TAG 380, LLC v. ComMet 380, Inc.

Summary

The New York Court of Appeals held that a ground-lease provision requiring insurance against specified named perils required coverage for losses caused by terrorism when terrorism resulted in one of those perils. The tenant breached the lease by obtaining a policy expressly excluding terrorism and by failing to timely disclose additional terrorism coverage. The court reinstated the trial court’s judgment awarding the landlord damages and attorneys’ fees.

Holdings

1. The lease required TAG to procure coverage for fire and the other named perils identified in the New York Standard Fire Insurance Policy and Extended Coverage Endorsement, without excluding those perils merely because the loss was caused by terrorism.
2. TAG breached the lease by purchasing insurance that excluded all losses caused by terrorism, including losses resulting from the lease's named perils, and by failing to timely furnish proof of adequate insurance.
3. ComMet was entitled to reimbursement for reasonable damages incurred as a result of TAG's breach, including reasonable costs of procuring coverage to remedy the default.
4. ComMet was entitled to attorneys' fees because section 12.01 of the lease expressly authorized recovery of reasonable attorneys' fees incurred in enforcing rights under or in connection with the lease.

Questions Presented

1. Whether the lease required TAG to maintain insurance covering the specified named perils when the loss resulted from a terrorist act.
2. Whether TAG breached the lease by procuring insurance that expressly excluded terrorism and by failing to timely disclose additional terrorism coverage.
3. Whether ComMet was entitled to recover reasonable damages incurred in procuring replacement coverage and attorneys' fees under the lease.

Disposition

affirmed