Preview
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
------------------------------------------------------------- X
MOUNTAIN VALLEY INDEMNITY Index No.: 151433/2020
COMPANY,
Plaintiff,
-against-
MENELIK T. EADDY and ESSIE L. GASKIN,
Defendants.
------------------------------------------------------------- X
MOUNTAIN VALLEY INDEMNITY COMPANY’S MEMORANDUM OF LAW
IN SUPPORT OF MOTION FOR DEFAULT AND SUMMARY JUDGMENT
Mound Cotton Wollan & Greengrass
One New York Plaza
New York, New York 10004-1901
(212) 804-4200
Of Counsel:
Kevin F. Buckley, Esq.
Tania A. Gondiosa, Esq.
1 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
PRELIMINARY STATEMENT
Plaintiff, Mountain Valley Indemnity Company (“Mountain Valley”), respectfully
submits this Memorandum of Law in support of its motion for an Order: (i) pursuant to CPLR
3215(a) granting Mountain Valley a default judgment against defendant Menelik T. Eaddy
(Eaddy”); and (ii) pursuant to CPLR 3212, granting Mountain Valley summary judgment
against defendants, Eaddy and Essie L. Gaskin (“Gaskin”), declaring that it has no duty to defend
or indemnify Eaddy in the lawsuit entitled Essie L. Gaskin v. The City of New York, Damon I.
Sheppard, Michelle Mansell-Shepard and Menelik T. Eaddy, pending in the Supreme Court of
the State of New York, Kings County, under Index No.: 525012/2018 (the “Underlying Action”).
The Underlying Action seeks damages for personal injuries allegedly sustained by
Gaskin on February 27, 2018, when she tripped and fell while on the sidewalk in front of the
premises known as 9 Somers Street, Brooklyn, New York (the “Premises”), which was owned by
defendant, Eaddy. By virtue of this action, Mountain Valley requests that this Court confirm that
it is not obligated to defend or indemnify Eaddy in the Underlying Action under a homeowners
insurance policy Mountain Valley issued to Eaddy the ground that the Premises does not qualify
as a “residence premises,” which is a prerequisite to coverage under the Mountain Valley
policy. Residence Premises is defined, in relevant part, as “the one family dwelling…where you
reside” or the “two, three, or four family dwelling where you reside in at least one of the family
units…” As set forth below, the Premises was not an owner occupied dwelling as required
by the Policy, but rather an investment property occupied exclusively by tenants. Thus, there
is no coverage under the Mountain Valley Policy for the Underlying Action because the
Premises does not qualify as a “residence premises.”
1
2 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
Mountain Valley also moves pursuant to Exclusion b. for liability rising out of
“business” pursuits of an “insured” or the rental or holding for rental of any premises by an
“insured” that is not an “insured location,” and Exclusion d. for bodily injury arising out a
premises owned by an insured or rental to others by an insured that is not an “insured
location.” The Mountain Valley Policy defines an “insured location” as the “residence
premises.” As set forth below, the courts have held that the very exclusions at issue herein
apply to bar coverage for an underlying action in instances where the insured did not reside
at the insured premises at the time of the accident. Here, Eaddy admittedly did not reside at
the Premises, but rather used it as a rental property. Therefore, not only is there no coverage
under the Mountain Valley Policy for the Underlying Action in the first instance, the
Mountain Valley policy exclusions likewise serve to bar coverage because the Premises does
not qualify as an “insured location” since the insured admittedly did not reside there.
Accordingly, there is no coverage for the Eaddy, or any other party, under the
Mountain Valley Policy for the claims asserted in the Underlying Action.
STATEMENT OF FACTS
The Mountain Valley Policy
Mountain Valley issued a renewal dwelling policy to Eaddy under policy number
2005245991, for the policy period from August 29, 2017 to August 29, 2018 (“Mountain
Valley policy” or “the Policy”). The Mountain Valley Policy describes the “residence
premises” covered by the policy as the “Premises”, a three-family owner occupied dwelling.
