Village of Kiryas Joel Local Development Corp. v. Insurance Co. of North America

• Decision Date: 21 June 1993
• Docket Number: No. 1363,D,1363
• Citation: 996 F.2d 1390
• Parties: VILLAGE OF KIRYAS JOEL LOCAL DEVELOPMENT CORPORATION, Plaintiff-Appellant, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee. ocket 92-9349.
• Court: U.S. Court of Appeals — Second Circuit

Page 1390

996 F.2d 1390

VILLAGE OF KIRYAS JOEL LOCAL DEVELOPMENT CORPORATION, Plaintiff-Appellant, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee.

No. 1363, Docket 92-9349.

United States Court of Appeals, Second Circuit.

Argued April 23, 1993.

Decided June 21, 1993.

Dennis T. D'Antonio, New York City (Debra Ruth Wolin, Weg & Myers, P.C., of counsel), for plaintiff-appellant.

Zachary Robb Greenhill, New York City (Ira J. Greenhill, New York City, of counsel), for defendant-appellee.

Before: PRATT and JACOBS, Circuit Judges, and KNAPP, District Judge. ^*

JACOBS, Circuit Judge:

Plaintiff-appellant Village of Kiryas Joel Local Development Corporation ("Kiryas Joel") brought this action to recover money it claims is due under the terms of a builders risk insurance policy purchased from defendant-appellee Insurance Company of North America ("INA"). The covered premises, a partially built medical facility, was destroyed by fire. INA contends that it had cancelled the policy before the fire and that, in any event, Kiryas Joel had committed arson. INA moved for summary judgment on its cancellation defense and Kiryas Joel cross-moved to strike INA's arson defense. The United States District Court for the Southern District of New York (Keenan, J.) granted INA's motion for summary judgment and this appeal followed. We reverse and remand for further proceedings.

FACTS

Kiryas Joel is a not-for-profit development corporation that was engaged in the construction of a medical building in the Village of Kiryas Joel, a community composed of members of the Satmar sect of Hasidic Jews. Kiryas Joel used an insurance broker to procure a builders risk coverage for the project. On May 22, 1989 INA issued to Kiryas Joel builders risk policy number 104702694. The policy contained the following cancellation provision:

We may cancel this insurance by sending you notice.... We may mail or deliver the notice of cancellation. If mailed, proof of mailing will be sufficient proof of notice. In either case, we will send the notice to your last mailing address known by us....

* * * * * *

If this insurance is cancelled, you may be entitled to a premium refund. If so, we will send you the refund. If we cancel, the refund will be pro rata.... The cancellation will be effective even if we have not made or offered a refund.

The project was destroyed by fire on April 21, 1990. On July 27, 1990, Kiryas Joel commenced this suit seeking to recover under the policy. INA moved for summary judgment on the ground that the policy had been cancelled. In its motion, INA undertook to show that INA sent a timely 30-day notice of cancellation, and that the policy was therefore cancelled as of March 19, 1990, a month before the loss. In opposition, Kiryas Joel contended: that INA's notice of cancellation was invalid because it did not comply with N.Y.Ins.Law § 3426, which allows an insurance company to cancel a property policy only under certain enumerated circumstances, and which requires that the notice recite which of the enumerated circumstances is the ground for cancellation (see N.Y.Ins Law. § 3426 (McKinney 1985 and Supp.1993)); and that INA failed to show The district court granted INA's motion for summary judgment, finding that INA had adequately shown that it mailed the notice of cancellation and that the policy was an inland marine policy. On appeal, Kiryas Joel challenges the district court's decision in both respects. Because the policy at issue was not an inland marine policy, we reverse.

                that the notice was actually sent.   INA countered that a builders risk policy was an inland marine insurance policy as defined by N.Y.Ins.Law § 1113(a)(20) (McKinney 1985 and Supp.1993), rather than a property policy subject to N.Y.Ins.Law § 3426, and that, at the time the policy was written, inland marine policies were exempt from the requirements of § 3426
                

DISCUSSION

An order granting summary judgment is subject to review de novo. Summary judgment is appropriate only if there is no genuine issue as to any material fact. See Fed.R.Civ.P. 56. Our role is not to weigh the evidence or make determinations of credibility but to "determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). In making such a determination, we resolve "ambiguities and [draw] reasonable inferences against the moving party." Knight v. United States Fire Insurance Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987).

