On April 3, 2013, the Supreme Court of New York granted an insurer’s motion for summary judgment in part, declaring the insurer had no duty to defend and indemnify its insured in an underlying claim because the insurance policy did not cover the portion of the property where the accident occurred. Seneca Ins. Co. v. Cimran Co, 963 N.Y.S.2d 182 (App. Div. 1st Dep’t 2013).
Following a construction accident on its property, Cimran Company (“Cimran”), filed a claim with its insurer, Seneca Insurance Company (“Seneca”). Upon receiving the claim, Seneca reserved its rights to disclaim coverage and/or rescind the policy, stating that further investigation of the claim was needed. Shortly thereafter, Seneca sent Cimran a notice of cancellation, and cancelled the policy because the building was currently under construction.
Next, Seneca filed a declaratory judgment action, seeking a declaration that it had no duty to defend Cimran in the underlying action because the accident did not take place at the “designated premises” covered in the policy, and a declaration that the policy was void ab initio based on the defendants’ material misrepresentations. Cimran argued that the accident occurred in the “designated premises” and that Seneca’s cancellation of the policy effectuated a waiver of the rescission claim, or estopped it from seeking rescission of the policy. Both sides moved for summary judgment, and the motion court denied the motions.
On appeal, the court ruled that the “designated premises” in the policy was limited to the one-story building which existed when the policy was issued. Since the accident occurred on the steel framing of the fourth floor of the construction site, the court found there was no coverage under the policy. Consequently, the Appellate Division held that the denial of Seneca’s cross motion should be modified to the extent of declaring that it had no duty to defend and indemnify Cimran in the underlying personal injury action.
With respect to a declaration that the policy was void ab initio based on Cimran’s material misrepresentations, the court held that the cross motions for summary judgment on this issue were properly denied. In particular, the court held that there is an issue of fact regarding whether or not Cimran was contemplating performing construction work on the property when the policy was issued and whether Cimran made material misrepresentations on the insurance application.
Dissenting in part, the Hon. Abus-Salaam argues that summary judgment on the duty to defend and indemnify was properly denied because the documents submitted in support of plaintiff’s position were only verified by counsel, who had no personal knowledge of the location of the accident. He argues that these statements “fail to qualify as proof in admissible form,” and, thus, plaintiff failed to make a prima facie showing of entitlement to summary judgment. The majority notes that these same documents formed the basis for defendant’s claim for insurance coverage, and, as such, there is no reason why the court cannot hold, as a matter of law, that those documents fail to establish a valid basis for coverage under the purchased policy.
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