City of Elmira v. Selective Insurance
921 N.Y.S.2d 662
N.Y. App. Div.2011Background
- Plaintiff owns the Armory Building, a historic three-story brick structure in Elmira, Chemung County.
- On March 10, 2006, a windstorm caused the southern wall to collapse and exposed structural hazards.
- Hunt Engineers reported the collapse resulted from hidden mortar deterioration and recommended vacating until exterior walls were rebuilt.
- The fire marshal enforced the Property Maintenance Code, finding violations and advising repairs or demolition; demolition was pursued after costs were estimated.
- Plaintiff demolished the undamaged portions and relocated functions by purchasing a replacement building at another site, incurring substantial costs.
- Plaintiff sought coverage under the Ordinance or Law endorsement; the trial court awarded partial sums for demolition and replacement costs, leading to cross appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Ordinance or Law coverage cover demolition costs caused by code enforcement after a covered loss? | Gains demolition costs caused by enforcement. | Coverage limited by policy language; enforcement must be tied to the loss. | Yes, demolition costs are covered if caused by enforcement following a covered loss. |
| Does replacement of the Armory with a different structure fall within the Ordinance or Law increased-cost coverage? | Replacement could be covered as increased-cost to repair/rebuild at a new site. | Increased-cost coverage requires repair/rebuild; replacement of an existing building is not covered. | Replacement of the Armory with an existing building is not covered; only increased costs to repair/rebuild are covered. |
| What amount of demolition costs is recoverable under Ordinance or Law? | Demolition costs should be the actual amounts spent, up to $500,000. | Evidence shows only a council bid of $1,022,000; actual expenditure not proven; cap applies. | Recovery limited to actual demolition costs up to $500,000, with amount to be proven. |
| Is plaintiff entitled to increased construction costs for replacing the Armory at a different site when not repairing the original structure? | Entitled to increased costs if caused by enforcement accommodations. | Not entitled because policy ties increased costs to repair/rebuild at same premises or replacement; purchase of a new building is not covered. | Not entitled to increased construction costs where replacement involves a purchased building rather than repair/rebuild. |
Key Cases Cited
- Pepper v Allstate Ins. Co., 20 A.D.3d 633 (2005) (ambiguous provisions interpreted against insurer)
- State Farm Mut. Auto. Ins. Co. v Glinbizzi, 9 A.D.3d 756 (2004) (policy language interpreted for coverage disputes)
- Matter of Progressive Ins. Cos. [Nemitz], 39 A.D.3d 1121 (2007) (ambiguities resolved in insured's favor)
- Regents of Mercersburg Coll. v Republic Franklin Ins. Co., 458 F.3d 159 (3d Cir. 2006) (federal interpretation of ordinance or law coverage)
- Park City Estates Tenants Corp. v Gulf Ins. Co., 33 A.D.3d 484 (2006) (coverage for costs arising from enforcement of law)
- MarkWest Hydrocarbon, Inc. v Liberty Mut. Ins. Co., 558 F.3d 1184 (10th Cir. 2009) (policy language requiring enforcement link to loss)