Motion-Secondary: E.E. Cruz & Company, Inc. v. Starr Surplus Lines Insurance Company

On June 08, 2020 a Motion-Secondary was filed involving a dispute between E.E. Cruz & Company, Inc., and Starr Surplus Lines Insurance Company, for Commercial - Insurance in the District Court of New York County.

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FILED: NEW YORK COUNTY CLERK 01/20/2023 01:48 PM INDEX NO. 652321/2020
NYSCEF DOC. NO. 134 RECEIVED NYSCEF: 01/20/2023

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
-----------------------------------------------------------------X Index No.: 652321/2020
E.E. CRUZ & COMPANY, INC.,

Plaintiff,

-against-

STARR SURPLUS LINES INSURANCE COMPANY,

Defendant.
------------------------------------------------------------------X

DEFENDANT’S REPLY IN FURTHER SUPPORT
OF ITS MOTION FOR SUMMARY JUDGMENT

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TABLE OF CONTENTS

TABLE OF AUTHORITIES ....................................................................................................... 3
PRELIMINARY STATEMENT ................................................................................................. 5
STATEMENT OF MATERIAL FACTS .................................................................................... 5
ARGUMENT ................................................................................................................................. 7
I. CRUZ’S CAUSES OF ACTION FOR DECLARATORY JUDGMENT AND
BREACH OF CONTRACTSHOULD BE DISMISSED ........................................................... 7
a. The Caisson Endorsement Applies to Preclude Coverage ................................................... 8
b. The Cost of Making Good Exclusion Applies to Preclude Coverage ............................... 11
c. The Policy does not Provide Coverage for Cruz’s Claimed “Impact Costs” .................... 11
II. CRUZ’S CAUSE OF ACTION FOR BREACH OF THE IMPLIED COVENANT
OF GOOD FAITH AND FAIR DEALING SHOULD BE DISMISSED ............................... 13
a. The Evidence Demonstrates that Starr Never Altered the Policy ...................................... 13
III. CRUZ’S CAUSE OF ACTION FOR NEGLIGENT MISREPRESENTATION
SHOULD BE DISMISSED ........................................................................................................ 15
IV. CRUZ’S CAUSE OF ACTION FOR VIOLATION OF GBL § 349 SHOULD BE
DISMISSED................................................................................................................................. 16
CONCLUSION ........................................................................................................................... 17

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TABLE OF AUTHORITIES
Cases
1357 Tarrytown Rd. Auto, LLC v. Granite Properties, LLC,
142 A.D.3d 976 (2nd Dept. 2016) ................................................................................................ 14

Anderson v. Liberty Lobby, Inc.,
477 U.S. 242 (1986) ........................................................................................................................ 6

Burlington Ins. Co. v. NYC Transit Auth.,
29 N.Y.3d 313, 57 N.Y.S.3d 85, 79 N.E.3d 477 (2017) ................................................................. 9

Chimart Assoc. v. Paul,
66 N.Y.2d 570, 498 N.Y.S.2d 344, 489 N.E.2d 231 (1986) ........................................................... 8

Fruin-Colnon Corp. v. Niagara Frontier Transp. Auth.,
180 A.D.2d 222, 585 N.Y.S.2d 248 (1992) .................................................................................. 10

Hess v. Zoological Soc. of Buffalo, Inc.,
134 A.D.2d 824, 521 N.Y.S.2d 903 (1987) .................................................................................... 9

Indian Country Inc. v. Pennsylvania Lumbermens Mutual Insurance Company,
284 A.D.2d 712 ............................................................................................................................. 12

JFK Family Ltd. Partnership v. Millbrae Natural Gas Development Fund 2005, L.P.,
21 Misc.3d 1102(A) (N.Y. Sup. 2008) ......................................................................................... 13

Long Island Lighting Co. v. Allianz Underwriters Ins. Co.,
301 A.D.2d 23, 749 N.Y.S.2d 488 (1st Dep’t 2002) ...................................................................... 9

Moshiko, Inc. v. Seiger & Smith, Inc.,
137 A.D.2d 170, 529 N.Y.S.2d 284 (1st Dept. 1988)..................................................................... 9

