Cresthill Industries, Inc. v. Providence Washington Ins. Co.

• Decision Date: 19 July 1976
• Citation: 53 A.D.2d 488,385 N.Y.S.2d 797
• Parties: CRESTHILL INDUSTRIES, INC., Appellant, v. PROVIDENCE WASHINGTON INSURANCE COMPANY, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 797

385 N.Y.S.2d 797

53 A.D.2d 488

CRESTHILL INDUSTRIES, INC., Appellant, v. PROVIDENCE WASHINGTON INSURANCE COMPANY, Respondent.

Supreme Court, Appellate Division, Second Department.

July 19, 1976.

David Romanoff, New York City, for appellant.

Rein, Mound & Cotton, New York City (Arthur N. Brook, New York City, of counsel), for respondent.

Before MARTUSCELLO, Acting P.J., and COHALAN, DAMIANI, SHAPIRO and TITONE, JJ.

SHAPIRO, Justice.

In an action to recover on a policy of insurance for damages allegedly sustained as a result of vandalism or malicious mischief practiced upon the property of the insured, the plaintiff appeals from a judgment of the Supreme Court, Westchester County, which dismissed the complaint. We reverse, direct judgment for the plaintiff and remand to the Trial Term for the fixation of its damages. The single question to be decided is whether the damage sustained by the plaintiff is covered by the defendant's policy of insurance.

According to the stipulation of facts upon which this case was determined (see CPLR 3222), the plaintiff, Cresthill Industries, Inc., leased a portion of the ground floor of a three-story warehouse located at 289 Nepperhan Avenue, Yonkers, New York, during May, 1973, for the storage of buttons and button fixtures manufactured by it. Over the Memorial Day weekend of that year, persons described in the stipulation as 'perpetrators' apparently broke into the unoccupied third floor of the warehouse, uncoupled the pipes carrying water to the bathroom fixture, carried away the fixtures and left the water running from the severed connections. It does not appear that the 'perpetrators' entered the ground floor where the plaintiff's goods were stored but, eventually, the water did, in quantities sufficient to cause considerable damage to the plaintiff's buttons and button fixtures.

At the time of the occurrence the plaintiff was a policyholder with the defendant, Providence Washington Insurance Company, having obtained a policy of insurance providing coverage against fire, lightning and various other hazards, including vandalism and malicious mischief. The plaintiff's claim for compensation under the 'vandalism and malicious mischief' provision was rejected by the insurer in reliance on the policy language. The subject policy provides, in pertinent part, as follows:

'This policy is also extended to insure against direct loss by the following perils as hereinafter provided * * *

'8. Vandalism and malicious mischief, meaning only willful and malicious damage to or destruction of the property covered hereunder.

'b. This Company shall not be liable for loss--

'(2) by pilferage, theft, burglary or larceny, except that this Company shall be liable for willful damage to the building(s) covered hereunder caused by burglars'.

The Trial Term dismissed the plaintiff's complaint on the ground, Inter alia, that the loss sustained by it was an Indirect loss rather than a Direct loss as provided for in the policy, because:

'The eventual damage to plaintiff's property depended not only on the initial act of destruction on the third floor, but upon the volume of the flow, the manner of construction of the building, the direction of the flow and perhaps other intervening causes.'

Thus, the court concluded:

'It would strain the meaning of the word 'direct' beyond any recognized understanding of it to say that the damage to plaintiff's goods was direct. The language of the policy plainly and unambiguously clarified its meaning when it said further, 'only wilful and malicious damage to or destruction of the property covered hereunder.' The wilfulness and malice in this case, as the stipulation of facts makes clear, were exerted upon plumbing fixtures, distant from and out of sight of the damaged property.

'Furthermore, the exclusion of coverage for less by pilferage, theft, burglary or larceny, except for wilful damage to buildings, clarified the point. The origin of the causes resulting in the loss was a theft, burglary and larceny. The exclusion of coverage for such causes applies except in cases where burglaries damage a building.

'The facts are clear that there was no wilful or malicious damagge to or destruction of the plaintiff's property. The terms of the policy are sufficiently plain and unambiguous that strict construction against the insurer is not applicable.'

