| Magie v Preferred Mut. Ins. Co. |
| 2012 NY Slip Op 00440 [91 AD3d 1232] |
| Jnury 26, 2012 |
| Appellate Division, Third Department |
| James Magie et al., Respondents, v Preferred Mutual InsuranceCompany, Appellant. |
—[*1] Basch & Keegan, L.L.P., Kingston (Eli B. Basch of counsel), for respondents.
Lahtinen, J. Appeal from a judgment of the Supreme Court (Ledina, J.), entered July 2, 2010in Sullivan County, upon a decision of the court in favor of plaintiffs.
In August 2005, plaintiffs' house in the Town of Fallsburg, Sullivan County was destroyed byfire. Plaintiffs had a homeowner's insurance policy with defendant that included coverage of,among other things, $487,000 for the dwelling and $340,900 for personal property. Their lossesallegedly exceeded these amounts and they elected not to rebuild the house.
At the time of the fire, plaintiffs were not staying at the premises, but instead were at arecently completed "retirement home" a short distance away. Defendant made two partialadvance payments totaling $15,000 and, after considerable delay, paid the outstanding mortgagebalance of $284,655.89. Defendant informed plaintiffs in March 2006 that it considered thepolicy void based upon its conclusion that plaintiffs had misrepresented material facts andengaged in fraudulent conduct regarding some of their claims including, among other things,misrepresenting the value of their personal property.
Plaintiffs commenced this action seeking to be indemnified for their covered losses. [*2]Following a bench trial, Supreme Court rendered a written decisionfinding that defendant failed to prove material misrepresentation or fraud by plaintiffs andrejecting defendant's alternative contention that a coinsurance penalty was implicated. The courtdetermined that plaintiffs had established that they were entitled to $593,098.13, comprised of$252,198.13 under coverage for the dwelling[FN*]and $340,900 for personal property coverage. Defendant appeals.
Defendant argues that plaintiffs' complaint should have been dismissed as a matter of lawsince the proof at trial allegedly demonstrated fraud and misrepresentation by plaintiffs and theiradjuster, thus providing the ground for defendant to void the policy. A policy may be voided ifthe insured " 'willfully and fraudulently placed in the proofs of loss a statement of property lostwhich [the insured] did not possess, or has placed a false and fraudulent value upon the articleswhich [the insured] did own' " (Saks & Co. v Continental Ins. Co., 23 NY2d 161, 165[1968], quoting Domagalski v Springfield Fire & Mar. Ins. Co., 218 App Div 187, 190[1926]). Incorrect information is not necessarily tantamount to fraud or materialmisrepresentation as the insurer must tender "proof of intent to defraud—a necessaryelement to the defense" (Deitsch Textiles v New York Prop. Ins. Underwriting Assn., 62NY2d 999, 1001 [1984]; see Kittner vEastern Mut. Ins. Co., 80 AD3d 843, 847 [2011], lv dismissed 16 NY3d 890[2011]). Whether a misrepresentation reaches the level of being material is typically for thefactfinder "unless the insurer proffers clear and substantially uncontradicted evidence concerningmateriality" (Carpinone v Mutual of Omaha Ins. Co., 265 AD2d 752, 754 [1999]; see Lenhard v Genesee Patrons Co-op. Ins.Co., 31 AD3d 831, 833 [2006]). Where a defendant seeks dismissal as a matter of law, aplaintiff is afforded every favorable inference from the proof presented at trial (see Crawford v Village of Millbrook,61 AD3d 918, 920 [2009]; Martin vFitzpatrick, 19 AD3d 954, 955-956 [2005]).
