| Insurance Co. of Greater N.Y. v Clermont Armory, LLC |
| 2011 NY Slip Op 04421 [84 AD3d 1168] |
| May 24, 2011 |
| Appellate Division, Second Department |
| Insurance Company of Greater New York,Appellant, v Clermont Armory, LLC, Respondent, et al., Defendants. (And Third-PartyActions.) |
—[*1] Welby, Brady & Greenblatt, LLP, White Plains, N.Y. (Gregory J. Spaun of counsel), forrespondent. Traub Lieberman Straus & Shrewsberry, LLP, Hawthorne, N.Y. (James J. Lofrese ofcounsel), for defendant Vanderbilt Associates, LLC, and third-party defendant VanderbiltMansions, LLC.
In an action, inter alia, for a judgment declaring that the plaintiff is not obligated to providecoverage to the defendant Clermont Armory, LLC, under a certain policy of insurance, forproperty damage sustained on or about December 26, 2006, or February 7, 2007, as the result ofcertain excavation activity on adjacent property, the plaintiff appeals from (1) an order of theSupreme Court, Kings County (F. Rivera, J.), dated March 1, 2010, which granted the motion ofClermont Armory, LLC, for summary judgment on the counterclaim of that defendant declaringthat it is so obligated and for an award of an attorney's fee, and (2) an interlocutory judgment ofthe same court dated July 30, 2010, which, after a hearing on the issue of the proper amount ofthe award of the attorneys' fee, is in favor of the defendant Clermont Armory, LLC, and against itin the total sum of $41,000.
Ordered that the appeal from so much of the order as granted that branch of the motion of thedefendant Clermont Armory, LLC, which was for an award of an attorney's fee is dismissed,without costs or disbursements, as that portion of the order was superseded by the interlocutoryjudgment; and it is further,
Ordered that the order is affirmed insofar as reviewed, without costs or disbursements; and itis further,
Ordered that the interlocutory judgment is reversed, on the law, without costs ordisbursements, that branch of the motion of the defendant Clermont Armory, LLC, which was foran award of an attorney's fee is denied, the order is modified accordingly, and the matter isremitted to the Supreme Court, Kings County, for the entry of a final judgment declaring that theplaintiff is obligated to provide coverage to the defendant Clermont Armory, LLC, under thepolicy of insurance issued by the plaintiff to that defendant for the losses sustained by thatdefendant on or about December 26, 2006, or February 7, [*2]2007.
The defendant Clermont Armory, LLC (hereinafter Clermont), owns the Clermont AvenueArmory (hereinafter the Armory), in Brooklyn. Clermont obtained a policy of insurance(hereinafter the policy) from the plaintiff, Insurance Company of Greater New York (hereinafterICGNY) covering loss or damage to the premises. At some point in 2006, the defendantVanderbilt Associates, LLC (hereinafter Vanderbilt), commenced construction on propertyadjacent to the Armory. As part of the construction, Vanderbilt conducted excavation activitiesboth on its property and under a portion of the Armory, and it installed underpinnings under aportion of the Armory. Thereafter, Clermont alleged that cracks appeared in walls and floors ofparts of the Armory. Clermont filed a claim under the policy, but ICGNY, relying on severalpolicy exclusions, did not pay the claim, instead commencing this action, inter alia, seeking ajudgment declaring that it was not obligated to provide coverage for the damage to the Armorycaused by Vanderbilt's work. Clermont asserted a counterclaim seeking a declaration that thepolicy provided coverage for the damage. Clermont eventually moved for summary judgment onits counterclaim and for an award of an attorney's fee. The Supreme Court granted Clermont'smotion, and, after a hearing, awarded Clermont an attorney's fee in the total sum of $41,000.
Generally, where an insurer wishes to exclude certain coverage from its policy obligations,"it must do so in clear and unmistakable language. Any such exclusions or exceptions frompolicy coverage must be specific and clear in order to be enforced. They are not to be extendedby interpretation or implication, but are to be accorded a strict and narrow construction. Indeed,before an insurance company is permitted to avoid policy coverage, it must satisfy the burdenwhich it bears of establishing that the exclusions or exemptions apply in the particular case, andthat they are subject to no other reasonable interpretation" (Seaboard Sur. Co. v GilletteCo., 64 NY2d 304, 311 [1984] [internal quotation marks and citations omitted]; seePioneer Tower Owners Assn. v State Farm Fire & Cas. Co., 12 NY3d 302, 307 [2009]). Theinsurer's burden is heavy, and doubtful or uncertain language leading to ambiguity will beinterpreted against the insurer (see Lee v State Farm Fire & Cas. Co., 32 AD3d 902, 904[2006]; Pepsico, Inc. v Winterthur Intl. Am. Ins. Co., 13 AD3d 599, 600 [2004]).
Here, ICGNY's reliance on the exclusions for "earth movement" and "defectiveworkmanship" is misplaced because the exclusions may reasonably be interpreted as inapplicableto the causes of the damage to the Armory. Accordingly, the language in these exclusions mustbe construed against the insurer. The decision of the Appellate Division, First Department, in242-44 E. 77th St., LLC v Greater N.Y. Mut. Ins. Co. (31 AD3d 100 [2006]), is directlyon point, factually and legally, as to both exclusions, and we find it persuasive. Consequently, theSupreme Court correctly granted that branch of Clermont's motion which was for summaryjudgment on its counterclaim.
However, the Supreme Court erred in granting that branch of Clermont's motion which wasfor an award of an attorney's fee. A prevailing party may not recover an attorney's fee from thelosing party except where authorized by statute, agreement, or court rule (see U.S.Underwriters Ins. Co. v City Club Hotel, LLC, 3 NY3d 592, 597-598 [2004], citingMighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21-22 [1979]). Although an insuredwho is "cast in a defensive posture by the legal steps an insurer takes in an effort to free itselffrom its policy obligations," and who prevails on the merits, may recover an attorney's feeincurred in defending against the insurer's action (U.S. Underwriters Ins. Co. v City ClubHotel, LLC, 3 NY3d at 598, quoting Mighty Midgets v Centennial Ins. Co., 47 NY2dat 21), recovery is only possible where the insurer has a duty to defend the insured. Here, thepolicy covered only property damage and was not a liability policy, but rather a casualty policy.Consequently, ICGNY had no duty to defend Clermont, and its commencement of this action didnot put Clermont in a "defensive posture" within the meaning of Mighty Midgets vCentennial Ins. Co. (47 NY2d at 21) (cf. Matter of Aetna Cas. & Sur. Co. v Dawson,84 AD2d 708, 709 [1981], affd for reasons stated below 56 NY2d 1022 [1982]). Dillon,J.P., Balkin, Eng and Roman, JJ., concur.