The defendant contends that the trial court's determination was proper because (1) the loss was not brought about as the result of vandalism or malicious mischief practiced against the property of the insured and therefore was not a 'direct loss', (2) the 'intent' of the 'perpetrators' was never to damage the plaintiff's property, but solely to steal piping and fixtures from the third floor of the building (thus negating any claim of 'vandalism' or 'malicious mischief' as defined in the policy), (3) the specific 'cause' of the loss was neither vandalism nor malicious mischief, but a remote burglary and theft, and (4) the policy, as written, 'excludes liability for loss(es) caused by 'theft, burglary or larceny' with a single exception relating solely to 'damage to the Buildings covered hereunder caused by burglars" (defendant's emphasis). Since no claim for damage to the buildings has been made (the plaintiff is not the owner of the building, nor is the building covered under the subject policy), the defendant contends that there is No coverage for Any of the losses sustained.

The plaintiff, of course, argues to the contrary, stating, in effect, that (1) the 'cause' of the damage was the severance of the pipes and fixtures Prior to their removal, (2) such severance constituted an act of vandalism or malicious mischief within the policy definition and (3) the flow of water engendered thereby resulted in a 'direct' (as opposed to 'consequential') 'loss' to property insured under the policy. Moreover, the plaintiff contends, the theft of the pipes and fixtures after their severance would not trigger the so-called 'exclusionary' clause (excluding losses through 'pilferage, theft, burglary or larceny') since the acts of vandalism or malicious mischief occurred prior thereto. Finally, it is the plaintiff's contention that the exclusionary clause is unclear as written, and that any ambiguity must be resolved Against the insurer and in favor of it.

There is no controlling New York precedent and the decisions of other states are not uniform in their approach. However, we are of the opinion that the sounder authorities point to a recovery by the plaintiff.

In Beauty Supplies, Inc. v. Hanover Ins. Co. (526 S.W.2d 75, 76 (Mo.App.)), upon which the plaintiff chiefly relies, the intermediate appellate court in Missouri found coverage upon a state of facts strikingly similar to those here present:

'(Plaintiff) insured was a tenant occupying the ground floor of * * * (a warehouse) building located * * * in the City of St. Louis. The building in which (the) insured's property was located was not covered by * * * (the) policies (in dispute). On (May 20, 1970) * * * unauthorized persons entered the vacant second floor of the building, which was not rented to or occupied by (the) insured, and stole plumbing fixtures therefrom by tearing them out of the walls and flooring of the second floor, breaking them loose from the connected water pipes, thereby permitting water to flow continuously over the floor of the second story, from whence the water leaked and came down through the ceiling of the first floor occupied by (the) insured, damaging (its) * * * goods, wares and merchandise in the sum of $14,388.90'.

The insured thereupon made claim against its insurer, which disclaimed coverage on the ground 'that the loss was the direct and proximate result of the acts of thieves and burglars, and since the vandalism endorsement (of the plaintiff's 'contents' policy) Excludes liability for loss(es) caused by theft or burglary the loss is not covered (thereby)' (Supra, p. 76; emphasis supplied). The plaintiff was successful and, on appeal, the judgment in its favor was affirmed. The policy there in suit was identical (insofar as is here pertinent) with the policy at bar.

The court there wrote (pp. 76--78):

'This is a question of proximate cause. While the means and method by which the unauthorized persons entered the building are not disclosed by the stipulation of facts, we assume there was a sufficient breaking to constitute a burglary. What happened, then, was (1) a burglary, (2) acts of vandalism, Romanych v. Liverpool & London & Globe Ins. Co., 8 Misc.2d 269, 167 N.Y.S.2d 398, 402, and (3) a theft. In our view the loss was directly caused by acts of vandalism, a specifically covered risk, notwithstanding a peril expressly excluded (burglary) Was an antecedent contributing circumstance, and another peril expressly excluded (theft) Was an independent concurring cause.

'The burglary is not a factor in determining the proximate cause of the damage from water leakage. 'An antecedent contributing circumstance is generally ignored in determining the proximate cause. That is to say, a situation which merely sets the stage for the later event is not regarded as being the proximate cause merely because it made possible the subsequent loss. For example, the explosion of gas, and not the lighting of a match, is the proximate cause of loss, where the explosion is caused by the lighting of a match in a room filled with gas. Likewise, the destruction of a plate-glass window, shattered when gas exploded upon its ignition by a lighted match being used to locate a gas leak, is by explosion, and not by fire, within an exception in a policy insuring the window against loss by fire.' 18 Couch on Insurance 2d § 74:714, p. 618.

'Nor is the theft a controlling factor. If the theft be considered as a concurring cause of the loss, it was not the predominating, efficient one. The stealing and carrying away of the plumbing fixtures, after their...