A certified copy of the Policy is annexed to the Affidavit of Daniel Brownsey (hereinafter
“Brownsey Aff.”) at Ex. A.
2
3 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
The Policy provides the following coverage grant at form DL 24 01 07 88, as amended in
part by form DL 25 31 12 95, Section II - Liability Coverages:
Liability Coverages
Coverage L-Personal Liability
If a claim is made or suit is brought against an “insured” for damages
because of “bodily injury” or “property damage” caused by an
“occurrence” to which this coverage applies, we will:
1. Pay up to our limit of liability for the damages for which the “insured”
is legally liable. Damages include prejudgment interest awarded against
the “insured”;
Coverage M-Medical Payments To Others
We will pay the necessary medical expenses that are incurred or medically
ascertained within three years from the date of an accident causing “bodily
injury.” Medical expenses mean reasonable charges for medical, surgical,
x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices
and funeral services. This coverage does not apply to you or regular
residents of your household except “residence employees.”
* * *
Policy form DL 24 01 07 88 also contains certain Exclusions to Coverage L and
Coverage M. However, the Policy also contains form DL 25 31 12 95, Special Provisions – New
York, which replaces some of these Exclusions, in relevant part, as follows:
Under 1. Coverage L – Personal Liability Coverage and Coverage M –
Medical Payments to Others:
* * *
B. Item b. is delted and replaced by the following:
b. Arising out of “business” pursuits of an “insured” or the rental or
holding for rental of any premises by an “insured.”
This exclusion does not apply to:
(1) Activities which are usual to non-”business” pursuits;
(2) The rental or holding for rental or an “insured location:”
(a) On an occasional basis if used only as a residence;
3
4 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
(b) in part for use only as a residence unless a single family
unit is intended for use by the occupying family to lodge
more than two roomers or boarders; or
(c) in part, as an office, school, studio, or private garage.
* * *
Policy form DL 24 01 07 88 also contains the following relevant Exclusion:
1. Coverage L- Personal Liability and Coverage M-Medical Payments to
Others do not apply to “bodily injury” or “property damage”:
* * *
d. Arising out of a premises:
(1) owned by an “insured”;
(2) rented to an “insured”; or
(3) rented to others by an “insured”;
that is not an “insured location”
* * *
“Insured location” and “residence premises” are defined in the Definitions section of
Policy form DL 24 01 07 88, as follows:
“Insured location” means:
a. The “residence premises”;
b. The part of other premises, other structures and grounds used by you as
a residence and:
(1) Which is shown in the Declarations; or
(2) Which is acquired by you during the policy period for your use as a
residence;
c. Any premises used by you in connection with a premises in 4a or 4b
above;
d. Any part of a premises:
(1) Not owned by an “insured;” and
(2) Where an “insured” is temporarily residing;
e. Vacant land, other than farm land, owned by or rented to an “insured;”
f. Land owned by or rented to an “insured” on which a one or two family
dwelling is being built as a residence for an “insured”; or
g. Individual or family cemetery plots or burial vaults of an “insured”;
4
5 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
h. Any part of a premises occasionally rented to an “insured” for other
than “business” use.
* * *
“Residence premises” means:
a. The one family dwelling, other structures, and grounds; or
b. That part of any other building;
where you reside and which is shown as the “residence premises” in the
Declarations.
“Residence premises” also means a two, three or four family dwelling
where you reside in at least one of the family units and which is shown as
the “residence premises” in the Declarations.
See Brownsey Aff. at Ex. A.
Thus, there is no coverage under the Policy for bodily injury arising out of the
Premises, which is owned by the Eaddy, unless Eaddy resides in one of the three family
units.
The Underlying Claim/Action
Gaskin was allegedly injured on February 27, 2018 when she tripped and fell on the
sidewalk abutting the Premises. On December 12, 2018, Gaskin commenced suit against
Eaddy, the City of New York, and several other defendants, in the Supreme Court, Kings
County seeking recovery for personal injuries allegedly sustained as the result of her fall at
the Premises. The suit alleges that the Eaddy was negligent in the ownership, maintenance,
management and repair of the Premises and, more specifically, in permitting the abutting
sidewalk to remain in a raised, cracked, dangerous, defective, and trap-like condition. A
copy of the Complaint in the Underlying Action is annexed to the Affirmation in Support of
Tania A. Gondiosa (“Gondiosa Aff.”) at Ex. A.
