Upon the foregoing papers, it is ordered that the motion by the plaintiffs James C. Markotsis, Scott Abraham, Douglas Lieberman, Jeffery Frankel, George Katsoulaki, David Siegel, James Kalaitzis, Mike Brody, Ron Cooperman, and Andrea Madison for an order pursuant to (1) CPLR 3212 for summary judgment on its first cause of action for breach of contract; and (2) CPLR 3025, amending the ad damnum clause by increasing the amount demanded from $300,000.00 to $330,000.00 is granted to the extent indicated below.

The cross- motion by the defendant Zurich Insurance Company, d/b/a Zurich Assurance Company of America, also d/b/a Zurich North America, for summary judgment dismissing the complaint is denied.

In April of 2006, a ten-unit apartment building owned by non-party Sirgany, Inc ["Sirgany"] and located in Monticello, New York was destroyed by fire (Gartner Aff., ¶¶ 3-4; Exhs., "3-4").

Prior thereto, in May of 2005, Sirgany had purchased a so-called "Builders Risk" property insurance policy from defendant Zurich Insurance Company ["Zurich" or "the defendant"], which was effective during the ensuing, one-year [*2]period ending in May of 2006 (Gartner Aff., Exh., "2").

Before the April, 2006 fire occurred, Sirgany had been performing renovations to the property and obtained funding for the project from the plaintiffs the repayment of which was secured by a "mortgage note" given by Sirgany to the plaintiffs in the principal amount of $330,000.00 (Gartner Aff., ¶¶ 5-6; Exh., "1").

Notably, the declarations page of the Zurich policy contains a paragraph "5" entitled,"Limits of Insurance," which incorporates a subheading under which various "check off" type option boxes are located. The foregoing subparagraph permits the reader to select the type of structure to be insured and includes option boxes for, inter alia, "1-12 Family dwelling" or "commercial structure." The latter option box "commercial structure" was checked off by the carrier (Gartner Aff.,¶ 2; Exh., "2").

The policy itself defines covered property, in part, as property which "has been installed, or is to be installed in any commercial structure and/or any one (1) to twelve (12) family dwelling * * *" (Gartner Aff., Exh., "2"; Policy, § A1[a] "ACT" 0274 at 1). The term "commercial structure" is not defined in the policy.

Section E of the policy ("Additional Conditions") includes a key subparagraph 3 entitled, "WHEN COVERAGE ENDS AND BEGINS," which provides in substance that coverage would automatically terminate if the property is leased and/or occupied in certain stated percentages which vary depending on the type of property insured (Gartner Exh., "2" Policy, ACA 283-284, at 10-11).

If the property is a "multiple dwelling," coverage would terminate when "50% or more of the units in the dwelling are leased or rented to others" whereas if the property constitutes a "commercial structure," coverage would cease "when 75% or more of the square footage space is leased or rented to others" (Gartner Aff., Exh., "2"; Policy, § E3[c][2], [3], ACA 284, at 10-11).

The "Coverage Form" portion of the policy in which the above-referenced conditions are located, contains an introductory paragraph which provides that "[this form is subject to the information in the Declarations and the Policy Conditions, Schedules, and Endorsements" (Gartner Exh., "2"; ACT 274 at 1).

Within a week of the fire, Signay through its public adjuster notified Zurich of the loss and made a claim under the policy (Gartner Aff.,¶¶ 15-16; Exhs., "5-6").

In September of 2006, Zurich replied and advised that it had recently acquired information indicating that six of the ten apartments in the building may have been leased prior to the fire, thereby raising a question as to whether coverage existed under the above-quoted occupancy conditions (Gartner Aff., Exh., 8). The [*3]Zurich letter further advises that it would be reserving its rights with respect to the claim but that it would "promptly and diligently" attempt to resolve the issue and keep Sirgany apprised of its progress.

Sirgany's adjuster replied, asserting that Zurich's claims with respect to the alleged 60% rental of the property were incorrect.

