Troisi, Majkowski, and Gindele Obtain Summary Judgment Victory for State Farm

Michael Troisi, Paul Majkowski, and Laura Gindele secured summary judgment on behalf of our client, State Farm.

The plaintiff, the owner of a Brooklyn rental building, claimed State Farm owed it nearly $200,000 in unpaid rent based on an alleged guarantee State Farm signed regarding leases for three units to house its insureds after their property was nearly destroyed by construction activities in the neighboring lot. State Farm’s policy provided additional living expense (ALE) coverage for the insureds’ temporary housing costs, and despite its disclaimer under an “earth movement” exclusion, the insureds obtained a preliminary injunction compelling State Farm to continue paying ALE pending resolution of their separate state court action contesting State Farm’s denial of coverage and against the contractors who had damaged their residence rendering it uninhabitable. In the state court action, we obtained an order terminating the injunction, but the plaintiff alleged that State Farm’s insureds never vacated the apartments.

The plaintiff landlord sought to recover the unpaid rent from State Farm, claiming State Farm had fraudulently concealed the circumstances of the insurance coverage dispute and thereby induced it to lease the apartments, and breached the guarantee by failing to pay rent for as long as its insureds occupied the apartments.

After obtaining dismissal of the plaintiff’s fraud-related claims, State Farm moved for summary judgment on the remaining breach of contract claim, arguing it never promised to pay for an unlimited period or for its insureds holding over after the leases expired.

United States District Court Judge Jed Rakoff agreed with State Farm and dismissed the entire action. The court ruled that State Farm properly exercised its option to terminate on 60 days’ notice as provided in the leases and observed that the insureds’ alleged failure to vacate did not mean State Farm had violated its obligations.

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