Summary
This Appellate Division, Third Department decision reviews a trial court's denial of a motion to dismiss in a breach of contract action brought by a business owner against its insurance carrier. The plaintiff sought over $2 million in lost business income following a fire, while the insurer argued the policy capped coverage at $175,000. The appellate court affirmed the lower court's ruling, holding that the insurance policy's conflicting provisions regarding time limits and monetary caps rendered the coverage terms ambiguous, thus precluding dismissal as a matter of law.
Topics
Practice areas
Questions Presented
- Whether the insurer's motion to dismiss should be granted when the insurance policy is ambiguous as to coverage for loss of business income
- Whether the policy limit of $175,000 applies to the plaintiff's claimed loss of business income
Holdings
- The motion to dismiss was properly denied because the policy is not clear and unambiguous on its face; ambiguity requires denial of the motion and permits extrinsic evidence.
- The policy limit of $175,000 does not control because the coverage provision for loss of business income is ambiguous and not clearly limited to that amount.
Key quotations
“"such motion may be appropriately granted only where the documentary evidence utterly refutes the plaintiff's allegations, conclusively establishing a defense as a matter of law"” (*1)
“"policies of insurance are to be construed liberally in favor of the insured and strictly against the insurer"” (*2)
Factual background
After a fire damaged the plaintiff's business in Fallsburg, Sullivan County, the plaintiff filed a claim for over $2 million in lost business income. The insurer paid only $175,000, asserting that amount was the policy limit. The plaintiff sued for breach of contract, and the insurer moved to dismiss the complaint.
Procedural history
The Supreme Court denied the insurer's motion to dismiss the breach of contract complaint; the insurer appealed the denial.