Nat’l Union Fire Ins. Co. of Pittsburgh, Pennsylvania v. TransCanada Energy USA, Inc.,
52 Misc. 3d 455, 28 N.Y.S.3d 800 (N.Y. Sup. Ct. 2016) ......................................................... 8, 12

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Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank,
85 N.Y.2d 20, 623 N.Y.S.2d 529, 647 N.E.2d 741 (1995) ........................................................... 17

Sci. Applications Int’l Corp. v. Env’t Risk Sols., LLC,
37 Misc. 3d 1202(A), 964 N.Y.S.2d 62 (Sup. Ct. 2012) ................................................................ 9

Superhost Hotels Inc. v. Selective Ins. Co. of Am.,
160 A.D.3d 1162, 75 N.Y.S.3d 124, 126 (2018) ............................................................................ 8

Tractebel Energy Mktg., Inc. v. AEP Power Mktg., Inc.,
487 F.3d 89, 101 (2d Cir. 2007).................................................................................................... 13

Uniroyal, Inc v. Home Ins. Co.,
707 F. Supp. 1368 (E.D.N.Y. 1988) ............................................................................................... 9

Valentino v. Fuertes,
73 Misc. 3d 1222(A), 155 N.Y.S.3d 309 (Sup. Ct., Columbia County 2021) ................................ 6

W.W.W. Assocs., Inc. v. Giancontieri,
77 N.Y.2d 157, 565 N.Y.S.2d 440, 566 N.E.2d 639 (1990) ....................................................... 8, 9

Wider v. Heritage Maintenance, Inc.,
14 Misc. 3d 963, 827 N.Y.S.2d 837 (Sup 2007)........................................................................... 11
Rules
22 NYCRR § 202.8-g ..................................................................................................................... 6

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PRELIMINARY STATEMENT

Starr 1 respectfully submits this Reply in Further Support of its Motion for Summary

Judgment. In its Opposition, Cruz muddies the waters by raising immaterial facts which should be

wholly disregarded. This case can be resolved based solely on the unambiguous terms within the

four corners of the Policy and the undisputed facts. Based on Cruz’s own documents, the Caisson

was clearly a caisson. As such, pursuant to the Casson Endorsement, there is no coverage for the

Loss. Cruz’s attempt to parse technical differences between “drilled shafts” and “caissons” is

irrelevant and inappropriate. An insurance policy should be interpreted based on the understanding

of an insured. Furthermore, the Policy’s Cost of Making Good exclusion precludes coverage for

the Loss. Finally, even if there were coverage for the Loss, Cruz’s “impact costs” claim would

never be covered. As such, the Policy does not provide coverage for the Loss, and Cruz’s causes

of action for declaratory judgment and breach of contract should be dismissed. Moreover, Starr

did not act in bad faith or make any misrepresentations. Accordingly, Starr respectfully requests

that summary judgment be granted, and Cruz’s Complaint be dismissed in its entirety with

prejudice.

STATEMENT OF MATERIAL FACTS

Starr incorporates by reference the facts presented in Starr’s Motion, the Affirmation of

Charles J. Rocco, Affidavit of Nicholas Lee, and Starr’s Reply to Plaintiff’s Response in

Opposition and Statement of Additional Material Facts and Issues to be Tried (“Starr’s

Statement”).

1
Terms are given the definitions set forth in Defendant’s Motion for Summary Judgment and
Memorandum of Law in Support (NYSCEF Doc. No. 63) (“Starr’s Motion”).
5

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This case can be resolved with the following undisputed material facts. Cruz reported

damage to a Caisson. See Starr’s Statement ¶¶ 14-15. In numerous pre-Loss documents, Cruz

referred to the Caisson as a caisson. Id. ¶¶ 20-35. The Caisson was intended to be a support

structure for a bridge, but failed to reach design load bearing capacity and could not be used as

intended. Id. ¶¶ 38-40. It was abandoned by Cruz. Id. ¶ 12; see also Exhibit 10, Sheehan Dep.

46:15-24; 127:5-24. The Policy excludes coverage for the costs to rectify: (1) caissons abandoned

during installation; (2) leakage or material infiltration of any kind; and (3) failure to reach design

load bearing capacity. Starr’s Statement ¶ 19. Further, the Policy’s Cost of Making Good exclusion

precludes coverage for fault, defect, error, deficiency or omission in design, plan or specification.

