25 Bay Terrace Assocs., L.P. v. Pub. Serv. Mut. Ins. Co.

• Decision Date: 05 May 2021
• Docket Number: Index No. 150345/13,2016–04867, 2016–10843
• Citation: 194 A.D.3d 668,148 N.Y.S.3d 484
• Court: New York Supreme Court — Appellate Division
• Parties: 25 BAY TERRACE ASSOCIATES, L.P., appellant-respondent, v. PUBLIC SERVICE MUTUAL INSURANCE COMPANY, etc., respondent-appellant.

194 A.D.3d 668

148 N.Y.S.3d 484

25 BAY TERRACE ASSOCIATES, L.P., appellant-respondent,

v.PUBLIC SERVICE MUTUAL INSURANCE COMPANY, etc., respondent-appellant.

2016–04867, 2016–10843

Index No. 150345/13

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

Argued—March 23, 2021

May 5, 2021

Carroll McNulty & Kull LLC, New York, N.Y. (Kristin V. Gallagher and Joanna L. Young of counsel), for appellant-respondent.

Ohrenstein & Brown, LLP, Garden City, N.Y. (Matthew Bryant of counsel), for respondent-appellant.

MARK C. DILLON, J.P., SYLVIA O. HINDS–RADIX, COLLEEN D. DUFFY, PAUL WOOTEN, JJ.

DECISION & ORDER

In an action, inter alia, to recover damages for breach of an insurance policy, (1) the plaintiff appeals, and the defendant cross-appeals, from an order of the Supreme Court, Richmond County (Philip G. Minardo, J.), dated April 14, 2016, and (2) the defendant appeals from an order of the same court dated October 13, 2016. The order dated April 14, 2016, insofar as appealed from, denied the plaintiff's motion for summary judgment on the first cause of action. The order dated April 14, 2016, insofar as cross-appealed from, denied the defendant's cross motion for summary judgment dismissing the complaint and the defendant's separate motion pursuant to CPLR 3126 to impose sanctions against the plaintiff for spoliation of evidence. The order dated October 13, 2016, denied the defendant's motion for leave to renew that branch of its prior cross motion which was for summary judgment dismissing the plaintiff's claim for $673,559 in damages pursuant to the "Extra Expense" provision of the subject policy.

ORDERED that the order dated April 14, 2016, is affirmed insofar as appealed and cross appealed from, without costs or disbursements; and it is further,

ORDERED that the order dated October 13, 2016, is affirmed, without costs or disbursements.

In 2013, the plaintiff commenced this action against the defendant to recover damages for breach of contract and breach of the implied covenant of good faith and fair dealing, in connection with a commercial insurance policy (hereinafter the policy) that the plaintiff purchased from the defendant for a multi-story property (hereinafter the property) located in Staten Island.

The plaintiff alleges that the defendant breached the policy and acted in bad faith in response to the plaintiff's insurance claim stemming from damages to the property suffered as a direct result of Hurricane Irene, which struck on August 28, 2011. According to the plaintiff, the hurricane caused major damage to the property's roof fascia and support structures situated above the property's individual apartment units.

After discovery, the plaintiff moved for summary judgment on the first cause of action, which was to recover damages for breach of contract. The defendant cross-moved for summary judgment dismissing the complaint. The defendant separately moved pursuant to CPLR 3126 to impose sanctions against the plaintiff for spoliation of evidence, alleging that the plaintiff, as owner and manager of the property, failed to identify its tenants, and failed to disclose and/or produce its leases, rent rolls, and maintenance records. In an order dated April 14, 2016, the Supreme Court denied the plaintiff's motion and the defendant's cross motion. It also denied the defendant's separate motion for sanctions, but ordered the plaintiff to promptly furnish relevant documents in response thereto. The plaintiff appeals, and the defendant cross-appeals, from this order.

Although the parties disagree about the substantive import of the plaintiff's subsequent document production, there is no dispute that the plaintiff produced the property's prior leases and rent roll as of August 2011, and copies of certain photographs relied upon by the plaintiff's experts, which photographs the defendant deemed to be unviewable. The defendant subsequently moved for leave to renew that branch of its prior cross motion which was, in effect, for summary judgment dismissing so much of the complaint as sought to recover $673,559 in damages pursuant to the "Extra Expense" provision of the policy (hereinafter Extra Expense). In an order dated October 13, 2016, the Supreme Court denied the defendant's motion. The defendant appeals from this order.

