        SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

698
CA 11-01716
PRESENT: SMITH, J.P., FAHEY, PERADOTTO, SCONIERS, AND MARTOCHE, JJ.


FREDERICK J. PLATEK AND MARY E. PLATEK,
PLAINTIFFS-RESPONDENTS,

                    V                             MEMORANDUM AND ORDER

TOWN OF HAMBURG, ET AL., DEFENDANTS,
AND ALLSTATE INDEMNITY COMPANY,
DEFENDANT-APPELLANT.


KENNEY SHELTON LIPTAK NOWAK LLP, BUFFALO (ALAN J. DEPETERS OF
COUNSEL), FOR DEFENDANT-APPELLANT.

LIPSITZ GREEN SCIME CAMBRIA LLP, BUFFALO (PATRICK J. MACKEY OF
COUNSEL), FOR PLAINTIFFS-RESPONDENTS.


     Appeal from an order of the Supreme Court, Erie County (Ralph A.
Boniello, III, J.), entered May 12, 2011 in a breach of contract
action. The order granted the motion of plaintiffs for summary
judgment, declared that plaintiffs’ loss is covered by the subject
insurance policy, directed defendant Allstate Indemnity Company to pay
plaintiffs’ claim and denied the cross motion of defendant Allstate
Indemnity Company for summary judgment.

     It is hereby ORDERED that the order so appealed from is modified
on the law by vacating the declaration and as modified the order is
affirmed without costs.

     Memorandum: Plaintiffs commenced this action for, inter alia,
breach of contract, alleging that defendant Allstate Indemnity Company
(Allstate) breached its insurance contract with plaintiffs by failing
to provide coverage for water damage to the basement of their home
after an abutting water main ruptured and water flooded their
property. Allstate disclaimed coverage pursuant to an exclusion in
the insurance policy, denominated “item 4,” which states that Allstate
does not cover losses caused by “[w]ater . . . on or below the surface
of the ground, regardless of its source . . . [,] includ[ing] water .
. . which exerts pressure on, or flows, seeps or leaks through any
part of the residence premises.” Plaintiffs moved for summary
judgment, seeking a declaration that the insurance policy covered
their claimed loss and directing Allstate to pay their claim.
Plaintiffs relied upon a provision in the insurance policy setting
forth an exception to the exclusion relied upon by Allstate, which
provides that Allstate covers “sudden and accidental direct physical
loss caused by fire, explosion or theft resulting from item[] . . . 4
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                                                         CA 11-01716

. . . .” Plaintiffs averred that the exception applies because their
claimed loss was caused by an “explosion” of the water main. Allstate
cross-moved for summary judgment dismissing the complaint against it
on the ground that the insurance policy does not cover plaintiffs’
loss.

     Supreme Court granted the motion and denied the cross motion,
declaring that plaintiffs’ loss is covered under the insurance policy
and directing Allstate to pay plaintiffs’ claim in accordance with the
policy provisions. Although we conclude that the court properly
granted summary judgment to plaintiffs on the issue of liability, we
further conclude that the court erred in “declaring” that plaintiffs’
claimed loss is covered under the policy, inasmuch as the action
against Allstate is for breach of contract and not a declaratory
judgment (see Gravino v Allstate Ins. Co., 73 AD3d 1447, 1448, lv
denied 15 NY3d 705). We therefore modify the order by vacating the
declaration.

     The parties disagree with respect to whether the exception to
item 4 under the policy exclusions applies, and they offer conflicting
interpretations of that exception. Allstate characterizes the
exception as an “ensuing loss” provision, and it thus interprets the
exception to provide that any initial loss to the insured’s property
caused by the conditions set forth in item 4, i.e., “[w]ater . . . on
or below the surface of the ground,” is not covered under the policy
but that, in the event that there is an “explosion . . . resulting
from” that initial loss, any secondary or ensuing loss caused by the
explosion is covered. Plaintiffs disagree that there must be a
secondary or ensuing loss, and they assert that the exception applies
because there was an “explosion [of the water main] resulting from”
the conditions set forth in item 4, i.e., “[w]ater . . . below the
surface of the ground,” and causing “sudden and accidental direct
physical loss” to their property.

