Royal Indem. Co. v. Grunberg

• Decision Date: 29 March 1990
• Citation: 155 A.D.2d 187,553 N.Y.S.2d 527
• Parties: ROYAL INDEMNITY COMPANY, Respondent, v. Michael GRUNBERG et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 527

553 N.Y.S.2d 527

155 A.D.2d 187

ROYAL INDEMNITY COMPANY, Respondent, v. Michael GRUNBERG et al., Appellants.

Supreme Court, Appellate Division,

Third Department.

March 29, 1990.

Eli B. Basch, Kingston, for appellants.

Bouck, Holloway, Kiernan & Casey (Jonathan B. Summers, of counsel), Albany, for respondent.

Before KANE, J.P., and MIKOLL, YESAWICH, MERCURE and HARVEY, JJ.

YESAWICH, Justice.

Defendants hired a contractor to construct a foundation and erect their two-story modular home. Plaintiff issued a comprehensive homeowners policy covering the premises. In September 1986, after the house, which is located on the side of a hill overlooking what appears to be a ravine, was placed upon its foundation, defendants discharged the first contractor and retained a second to complete the house. Shortly thereafter, defendants discovered that the east wall of the house (the hillside descends sharply from west to east) and the deck were seven inches out of plumb, the house precipitously tilted eastward, certain windows and doors would not open or close properly, numerous cracks had developed throughout the house including one four inches deep along the entire 48-foot length of the basement floor, and that the east foundation wall of the house dropped and began to bow outward. In the spring and summer of 1987, plaintiff and defendants, respectively, hired civil engineers who submitted reports indicating that substandard foundation materials, and improper methods of construction and site preparation caused the damage. Because the house was placed partly on landfill and partly on rock it settled differentially which caused bowing, bulging and cracking.

Defendants sought reimbursement from plaintiff for the repairs they made that were necessary to arrest the inevitable collapse of the structure; however, plaintiff denied their claim. Plaintiff then brought this action seeking a declaration that the loss defendants sustained was not covered by the policy. Supreme Court agreed with plaintiff, granted the latter's summary judgment motion and denied defendants' cross motion to dismiss the complaint. Defendants, on appeal, contend that plaintiff has not sustained its burden of establishing, as a matter of law, that the loss at issue falls within the scope of an insurance exclusion; we agree.

The language of the policy, which both parties urge upon the court as being dispositive, reads as follows:

Collapse Under Coverages A [dwelling] and B [other structures]. [Plaintiff] insure[s] for direct physical loss to covered property involving collapse of a building or any part of a building caused only by * * * (f) Use of defective material or methods in construction * * * if the collapse occurs during the course of the construction * * *. Loss to [a] * * * foundation * * * is not included * * * unless the loss is a direct result of the collapse of a building. Collapse does not include settling, cracking, shrinking, bulging or expansion.

* * * * * *

SECTION 1--PERILS INSURED AGAINST * * * [Plaintiff] do[es] not insure loss: (1). Under Coverages A, B and C [personal property]: * * * (b) caused by: * * * (f) settling, cracking, shrinking, bulging, or expansion of pavements, patios, foundations, walls, floors, roofs or ceilings * * *.

The parties do not dispute that the damage occurred "during the course of the construction", nor do they contest that for the policy to provide coverage, defendants' losses must have been occasioned by a "collapse". At issue is the definition to be accorded the term "collapse", particularly whether an impending "collapse" must actually occur for an insured to recover under an insurance policy which requires him, "[i]n the case of a loss to covered property * * * [to] protect the property from further damage * * * [and] make...