Defendant insurer denied coverage to plaintiff homeowner after her house collapsed. The homeowner brought this declaratory judgment action. The insurer moved for summary judgment, which was denied by Supreme Court, Nassau County. The Appellate Division reversed.

Under ahomeowners insurance policy effective from April 12, 2004 to April 12, 2005, the defendant, Merrimack Mutual Fire Ins. Co., insured the plaintiffs home in Valley Stream. During the coverage period, the plaintiffs house suffered extensive damage when the concrete slab foundation that supported the house settled, sank, and cracked. The plaintiff made a claim to the insurer pursuant to the policy for the loss sustained as a result of the collapse of the premises. However, the insurer disclaimed coverage for the loss based upon language in the insurance policy which excluded losses, inter alia, due to earth movementearth sinking, rising or shifting and due to the settling, shrinking, bulging, or expansion, including resultant cracking, of pavements, patios, foundations, walls, floors, roofs, or ceilings.

In 2005 the plaintiff commenced this action against the insurer seeking a judgment declaring that the insurer is obligated to reimburse the plaintiff for the damage to her property.The insurer moved for summary judgment declaring that it is not obligated to reimburse the plaintiff for the subject loss to her property, and the plaintiff cross-moved for summary judgment on the issue of liability, arguing that the house collapsed as the result of hidden decay, a peril that was covered under the insurance policy.

Specifically, the plaintiffs engineer concluded that the slab foundation partial[ly] collapsed as a result of decayed wood in the earth beneath the foundation, which created a void in the soil and the resultant collapse of the foundation.

The Appellate Division held, Courts bear the responsibility of determining the rights or obligations of parties under insurance contracts based on the specific language of the policies, whose unambiguous provisions must be given their plain and ordinary meaning. As such, an exclusion from coverage must be specific and clear in order to be enforced, and an ambiguity in an exclusionary clause must be construed most strongly against the insurer. The plain meaning of the policys language may not be disregarded in order to find an ambiguity where none exists.

Insurer Shows Loss Falls Under Exclusion

In this casethe insurer met its initial burden of establishing its entitlement to judgment as a matter of law by demonstrating that the exclusion clearly and unambiguously applies to the plaintiffs property loss. The plain language of the exclusion was to relieve the insurer from loss or damage to covered property caused directly or indirectly by earth movement, meaning earthquake, landslide, mine subsidence, mudflow, earth sinking, rising or shifting. The policy similarly does not insure for settling, shrinking, bulging, or expansion, including resultant cracking offoundations, walls, [or] floors. Losses due to earth movement are excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.

Here, the loss was attributable to the resultant earth movement and sinking, even though the movement was precipitated, at least in part, by decayed wood in the earth beneath the foundation slab. In opposition, the plaintiff failed to raise a triable issue of fact.

Although it is not unreasonable for insureds to have an expectation that their insurance policy would provide coverage for their losses, particularly where premiums are paid and losses are as significant as that sustained by this homeowner plaintiff, we are nonetheless constrained to conclude that this policys language specifically excluded coverage for damages resulting from earth movement even though the cause of the earth movement is a covered peril.

Comment: Most significant about this decision, I think, is the last sentence quoted " that even if the earth movement is caused by a covered peril, there is still no coverage.

Cali v. Merrimack Mut. Fire Ins. Co., 2007 NY Slip Op 06415 (Appellate Division, Second Department)