Did Insurer Improperly Withhold Coverage for Building After Hurricane?

Landlord sued its property insurance provider, seeking damages for a claimed breach of the insurance policy. Landlord claimed that its insurer refused to pay coverage after Hurricane Irene damaged the building in 2011. The court denied the insurer's request to dismiss the complaint and denied landlord's request to grant summary judgment in its favor.

Both sides appealed and lost. The trial court properly denied landlord's summary judgment motion on its breach of insurance contract claim because the insurer raised triable issues of fact as to whether Hurricane Irene directly caused some or all of the property damage landlord sought coverage for, or whether preexisting wear and tear and/or prior maintenance work and repairs had contributed to the damages. And the trial court didn't abuse its discretion by denying the insurer's request to dismiss the complaint as a sanction for landlord's destruction of evidence because the trial court alternatively ordered landlord to expeditiously furnish many of the discovery items that were in dispute. These items included relevant leases and rent rolls for those specific tenants living in building apartments identified as having been damaged as a result of the hurricane.

25 Bay Terrace Assoc., L.P. v. Public Serv. Mut. Ins. Co.: App. No. 2016-04867, 2016-10842, Index No. 150345/13, 2021 NY Slip Op 02776 (App. Div. 2 Dept.; 5/5/21; Dillon, JP, Hinds-Radix, Duffy, Wooten, JJ)