Court Dismisses Commercial Property Coverage Claim Based on Spoliation of Evidence
Case Study

Court Dismisses Commercial Property Coverage Claim Based on Spoliation of Evidence

In an insurance coverage dispute stemming from the collapse of a commercial building in Kingston, New York, Goldberg Segalla partner Jonathan Schapp and associate Adam R. Durst earned summary judgment for General Casualty Company of Wisconsin (GCCW), dismissing a complaint that reached $440,000 with interest.

The plaintiff was seeking coverage under a commercial property policy issued by GCCW. The property owner alleged that building damage had resulted from an improperly performed plumbing job. After investigating, GCCW found the loss was caused by a leak in the kitchen, which caused significant rot damage to the sub-floor and floor joists. Due to the extent of the damage, GCCW concluded that the leak had been occurring for months and disclaimed coverage due to its exclusion for damage caused by “continuous or repeated seepage or leakage of water … that occurs over a period of 14 days or more.” GCCW also denied coverage based on the policy’s provision barring coverage for damage caused by wet rot.

Over six months later, the plaintiff’s adjuster demanded that GCCW reopen its claim, asserting that “the loss was reported incorrectly by the insured, since the floor has collapsed into the crawl space, taking the exterior walls with it.” The adjuster also stated that the “collapse” was not subject to the policy’s provisions.

Jonathan and Adam, members of the firm’s Global Insurance Services practice based in the firm’s Buffalo and Manhattan offices, argued that neither the plaintiff nor the adjuster had produced any documentation supporting their assertion that the loss was a “collapse” or that the exclusions in its disclaimer didn’t apply. They further argued that the plaintiff demolished the premises without adequate notice to GCCW, thus precluding it from inspecting and assessing the claims.

On August 31, 2020, the U.S. District Court for the Northern District of New York granted summary judgment, finding that the plaintiff’s demolition of the building during litigation constituted spoliation and mandated dismissal of the complaint, and that the loss was barred by the cited exclusions within GCCW’s policy.


 

 

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