Bardi v. Farmers Fire Insurance Company

• Decision Date: 08 April 1999
• Citation: 260 A.D.2d 783,687 N.Y.S.2d 768
• Court: New York Supreme Court — Appellate Division
• Parties: RICHARD BARDI et al., Respondents-Appellants,<BR>v.<BR>FARMERS FIRE INSURANCE COMPANY et al., Appellants-Respondents, and MARK R. SONDERS, Respondent.

260 A.D.2d 783

687 N.Y.S.2d 768

RICHARD BARDI et al., Respondents-Appellants,

v.FARMERS FIRE INSURANCE COMPANY et al., Appellants-Respondents, and MARK R. SONDERS, Respondent.

Mercure, J.

Decided April 8, 1999.

Mikoll, J. P., Crew III, Yesawich Jr. and Peters, JJ., concur.

Mercure, J.

Plaintiffs' home was destroyed by a May 15, 1994 fire. The loss was covered under an insurance policy issued by defendant Farmers Fire Insurance Company. The policy provided "replacement cost" coverage with respect to both the dwelling and plaintiffs' personal property, requiring Farmers to pay the full replacement cost of the loss, without deduction for depreciation, but not exceeding (as relevant here) the applicable limit of liability under the policy. The policy's declarations page indicated that the limits of liability were $130,000 for dwelling loss and $91,000 for personal property loss. Unwilling to accept the applicability of the $130,000 limit of liability, on June 17, 1994, plaintiff Richard Bardi (hereinafter plaintiff) submitted a proof of loss claiming $187,040.78 for damage to the dwelling. On June 29, 1994, Farmers' vice-president of claims, defendant Jack F. Pepo, rejected the proof of loss based upon the fact that Farmers' limit of liability was $130,000. On August 12, 1994, Farmers tendered four checks to plaintiff, including one for $130,000, representing the policy limit for coverage on the dwelling. The checks were hand delivered to plaintiff, together with a cover letter containing the following language: "You are free to negotiate these drafts at any time. Please be advised that the negotiation or cashing of these drafts will not operate as a waiver of any additional claims you may have under the above-referenced policy. Moreover, payments are being made as to those elements of your claim which are not in dispute notwithstanding the existence of disputes as to other elements of the claim which are not being paid." Citing to the statement on the back of the drafts that "[e]ndorsement of this draft constitutes a receipt and release in full for the account shown on the face", plaintiff refused to negotiate the $130,000 check. Plaintiff similarly refused Farmers' August 2, 1995 tender of $52,304.49, constituting the balance of the $91,000 policy limit for damage to personal property, and in September 1995 he submitted a proof of loss claiming entitlement to $168,354.30 for damage to contents.

In May 1996, plaintiffs commenced this action asserting various damage theories against essentially every person who had ever been involved in the issuance of the subject policy to plaintiffs and in the adjustment of the fire loss claim. Named as defendants were Farmers, Pepo, defendant David M. Small, Farmers' president, and defendant Mark R. Sonders, an attorney with the law firm engaged to assist Farmers in its dispute with plaintiffs. Also named were defendant G. John Potter, Jr., the insurance agent who issued the subject policy to plaintiffs, and his insurance agency, defendant Community Insurance Agencies, Inc. Finally, plaintiffs included as defendants Crawford and Company, the adjusting agency engaged to assist in ascertaining and adjusting the damage to plaintiffs' property, and its employees, defendants Walter K. Quillinan, Jr. and Susan Stark (hereinafter collectively referred to as the adjusters). In October 1996, Farmers made a tender pursuant to CPLR 3219 of $130,000 on the claim for damage to the dwelling and the $52,304.49 balance of the policy limit for damage to personal property. Plaintiffs did not accept the tender within the 10-day period set forth in CPLR 3219.

Following joinder of issue, plaintiffs moved for partial summary judgment, seeking recovery of the "undisputed" portion of their claim for loss of the dwelling ($130,000) and their claim for loss of personal property ($52,304.49), plus interest from July 17, 1994 and October 14, 1995, respectively. In response, Farmers, Small, Pepo and Sonders moved for summary judgment dismissing the complaint against them upon the ground that Farmers made an unrestricted tender of the full amount due under the policy on August 12, 1994 and August 2, 1995. Potter and Community moved for summary judgment dismissing the complaint upon the grounds that any claim against them was untimely and that they breached no duty in favor of plaintiffs in any event. Finally, the adjusters moved for summary judgment upon the ground that they acted at all relevant times as Farmers' agents and had no discretion in the handling of plaintiffs' claim.

Supreme Court awarded plaintiffs partial summary judgment on the undisputed amount of their claim and, reasoning that Farmers' prior tender "was a conditional offer and does not halt the running of interest on that amount", on the claim for interest as well. Supreme Court denied the motions by Farmers, Potter, Community and the adjusters, finding sufficient "triable issues of fact". Finally, in a "supplemental order", Supreme Court denied the motion by Small and Pepo but granted Sonders' motion and dismissed the complaint against him. Defendants appeal from Supreme Court's first order and plaintiffs appeal from the supplemental order.

Initially, we agree with defendants' contention that, under the clear and unambiguous terms of the subject insurance policy, plaintiffs could recover no more than the applicable policy limits for damage to their dwelling and their personal property (see, Harrington v Amica Mut. Ins. Co., 223 AD2d 222, lv denied 89 NY2d 808; see also, Snapp v State Farm Fire & Cas. Co., 206 Cal App 2d 827, 834, 24 Cal Rptr 44, 48; Bingham v St. Paul Ins. Co., 503 So 2d 1043, 1045 [La]; McCahill v Commercial Union Ins. Co., 179 Mich App 761, 775-776, 446 NW2d 579, 585-586). Under section I of the policy, entitled "Conditions", the replacement cost coverage for the dwelling (Coverage A), as relevant to plaintiffs' loss, is expressed in the following terms:

"3. Loss Settlement. Covered property losses are settled as follows: * * *

"c. Buildings under Coverage A or B at replacement cost without deduction for depreciation, subject to the following:

"(1) If at the time of loss the amount of insurance in this policy on the damaged building is 80% or more of the full replacement cost of the building immediately prior to the loss, we will pay the cost of repair or replacement, without deduction for depreciation, but not exceeding the smallest of the following...