5
6 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
Mountain Valley’s First Notice of Loss/Investigation
On or about May 2, 2019, Mountain Valley received its first notice of the claim and
suit, which was reported by Eaddy to Nya Services, Inc., presumably his insurance broker.
(See Brownsey Aff. at ¶11.) Mountain Valley immediately initiated Bauer Trial Preparation
(“Bauer”) to conduct an investigation of the claim. (See Brownsey Aff. at ¶11.)
Statement of Manelik Eaddy
On May 15, 2019, the Bauer investigator interviewed Eaddy and obtained his signed
statement. A copy of Eaddy’s signed statement is annexed to the Affidavit of Scott Ricki
(“Rickli Aff.”) at Ex. 1. Eaddy informed the investigator that he resides at 109-21 173rd
Street, Jamaica, New York 11433. Eaddy has owned and managed the premises at 9 Somers
Street, Brooklyn, New York 11238, a three-family home, since 2006. However, Eaddy
admitted that he has never resided at the Premises. Rather, Eaddy rents all three units of the
Premises to separate tenants. Eaddy visits the Premises at least once a week, as needed.
Cecil Gilbert, who has been the superintendent of the Premises for over 10 years, also visits
the Premises several times a week to handle the maintenance. (See Rickli Aff. at Ex. 1.)
Statement of Cecil Gilbert
On May 30, 2019, the Bauer investigator interviewed Cecil Gilbert and obtained his
signed statement. A copy of Gilbert’s signed statement is annexed to Rickli Aff. at Ex. 2.
Gilbert informed the investigator that he works for Eaddy as the super at the Premises, and
had been the super for over 10 years. The property is owned by Eaddy. However, to the best
of Gilbert’s knowledge, Eaddy does not reside at the Premises. (See Rickli Aff. at Ex. 2.)
6
7 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
Coverage Review/Disclaimer
On June 12, 2019, Bauer’s final report was received and reviewed by Mountain
Valley. (See Brownsey Aff. at ¶14.) That same day, a proposed disclaimer of coverage
based on non-owner occupancy of the Premises was forwarded to management. The
proposed disclaimer was then forwarded to the claims attorney for review and approval. On
June 26, 2019, the disclaimer was approved by the claims attorney. (See Brownsey Aff. at
¶14.)
On June 26, 2019, Mountain Valley issued a disclaimer of coverage to Eaddy on the
ground that the Premises does not qualify as a “residence premises” or “insured location,” as
defined by the Mountain Valley Policy because the Eaddy did not reside at the Premises, but
rather used it as a rental property. A copy of Mountain Valley’s June 26, 2017 disclaimer is
annexed to Brownsey Aff. at Ex. B.
Mountain Valley also disclaimed coverage on the ground that coverage is excluded
under the policy’s rental exclusion (Exclusion b.), which excludes coverage for the rental or
holding for rental of any part of any premises by the insured on more than an occasional
basis, if it is not an “insured location,” and Exclusion d., which excludes coverage for
liability arising out of a premises owned by an insured or rented by an insured to others that
is not an “insured location,” which is defined, in relevant part, as the “residence premises.”
(See Brownsey Aff. at Ex. B.) Mountain Valley also disclaimed coverage on material
misrepresentation grounds, since Eaddy represented in his Application that the Premises would
be owner occupied.
Mountain Valley assigned the law firm Silverman Shin & Byrne PLLC to defend
Eaddy in the Underlying Action until such time as the court, in a declaratory judgment
7
8 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
action, confirms that Mountain Valley has no duty to defend or indemnify under the Policy.
Counsel for Gaskin was copied on the disclaimer. (See Brownsey Aff. at Ex. B.)