The plaintiffs assert that Zurich neither responded to the above follow-up letter nor formally disclaimed coverage based upon the alleged 50% occupancy condition referenced in its reservation of rights letter (Gartner Aff., ¶ 26).

The plaintiffs who are also additional insureds under the policy further assert that in September of 2006, because of the fire damage and resulting loss of income, Sirgany was "forced to sell the property through a foreclose sale" for the sum of only $69,106.00 after which a deficiency judgment in the amount of $338,619.49 was entered (Cmplt., ¶¶ 12-14).

By summons and verified complaint dated March of 2007, the plaintiffs commenced the within action alleging, inter alia, that Zurich breached the subject policy by refusing to pay the claim, thereby entitling them to damages in the principal sum "of over $300,000.00" (Gartner Aff., Exh., "10").

Zurich has answered, denied the material allegations of the complaint, and interposed several affirmative defenses, including a defense generally predicated upon the foregoing occupancy conditions set forth in section "E" of the policy (Gartner Aff., Exh., "12").

The parties now move and cross move effectively for declaratory relief and summary judgment on their respective claims with respect to the application and meaning of the policy.

Specifically, the plaintiffs contend that based on the declarations page designation of the property as a "commercial structure" the 75% occupancy provision is applicable; whereas Zurich asserts, inter alia, that the property is a multiple dwelling; that the 50% benchmark is applicable; and that any reference to the contrary in the declarations page was an inadvertent scrivener's error and/or an "obvious mistake". Zurich further contends that, in any event, the declarations page check-off box cannot trump the language of the main policy relative to occupancy-based coverage terminations.

Significantly, although not contained in its answer or formally requested in its notice of cross motion, Zurich also seeks leave to amend its answer so as to add the equitable defense of reformation based upon the alleged mistake in describing the premises as a "commercial structure".

The plaintiff's motion is granted to the extent indicated below. The defendant's cross motion is denied. [*4]

It is settled that courts must determine the rights and obligations of parties under an insurance contract based on the policy's specific language (State v. Home Indem. Co., 66 NY2d 669, 671 [1985]; Empire Fire and Marine Ins. Co. v. Eveready Ins.Co., 48 AD3d 406; Labate v. Liberty Mut. Ins. Co., 45 AD3d 811) and that "[u]nambiguous provisions must be given their plain and ordinary meaning" (Sanabria v. American Home Assur. Co., 68 NY2d 866, 868 [1986]; Government Employees Ins. Co. v. Kligler, 42 NY2d 863, 866 [1977]).

"The tests to be applied in construing an insurance policy are common speech * * * and the reasonable expectation and purpose of the ordinary businessman" (Ace Wire & Cable Co., Inc. v. Aetna Cas. & Sur. Co., 60 NY2d 390, 398 [1983] accord, Belt Painting Corp. v. TIG Ins. Co., 100 NY2d 377, 383 [2003]; Wai Kun Lee v. Otsego Mut. Fire Ins. Co., ___AD3d___, 2008 WL 802296 at 1 [2nd Dept. 2008]; MDW Enterprises, Inc. v. CNA Ins. Co., 4 AD3d 338, 340).

More specifically, "[i]n determining a dispute over insurance coverage, we first look to the language of the policy" and * * * "construe * * * [it] 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" (Raymond Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 5 NY3d 157, 162 [2005]; Consolidated Edison Co. of NY v Allstate Ins. Co., 98 NY2d 208, 221-222 [2002]; Fulmont Mut. Ins. Co. ex rel. Hutchinson v. New York Cent. Mut. Fire Ins. Co., 4 AD3d 724, 725).