Id. ¶ 37. The Policy also states that Contractor’s Extra Expense (“CEE”) is not covered. Id. ¶ 47;

see also Exhibit 2, Ozbek Dep. 169:7-9; Exhibit 34, Anerella Dep. 124:11-16. Starr never

represented that CEE was intended to be included in the Policy, and Cruz never requested CEE

from Starr. Starr’s Statement ¶¶ 45-46. Finally, Starr consistently communicated its coverage

positions with Cruz and had conducted a good investigation of the Claim. Id. ¶¶ 50-53. Based on

the foregoing, Starr respectfully requests that summary judgment be granted, and Cruz’s

Complaint be dismissed in its entirety with prejudice.

Cruz’s Response in Opposition to Defendant’s Uniform Civil Rules § 202.8.-g Statement

of Material Facts (NYSCEF Doc. No. 108) (“Cruz’s Statement”) is patently improper. Uniform

Rule 202.8-g(b) requires that each statement controverting any statement of material fact be

followed by a citation to evidence. See 22 NYCRR § 202.8-g(b). Further, as set forth in Uniform

Rule 202.8-g(c), facts not specifically controverted in accordance with Rule 202.8-g will be

deemed admitted. See Valentino v. Fuertes, 73 Misc. 3d 1222(A) at *3, 155 N.Y.S.3d 309 (Sup.

Ct., Columbia County 2021). In its Statement of Material Facts, Starr listed the undisputed material

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facts in support of its Motion for Summary Judgment. Cruz could either admit or deny those facts.

Instead, Cruz chose to brief the issues with irrelevant and improper evidence – misleading the

Court as to whether there are material facts in dispute. For example, Material Fact No. 47 provides:

“The Policy states that CEE is ‘Not Covered.’ See Exhibit 12, Policy, p. 8 of 52.” See Starr’s

Statement ¶ 47. This is uncontroverted documentary evidence. Yet Cruz responded with an

improper denial and a citation to irrelevant evidence. Thus, Cruz’s Statement fails to provide

evidentiary citations specifically controverting Starr’s statements in its Statement of Material

Facts, and this Court should deem admitted Starr’s Statement of Material Facts.

Cruz’s Statement also fails to identify any material facts that remain in dispute. A fact is

material only if it “might affect the outcome of the suit under the governing law.” Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Cruz stated no fact that might affect the outcome

of this suit. Instead, Cruz offers pages of general background information and matters otherwise

immaterial to the outcome of this suit under the governing law. Based on the foregoing, the

additional facts submitted by Cruz should be disregarded as immaterial.

ARGUMENT

I. CRUZ’S CAUSES OF ACTION FOR DECLARATORY JUDGMENT AND
BREACH OF CONTRACTSHOULD BE DISMISSED

Cruz’s causes of action for declaratory judgment and breach of contract should be

dismissed because the Loss is not covered under the Policy. First, the Loss to the Caisson is

excluded pursuant to the plain terms of the caisson endorsement. Second, the Cost of Making

Good exclusion applies to preclude coverage for the Loss. Finally, even if there were coverage

for the Loss, the Policy would never cover Cruz’s “impact costs” claim. Accordingly, the Policy

does not provide coverage for the Loss and Cruz’s Complaint should be dismissed.

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a. The Caisson Endorsement Applies to Preclude Coverage

As set forth in Starr’s Motion, the Caisson Endorsement clearly applies to preclude

coverage for the Loss. The testimony from Cruz’s expert, Mr. Oakland, 2 regarding the meaning of

a Policy term, is wholly inadmissible because the Policy is unambiguous. Moreover, Mr.

Oakland’s opinion – years after the negotiation and binding of the Policy – is irrelevant to the

understanding of the parties at the time of contracting. Thus, Mr. Oakland’s opinion should be

precluded. Policy interpretation is based on the plain understanding of the insured. Based on the

evidence submitted with Starr’s Motion, Cruz understood the Caisson to be a caisson. In its

Opposition, Cruz failed to raise a triable issue of fact showing that they did not understand the

term “caisson.” As such, there are no triable issues of material fact, and the Caisson Endorsement

applies to preclude coverage for the Loss.