The Instant Litigation
On February 7, 2020, Mountain Valley commenced this declaratory judgment action
by filing a summons and declaratory judgment complaint. (See Gondiosa Aff. at Ex. B.) By
virtue of the declaratory judgment complaint, Mountain Valley seeks to confirm the validity
of its disclaimer. On March 10, 2020, an Answer was interposed on behalf of Gaskin. (See
Gondiosa Aff. at Ex. C.)
Eaddy was served with the summons and declaratory judgment complaint on
February 15, 2020. (See Gondiosa Aff. at Ex. D.) By letters, dated November 11, 2020
and January 4, 2021, Eaddy was advised of his default and the need to respond to Mountain
Valley’s complaint. (See Gondiosa Aff. at Ex. E and F, respectively.) An answer has not
been interposed on behalf of Eaddy and his time to do so has expired.
Via this motion, Mountain Valley seeks summary judgment on the ground that the
Premises does not qualify as a “residence premises” or “insured location” because Eaddy did
not reside at the Premises as required by the Policy. Mountain Valley also seeks a default
judgment against Eaddy for failure to answer or otherwise respond to the declaratory
judgment complaint.
8
9 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
ARGUMENT
POINT I
MOUNTAIN VALLEY IS ENTITLED TO A DEFAULT JUDGMENT
AGAINST EADDY PURSUANT TO CPLR 3215(a)
FOR HIS UNEXCUSED FAILURE TO
ANSWER THE COMPLAINT
The summons and declaratory judgment complaint were filed on February 7, 2020.
Eaddy was served with Mountain Valley’s summons and declaratory judgment complaint on
February 15, 2020. Accordingly, by letters dated November 11, 2020 and January 4, 2021,
Eaddy was advised of his default and the need to respond to the complaint. Eaddy has not
appeared in this action or obtained an extension of time to do so.
CPLR 3012(a) states, in pertinent part:
The complaint may be served with the summons…Service of an answer
or reply shall be made within twenty days after service of the pleading to which it
responds.
(McKinney's 2009)
CPLR 3215(a) states, in pertinent part:
Default and entry. When a defendant has failed to appear,
plead or proceed to trial of an action…the plaintiff may seek
a default judgment against him. . . .
(McKinney's 2009)
The unexcused default of Eaddy has prejudiced and hampered Mountain Valley’s ability
to litigate this action expeditiously. By defaulting in this action, Eaddy effectively admits the
facts giving rise to Mountain Valley’s claims. As detailed below and in the annexed motion
papers, Mountain Valley has meritorious causes of action and, if the action herein proceeded on
the merits, it would be decided in Mountain Valley’s favor. Accordingly, Mountain Valley’s
motion for a default judgment should be granted.
9
10 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
Accordingly, via this motion Mountain Valley seeks both a default judgment and
summary judgment against Eaddy.
POINT II
EADDY IS NOT ENTITLED TO
COVERAGE UNDER THE MOUNTAIN VALLEY POLICY
BECAUSE THEY DID NOT RESIDE AT THE PREMISES
As set forth above, the Mountain Valley Policy describes the “residence premises”
covered by the policy as the Premises, a three-family owner occupied dwelling. The
Mountain Valley Policy defines “Residence premises” as:
a. The one family dwelling, other structures, and
grounds; or
b. That part of any other building;
where you reside and which is shown as the “residence
premises” in the Declarations.
“Residence premises” also means a two, three or four
family dwelling where you reside in at least one of the
family units and which is shown as the “residence
premises” in the Declarations.
The policy’s coverage is dependent on these requirements being met. Indeed, it has
been held that the “residence premises” definition is unambiguous and requires the insured to
reside at the premises when the loss occurs. See, Marshall v. Tower Ins. Co. of New York,
44 A.D.3d 1014, 1015, 845 N.Y.S.2d 90 (2nd Dep't 2007). Numerous courts have held that
this definition is clear and unambiguous. See Vela v. Tower Ins. Co. of N.Y., 83 A.D.3d
1050, 1051 (2d Dep’t 2011)(holding that the definition of “residence premises” is not
ambiguous and must be accorded its plain and ordinary meaning); Megafu v. Tower Ins. Co.
of N.Y., 73 A.D.3d 713 (2d Dep’t 2010); Marshall v. Tower Ins. Co. of N.Y., 44 A.D.3d
10
11 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
1014 (2d Dep’t 2007); Metropolitan Prop. & Cas. Ins. Co. v. Pulido, 271 A.D.2d 57, 61 (2d
Dep’t 2000); Heniser v. Frankenmuth Mut. Ins. Co., 534 N.W.2d 502, 504-08 (Mich. 1995).