On the other hand, "[t]he law is clear that if an insurance policy is written in such language as to be doubtful or uncertain in its meaning" or is "susceptible of two reasonable interpretations" "all ambiguity must be resolved in favor of the insured against the insurer" (Liberty Mut. Fire Ins. Co. v. National Cas. Co., 47 AD3d 770, 771 see, Belt Painting Corp. v. TIG Ins. Co., supra; Mostow v. State Farm Ins. Companies, 88 NY2d 321, 326 [1996]; Wai Kun Lee v. Otsego Mut. Fire Ins. Co., supra; White v. Rhodes, 34 AD3d 951, 952; 242-44 East 77th Street, LLC v. Greater New York Mut. Ins. Co., 31 AD3d 100, 105 see also, Penna v. Federal Ins. Co., 28 AD3d 731).

Applying the foregoing principles to the facts presented, supports the plaintiff's assertion that the "multiple dwelling" termination condition and its 50% occupancy benchmark are both inapplicable to the subject loss.

More particularly, the plaintiff has demonstrated its prima facie entitlement to judgment as a matter of law with respect to its interpretation of the policy by submitting, inter alia: (1) the executed declarations page which unambiguously depicts the property as a "commercial structure"; (2) portions of the "Builders' Risk Coverage Form" section of the policy, which expressly incorporates into that [*5]section,"the information contained in the Declarations" page; and (3) section E, "Additional Conditions," which provides that coverage would terminate in connection with a "commercial structure" undefined in the policy only "when 75% or more of the square footage space is leased or rented to others" (see, Policy, § E3[c][2], [3], ACA 284, at 10-11).

Contrary to the defendant's contentions (Mem. of Law at 7), since the coverage portion of the policy, which also contains the occupancy termination provisions, itself refers to and incorporates "the information" entered on the declarations page, the defendant's designation of the property as "commercial" cannot be ignored in construing the import of the disputed termination conditions. Indeed, the relevant "condition" language contained main policy mirrors the terms utilized in the declarations page, i.e., both components of the policy are linked through common use of the operative terms, "multiple dwelling" and "commercial structure" (compare, Declarations Page, with, Section E3[c][2]-[3]; Policy ACA 284, at 11of 17).

Although the defendant now contends, among other things, that property is clearly a multiple dwelling and that the declarations page designation was allegedly no more than an errant check mark, an equally persuasive and competing inference is that the defendant a highly sophisticated insurer (e.g., EBC I, Inc. v. Goldman Sachs & Co., 5 NY3d 11, 24 [ 2005]) analyzed the risk from its own underwriting perspective and affirmatively elected to classify the property as a commercial structure. There is no affidavit from an individual competent to claim otherwise included in the defendant's papers or which explains the specific manner in which the risk was analyzed and reviewed (see, St. George Hotel Associates v. Lloyds New York Ins. Co., 306 AD2d 197).

Nor is the unqualified "commercial structure" designation lacking in underlying logic or implausible, inasmuch as the property itself while residential in character to its occupants is clearly a commercial, revenue-generating enterprise insofar as viewed from the insured's perspective. It bears noting that neither the declarations page not the policy itself contain a limiting definition of what constitutes a "commercial structure" which term, in the Court's view, is ambiguous in its precise import (cf., St. George Hotel Associates v. Lloyds New York Ins. Co., supra), i.e., it is unclear why a multiple dwelling utilized as a business and/or revenue generating enterprise cannot also be viewed as "commercial" within the undefined scope of the operative term, "commercial structure".

Construed liberally in favor of the insured, the foregoing interpretation of the policy is not inconsistent with the "reasonable expectations of the average [*6]insured upon reading the policy" (Penna v. Federal Ins. Co., supra see, Ace Wire & Cable Co., Inc. v. Aetna Cas. & Sur. Co., supra, at 398; Wai Kun Lee v. Otsego Mut. Fire Ins. Co., supra).

Additionally, the defendant has similarly failed to make the requisite evidentiary showing in support of its claim that the designation was simply an error, so as to support a formal, equity-based defense sounding in reformation.