The Policy is unambiguous. “Whether or not a writing is ambiguous is a question of law to

be resolved by the courts.” W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d 157, 162, 565

N.Y.S.2d 440, 566 N.E.2d 639 (1990). An agreement is ambiguous only where “the agreement on

its face is reasonably susceptible of more than one interpretation.” Chimart Assoc. v. Paul, 66

N.Y.2d 570, 573 (1986). Here, Cruz has not shown that the Policy is reasonably susceptible of

more than one interpretation. See generally, Exhibit 1, Complaint; see also Cruz’s Opposition.

Simply because “caisson” is not defined in the Policy does not render it ambiguous. Superhost

Hotels Inc. v. Selective Ins. Co. of Am., 160 A.D.3d 1162, 1163 (2018) (policy’s “wear and tear”

exclusion was deemed unambiguous despite lack of definition). Rather, the Policy is reasonably

susceptible to only one interpretation. Based on Cruz’s own documents, the parties understood that

2
Cruz’s Exhibit T, NYSCEF Doc. No. 129 (“Oakland Affidavit”).
8

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the Caisson is a caisson within the meaning of the Policy. See Starr’s Motion p. 16-21 of 32. Thus,

the Policy is unambiguous.

Mr. Oakland’s opinion is inadmissible extrinsic evidence. Where a Policy is clear and

unambiguous, extrinsic evidence is precluded. See Nat’l Union Fire Ins. Co. of Pittsburghv.

TransCanada Energy USA, Inc., 28 N.Y.S.3d 800, 806 (N.Y. Sup. Ct. 2016), aff'd 153 A.D.3d

1153 (2017) (“Whether a contractual term is ambiguous must be determined by looking within the

four corners of the document and not to extrinsic sources”). Further, “it is well settled that

‘extrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which

is complete and clear and unambiguous upon its face.’” W.W.W. Assoc. v. Giancontieri, 77 N.Y.2d

157 (1990) (citation omitted). In its attempt to avoid the plain meaning of the Caisson

Endorsement, Cruz introduces expert testimony parsing technical definitions of the term “caisson.”

See generally Oakland Affidavit. Such extrinsic evidence is patently improper, and should be

precluded. See Hess v. Zoological Soc. of Buffalo, Inc., 134 A.D.2d 824, 825 (1987) (holding that

expert testimony is inadmissible because the “language of the contract is clear and unambiguous;

therefore, interpretation of the contract was a matter for the court”); see also Long Island Lighting

Co. v. Allianz Underwriters Ins. Co., 301 A.D.2d 23, 23 n.2 (1st Dep’t 2002) (same); Sci.

Applications Int’l Corp. v. Env’t Risk Sols., LLC, 964 N.Y.S.2d 62 (Sup. Ct. 2012) (holding that

an expert is not permitted “to interpret the contractual agreements between the parties”). Thus, Mr.

Oakland’s opinion is inadmissible extrinsic evidence.

Even if this extrinsic evidence could be considered, Mr. Oakland’s opinion is not material

or relevant – it sheds no light on Cruz’s understanding of the term “caisson.” Under New York

law, courts apply the ordinary principles of contract interpretation to insurance agreements,

construing unambiguous provisions in line with “their plain and ordinary meaning.” Burlington

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Ins. Co. v. NYC Transit Auth., 29 N.Y.3d 313, 321 (2017). The plain meaning of policy language

is measured “by the understanding of a person engaged in the insured’s course of business.”

Moshiko, Inc. v. Seiger & Smith, Inc., 137 A.D.2d 170, 176 (1st Dept. 1988) (citation omitted);

Uniroyal, Inc v. Home Ins. Co., 707 F. Supp. 1368, 1377 (E.D.N.Y. 1988); see also Fruin-Colnon

Corp. v. Niagara Frontier Transp. Auth., 180 A.D.2d 222, 226 (1992) (holding that the contract

was controlling, and expert witnesses were not experts in contract interpretation). Based on the

foregoing, Mr. Oakland’s opinion regarding the meaning of the term “caisson,” years after the

negotiation and binding of the Policy, should be disregarded.

