The Supreme Court-New York addressed a case where an insured sued an insurer after the insurer denied its claim for water damage to a restaurant caused by frozen pipe bursts in sprinkler pipes and domestic water lines. In Arrpei LLC v. Public Service Mutual Insurance Company (“Public Service”), the court granted summary judgment to the insurer on the basis that the policy’s Vacancy and Water Damage Provisions precluded coverage because it was undisputed that the restaurant had been vacant and without heat for several months before the loss.
The facts regarding the loss are straightforward. Public Service’s policy contained a water damage exclusion for frozen domestic pipe lines that barred coverage for water damage from pipes unless heat was maintained in the building or the system was drained and shut off if heat was not maintained. The policy also included a Vacancy Provision that excluded coverage for water damage if the building where the loss occurred was vacant for more than 60 consecutive days before the loss occurred, as well as damage caused by sprinkler leakage, unless the system is protected from freezing. The insured reported a loss in January of 2014 claiming that severe cold weather had resulted in water damage throughout the premises. The insurer then retained an engineer to investigate the cause of the loss. He inspected the property and reviewed records, including the natural gas meter readings, the Fire Marshal’s report, and repair records.
The engineer’s investigation found that the gas meter readings showed that there was little to no gas usage in the months before the loss. The engineer concluded that the sprinkler lines and domestic water lines had frozen and burst because heat was not being maintained in the building. This conclusion was supported by the EUO testimony of the insured, who could not identify anything specific that had been done to ensure the building was being heated or winterized. She also testified that she had not kept track of the gas usage, did not visit the property between the closing of the restaurant in July of 2013 and the loss in January 2014, and did not know if the thermostat was turned on during that time.
Citing well-established law, the court pointed out that while it is the insurer’s duty to prove that an exclusion applies, it is the insured’s burden to prove that an exception to an exclusion applies. Looking at the factual record, the court held that Public Service met its burden of proof that the building was unoccupied and the damages were caused by water that discharged when the pipes froze. It also found that it was undisputed that the property was vacant after it stopped operating as a restaurant on July of 2013. Examining the facts in favor of the insured to determine whether an exception to the exclusion could be supported, the court held that the insured had not proffered any evidence to raise an issue of fact as to whether reasonable care was used to maintain heat on the building. Accordingly, summary judgment was entered in favor of the insurer.
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