The Seaport Park Condominium is a seven-story residential structure located at 117 Beekman
Street in Manhattan. On January 12, 2004, the pipes of that building's cooling tower froze and burst.
The condo contacted its insurance carrier -- Greater New York Mutual Insurance Company (GNY) -- and an adjuster was dispatched to inspect the tower. After an initial site visit, the adjuster advised that an additional inspection would be required to conclusively determine whether or not the damage was a "covered loss."
Although it was agreed that the tower could be removed and replaced, the condo and its contractors specifically represented that the old tower would be stored in a safe place. Of course, before GNY could complete its investigation of the loss, the defective tower was inexplicably destroyed. As a result, the insurance company disclaimed coverage and litigation in the New York County Supreme Court ensued.
The insurer moved to dismiss the case alleging that a necessary condition precedent -- preservation of the cooling tower -- had been breached. After the Supreme Court's denial of the motion, GNY appealed to the Appellate Division, First Department, which reversed. The thrust of the appellate court's analysis follows:
The failure to preserve the cooling tower is no mere technicality. The interpretation of an insurance contract, as noted, presents a question of law ... and a court is not free to "make or vary the contract of insurance to accomplish its notions of abstract justice or moral obligation" .... The condition at issue here, i.e., the obligation to preserve the damaged cooling tower, is clear and unambiguous and stated in unmistakable language. Thus, it constitutes an express condition precedent ... that must be literally complied with before plaintiff may recover .... Since compliance with the requirement is a condition precedent to coverage, the insurer need not show prejudice .... That plaintiff was only required to preserve the tower "if feasible" does not warrant a different conclusion. Preservation was not only feasible here, it was expressly agreed to by plaintiff.
Noncompliance with the contract's requirements precluded a recovery against the insurer and mandated dismissal of the claim made against GNY.
If only cooler minds had prevailed ....
For a copy of the Appellate Division's decision, please use this link: Seaport Park Condominium v. Greater N. Y. Mut. Ins. Co.