Here, Eaddy admitted in his statement that he has never resided at the Premises.
Rather, Eaddy rented all three of the family units to separate tenants. Eaddy further admitted
that he owned and managed the Premises, with the assistance of the superintendent, Cecil
Gilbert. According to the statements of both Eaddy and Gilbert, Gilbert has been employed
by Eaddy as the superintendent of the Premises for over 10 years. (See Rickli Aff. at Ex. 1
and 2.)
Since Eaddy admittedly did not reside at the Premises at the time of the accident, the
Premises does not qualify as a “residence premises” as unambiguously defined by the Mountain
Valley Policy. Therefore, Bedri Sela is not entitled to coverage under the Mountain Valley
Policy for the Underlying Action, and a declaration should be issued, accordingly.
POINT III
EADDY IS LIKEWISE NOT ENTITLED TO
COVERAGE UNDER THE MOUNTAIN VALLEY
POLICY PURSUANT TO THE POLICY EXCLUSIONS
BECAUSE HE DID NOT RESIDE AT THE PREMISES
Although there is no coverage under the Mountain Valley Policy for the Underlying
Action in the first instance because the Premises does not qualify as “residence premises” as
defined by the Policy, coverage is also barred pursuant to the policy Exclusion d., which
precludes coverage for bodily injury arising out of a premises that is “owned by an ‘insured’…or
rented to others by an ‘insured’ that is not an ‘insured location.’” As set forth above, the
Mountain Valley Policy defines an “insured location” as the “residence premises,” which, as set
forth above, is defined as “the one family dwelling where you reside” or the “two, three or four
family dwelling where you reside in at least one of the family units…” (See Brownsey Aff. at
11
12 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
Ex. A.) Thus, in order to qualify as an “insured location,” Eaddy must, likewise, reside at the
Premises.
New York Courts have routinely held that exclusions such as this, which preclude
coverage for bodily injury arising out of a premises that is “owned by an ‘insured’…or rented to
others by an ‘insured’ that is not an ‘insured location,’” applies to bar coverage for an underlying
action in instances where the insured did not reside at the subject premises at the time of the
accident. See, e.g., Marshall, supra, at 1015 (holding unambiguous language of policy requires
insured to reside at insured location for coverage); Metro. Prop. & Cas. Ins. Co. v. Pulido, 271
A.D.2d 57, 61, 710 N.Y.S.2d 375 (2nd Dep’t 2000)(holding homeowners policy “only intended
to afford coverage for places where the insured lives”); CastlePoint Ins. Co. v. Kum, 2018 N.Y.
Slip Op. 32275U; 2018 WL 4407537 (N.Y. Cty. 2018)(policy definition of insured location
requires insured to reside at premises as a condition to coverage); Tower Ins. Co. of N.Y. v.
Monroy, 2008 N.Y. Slip Op. 33518U (N.Y. Cty. 2008) (holding clear language of policy
requires insured to reside at insured location for coverage); see also, Tower Ins. Co. of New
York v. Peralta, Index No. 153841/2012 (Sup. Ct. N.Y. County May 20, 2013);1 Tower Ins. Co.
of New York v. Barry, No. 109818/07 (Sup. Ct. N.Y. County July 14, 2009);2 Tower Ins. Co. of
New York v. Lawrence, 2009 NY Slip Op 30274U (Sup. Ct. N.Y. County February 4, 2009);
Tower Ins. Co. of New York v. Said, 2007 NY Slip Op 30724U (Sup. Ct. N.Y. County April 11,
2007), Madera v. Allstate Ins. Co., 12 Misc. 3d 1162A, 819 N.Y.S.2d 210 (Sup. Ct. Kings
County 2006).
