Balloon & Novelty Corp. v. American Motorists Ins. Co., 62 A.D.3d 920, 922, 880 N.Y.S.2d 112;  see Cali v. Merrimack Mut. Fire Ins. Co., 43 A.D.3d at 417, 841 N.Y.S.2d 128).   Where an insurer denies coverage based upon an exclusion, the burden is on the insurer to demonstrate that the exclusion applies in the particular case and that it is “subject to no other reasonable interpretation” (Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d at 311, 486 N.Y.S.2d 873, 476 N.E.2d 272).

 In this case, the Supreme Court erred in denying Liberty's motion for summary judgment and in granting the plaintiffs' cross motion for summary judgment.   Liberty met its initial burden of establishing its entitlement to judgment as a matter of law by demonstrating that the “water damage” exclusion clearly and unambiguously applied to the plaintiffs' loss (see Reynolds v. Standard Fire Ins. Co., 221 A.D.2d 616, 634 N.Y.S.2d 163;  Hipper v. CNA Ins. Co., 2002 N.Y. Slip Op. 40109(U), 2002 WL 857693 [App. Tm. 9th & 10th Dists. 2002];  see generally Cali v. Merrimack Mut. Fire Ins. Co., 43 A.D.3d at 417, 841 N.Y.S.2d 128;  Sheehan v. State Farm Fire & Cas. Co., 239 A.D.2d 486, 487, 658 N.Y.S.2d 61;  Kula v. State Farm Fire & Cas. Co., 212 A.D.2d 16, 20, 628 N.Y.S.2d 988).   The plain language of the exclusion relieves Liberty from loss caused “directly or indirectly” by “[w]ater damage, meaning ․ [w]ater below the surface of the ground, including water which exerts pressure on ․ a building ․ swimming pool or other structure.”   Furthermore, losses due to “water damage” are excluded “regardless of any other cause or event contributing concurrently or in any sequence to the loss.”   Here, the evidence demonstrated that the plaintiffs' loss was attributable to the subsurface water pressure that was exerted upon the empty swimming pool, even though it was precipitated by the drainage of the pool and heavy rainfall (see Cali v. Merrimack Mut. Fire Ins. Co., 43 A.D.3d at 417-418, 841 N.Y.S.2d 128;  Sheehan v. State Farm Fire & Cas. Co., 239 A.D.2d at 487, 658 N.Y.S.2d 61;  Reynolds v. Standard Fire Ins. Co., 221 A.D.2d 616, 616-617, 634 N.Y.S.2d 163;  Kula v. State Farm Fire & Cas. Co., 212 A.D.2d at 20-21, 628 N.Y.S.2d 988;  Hipper v. CNA Ins. Co., 2002 N.Y. Slip Op. 40109(U), 2002 WL 857693 [App. Tm. 9th & 10th Dists. 2002];  South Carolina Farm Bureau Mut. Ins. Co. v. Durham, 380 S.C. 506, 671 S.E.2d 610).   In opposition to Liberty's motion and in support of its cross motion for summary judgment, the plaintiffs failed to raise a triable issue of fact or establish their prima facie entitlement to judgment as a matter of law, respectively, so as to preclude the award of summary judgment to Liberty (see Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718).

Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Suffolk County, for the entry of a judgment, inter alia, declaring that Liberty is not obligated to provide coverage for the loss sustained by the plaintiffs pursuant to the homeowners insurance policy issued by it (see Lanza v. Wagner, 11 N.Y.2d 317, 334, 229 N.Y.S.2d 380, 183 N.E.2d 670, appeal dismissed 371 U.S. 74, 83 S.Ct. 177, 9 L.Ed.2d 163, cert. denied 371 U.S. 901, 83 S.Ct. 205, 9 L.Ed.2d 164).

The plaintiffs' remaining contentions either are without merit or have been rendered academic by our determination.