Even if Mr. Oakland’s opinion were considered, Cruz’s technical parsing of the term

“caisson” versus “drilled shaft” does not raise a triable issue of material fact. The Policy does not

provide coverage for the costs to rectify: (1) caissons abandoned during installation; (2) leakage

or material infiltration of any kind; and (3) failure to reach design load bearing capacity. See

Exhibit 12, Policy p. 46 of 52. Cruz reported this Loss stating, “caisson and concrete failed at

bridge project resulting in caisson and concrete unusable.” See Exhibit 16. Moreover, Cruz’s own

documents reflect the undeniable fact that the Caisson was a caisson. See Starr’s Motion, p. 16-22

of 32. Thus, at all relevant times, Cruz fully understood that the term “caisson” was referring to

the damaged property. While Cruz now argues that the Caisson could also be referred to as a

“drilled shaft,” this does not negate the fact that it was plainly understood by Cruz to be a caisson

as well. The Caisson failed to reach design load bearing capacity, sustained leakage and material

infiltration, and was abandoned during its installation. Id. p. 7 of 32. Thus, this Loss is not covered

under the Policy. Accordingly, Starr requests that summary judgment be granted, dismissing

Cruz’s Complaint in its entirety.

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b. The Cost of Making Good Exclusion Applies to Preclude Coverage

Assuming, arguendo, that the Caisson Endorsement were inapplicable, the Loss would be

excluded by the Policy’s Cost of Making Good exclusion. See Exhibit 12, Policy p. 20 of 52. This

excludes coverage for any loss or damage caused by fault, defect, error, deficiency, or omission in

design, plan, or specification. 3 In its Opposition, Cruz erroneously asserts that “an insurer must

prove the loss was due to the insured’s faulty work.” This is a misstatement of the unambiguous

Policy language and the law. First, based on the plain language of the exclusion, any loss or damage

caused by fault, defect, error, deficiency, or omission in design, plan, or specification is excluded–

not only an “insured’s faulty work.” Moreover, this language does not require any “failure to

comply with the standard of care.” It also does not require that Cruz be to blame for such “fault,

defect, error, deficiency or omission in design, plan, or specification.” Furthermore, under New

York law, such provisions extend “to both flaws in the process of doing the work and flaws in the

finished product.” Wider v. Heritage Maintenance, Inc., 827 N.Y.S.2d 837 (Sup 2007). Here, it is

undisputed that the Caisson was intended to be a support structure for the bridge, and the finished

product could not be used as intended. See Exhibit 10, Sheehan Dep. 34:6-34:14; 43:10-17. This

constitutes a flawed finished product. Thus, the Cost of Making Good exclusion applies to preclude

coverage. Accordingly, Starr requests that summary judgment be granted, dismissing Cruz’s

Complaint in its entirety.

c. The Policy does not Provide Coverage for Cruz’s Claimed “Impact Costs”

Assuming, arguendo, there were coverage for the physical damage, Cruz’s impact costs

claim would never be covered under the Policy. As discussed above, where a Policy is clear and

3
This exclusion embodies the familiar principle that property insurance does not cover damage caused by
the inherent nature of a thing, as opposed to damage caused by an external peril. See, e.g. Chute v.
Northern Ins. Co., 214 N.W. 473, 474 (Minn. 1927).
11

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unambiguous, extrinsic evidence is not permitted. Nat’l Union, 52 Misc. 3d at 461. Here, the Policy

is clear and unambiguous; it clearly states “Not Covered” next to the Contractor’s Extra Expense

(CEE) sublimit. See Exhibit 12, Policy p. 8 of 52. Cruz’s use of any extrinsic evidence should be

precluded. Further, Cruz’s use of the insurance binder is irrelevant. Under New York law, an

insurance binder provides temporary insurance which terminates when a policy is either issued or

refused. See, e.g., Indian Country Inc. v. Pennsylvania Lumbermens Mutual Ins. Co., 284 A.D.2d

712 (holding that any differences in the original binder were superseded by the issuance of the

final policy). Similarly, in our case, it is undisputed that Starr issued a final copy of the Policy to

Cruz. This final Policy was also reviewed by McGriff’s quality control department and “there were

no errors found.” See Exhibit 14, McGriff_EECruz_001915. Therefore, any alleged differences

between the binder and the final Policy are irrelevant and should be disregarded. Based on the

unambiguous Policy language, CEE is not covered under the Policy. Thus, Cruz’s impact costs are

not covered under the Policy.

