Exclusions and terms

Bentoria Holdings, Inc. v Travelers Indem. Co., 2011 NY Slip Op 04400 (App. Div., 2nd 2011)

The Supreme Court properly denied that branch of Travelers' motion which was for summary judgment dismissing the complaint insofar as asserted against it. "Generally, where an insurer wishes to exclude certain coverage from its policy obligations, it must do so in clear and unmistakable language" (Lee v State Farm Fire & Cas. Co., 32 AD3d 902, 903 [internal quotation marks omitted]; see Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311). "Such exclusions or exceptions from policy coverage must be specific and clear in order to be enforceable, and they are not to be extended by interpretation or implication, but are to be accorded a strict and narrow construction" (Lee v State Farm Fire & Cas. Co., 32 AD3d at 903 [internal quotation marks omitted]). "Thus the insurance company bears the burden of establishing that the exclusions apply in a particular case and that they are subject to no other reasonable interpretation" (id. at 903-904 [internal quotation marks omitted]; see Seaboard Sur. Co. v Gillette Co., 64 NY2d at 311). "The burden is a heavy one, and if the language is doubtful or uncertain in its meaning, any ambiguity will be construed in favor of the insured and against the insurer" (Lee v State Farm Fire & Cas. Co., 32 AD3d at 904; see Pepsico, Inc. v Winterthur Intl. Am. Ins. Co., 13 AD3d 599, 600).

Here, Travelers failed to establish its prima facie entitlement to judgment as a matter of law by meeting the heavy burden of demonstrating that the earth movement exclusion clearly and unambiguously applied to the loss at issue in this case (see Pioneer Tower Owners Assn. v State Farm Fire & Cas. Co., 12 NY3d 302, 306-307; Lee v State Farm Fire & Cas. Co., 32 AD3d at 904). Excavation was not expressly set forth in the exclusion, while other, less common causes of earth movement were (see Pioneer Tower Owners Assn. v State Farm Fire & Cas. Co., 12 NY3d at 308). Travelers failed to establish, prima facie, that the facts of this case, which allegedly involves the excavation of earth from a lot adjacent to the plaintiff's building, fall squarely within the language of the exclusion, which expressly defines earth movement as "[e]arth sinking, . . . rising or shifting" (see Lee v State Farm Fire & Cas. Co., 32 AD3d at 904). Thus, notwithstanding the fact that the exclusion here refers to earth movement caused by "man made" or "artificial" causes, we conclude that Travelers failed to demonstrate, prima facie, that the express terms of the exclusion clearly and unambiguously establish that the loss at issue here was not covered by the policy. Accordingly, the Supreme Court properly denied that branch of Travelers' motion which was for summary judgment dismissing the complaint insofar as asserted against it.

The Supreme Court providently exercised its discretion in denying the alternate branch of Travelers' motion which was to sever the action insofar as asserted against it. "The determination to grant or deny a request for a severance pursuant to CPLR 603 is a matter of judicial discretion which should not be disturbed on appeal absent a showing of prejudice to a substantial right of the party seeking the severance" (Naylor v Knoll Farms of Suffolk County, Inc., 31 AD3d 726, 727). Here, there are common factual issues involved in the claims against Travelers and the other defendants, and the interests of judicial economy and consistency will be served by having a single trial (see Ingoglia v Leshaj, 1 AD3d 482, 485). Additionally, Travelers failed to demonstrate that a single trial would result in prejudice to a substantial right (see Quiroz v Beitia, 68 AD3d 957, 960-961).

Insurance Co. of Greater N.Y. v Clermont Armory, LLC, 2011 NY Slip Op 04421 (App. Div., 2nd 2011)

Generally, where an insurer wishes to exclude certain coverage from its policy obligations,

"it must do so in clear and unmistakable language. Any such exclusions or exceptions from policy coverage must be specific and clear in order to be enforced. They are not to be extended by interpretation or implication, but are to be accorded a strict and narrow construction. Indeed, before an insurance company is permitted to avoid policy coverage, it must satisfy the burden which it bears of establishing that the exclusions or exemptions apply in the particular case, and that they are subject to no other reasonable interpretation" (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311 [internal quotation marks and citations omitted]; see Pioneer Tower Owners Assn. v State Farm Fire & Cas. Co., 12 NY3d 302, 307).