"[A] contract is to be construed in accordance with the parties' intent, which is generally discerned from the four corners of the document itself. Consequently, ‘a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms’ " ( MHR Capital Partners LP v. Presstek, Inc., 12 N.Y.3d 640, 645, 884 N.Y.S.2d 211, 912 N.E.2d 43, quoting Greenfield v. Philles Records, 98 N.Y.2d 562, 569, 750 N.Y.S.2d 565, 780 N.E.2d 166 ). In other words, "when parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms" ( W.W.W. Assoc. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440, 566 N.E.2d 639 ; see Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 N.Y.3d 470, 475, 775 N.Y.S.2d 765, 807 N.E.2d 876 ). "[C]ontract language is ambiguous when it is reasonably susceptible of more than one interpretation, and extrinsic or parol evidence may be then permitted to determine the parties' intent as to the meaning of that language" ( RE/MAX of N.Y., Inc. v. Energized Realty Group, LLC, 135 A.D.3d 924, 925, 24 N.Y.S.3d 176 [internal quotation marks omitted]). Only when an ambiguity is found within the four corners of the contract may the court consider extrinsic evidence; extrinsic evidence should not be used to create an ambiguity in a written agreement which is unambiguous on its face (see W.W.W. Assoc. v. Giancontieri, 77 N.Y.2d at 162, 565 N.Y.S.2d 440, 566 N.E.2d 639 ). Where several constructions of a contract are possible, the court can look to the surrounding facts and circumstances to determine the intent of the parties (see 67 Wall St. Co. v. Franklin Natl. Bank, 37 N.Y.2d 245, 248–249, 371 N.Y.S.2d 915, 333 N.E.2d 184 ; M. O'Neil Supply Co. v. Petroleum Heat & Power Co., 280 N.Y. 50, 55–56, 19 N.E.2d 676 ).

"The essential elements of a breach of contract cause of action are ‘the existence of a contract, the plaintiff's performance pursuant to the contract, the defendant's breach of his or her contractual obligations, and damages resulting from the breach’ " ( Victory State Bank v. EMBA Hylan, LLC, 169 A.D.3d 963, 965, 95 N.Y.S.3d 97, quoting Canzona v. Atanasio, 118 A.D.3d 837, 838, 989 N.Y.S.2d 44 ; Dee v. Rakower, 112 A.D.3d 204, 208–209, 976 N.Y.S.2d 470 ). Here, the plaintiff established its prima facie entitlement to summary judgment on the first cause of action to recover damages for breach of contract, as it demonstrated that the defendant materially breached the unambiguous policy terms by failing to compensate. In opposition to the plaintiff's prima facie showing, however, the defendant raised triable issues of fact. Specifically, the defendant's submissions raised triable issues of fact concerning whether Hurricane Irene directly caused some or all of the property damage, or whether pre-existing wear and tear and/or prior maintenance work and repairs had contributed to the damages thereto. Given that the parties have submitted affidavits from engineers whose conclusions regarding the cause of the property damage are directly contradictory, triable issues of fact preclude an award of summary judgment (see Pilgrim v. Vishwanathan, 151 A.D.3d 769, 771, 56 N.Y.S.3d 268 ; Milkins v. New York City Tr. Auth., 140 A.D.3d 936, 937, 33 N.Y.S.3d 454 ; Gonzalez v. City of New Rochelle, 132 A.D.3d 724, 725, 18 N.Y.S.3d 98 ). Accordingly, the Supreme Court properly denied the plaintiff's motion for summary judgment.

The Supreme Court also properly denied that branch of the defendant's cross motion which was for summary judgment dismissing the first cause of action, which was to recover damages for breach of contract. The defendant established, prima facie, through its evidentiary submissions, that it did not materially breach the unambiguous terms of the policy. The defendant submitted evidence that the property's roof had pre-existing problems and/or deficiencies long before Hurricane Irene's landfall in 2011, and that prior wear and tear and/or previous maintenance and repairs at the property significantly contributed to the water damage that was allegedly first detected after the storm. In opposition, however, the plaintiff submitted evidence raising triable issues of fact as to whether the damages sustained to the property were directly caused by Hurricane Irene. The plaintiff's evidence demonstrated that the damages were a direct result of Hurricane Irene's strong winds which loosened and tore fascia from the roof structure and caused the water infiltration problems at the heart of the parties' dispute (see Pilgrim v. Vishwanathan, 151 A.D.3d at 771, 56 N.Y.S.3d 268 ; Milkins v. New York City Tr. Auth., 140 A.D.3d at 937, 33 N.Y.S.3d 454 ; Gonzalez v. City of New Rochelle, 132 A.D.3d at 725, 18 N.Y.S.3d 98 ).

"Implicit in every contract is an implied covenant of good faith and fair dealing" ( Gutierrez v. Government Empls. Ins. Co., 136 A.D.3d 975, 976, 25 N.Y.S.3d 625 ; see Elmhurst Dairy, Inc. v. Bartlett Dairy, Inc., 97 A.D.3d 781, 784, 949 N.Y.S.2d 115 ). "The implied covenant of good faith and fair dealing is a pledge that neither party to the contract shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruit of the contract, even if the terms of the contract do not explicitly prohibit such conduct" ( Gutierrez v. Government Empls. Ins. Co., 136 A.D.3d at 976, 25 N.Y.S.3d 625 ; see Moran v. Erk, 11 N.Y.3d 452, 456, 872 N.Y.S.2d 696, 901 N.E.2d 187 ; 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 153, 746 N.Y.S.2d 131, 773 N.E.2d 496 ). Such a cause of action is not necessarily...