It is settled that the "[t]he proponent of reformation must show in no uncertain terms, not only that mistake or fraud exists, but exactly what was really agreed upon between the parties'" (Chimart Associates v. Paul,66 NY2d 570, 574 [1986]; Backer Mgt. Corp. v Acme Quilting Co., 46 NY2d 211, 219 [1978] see also, Yu Han Young v. Chiu,___AD3d___ 2008 WL 596198 [2nd Dept. 2008]; M.S.B. Development Co., Inc. v. Lopes, 38 AD3d 723, 725). Indeed, "there is a heavy presumption that a deliberately prepared and executed written instrument manifest[s] the true intention of the parties' and a correspondingly high order of evidence is required to overcome that presumption" (Chimart Associates v. Paul, supra, at 574, quoting from, Backer Mgt. Corp. v Acme Quilting Co., 46 NY2d 211, 219 [1978]; Greater New York Mut. Ins. Co. v. United States Underwriters Ins. Co., 36 AD3d 441, 442-443).

Accordingly, "a party resisting pretrial dismissal of a reformation claim * * * [must] tender a high level' of proof in evidentiary form" (Chimart Associates v. Paul, supra, citing, Sagan v Sagan, 53 NY2d 635, 637 [1981]) and "bare, conclusory claim[s] of unilateral mistake * * * unsupported by legally sufficient allegations" will not suffice (Greater New York Mut. Ins. Co. v. United States Underwriters Ins. Co., supra, at 443; Migliore v. Manzo, 28 AD3d 620, 622). Shark Information Services Corp. v. Crum and Forster Commercial Ins., 222 AD2d 251, 252-253).

In sum, the defendant's reformation claim is supported primarily through the assertions of Zurich's own counsel, who theorizes that since there is a multiple dwelling category contained in the subject policy, then the checked "commercial structure" option box must necessarily have been an "obvious" mistake (Def's Mem. of Law at 7, 10-11).

The Court notes, however, that Zurich has not submitted affidavits or other evidentiary materials from the individuals or entities who personally prepared the declarations page and/or actually dealt with the insured prior to the issuance of the policy (see, St. George Hotel Associates v. Lloyds New York Ins. Co., supra, 306 AD2d 197).

Accordingly, the record does not contain a statement by someone with personal knowledge who actually makes the affirmative claim that the check mark [*7]was indeed a mistake. Similarly, the defendant has not produced competent evidence demonstrating that insured understood despite the "commercial structure" designation that the policy termination provision was nevertheless to be applied as if this designation had not been made (St. George Hotel Associates v. Lloyds New York Ins. Co., supra; Shark Information Services Corp. v. Crum and Forster Commercial Ins., supra).

Nor do the defendant's submissions include relevant underwriting and/or risk analysis provided by competent affiants illuminating the intended meaning of the phrase "commercial structure" or evidence establishing that the premiums paid by the insured here were those typically charged for multiple dwellings as opposed to some different and distinct rate schedule applicable to commercial structures.

The unsigned and unauthenticated policy application printout submitted by the defendant, which was allegedly filled by the insured (Def's Exh., "K"), is not a competent evidentiary submission, and in any event, does not alter the underlying fact that the defendant was aware that the property was to be operated as a revenue-generating, business property.

The defendant's reliance upon the factually inapt holding in St. Pierre v. Coburn Insuring Agency,___F.Supp2d___ [NOR] 1993 WL 85757 [N.D.NY 1993], affd, 28 F.3d 275 [2nd Cir 1994]), is misplaced.

In Coburn, the declarations page listed the plaintiff as a "named insured," but two subsequently added and controlling "loss payable" endorsements were added to the policy which, by their express terms, were specifically intended to modify the existing contract by identifying the persons to whom losses would be payable (Coburn, supra, at 1993 WL 85757, at 4-5 cf., Central Synagogue v. Hermitage Ins. Co., 36 AD3d 742, 743-744).