The insurer's burden is heavy, and doubtful or uncertain language leading to ambiguity will be interpreted against the insurer (see Lee v State Farm Fire & Cas. Co., 32 AD3d 902, 904; Pepsico, Inc. v Winterthur Intl. Am. Ins. Co., 13 AD3d 599, 600).

Altronix Corp. v Central Machining Specialties, Inc., 2011 NY Slip Op 04181 (App. Div., 2nd 2011)

"[A] written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (Greenfield v Philles Records, 98 NY2d 562, 569; see Bridge Pub. Relations & Consulting, Inc. v Hylan Elec. Contr., Inc., 65 AD3d 603, 603-604). "A contract is unambiguous if the language it uses has a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion" (Greenfield v Philles Records, 98 NY2d at 569 [internal quotation marks omitted]; see Bridge Pub. Relations & Consulting, Inc. v Hylan Elec. Contr., Inc., 65 AD3d at 603-604). It is for the court to determine, as matter of law, whether reasonable people may reasonably differ about the meaning of the contract's language (see Breed v Insurance Co. of N. Am., 46 NY2d 351, 356; Bridge Pub. Relations & Consulting, Inc. v Hylan Elec. Contr., Inc., 65 AD3d at 604).

Etzion v Etzion, 2011 NY Slip Op 04198 (App. Div., 2nd 2011)

On this appeal, the plaintiff contends that the Supreme Court erred in denying her motion pursuant to CPLR 3211(a)(1) and (7) to dismiss a counterclaim asserted by the defendant former husband, Rafael Etzion (hereinafter the defendant), for an award of an attorney's fee pursuant to the terms of a stipulation of settlement entered into by the defendant and the plaintiff on June 8, 2005, or, in the alternative, for summary judgment dismissing the counterclaim.

Parties are free to enter into agreements that "not only bind[ ] them, but which the courts are bound to enforce" (Greve v Aetna Live-Stock Ins. Co., 30 NYS 668, 670). Marital contracts are "subject to principles of contract [construction and] interpretation" (Rainbow v Swisher, 72 NY2d 106, 109; see Matter of Meccico v Meccico, 76 NY2d 822, 823-824; Girardin v Girardin, 281 AD2d 457, 457). Moreover, "[w]here a stipulation of settlement provides the basis for an award of an attorney's fee, the terms of the agreement control" (Arato v Arato, 15 AD3d 511, 512; see Sweeney v Sweeney, 71 AD3d 989, 992). 

"The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent" (Greenfield v Philles Records, 98 NY2d 562, 569; see Hooper Assoc. v AGS Computers, 74 NY2d 487, 491). "Where . . . the contract is clear and unambiguous on its face, the intent of the parties must be gleaned from within the four corners of the instrument, and not from extrinsic evidence" (Rainbow v Swisher, 72 NY2d at 109; see Matter of Meccico v Meccico, 76 NY2d 822; Clark v Clark, 33 AD3d 836, 837; see also Kass v Kass, 91 NY2d 554, 556). "Thus, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (Greenfield v Philles Records, 98 NY2d at 569; see W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162).

" [C]ourts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing'" (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475, quoting Reiss v Financial Performance Corp., 97 NY2d 195, 199; see Riverside S. Planning Corp. v CRP/Extell Riverside, L.P., 13 NY3d 398, 404; McWade v McWade, 253 AD2d 798, 799). Thus, a court "will not imply a term where the circumstances surrounding the formation of the contract indicate that the parties, when the contract was made, must have foreseen the contingency at issue and the agreement can be enforced according to its terms" (Reiss v Financial Performance Corp., 97 NY2d at 199; see Henrich v Phazar Antenna Corp., 33 AD3d 864, 867). "The construction and interpretation of an unambiguous written contract is an issue of law within the province of the court" (Franklin Apt. Assoc., Inc. v Westbrook Tenants Corp., 43 AD3d 860, 861; see Katina, Inc. v Famiglietti, 306 AD2d 440, 441).