Assuming, arguendo, that such extrinsic evidence was permitted, the evidence

demonstrates that CEE was not intended to be covered under Starr’s Policy form. In both the quote

and binder, the lists of sublimits do not include CEE. Underneath the lists, both forms

unambiguously state, “Coverages and/or Extensions of Coverage not specifically shown above are

not included.” See Cruz’s Exhibit J (NYSCEF Doc. No. 119) p. 8 of 22; Cruz’s Exhibit L

(NYSCEF Doc. No. 121) p. 7 of 18 (emphasis added). Hyland Knecht, Cruz’s experienced

insurance broker, read through the binder at his deposition, and acknowledged that the binder does

not provide coverage for CEE. See Exhibit 13, Knecht Dep. 46:4-51:25. Any contention of default

coverage by Cruz for CEE is belied by the clear and unambiguous wording in the Policy, quote,

and binder showing that CEE is not covered. Thus, Cruz’s impact costs are not covered under the

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Policy. Accordingly, Starr respectfully requests that summary judgment be granted, and Cruz’s

Complaint be dismissed in its entirety with prejudice.

II. CRUZ’S CAUSE OF ACTION FOR BREACH OF THE IMPLIED COVENANT
OF GOOD FAITH AND FAIR DEALING SHOULD BE DISMISSED

Cruz’s cause of action for breach of the implied covenant of good faith and fair dealing

should be dismissed because Cruz cannot show that Starr acted in bad faith. Under New York law,

“the burden of proving a breach of the covenant of good faith and fair dealing is on the person

asserting the absence of good faith.” Tractebel Energy Mktg., Inc. v. AEP Power Mktg., Inc., 487

F.3d 89, 101 (2d Cir. 2007). To state a claim, Cruz must prove “arbitrary or unreasonable conduct

which has the effect of preventing the other party to the contract from receiving the fruits of the

contract.” JFK Family Ltd. Partnership v. Millbrae Natural Gas Development Fund 2005, L.P.,

21 Misc.3d 1102(A), at *23 (N.Y. Sup. 2008). In its Opposition, Cruz only provided conclusory

allegations lacking evidentiary support. As such, none of Cruz’s statements should be considered.

Even if Cruz’s statements were considered, they are completely meritless. Here, all the material

facts demonstrate that Starr acted in good faith during the handling of this claim. First, the evidence

demonstrates that Starr enver altered the Policy. Starr reasonably denied coverage for impact costs

because the Policy states same are “not covered.” Second, Starr consistently handled this claim in

the utmost good faith. As such, Cruz cannot meet its burden and the cause of action for breach of

the implied covenant of good faith and fair dealing should be dismissed.

a. The Evidence Demonstrates that Starr Never Altered the Policy

Starr reasonably denied coverage for impact costs because the Policy states same are “not

covered.” On August 17, 2017 – over a year before the Loss – Starr sent the final Policy to Cruz’s

insurance brokers. See Exhibit 34, Anerella Dep. 150:5-151:22. The Policy stated that CEE is “not

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covered.” After receiving the Policy, neither Cruz nor any of its representatives informed Starr that

there was any issue with the wording of the Policy. Rather, the broker advised that the Policy was

“reviewed by [McGriff’s] quality control department and there were no errors found.” See Exhibit

14, McGriff_EECruz_001915. Accordingly, the Policy as issued does not provide coverage for

CEE. Supra Section I.c. Contrary to the baseless assertions in Cruz’s Opposition, CEE was never

intended to be part of the Policy. See Exhibit 13, Knecht Dep. 89:19-24 (testifying that he never

requested CEE coverage from Starr); and 90:12-21 (testifying that according to both the Policy

quote and binder, Starr never represented that CEE would be included in coverage). Mr. Knecht

further testified that there were no errors between the binder and the Policy as issued. Id. at 54:2-

