'Earth movement' exclusion does not apply to building cracks caused by excavation.
Plaintiff's building sustained damage to its foundation, interior walls, floors, and ceilings sometime in the summer of 2004 as a result of the excavation and construction work performed adjacent to the plaintiff's building.
The plaintiff submitted a claim to State Farm seeking coverage for the damage and State Farm denied coverage based upon an "earth movement" exclusion contained in the policy. The plaintiff's expert report, by engineer Simon Weiming Wu, P.E., of Simon Hometech Inc., dated September 17, 2004, stated that upon inspection of the plaintiff's building, the engineer found cracks in the walls, ceilings, windows, foundation, open joints at the cement coping of the rear roof between the bearing wall and driveway, as well as slanted doors of bathrooms and bedrooms. Wu concluded that the cracks, which occurred after the neighboring underpinning operation was completed, indicate that severe flaws must have been committed during the underpinning operation. Wu stated that underpinning was built to prevent the settlement and movement of the existing adjoining foundation.
The defendant's expert report, by Paul J. Angelides, P.E., dated October 22, 2004, stated that upon inspection of the plaintiff's building, a three-story plus basement, brick masonry 21 unit apartment building, he observed construction work in progress on the property located immediately to the right of the plaintiff's building. Angelides stated that he observed visible cracks on the building's foundation wall, driveway, ceiling and siding, as well as interior cracks of the building. Angelides stated that the condition of the cracks was consistent with the recent excavation work being performed adjacent to the plaintiff's building. Angelides stated that the absence of lateral and subjacent support would have caused soil movement under the foundation of the plaintiff's building, thereby creating building movement that resulted in the development of the observed cracks. Angelides concluded that the soil movement was the result of the failure of the contractor to provide adequate lateral and subjacent support of underpinning during excavation work for the foundation of a new building being constructed on the adjoining property.
State Farm, by way of letter dated November 1, 2004, determined that the damage sustained to plaintiff's building was not covered under the policy and referred to the following exclusion:
LOSSES NOT INSURED
1. We do not insure under any coverage for any loss which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to produce the loss:
b. earth movement, meaning the sinking, rising, shifting, expanding or contracting of earth, all whether combined with water or not. Earth movement includes but is not limited to earthquake, landslide, erosion and subsidence but does not include sinkhole collapse.
State Farm notified plaintiff that since the building being built adjacent to plaintiff's building undermined plaintiff's property "due to earth movement," no payment could be made to plaintiff for this claim.
The court wrote, "The plaintiff argues, inter alia, that during excavation, the soil was 'removed', and therefore, the earth did not move naturally. Rather, plaintiff sets forth that the earth moved as a result of the intentional and negligent conduct of the neighboring contractor, a third party. Therefore, the 'earth movement' exclusion does not apply.
"The defendant argues that this distinction by plaintiff is without merit because the earth did in fact move during excavation. The defendant submits that the damages sustained to plaintiff's building was caused by 'movement and shifting' of the earth which is clearly excluded by the terms of the insurance policy. Additionally, the defendant submits that the policy states that the exclusion applies to losses involving earth movement resulting from 'man-made or external forces.'
"The circumstances at bar are most exact to the circumstances before the recent Second Department decision in Lee v. State Farm Fire & Casualty, 32 AD3d 902. In Lee v. State Farm, the Second Department found that the insured's loss was caused during excavation and underpinning operations on the adjoining lot and therefore, did not fall within policy's earth movement exclusion. Here, as in Lee, the State Farm exclusion defined 'earth movement' as 'sinking, rising, shifting, expanding, or contracting of earth, all whether combined with water or not.'
"The court in Lee v. State Farm distinguished the facts in Lee from prior precedent, to wit, Sheehan v. State Farm Fire (z Casualty Co., 239 AD2d 486, and Kula v. State Farm Fire & Casualty, 212 AD2d 16. The court in Lee stated that in Sheehan, the same earth movement exclusion involved a loss where the insured's house collapsed as a result of the 'decomposing organic matter within the ground underneath the foundation: In Kula, the loss occurred when a 'water pipe ruptured beneath their home: The court in Lee stated that the facts in Kula and Sheehan involved a 'sinking' of the ground, whereby the facts in Lee involved the physical removal of earth by excavation from underneath the plaintiff's dwelling, and therefore, the court reasoned that plaintiff's loss did not fall within the language of the exclusion which defined earth movement as 'sinking, rising, shifting, expanding or contracting of earth.'
"Likewise, here, the plaintiff's loss involved the physical removal of earth from underneath the plaintiff's building during excavation and underpinning operations on the adjoining lot, and therefore, the plaintiff's loss does not fall within the 'earth movement' exclusion.
"In light of the foregoing, plaintiff's motion for summary judgment against State Farm on the issue of liability for breach of contract is granted. The defendant's crossmotion for summary judgment is denied. The defendant's argument that the loss is excluded on the settling and cracking exclusion, and/or the defective construction exclusion, is unavailing."
Pioneer Tower Owners Association v. State Farm Fire & Casualty Co., NYLJ 4/11/07 (Supreme Court, Nassau Co.) (Feinman, j) (Index no. 5575/05)
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|Title Annotation:||COURTSIDE IN NEW YORK|
|Author:||Rogak, Lawrence N.|
|Date:||Apr 23, 2007|
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