Inland Marine Insurance

Kiryas Joel contends that INA's notice of cancellation was invalid because it failed to comply with the applicable provisions of the New York Insurance Law. Under N.Y.Ins.Law § 3426(c)(1), there are only eight grounds for canceling most insurance policies, including those relating to real property. The notice of cancellation at issue in this case did not specifically invoke any of these grounds. The cancellation form printed the eight grounds with a check-off box for each; on the form sent to Kiryas Joel, INA checked only the box for "Other," and wrote in that the policy would be cancelled as of March 19, 1990 on the ground that the "class of business falls outside the company's guidelines." ¹ The district court concluded that the INA builders risk policy issued to Kiryas Joel is an inland marine policy, rather than a property policy, and because, on the date of policy issuance, § 3426(i) exempted inland marine insurance from the requirements of § 3426(c)(1).

Kiryas Joel argues that a builders risk policy cannot be inland marine insurance because inland marine policies can be written only for movable things such as railway cars and cargoes, not construction projects. In fact, inland marine insurance has evolved to cover virtually all kinds of things that move or are in transport. See generally Roderick McNamara, Robert A. Laurence & Glenn L. Wood, Inland Marine Insurance (1987). Builders risk covers a project in construction, before it becomes insurable as a building, while its materials and components are being moved on-site, assembled, and put in place. In that sense, a building site becomes a terminus for cargo, and can be insurable as inland marine, as many states and insurance commissioners allow.

As to the status of builders risk policies under New York law, Kiryas Joel and INA both invoke the provision in the Insurance Law that defines inland marine insurance, though each relies on different phrases and argues for an opposite conclusion. New York Ins.Law § 1113(a)(20) states:

"Marine and inland marine insurance," means insurance against any and all kinds of loss of or damage to:

(A) Vessels, hulls craft, aircraft, cars, automobiles, trailers and vehicles of every (Emphasis added.) INA urges that the builders risk policy at issue is inland marine under that definition because it insures against "loss or damage to" a "kind[ ] of property", in respect of "all risks" while the property (i.e., the medical facility) is "being assembled" or "while awaiting the same." The "risk" referenced in the statute ("any and all risk or perils of navigation, transit or transportation") could be construed as applicable to building materials being moved onto the construction site and into place. But the language does not embrace all property "while being assembled," only property "while being assembled, packed, crated, compressed or similarly prepared for shipment or while awaiting the same or during any delay, storage, transshipment or reshipment incident thereto, including marine builders risks ..." (emphasis added). This definition cannot be edited to fit builders risk coverage. Moreover, the express inclusion of "marine" builders risk suggests the exclusion of "inland marine" builders risk.

kind, and all goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, choses in action, evidences of debt, valuable paper, bottomry and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to or in connection with any and all risk or perils of navigation, transit, or transportation, including war risks, on or under any seas or other waters, on land or in air, or while being assembled, packed, crated, compressed or similarly prepared for shipment while awaiting the same or during any delays, storage, transshipment or reshipment incident thereto, including marine builders risks and all personal property floater risks.

If § 1113(a)(20) were the only applicable subsection of the statute, we might adopt Kiryas Joel's position that builders risk insurance cannot be inland marine insurance under New York law. However, N.Y.Ins.Law § 1113(a)(30) states:

"Substantially similar kind of insurance" means such insurance which in the opinion of the Superintendent is determined to be substantially similar to one of the foregoing kinds of insurance and thereupon for the purposes of this subchapter shall be deemed to be included in that kind of insurance.

(Emphasis added.) Thus the Superintendent of Insurance is authorized to determine that a type of insurance that is not listed as inland marine may nonetheless be classified as inland marine so long as it is "substantially similar". In our view, this was accomplished in Circular Letter No. 19 issued by the New York Superintendent of Insurance on November 24, 1987. Circular Letter No. 19 is directed to all insurers licensed to write marine insurance in the State of New York, and concerns the nationwide marine definition adopted by the National Association of Insurance Commissioners,...