LICHTER REAL ESTATE NUMBER THREE v. GREATER NEW YORK INSURANCE COMPANY

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Supreme Court, Appellate Division, First Department, New York.

LICHTER REAL ESTATE NUMBER THREE, L.L.C., Plaintiff-Respondent, v. GREATER NEW YORK INSURANCE COMPANY, Defendant-Appellant.

Decided: August 30, 2007

SAXE, J.P., NARDELLI, BUCKLEY, SWEENY, MALONE, JJ. Richard C. Rubinstein, New York, for appellant. Kera Graubard & Litzman, New York (Martin S. Kera of counsel), for respondent.

Order, Supreme Court, New York County (Marilyn Shafer, J.), entered March 6, 2006, which denied defendant's motion to dismiss the complaint as barred by the two-year contractual limitations period, unanimously reversed, on the law, without costs, the motion granted and Greater New York Insurance Company is declared not obligated to afford plaintiff coverage under the policy.

 The policy at issue contained a provision that any legal action for coverage under it must be brought within two years of the date the direct physical loss or damage occurred.   Plaintiff commenced this action on June 7, 2005.   However, the date of the direct physical loss or damage from which plaintiff's two-year limitations period must to be measured was the date the steam riser broke, in November, 2002, as both plaintiff's loss of rent claim and its mold remediation claim were predicated on that event.

 There is no merit to plaintiff's contention that the date from which this contractual limitation period must begin to run is the first time a mold test disclosed dangerous levels of mold contamination, on June 23, 2003.   Under New York law, the loss date is the date of “the occurrence of the casualty or event insured against” (see Morgan Guar. Trust Co. of N.Y. v. Aetna Cas. & Sur. Co., 199 A.D.2d 72, 604 N.Y.S.2d 952 [1993], citing Margulies v. Quaker City Fire & Mar. Ins. Co., 276 App.Div. 695, 97 N.Y.S.2d 100 [1950];  Califano v. Citizens Ins. Co. of N.J., 163 Misc. 542, 296 N.Y.S. 234 [Sup. Ct. 1937], affd., 252 App.Div. 731, 299 N.Y.S. 303 [1937] ).

 Nor may plaintiff rely on the date-of-discovery rule.   For that rule to apply, an insured must demonstrate that an earlier inspection, diligently undertaken in the face of discovered facts, would not have revealed the cause of the loss (see Morgan Guar. Trust Co. v. Aetna, 199 A.D.2d at 73, 604 N.Y.S.2d 952).   Here, the tests in December, 2002 and in March, 2003 revealed the presence of mold contamination, albeit not yet the dangerous levels of mold that were first found at the time of the June 23, 2003 test.   This is insufficient to establish that the cause of the claimed loss could not have been revealed sooner than June 7, 2003.

Thus, plaintiff's action against ICGNY was barred by the Policy's two-year contractual limitations period.