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Fourth Department Finds Insurance Policy Ambiguous...

In Topor v Erie Ins. Co., 2006 NYSlipOp 03324, the Fourth Department concluded that an insurance policy provision was ambiguous, but nevertheless found in favor of the defendant.  In Topor, the plaintiffs sought to recover for a loss that occurred when the parapet of a building collapsed.  The defendant alleged that the policy excluding damage caused by rotting, and that the parapet collapsed due to rotted mortar joints in the brick wall.  The plaintiff countered that the "rotting" provision only applied only to wood.

The Court set forth the relevant law in regard to interpreting insurance contracts:

(I)t is well established that [a]n exclusion from policy coverage must be specific and clear in order to be enforced; the exclusion must be set forth in clear and unmistakable language'. . . . The burden is on the insurer to demonstrate that the exclusion applies in the particular case and that the policy language relied upon by the insurer in support of the exclusion is subject to no other reasonable interpretation. The construction and effect of a contract of insurance is a question of law to be determined by the court where[, as here,] there is no occasion to resort to extrinsic proof... Any ambiguity in the insurance policy must be resolved against the insurer, its drafter. (Internal citations and quotations omitted.)

The Court applied these principles and determined that the policy was ambiguous in regard to the application of the "rotting" provision, but nevertheless concluded that the plaintiffs failed to establish that the loss fell within the policy terms:

The evidence submitted by plaintiffs in support of their motion established that the collapse was caused by both the deterioration and loosening of the mortar joints in the brick wall based on water infiltration and the freezing and thawing of that water, and by the rotting of the wooden portion of the supporting structure of the parapet. On the record before us, plaintiffs conceded in opposing defendant's cross motion that the policy excludes damage caused by the rotting of wood, and plaintiffs submitted evidence in support of their motion establishing that the loss may have been caused at least in part by the rotting of wood. We thus conclude on the record before us that plaintiffs failed to meet their burden of establishing that the loss was covered under the policy as a matter of law.  (Emphasis added).

Oops.  I suppose that the lesson to be learned is to never concede anything.  Or maybe the lesson is to make sure that your concessions don't undermine your position.  Or perhaps to think before you speak. 

I'm not entirely sure.  But there's a lesson in there somewhere.  And, it's an important one.


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