Misleading? Maybe. Malicious? No.
Louis Magnano was insured under a homeowners policy issued by Allegany Co-Op Insurance Company that included coverage for water damage. Magnano notified Allegany that a water leak in the second floor master bathroom of his house caused extensive damage. He submitted a sworn statement in proof of loss, which contained a description of the damage and a contractor’s estimate of the cost to repair the damage, and a claim of loss in the amount of $72,748.
Allegany denied the claim on, among other things, the grounds that the claim was inflated and that prior damage to the house was not disclosed to Allegany.
The county supreme court granted Allegany’s motion for summary judgment and dismissed the claim against it. Magnano appealed.
On appeal, the state supreme court reversed the county supreme court’s judgment. The court agreed with Magnano that Allegany failed to meet its initial burden on its motion of establishing as a matter of law that the claim was inflated. The court cited case law that held that a policy may be voided if the insured “willfully and fraudulently placed in the proofs of loss a statement of property lost which [the insured] did not possess, or placed a false and fraudulent value upon the articles which [the insured] did own.” The court then cited another case in which it was ruled that “Incorrect information is not necessarily tantamount to fraud or material misrepresentation as the insurer must tender ‘proof of intent to defraud …’”
In this case, the court held that, although Allegany’s submissions in support of its motion demonstrated a disparity between the estimates of Magnano’s contractor and Allegany’s assessor of the amount of damage and loss, the submissions failed to establish fraudulent intent on the part of Magnano.
To the extent that the lower court based its determination on the finding that Magnano’s inclusion in his claim of cabinets to replace those not damaged by water in this event vitiated the policy and prohibited Magnano from recovering under the policy, the state supreme court noted that neither the estimate of Magnano’s contractor nor Magnano’s proof of loss statement specified an amount for replacement of the cabinets.
Finally, the court held that Allegany failed to meet its burden of establishing as a matter of law that Magnano breached the terms of the policy by failing to disclose a previous claim that he submitted for prior damage to the house, so the burden never shifted to Magnano with respect to that issue.
The lower court’s order was reversed, the motion was denied, and the complaint against Allegany was reinstated.
Magnano v. Allegany Co-Op Insurance Company—New York Supreme Court, Appellate Division, 4th Department—October 2, 2020—No. CA 19-01333.