James MAGIE et al., Respondents, v. PREFERRED MUTUAL INSURANCE COMPANY, Appellant.
Appeal from a judgment of the Supreme Court (Ledina, J.), entered July 2, 2010 in Sullivan County, upon a decision of the court in favor of plaintiffs.
In August 2005, plaintiffs' house in the Town of Fallsburg, Sullivan County was destroyed by fire. Plaintiffs had a homeowner's insurance policy with defendant that included coverage of, among other things, $487,000 for the dwelling and $340,900 for personal property. Their losses allegedly exceeded these amounts and they elected not to rebuild the house.
At the time of the fire, plaintiffs were not staying at the premises, but instead were at a recently completed “retirement home” a short distance away. Defendant made two partial advance payments totaling $15,000 and, after considerable delay, paid the outstanding mortgage balance of $284,655.89. Defendant informed plaintiffs in March 2006 that it considered the policy void based upon its conclusion that plaintiffs had misrepresented material facts and engaged in fraudulent conduct regarding some of their claims including, among other things, misrepresenting the value of their personal property.
Plaintiffs commenced this action seeking to be indemnified for their covered losses. Following a bench trial, Supreme Court rendered a written decision finding that defendant failed to prove material misrepresentation or fraud by plaintiffs and rejecting defendant's alternative contention that a coinsurance penalty was implicated. The court determined that plaintiffs had established that they were entitled to $593,098.13, comprised of $252,198.13 under coverage for the dwelling1 and $340,900 for personal property coverage. Defendant appeals.
Defendant argues that plaintiffs' complaint should have been dismissed as a matter of law since the proof at trial allegedly demonstrated fraud and misrepresentation by plaintiffs and their adjuster, thus providing the ground for defendant to void the policy. A policy may be voided if the insured “ ‘willfully and fraudulently placed in the proofs of loss a statement of property lost which [the insured] did not possess, or has placed a false and fraudulent value upon the articles which [the insured] did own’ “ (Saks & Co. v. Continental Ins. Co., 23 N.Y.2d 161, 165 , quoting Domagalski v. Springfield Fire & Mar. Ins. Co., 218 App.Div. 187, 190  ). Incorrect information is not necessarily tantamount to fraud or material misrepresentation as the insurer must tender “proof of intent to defraud-a necessary element to the defense” (Deitsch Textiles v. New York Prop. Ins. Underwriting Assn., 62 N.Y.2d 999, 1001 ; see Kittner v. Eastern Mut. Ins. Co., 80 A.D.3d 843, 847 , lv dismissed 16 N.Y.3d 890  ). Whether a misrepresentation reaches the level of being material is typically for the factfinder “unless the insurer proffers clear and substantially uncontradicted evidence concerning materality” (Carpinone v. Mutual of Omaha Ins. Co., 265 A.D.2d 752, 754 ; see Lenhard v. Genesee Patrons Co-op. Ins. Co., 31 A.D.3d 831, 833  ). Where a defendant seeks dismissal as a matter of law, a plaintiff is afforded every favorable inference from the proof presented at trial (see Crawford v. Village of Millbrook, 61 AD3d 918, 920 ; Martin v. Fitzpatrick, 19 A.D.3d 954, 955–956  ).
The proof presented revealed that a significant fire occurred which destroyed or damaged virtually everything at the location. Plaintiffs hired a public adjustment company, and the adjuster who aided in quantifying plaintiffs' loss indicated that, of the thousands of items he listed, less than one tenth of one percent were not damaged. And, those reported non-damaged items had been exposed to the fire so as to affect their value. Out of these thousands of damaged items, defendant points to a small number as purportedly reflecting incorrect information. However, plaintiffs offered explanations as to some of these items, and the proof at trial simply did not compel the conclusion as a matter of law that plaintiffs intended to defraud defendant or that the incorrect information constituted material misrepresentation. The fact that plaintiffs did not have documentation for some losses was explained by documentation being lost in the fire. The estimate of damages to plaintiffs' large firearms collection was based in part on plaintiff James Magie's extensive experience as an owner and collector. One adjuster's recollection that he thought Magie might have indicated that the firearms were separately insured is insufficient to clearly prove plaintiffs had additional insurance that they failed to disclose. Similarly, the fact that plaintiffs had very recently started sleeping in their new home and still were in the process of moving does not establish that plaintiffs made a material misrepresentation about whether the premises were owner occupied. Viewing the evidence under the standard applicable for dismissal as a matter of law, we find ample proof to support plaintiffs' asserted losses and reject defendant's affirmative defense.
Next, defendant contends that we should set aside the verdict as not supported by a fair interpretation of the evidence. “On our review of a verdict after a bench trial, we independently review the weight of the evidence and may grant the judgment warranted by the record, while according due deference to the trial judge's factual findings particularly where ․ they rest largely upon credibility assessments” (Martin v. Fitzpatrick, 19 A.D.3d at 957, 799 N.Y.S.2d 285; see Cotton v. Beames, 74 A.D.3d 1620, 1621–1622  ). This was a fire that even defendant's agent characterized as “devastating.” Plaintiffs submitted a comprehensive inventory as well as numerous photographs revealing the virtual total destruction of their home and property. The proof reveals that they cooperated with defendant and, to the extent that plaintiffs made errors when attempting to assess the significant losses, the errors were not intentional and were minor when considered in the context of the overall nature of the losses sustained. We are unpersuaded to disregard Supreme Court's credibility determinations. Accepting those determinations, and upon reviewing and weighing the proof in the extensive record, we agree with Supreme Court that plaintiffs adequately established their losses and defendant's affirmative defenses of fraud and material misrepresentation are unavailing.
Finally, we consider defendant's alternative argument that a coinsurance penalty should be applied to reduce the recovery for the real property part of plaintiffs' loss. Initially, the applicability of a coinsurance clause is an affirmative defense that must be pleaded (see Rosenbaum Plus Two Print. v. Allstate Ins. Co. ., 59 A.D.2d 939, 939 ; , 399 N.Y.S.2d 458 2 N.Y. PJI2d 4:49, Comment, at 976  ), and defendant did not specifically assert such defense in its answer. In any event, in New York, a coinsurance clause “results in reducing the recovery in case of a partial loss, though in case of total loss, the insurer is liable for the amount named in the policy” (New York Life Ins. Co. v. Glens Falls Ins. Co., 184 Misc. 846, 849 , affd 274 App.Div. 1045 , affd 301 N.Y. 506 ; see Quaker Hills, LLC v. Pacific Indem. Co., 2011 WL 4343368, *5, 2011 U.S. Dist LEXIS 92633, *16–17 [SD N.Y.2011]; 70A N.Y. Jur 2d, Insurance Law § 2201; Appleman, Insurance Law & Practice § 3866). Here, it is undisputed that plaintiffs sustained a total loss.
Defendant's remaining arguments have been considered and are unavailing.
ORDERED that the judgment is affirmed, with costs.
MERCURE, Acting P.J., ROSE, KAVANAGH and McCARTHY, JJ., concur.