1
A copy of the Decision and Order of Hon. Anil C. Singh, dated May 20, 2013, is annexed hereto as Exhibit 1.
2
A copy of the Decision, Order and Judgment of Hon. O. Peter Sherwood, dated July 14, 2019, is annexed hereto as
Exhibit 2.
12
13 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
Since Eaddy admittedly never resided at the Premises, the Premises does not qualify as
an “insured location” as defined by the Mountain Valley Policy. Therefore, Eaddy is not entitled
to coverage under the Mountain Valley Policy for the Underlying Action, and a declaration
should be issued, accordingly.
Additionally, the Policy contains exclusion b., which precludes coverage for bodily injury
“arising out of ‘business’ pursuits of an ‘insured’ or the rental or holding for rental of any
premises by an ‘insured.’” There is an exception to the rental exclusion for the rental of an
“insured location” on an occasional basis. As set forth above, Eaddy did not reside at the
Premises, nor was it rented out on an occasional basis. Rather, all three units of the three-family
premises were rented to tenants. Eaddy even hired a superintendent to assist in the management
of the Premises, which was used solely as an investment property. Thus, the exception to the
exclusion does not apply. Tower Ins. Co. of New York v. Parris, 2013 WL 577804 (N.Y.Sup.),
2013 N.Y. Slip Op. 30278(U)(Feb. 4, 2013) (finding that to the extent that insured did not reside
in the four family premises, but rather used it solely as a rental, coverage would be excluded);
Bleckner v. General Acc. Ins. Co. of Am., 713 F. Supp. 642 (S.D.N.Y. 1989) (holding rental
exclusion is clear and unambiguous); Gardner v. Travelers Prop. Cas. Co. of Am., 2011 WL
2600604 (N.D.N.Y. 2011) (same).
Since Eaddy has admitted that he did not reside at the Premises, but rather that it was
used exclusively as a rental property, with tenants residing in all three living units, the Premises
does not qualify as an “insured location” as defined by the Policy. Therefore, Eaddy is not
entitled to coverage under the Mountain Valley Policy for the Underlying Action, and a
declaration should be issued, accordingly.
13
14 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
POINT IV
THE PROMPT DISCLAIMER REQUIREMENTS OF INSURANCE LAW 3420
DO NOT APPLY WHERE THERE IS NO COVERAGE
UNDER THE POLICY IN THE FIRST INSTANCE
Where a claim falls outside the policy’s coverage, the insurer is not required to
disclaim. Zappone v. Home Ins. Co., 55 N.Y.2d 131, 447 N.Y.S.2d 911, 432 N.E.2d 783
(1982). Where a policy was not intended to provide liability coverage for incidents
occurring in premises the insured owns but does not live in, the issue of a timely disclaimer
is irrelevant. See, State Farm and Cas. Co. v. Guzman, 138 A.D.3d 503, 28 N.Y.S.3d 310
(1st Dep’t 2016), lv denied in part, dismissed in part 28 N.Y.3d 1101; Metropolitan Prop. &
Cas. Ins. Co. v Pulido, 271 A.D.2d 57, 710 N.Y.S.2d 375 (2nd Dep’t 2000).
As set forth above, the Mountain Valley policy describes the “residence premises”
covered by the policy as the Premises. “Residence premises” is defined by the policy, in
relevant part, as “the one family dwelling…where you reside” or the “two, three, or four
family dwelling where you reside in at least one of the family units and which is shown as
the ‘residence premises’ in the Declarations.’”3 By limiting coverage to losses sustained to
the “residence premises,” and by defining that term to include a residency requirement, the
policy’s coverage is dependent on that requirement being met.
In State Farm, supra, the First Department, under similar policy language, concluded
that the homeowner’s policy at issue was not intended to provide liability coverage for
accidents occurring in premises the insured owns but does not live in. Specifically, the Court
held:
3
A certified copy of the Mountain Valley policy is attached to Brownsey Aff. as Exhibit A.