9. Thus, the evidence demonstrates that Starr never altered the Policy after its issuance. Starr

cannot be found to have acted in bad faith by denying costs that are not covered. See 1357

Tarrytown Rd. Auto, LLC v. Granite Properties, LLC, 142 A.D.3d 976, 977 (2nd Dept. 2016) (“no

obligation may be implied that would be inconsistent with other terms of the contractual

relationship”). Accordingly, Cruz’s cause of action for breach of the implied covenant of good

faith and fair dealing should be dismissed.

b. Starr Consistently Handled the Claim in Good Faith

Starr consistently handled the Claim in good faith, as evidenced in Starr’s Motion. Starr

and its adjuster, Keith Culley of Sedgwick, retained Terrance Zich of YA Engineering Services

(formerly of Envista Forensics) to assist with the investigation. See Cruz’s Exhibit R, Zich Dep.

27:5-14. Starr relied on this investigation to determine its coverage obligations – not on any

“preconceived notion” of its adjuster. See Exhibit 29, p. 5 of 8; Cruz’s Exhibit Q, p. 3 of 15;

Cruz’s Exhibit R, Zich Dep. 55:22-56:21. Regarding the Caisson Endorsement, there was no

question “whether the structure was a caisson in the first instance” because Cruz had reported the

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Loss as a “caisson and concrete” failure. See Exhibit 16; Cruz’s Statement ¶¶ 14-15. Moreover,

Starr’s engineer, Mr. Zich, testified that the Caisson is a caisson. See Cruz’s Exhibit R, Zich Dep.

25:22-26:4. After discussions back and forth, on November 18, 2019, Starr sent Cruz a letter

detailing its full coverage position. See Exhibit 29, EECRUZ000632-000638. This letter explained

the legal, factual, and scientific basis for Starr’s coverage position and invited Cruz to provide its

coverage position along with any other documentation or information for Starr to consider. Id. As

such, Starr dutifully investigated the Claim without delay. Finally, Starr never delayed adjustment

of the impact costs claim. Cruz first notified Starr of its impact costs claim on November 15, 2019.

See Exhibit 28. Thus, Starr wasn’t aware of the impact costs claim until a year after the Loss. Starr

thoroughly investigated the Loss, communicated with its insured, and detailed its coverage

positions in writing on multiple occasions. See Lee Aff. ¶¶ 5, 7, 8, 10. Accordingly, the evidence

demonstrates that Starr thoroughly investigated the Claim in the utmost good faith. Based on the

foregoing, Starr respectfully requests that Cruz’s cause of action for the breach of the implied

covenant of good faith and fair dealing be dismissed in its entirety.

III. CRUZ’S CAUSE OF ACTION FOR NEGLIGENT MISREPRESENTATION
SHOULD BE DISMISSED

Cruz’s claim for negligent misrepresentation should be dismissed because Starr made no

misrepresentation. In its Opposition, Cruz admits “the fact that ‘Starr never represented that CEE

would be included.’” See Cruz’s Opposition, p. 26 of 30. Similarly, the Policy states that CEE is

“not covered.” This comports with the quote and binder, which both state, “Coverages and/or

Extensions of Coverage not specifically shown above are not included.” See Cruz’s Exhibit J, p.

8 of 22; Cruz’s Exhibit L, p. 7 of 18 (emphasis added). Further, Mr. Knecht testified that according

to both the Policy quote and binder, Starr never represented that CEE would be included in

coverage. Exhibit 13, 90:12-21. He also testified that there were no errors he was aware of between

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the binder and the Policy that was issued. Id. 54:2-9. Thus, Cruz has not and cannot demonstrate

any misrepresentation by Starr. Accordingly, Starr respectfully requests that summary judgment

be granted, and Cruz’s cause of action for negligent misrepresentation be dismissed.

IV. CRUZ’S CAUSE OF ACTION FOR VIOLATION OF GBL § 349 SHOULD BE
DISMISSED

Cruz’s cause of action for violation of GBL § 349 should be dismissed because Cruz failed

to show: (1) a materially misleading act by Starr; (2) that same was consumer-oriented; and (3)

resulting injury independent of its breach of contract claim.

