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A federal judge in New York on Friday ruled in favor of a CNA Financial Corp. subsidiary in a case of a Brooklyn, New York, shopping center that had electrical equipment damaged during Superstorm Sandy but refused to dismiss a separate case against a Chubb Ltd. subsidiary involving damage to the same plaintiff’s building.
The disputes arose in the aftermath of the massive storm that made landfall in New York and New Jersey on Oct. 29, 2012 and involves damage sustained by a shopping center located at 7001 E. 71st St. in Brooklyn.
The shopping center was insured by various policies, court documents said, including a $3 million commercial policy issued by Chubb subsidiary Chubb Custom Insurance Co. that insured the building, and a $5 million policy issued by a CNA subsidiary Continental Casualty Co. that covered equipment in the building, including electrical equipment in the walls and basement.
After the storm, the owner of the shopping center, 7001 E.71st Street L.L.C., filed claims for lost profits and property damage, maintaining the damage was caused by rainwater entering the building through the openings in the roof caused by the storm.
Both insurers denied coverage, and the owner sued for breach of contract in 2013. The two insurers moved for a summary judgment, citing their respective policies’ exclusions for flooding, and Continental also cites its exclusions in its policy for wind, corrosion, and fire.
Chubb also argued that the plaintiff could not prove the rainwater caused the damage and could not show the cost to repair the shopping center or the cost of its business interruption loss.
In his ruling in 7001 East 71st Street L.L.C. v. Continental Casualty Co., U.S. District Judge Raymond Dearie wrote: “The Court concludes that because Continental’s policy excluded coverage for damage caused by wind and flooding, and that the damage to electrical equipment insured by Continental was at least partially attributable to these hazards, Continental’s policy excludes coverage. As such Continental’s motion for summary judgment is granted.”
Judge Dearie wrote that “because an excluded event, wind, contributed sequentially to the event that caused the covered equipment to break down, the damage is not covered by the Continental Policy.”
However, in his ruling in 7001 East 71st Street L.L.C. v. Chubb Custom Insurance Co., the judge found that the Chubb’s policy excluded coverage for flooding but does not exclude coverage for wind or rainwater.
“Because a fact finder could reasonably attribute some damage solely to a covered hazard,” Judge Dearie wrote, “there are lingering issues that make summary judgment inappropriate. Chubb’s motion for summary judgment is therefore denied.”
A spokesperson for Chubb declined to comment.
The New York Supreme Court has rejected the latest in an ongoing effort by a commercial property owner and developer to obtain insurance coverage in connection with 2012's Superstorm Sandy.