14
15 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
It is undisputed that the named insured under the homeowner’s policy
issued by plaintiff did not reside at the subject premises. Accordingly,
under the terms of the policy, the subject premises was not
covered….Since the policy never provided coverage for these
circumstances in the first place, the timeliness of plaintiff’s disclaimer
is irrelevant.
State Farm and Cas. Co. v. Guzman, 138 A.D.3d 503, supra.
Likewise, in Metropolitan Property & Cas. Ins. Co. v. Pulido, 271 A.D.2d 57, 710
N.Y.S.2d 375 (2nd Dep’t 2000), the Second Department held that there was no coverage in
the first instance if the insured premises did not comply with the policy definition of
“residence premises,” held that no disclaimer was necessary under the circumstances.
Additionally, relying on Pulido, the court in Interboro Ins. Co. v. Fatmir, 89 A.D.3d 993, 933
N.Y.S.2d 343 (2nd Dep’t 2011), similarly held that a disclaimer pursuant to Insurance Law
3420(d) was not necessary because the policy only provided liability coverage to the insured
for premises which he occupied for residential purposes and, “thus, the policy never provided
coverage for the claim at issue.” Id.
Furthermore, in CastlePoint Ins. Co. v. Cantos, 2016 WL 7462712 (N.Y.Sup. Dec. 21,
2016), under almost identical policy language to that at issue here, the court found that policy
exclusion for claims “arising out premises… owned by an ‘insured’ …rented to others by
and ‘insured’…that is not an ‘insured location,’” together with the definition of “insured
location” to include the “residence premises,” or the “two, three or four family dwelling
where you reside in at least one of the family units…” were unambiguous and operate to
require that the insured reside at the premises as a condition of coverage. The court further
found that, based on the policy language, any coverage of the insured is “contingent upon his
residence at the Premises.” Id. Turning to the timelines of Castlepoint’s disclaimer, the
15
16 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
court found that the insured’s claim “falls outside the scope of the Policy’s coverage “the
insured location by definition does not include premises not owned or used as a residence by
Mr. Cantos), the timeliness of Castlepoint’s disclaimer is not an issue.” Id at 10.
Thus, the prompt disclaimer requirements of Insurance Law 3420(d) do not apply
where, like here, the insured admittedly did not reside at the Premises, and thus cannot
satisfy the policy’s residency requirement. Since the Premises does not qualify as a
“residence premises” as defined by the Mountain Valley Policy, there is no coverage for the
Premises under the Mountain Valley Policy for the underlying action in the first instance,
and no timely disclaimer is required.
16
17 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
CONCLUSION
Mountain Valley has presented admissible evidence confirming its entitlement to
default judgment against Defendant, Eaddy, and summary judgment against Defendants,
Eaddy and Gaskin, declaring that Mountain Valley has no duty to defend or indemnify
Eaddy, or any other party, with respect to the Underlying Action. Based on the foregoing,
Mountain Valley respectfully requests that the Court grant its motion in its entirety, together
with such other and further relief as this Court may deem just, proper, and equitable.
Dated: New York, New York
February 11, 2021
Respectfully submitted,
MOUND COTTON WOLLAN &
GREENGRASS LLP
By: /s/ Tania A. Gondiosa___________
Kevin Buckley
Tania A. Gondiosa
Attorneys for Plaintiff
Mountain Valley Indemnity Company
One New York Plaza, 44th Fl.
New York, New York 10004-1901
Tel No.: (212) 804-4200
Fax No.: (212) 344-8066
File No.: 3506.140
17
18 of 19
FILED: NEW YORK COUNTY CLERK 02/11/2021 04:32 PM INDEX NO. 151433/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 02/11/2021
CERTIFICATION OF WORD COUNT
This brief, excluding the caption, table of contents, table of authorities, and signature block,
contains 4,440 words.
/s/ Tania A. Gondiosa
Tania A. Gondiosa
18
19 of 19