     In our view, both interpretations are “reasonable” (Pioneer Tower
Owners Assn. v State Farm Fire & Cas. Co., 12 NY3d 302, 308), and we
therefore conclude that the exception “is ambiguous and thus should be
construed in favor of plaintiffs, the insureds” (Trupo v Preferred
Mut. Ins. Co., 59 AD3d 1044, 1045; see generally White v Continental
Cas. Co., 9 NY3d 264, 267; Belt Painting Corp. v TIG Ins. Co., 100
NY2d 377, 383). Contrary to Allstate’s contention, the relevant
language of the insurance policy does not specify that the exception
applies only to a secondary or ensuing loss or that the explosion must
result from a loss to the insured’s property caused by the conditions
set forth in item 4. Rather, the policy states that the exception
applies where the loss to the insured’s property was “caused by [an]
explosion . . . resulting from item[] . . . 4 . . . .”

     We further conclude that plaintiffs established their entitlement
to summary judgment by demonstrating that the exception at issue
applies to their claimed loss (see generally Topor v Erie Ins. Co., 28
AD3d 1199, 1200). The term “explosion” is not defined in the
insurance policy, and we thus “afford that term its ‘plain and
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                                                          CA 11-01716

ordinary meaning’ ” (Gallo v Travelers Prop. Cas., 21 AD3d 1379,
1380). Webster’s Third New International Dictionary defines
“explosion” as “an act of exploding” (Webster’s Third New
International Dictionary 802 [2002]), and to “explode” is “to burst
violently as a result of pressure from within” (id. at 801). Here,
plaintiffs submitted evidence, i.e., the affidavits of plaintiff
Frederick J. Platek and an expert engineer, sufficient to establish as
a matter of law that there was an “explosion” of the water main
abutting their property caused by the build up of pressure therein;
that the pressure in the water main “result[ed] from” the conditions
set forth in item 4, i.e., “[w]ater . . . below the surface of the
ground”; and that the explosion of the water main caused “sudden and
accidental direct physical loss” to plaintiffs’ property. Plaintiffs
thus met their initial burden on the motion, and Allstate failed to
raise a triable issue of fact in opposition inasmuch as it did not
oppose plaintiffs’ factual showing (see generally Zuckerman v City of
New York, 49 NY2d 557, 562).

     All concur except PERADOTTO and MARTOCHE, JJ., who dissent and vote
to reverse in accordance with the following Memorandum: We
respectfully dissent because, in our view, the homeowners insurance
policy at issue specifically excludes plaintiffs’ loss and the
exception to the exclusion relied upon by plaintiffs does not apply.
We would therefore reverse the order, deny plaintiffs’ motion for
summary judgment, and grant the cross motion of defendant Allstate
Indemnity Company (Allstate) for summary judgment dismissing the
complaint against it. We note at the outset that we agree with the
majority that Supreme Court erred in “declaring” that the claimed loss
is covered under the policy because this is a breach of contract
action and not a declaratory judgment action (see Gravino v Allstate
Ins. Co., 73 AD3d 1447, 1448, lv denied 15 NY3d 705). We therefore
also would vacate the declaration.

     Plaintiffs are the owners of certain residential real property in
defendant Town of Hamburg, which property was insured under a policy
of insurance issued by Allstate (policy). The policy provides, in
relevant part, that Allstate does not cover “loss to the property . .
. consisting of or caused by: 1. Flood, including, but not limited
to, surface water . . . [;] 2. Water . . . that backs up through
sewers or drains[;] 3. Water . . . that overflows from a sump pump,
sump pump well or other system designed for the removal of subsurface
water . . . [; or] 4. Water . . . on or below the surface of the
ground, regardless of its source . . . [,] includ[ing] water . . .
which exerts pressure on, or flows, seeps or leaks through any part of
the residence premises” (water loss exclusion). In September 2010,
plaintiffs’ property was damaged when an abutting water main ruptured
and water flooded their property, causing water damage to the basement
of their home. Allstate disclaimed coverage under “item 4” of the
water loss exclusion.