Here, the defendant's counterclaim for an award of an attorney's fee is based on an overbroad reading of an attorney's-fee provision in the parties' stipulation of settlement executed on June 8, 2005 (hereinafter the agreement), which was subsequently incorporated, but not merged, into their judgment of divorce. The parties' separation agreement, at Article XXV, paragraph 3, states, in relevant part:

"In the event either party is forced to seek aid of counsel in enforcing any rights pursuant to this Stipulation, and in the event that party is successful in enforcing such right(s), the other shall reimburse him or her for any reasonable attorneys' fees necessarily incurred in enforcing such rights. The provisions of this paragraph shall be in addition, and without prejudice or limitation, to any other rights or remedies to which the aggrieved party may be entitled. The parties agree that the purpose of this paragraph is to prevent unnecessary litigation between them and to encourage each to fulfill his or her responsibilities under the terms of this Stipulation as fully as possible" (emphasis added).

The defendant, in his counterclaim, asserts that he was entitled to an award of an attorney's fee pursuant to the fees provision because he has been forced, in effect, to defend his rights under the separation agreement. However, the agreement clearly and unambiguously provides that only the party seeking to enforce any rights under the agreement shall be entitled to an attorney's fee, if successful. The defendant is not enforcing any rights under the agreement by simply defending against the plaintiff's motion (see Ferrara v Ferrara, 42 AD3d 426, 427). Had the parties intended the fees provision to be construed as the defendant contends, they were free to expressly so provide (id. at 427).

" [W]here . . . documentary evidence utterly refutes [the proponent's] factual allegations, conclusively establishing a defense as a matter of law,'" a motion to dismiss may be properly granted (Stein v Garfield Regency Condominium, 65 AD3d 1126, 1128, quoting Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326; see Leon v Martinez, 84 NY2d 83, 87; Wild Oaks, LLC v Joseph A. Beehan Jr., Gen. Contr., Inc., 77 AD3d 924, 926; Roth v R & P Rest. Corp., 68 AD3d 961, 963; Mazur Bros. Realty, LLC v State of New York, 59 AD3d 401, 402; Troccoli v Zarabi, 57 AD3d 971, 972). Based upon the documentary evidence, consisting of the agreement, the plaintiff conclusively established, as a matter of law, that the defendant is not entitled to an award of an attorney's fee, regardless of the outcome of the current dispute.

31 Victory Corp. v Victory Props., LLC, 2011 NY Slip Op 04039 (App. Div. 2nd 2011)

"The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent" (Greenfield v Philles Records, 98 NY2d 562, 569). "[A] written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (id.). Here, however, the terms of the guaranty, including the effect and date of commencement of the 18-month limitation contained therein, cannot be enforced, as they did not have "a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion" (Breed v Insurance Co. of N. Am., 46 NY2d 351, 355). Moreover, the intentions of the parties cannot be ascertained from any of the extrinsic evidence presented (see Weiss v Weinreb & Weinreb, 17 AD3d 353, 354). As such, the Supreme Court properly construed the ambiguous terms of the guarantee against the party that drafted it, which in this instance was Victory Properties (see Jacobson v Sassower, 66 NY2d 991; 151 W. Assoc. v Printsiples Fabric Corp., 61 NY2d 732, 734).

Dean v Tower Ins. Co. of N.Y., 2011 NY Slip Op 03899 (App. Div., 1st 2011)

Defendant failed to satisfy its prima facie burden on its motion for summary judgment. Because the "residence premises" insurance policy fails to define what qualifies as "resides" for the purposes of attaching coverage, the policy is ambiguous in the circumstances of this case, where the plaintiffs-insureds purchased the policy in advance of closing but were then unable to fulfill their intention of establishing residency at the subject premises due to their discovery and remediation of termite damage that required major renovations. "[B]efore an insurance company is permitted to avoid policy coverage, it must satisfy the burden which it bears of establishing that the exclusions or exemptions apply in the particular case, and that they are subject to no other reasonable interpretation" (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311 [1984]). Accordingly, the ambiguity in the policy must be construed against defendant under the facts of this case, and precludes the grant of summary judgment in its favor (see Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398 [1983]). Marshall v Tower Ins. Co. of N.Y. (44 AD3d 1014 [2007] is inapposite because it did not address whether the term "residence premises" is ambiguous in light of the policy's failure to define "resides." Moreover, unlike here, the plaintiff in Marshall had no intention of living at the premises (see Marshall v Tower Ins. Co. of N.Y., 12 Misc 3d 117OA [Sup Ct 2006]).

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