Troisi, Gindele and Klein Obtain Summary Judgment for Insurance Client

Michael Troisi, Laura Gindele and Michelle Klein recently won summary judgment for Sentinel Insurance Company in a hotly contested property damage suit. The case was litigated in the U.S. District Court for the Southern District of New York before Judge Nelson Roman.

The plaintiff, Northway Medical Center Condo, claimed damage to its building from a one-time rain event. Specifically, the brick veneer of the building was bulging outward and pulling away from the rest of the structure. Sentinel’s retained engineers opined that the loss was caused by improper construction and anchoring of the brick veneer to the backup wall. During discovery, Sentinel learned that engineers retained by the plaintiff had reached a similar conclusion regarding the cause of the damage, but plaintiff never shared the report with Sentinel prior to litigation. Plaintiff then retained a Registered Architect who supported plaintiff’s contention that the damage was the result of “an event based occurrence.”  Sentinel denied plaintiff’s claim based on the exclusion for damage caused by improper or negligent construction, among other exclusions.

In moving for summary judgment, Sentinel sought to exclude the testimony of plaintiff’s expert since his opinions were unsupported by facts and were based primarily on speculation and conjecture. In ruling for Sentinel, the Court held that the expert’s report and testimony regarding the cause of the damage were inadmissible because his conclusions were based on nothing more than “subjective belief or unsupported speculation.” The Court credited the findings of Sentinel’s expert, who found that the improper construction of the building was the cause of the damage.

Notably, the Court also rejected plaintiff’s request for coverage under the “ensuing loss” provision of the policy. Ensuing loss provisions afford coverage in situations where, as a result of an excluded peril, a covered peril arises and causes damage. In this regard, plaintiff attempted to argue that even though the loss was caused by negligent construction (an excluded peril), the actual damage was caused by water  (a covered cause of loss.) In rejecting this argument, Judge Roman noted that New York law allows coverage under the ensuing loss provision if and to the extent a plaintiff can prove that collateral or subsequent damage occurred to other insured property as a result of the excluded peril. Judge Roman also noted that New York courts, when interpreting ensuing loss provisions, seek to ensure that the exception does not supersede the exclusion and will disallow coverage for losses directly related to the original excluded risk. Relying on a number of analogous cases, the Court rejected plaintiff’s argument that the water damage was an “intervening covered cause of loss” because all damage was the result of negligent construction, an excluded peril under the policy.

Click here for a copy of the decision.