     Plaintiffs commenced this action alleging that Allstate breached
its insurance contract with plaintiffs by failing to provide coverage
for the water damage to their home. Plaintiffs relied upon an
exception to the water loss exclusion (exception), which provides that
                                 -4-                           698
                                                         CA 11-01716

Allstate covers “sudden and accidental direct physical loss caused by
fire, explosion or theft resulting from items 1 through 4,” i.e., the
four categories of water incursion set forth in the water loss
exclusion. Specifically, plaintiffs averred that the exception
applies because their claimed loss was caused by an “explosion” of the
water main. As noted by the majority, plaintiffs moved for summary
judgment seeking a declaration that their loss is covered by the
policy and directing Allstate to pay their claim. Allstate cross-
moved for summary judgment dismissing the complaint against it on the
ground that the policy does not cover plaintiffs’ loss. The court
granted the motion, denied the cross motion, declared that plaintiffs’
loss is covered under the policy and directed Allstate to pay
plaintiffs’ claim in accordance with the policy provisions. We would
reverse, deny plaintiffs’ motion, thus vacating the improper
declaration, and grant the cross motion of Allstate for summary
judgment dismissing the complaint against it.

     It is undisputed that the loss occurred when a water main
ruptured outside plaintiffs’ residence, causing water to enter the
basement of their home. It is therefore further undisputed that the
loss falls within item 4 of the water loss exclusion precluding
coverage for “loss to the property . . . consisting of or caused by .
. . [w]ater . . . on or below the surface of the ground, regardless of
its source . . . [,] includ[ing] water . . . which exerts pressure on,
or flows, seeps or leaks through any part of the residence premises.”
“[B]ecause the existence of coverage depends entirely on the
applicability of [an] exception to the [water loss] exclusion,”
plaintiffs bear the burden of demonstrating the applicability of the
exception (Borg-Warner Corp. v Insurance Co. of N. Am., 174 AD2d 24,
31, lv denied 80 NY2d 753; see Hritz v Saco, 18 AD3d 377, 378;
Redding-Hunter, Inc. v Aetna Cas. & Sur. Co., 206 AD2d 805, 807, lv
denied 86 NY2d 709).

     In construing an insurance contract, the “parties’ intent is to
be ascertained by examining the policy as a whole, and by giving
effect and meaning to every term of the policy” (Oot v Home Ins. Co.
of Ind., 244 AD2d 62, 66 [internal quotation marks omitted]; see
Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 221-
222 [“We construe the policy in a way that affords a fair meaning to
all of the language employed by the parties in the contract and leaves
no provision without force and effect” (internal quotation marks
omitted)]). “[W]ords and phrases are to be understood in their plain,
ordinary, and popularly understood sense, rather than in a forced or
technical sense” (Oot, 244 AD2d at 66). “Where the provisions of the
policy are clear and unambiguous, they must be given their plain and
ordinary meaning, and courts should refrain from rewriting the
agreement” (United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229,
232 [internal quotation marks omitted]).

     Unlike the majority, we conclude that, when viewing the policy as
a whole, the claimed loss is not covered under the clear and
unambiguous language of the policy. Plaintiffs did not purchase, and
Allstate did not provide, what may generally be characterized as flood
insurance. The water loss exclusion broadly exempts from coverage
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                                                         CA 11-01716