Cruz has not demonstrated any materially misleading act by Starr. Rather, in its Opposition,

Cruz alleged that Starr delayed in its investigation and adjustment of the Claim. This is not a

materially misleading act. 4As detailed above, Starr consistently acted in good faith during its

investigation and adjustment of the Claim. Finally, Cruz alleged that it was misleading for the

Policy’s quote and binder to omit mention of CEE. However, as discussed above, according to

both the Policy quote and binder, Starr never represented that CEE would be included in coverage.

Supra Section I.c. CEE was never negotiated for or requested by Cruz or its brokers. Id.

Additionally, there were no errors between the binder and the Policy that was issued. Id. Thus,

Starr did not engage in a way that was materially misleading.

Further, even if Cruz could show a materially misleading act, Cruz cannot demonstrate that

same is consumer-oriented. New York courts have explained that an act or practice is consumer-

oriented when ithas “a broader impact on consumers at large.” Oswego Laborers’ Local 214

4
Further, Cruz’s allegations of “dilatory tactics” are unfounded. First, Starr did not receive the cause and
origin report until September 2019. See Exhibit U, Lee Dep. 132:14-133:3. Next, Starr’s letter invited
Cruz to provide its position along with any other documentation or information for Starr to consider.
Supra Section II.b. Starr’s adjuster, Keith Culley, confirmed that Starr was waiting for a response from
Cruz to see if any further information would change Starr’s position. See Cruz’s Exhibit O, Culley Dep.
165:22-165:19.
16

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Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25–27 (1995). Cruz provided no evidence

of a consumer-oriented act or practice. Rather, in its Opposition, Cruz alleged only that there were

“maybe three” examples where Starr issued policies that originally contained errors. See Cruz’s

Exhibit D, Kessler Dep. 158:5-23. First, as detailed above, there were no errors in this Policy.

Supra Section I.c; Exhibit 13, Knecht Dep. 54:2-9; 89:19-24; 90:12-21. Second, in each of those

examples, Ms. Kessler testified that she communicated with Starr, who immediately responded

and satisfactorily corrected those policy documents. See Cruz’s Exhibit D, Kessler Dep. 158:20-

163:21. Cruz alleges that “this is but one example” of such consumer-oriented conduct. However,

this is the only example that Cruz has – if Cruz had other examples, it would have included them

in its Opposition. Accordingly, Starr respectfully requests that summary judgment be granted, and

Cruz’s cause of action for violation of GBL §349 be dismissed in its entirety.

CONCLUSION

For the foregoing reasons, Starr respectfully requests that the Court issue an Order, pursuant

to New York CPLR § 3212:

(1) granting summary judgment in favor of Starr dismissing Cruz’s Complaint in its entirety

with prejudice;

(2) or, in the alternative, granting summary judgment in favor of Starr dismissing Cruz’s

$3,708,482.79 “impact costs” claim; and

(3) for such other and further relief as this Court deems just, proper, and equitable.

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Dated: January 20, 2023
New York, New York

Case Info

Judge

Nancy M. Bannon Track Judge’s New Case

Case No.

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Document Filed Date

January 20, 2023

Case Filing Date

June 08, 2020

County

Parties

BREHONY, DAWN M Attorney for the Defendant
E.E. CRUZ & COMPANY, INC. Plaintiff
MANOBIANCA, STACY M. Attorney for the Plaintiff
NAGEL, ANNA Attorney for the Defendant
PODOLAK, GREGORY DAVID Attorney for the Plaintiff
ROCCO, CHARLES J Attorney for the Defendant
SMALL, BRYAN ANTHONY Attorney for the Plaintiff
STARR SURPLUS LINES INSURANCE COMPANY Defendant
VICERE, ASHLEY CHRISTINE Attorney for the Defendant
JOHN CHAMBERS Attorneys for Plaintiffs
STEFANI BONATO Attorney
MICHAEL ANGIULO Attorney
JONATHAN WOHL Attorney
STEPHANIE BARAN Attorneys for Defendants
THOMAS CAHILL Attorney
STEPHANIE BERSHAD Attorney

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Motion-Secondary: E.E. Cruz & Company, Inc. v. Starr Surplus Lines Insurance Company

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