1840 Concourse Associates LP v. Praetorian Insurance Company f/k/a Insurance Corporation of Hannover, 2011 N.Y. Slip Op 08468 (1st Dep’t November 22, 2011)

A unanimous 5-Judge panel affirmed the Order and Decision of Justice James A. Yates of Supreme Court, New York County which held that plaintiff’s claim for replacement cost holdback under defendant’s fire insurance policy was barred by the two-year limitations period and the 180 day claim notification requirement.

The action concerned a claim for a Replacement Cost Holdback relating to fire damage incurred on February 9, 2007. Plaintiff prepared a damage estimate calculating the value of the damage to the property under the Replacement Cost Value (“RCV”) method in an amount in excess of $2.5 million. Plaintiff then submitted a Sworn Statement in Proof of Loss, indicating the Actual Cash Value (“ACV”) of the fire damage of approximately $2 million, as well as a Replacement Cost Holdback amount of more than $500,000, reflecting the fact that the damage had not yet been repaired or replaced. Within the month, plaintiff was paid the ACV of the damaged property.

In April, 2009, twenty-six months after the occurrence of the fire, plaintiff notified defendant that the repairs had been made and demanded payment of the holdback amount. The claim was denied as untimely, as plaintiff had not notified the insurer of its intent to file for the holdback within 180 days, as required by the policy. In August, 2009, plaintiff sued to recover the holdback amount.

Justice Yates granted summary judgment to the insurer, on the basis of the expiration of the policy’s two year to sue provision, as well as the insured’s failure to comply with the 180 day notification provisions. In doing so, he specifically rejected the insured’s argument that the parties had made a “separate and distinct contractual agreement, apart from the policy” in the Proof of Loss to which neither the policy’s 180 day notification provision nor the two year to sue provision applied.

On appeal, the Appellate Division unanimously agreed that the policy provisions applied and that plaintiff’s action was untimely as it had been commenced after the expiration of the policy’s two year to sue period.