losses consisting of or caused by the entry of water into the insured
premises “regardless of its source.” The exception to that exclusion
covers “sudden and accidental direct physical loss caused by fire,
explosion or theft resulting from items 1 through 4 listed above”
(emphasis added), i.e., the four types of excluded water events. In
our view, the exception should not be construed as intending to create
coverage for water intrusion inasmuch as such a reading of the
exception would supplant the water loss exclusion (see generally Narob
Dev. Corp. v Insurance Co. of N. Am., 219 AD2d 454, lv denied 87 NY2d
804). Rather, we agree with Allstate that the exception is properly
characterized as an “ensuing loss provision,” excluding from coverage
any initial loss to the insured’s property caused by “[w]ater . . . on
or below the surface of the ground,” but covering secondary or ensuing
loss caused by fire, explosion or theft that occurs as the result of
an excluded water event (see id. [“Where a property insurance policy
contains an exclusion with an exception for ensuing loss, courts have
sought to assure that the exception does not supersede the exclusion
by disallowing coverage for ensuing loss directly related to the
original excluded risk”]).

     As noted above, the exception provides that Allstate covers
“sudden and accidental direct physical loss caused by fire, explosion
or theft resulting from” the entry of water into the residence as
described in items 1 through 4 of the water loss exclusion. The
phrase “resulting from” in the exception does not mean “caused by,”
nor should it be interpreted in that manner. Indeed, interpreting the
exception to cover a loss where an explosion is caused by water
outside the residence, as plaintiffs urge, contravenes the purpose of
the water loss exclusion, which is to preclude coverage for losses
caused by water entry into the residence (see ITT Indus. v Factory
Mut. Ins. Co., 303 AD2d 177, 177 [rejecting plaintiff’s “untenable
interpretation that the policy provided coverage for a resulting loss
of an excluded risk”]). Rather, the language “resulting from” is
properly interpreted as referring to an “ensuing loss,” i.e., a loss
that follows or takes place after an excluded event (Goldner v Otsego
Mut. Fire Ins. Co., 39 AD2d 440, 442; see Narob Dev. Corp., 219 AD2d
at 454). In other words, the exception refers to a separate
occurrence—fire, explosion or theft—that results from the water damage
to the residence, and does not refer to the water damage itself. For
example, a fire or explosion triggered by water damage to a circuit
breaker or appliance, or a theft that occurs in an empty house
rendered uninhabitable by water damage would constitute an ensuing
loss. Our interpretation of the phrase “resulting from” is consistent
with the dictionary definition of “resulting” (“[t]o come about as a
consequence,” “synonym[]” to follow), or “resultant” (“[i]ssuing or
following as a consequence or result”) (The American Heritage
Dictionary 1487 [4th ed 2000]). Thus, in our view, the only
reasonable interpretation of the exception is that it covers losses
caused by fire, explosion or theft that follows one of the excluded
water events set forth in items 1 through 4 of the water loss
exclusion.

     Given the nature of the water loss exclusion, we discern no other
plausible way to read the exception. The water loss exclusion is for
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                                                         CA 11-01716

loss “consisting of or caused by” water intrusion; the coverage in the
exception is for loss “direct[ly] . . . caused by” fire, explosion, or
theft that “result[s] from” water intrusion. In order to adopt
plaintiffs’ interpretation, we would have to read the exception to
cover a loss caused by an explosion that in turn is caused by water.
The difficulty with that interpretation is exposed when the same
interpretation is applied to a loss from “theft,” also a part of the
exception. Under plaintiffs’ interpretation, the exception covers a
loss caused by a theft that is caused by water—an illogical, if not
absurd, reading. The weakness of plaintiffs’ proposed interpretation
is further exposed in reviewing the exception that covers “sudden and
accidental direct physical loss caused by . . . theft . . . resulting
from earth movement.” Theft cannot be “caused” by earth movement,
although theft might logically follow an earthquake if, for example,
the door to the residence is damaged, the windows are shattered, or
the house is rendered uninhabitable by the earthquake.

     Because, in our view, plaintiffs’ interpretation of the exception
is unreasonable, we would reverse the order, deny plaintiffs’ motion
for summary judgment, thus vacating the improper declaration, and
grant Allstate’s cross motion for summary judgment dismissing the
complaint against it.




Entered:   July 6, 2012                         Frances E. Cafarell
                                                Clerk of the Court