The proof presented revealed that a significant fire occurred which destroyed or damagedvirtually everything at the location. Plaintiffs hired a public adjustment company, and the adjusterwho aided in quantifying plaintiffs' loss indicated that, of the thousands of items he listed, lessthan one tenth of one percent were not damaged. And, those reported non-damaged items hadbeen exposed to the fire so as to affect their value. Out of these thousands of damaged items,defendant points to a small number as purportedly reflecting incorrect information. However,plaintiffs offered explanations as to some of these items, and the proof at trial simply did notcompel the conclusion as a matter of law that plaintiffs intended to defraud defendant or that theincorrect information constituted material misrepresentation. The fact that plaintiffs did not havedocumentation for some losses was explained by documentation being lost in the fire. Theestimate of damages to plaintiffs' large firearms collection was based in part on plaintiff JamesMagie's extensive experience as an owner and collector. One adjuster's recollection that hethought Magie might have indicated that the firearms were separately insured is insufficient toclearly prove plaintiffs had additional insurance that they failed to disclose. Similarly, the factthat plaintiffs had very recently started sleeping in their new home and still were in the process ofmoving does not establish that plaintiffs made a material misrepresentation about whether the[*3]premises were owner occupied. Viewing the evidence underthe standard applicable for dismissal as a matter of law, we find ample proof to support plaintiffs'asserted losses and reject defendant's affirmative defense.
Next, defendant contends that we should set aside the verdict as not supported by a fairinterpretation of the evidence. "On our review of a verdict after a bench trial, we independentlyreview the weight of the evidence and may grant the judgment warranted by the record, whileaccording due deference to the trial judge's factual findings particularly where . . .they rest largely upon credibility assessments" (Martin v Fitzpatrick, 19 AD3d at 957; see Cotton v Beames, 74 AD3d1620, 1621-1622 [2010]). This was a fire that even defendant's agent characterized as"devastating." Plaintiffs submitted a comprehensive inventory as well as numerous photographsrevealing the virtual total destruction of their home and property. The proof reveals that theycooperated with defendant and, to the extent that plaintiffs made errors when attempting to assessthe significant losses, the errors were not intentional and were minor when considered in thecontext of the overall nature of the losses sustained. We are unpersuaded to disregard SupremeCourt's credibility determinations. Accepting those determinations, and upon reviewing andweighing the proof in the extensive record, we agree with Supreme Court that plaintiffsadequately established their losses and defendant's affirmative defenses of fraud and materialmisrepresentation are unavailing.
Finally, we consider defendant's alternative argument that a coinsurance penalty should beapplied to reduce the recovery for the real property part of plaintiffs' loss. Initially, theapplicability of a coinsurance clause is an affirmative defense that must be pleaded (seeRosenbaum Plus Two Print. v Allstate Ins. Co., 59 AD2d 939, 939 [1977]; 2 NY PJI2d 4:49,Comment, at 976 [2011]), and defendant did not specifically assert such defense in its answer. Inany event, in New York, a coinsurance clause "results in reducing the recovery in case of a partialloss, though in case of total loss, the insurer is liable for the amount named in the policy"(New York Life Ins. Co. v Glens Falls Ins. Co., 184 Misc 846, 849 [1945], affd274 App Div 1045 [1949], affd 301 NY 506 [1950]; see Quaker Hills, LLC v PacificIndem. Co., 2011 WL 4343368, *5, 2011 US Dist LEXIS 92633, *16-17 [SD NY 2011];70A NY Jur 2d, Insurance Law § 2201; Appleman, Insurance Law & Practice §3866). Here, it is undisputed that plaintiffs sustained a total loss.
Defendant's remaining arguments have been considered and are unavailing.
Mercure, A.P.J., Rose, Kavanagh and McCarthy, JJ., concur. Ordered that the judgment isaffirmed, with costs.
Footnote *: Supreme Court found thatplaintiffs were entitled to the full $487,000 dwelling coverage; plus $18,316.75 for actual debrisremoval costs that were permitted up to 5% of the coverage amount; less $15,000 already paidand the $500 deductible; less $284,655.89 paid on the mortgage; plus $47,037.27 late paymentinterest resulting from defendant's delay in paying the mortgage.