Further, the construction adopted at bar does not render meaningless the multiple dwelling occupancy benchmark (e.g., County of Columbia v. Continental Ins. Co., 83 NY2d 618, 628 [1994]; Hamilton v. Khalife, 289 AD2d 444, 445), but rather, obviates its application based upon the defendant's own description of the property as commercial and the absence of any probative evidence establishing that the designation was an error.

In short, the defendant itself was afforded the opportunity to decisively catalogue the nature of the insured property with the imputed knowledge that its choice could impact the related, conditional termination provisions contained elsewhere in its own policy. The defendant made its election, and having failed to "tender a high level' of proof in evidentiary form" supporting its current claims of mistake (Chimart Associates v. Paul, supra; Migliore v. Manzo, supra), its [*8]reformation theories and claims of error are rejected.

Lastly, since leave to amend pleadings is to be freely given (CPLR 3025[b]; Pansini Stone Setting, Inc. v. Crow and Sutton Associates, Inc., 46 AD3d 784), and because the defendant has not established relevant prejudice, the Court in its discretion grants that branch of the plaintiffs' motion which is to increase the ad damnum clause from a "sum over $300,000" to an expressly stated amount of $330,000.00 (e.g., Loomis v. Civetta Corinno Construction Corp., 54 NY2d 18 [1981]; RCLA, LLC v. 50-09 Realty, LLC, 48 AD3d 538; Santana v. Acosta, 12 AD3d 282).

It is "settled that in the absence of prejudice to the defendant, a motion to amend the ad damnum clause, whether made before or after the trial, should generally be granted'" (Thomas v. Laustrup, 34 AD3d 1115, 1116, quoting from, Loomis v. Civetta Corinno Constr. Corp., supra, at 23; Santana v. Acosta, supra).

However, the Court agrees that a question of fact exists as to the extent to which the property was occupied prior to the fire.

Specifically, and in lieu of decisive evidentiary submissions, each party repeatedly asserts that the other does not "dispute" its particular factual claims as to the precise, pre-fire occupancy of the property (see, Gartner Aff., ¶ 37; Pltffs' Reply Mem. at 7 see also, Greisman Aff., ¶ 8; Greisman Reply Aff., ¶ 9). As a result, neither party has submitted evidence in admissible form determinatively establishing the accuracy of the occupancy claims advanced.

The Court notes in this respect that the plaintiffs' submissions contain nothing of an evidentiary nature in connection with the alleged occupancy of the property. Further, the defendant has argued in reply, that as a consequence, the precise occupancy of the property is uncertain and must await further discovery (Greisman Reply Aff., ¶ 9). The Court agrees.

Further, while the defendant has taken the position that six apartments were occupied a claim on which the plaintiffs rely it is settled that "[a]s a general rule, a party does not carry its burden in moving for summary judgment by pointing to gaps in its opponent's proof, but must affirmatively demonstrate the merit of its claim or defense'" (Fromme v. Lamour, 292 AD2d 417, quoting from, George Larkin Trucking Co., v. Lisbon Tire Mart, 185 AD2d 614, 615 see also, Falah v. Stop & Shop Companies, Inc., 41 AD3d 638, 640; Pappalardo v. Long Island R. Co., 36 AD3d 878).

The Court has considered the defendant's remaining contentions and concludes that they are lacking in merit.

The motion by the plaintiffs James C. Markotsis, Scott Abraham, Douglas Lieberman, Jeffery Frankel, George Katsoulaki, David Siegel, James Kalaitzis, [*9]Mike Brody, Ron Cooperman, and Andrea Madison for an order (1) pursuant to CPLR 3212 for summary judgment on its first cause of action for breach of contract; and (2) for further relief pursuant to CPLR 3025, amending the ad damnum clause by increasing the amount demanded to $330,000.00, is granted to the extent indicated above.

The cross motion by the defendant Zurich Insurance Company, d/b/a Zurich Assurance Company of America, also d/b/a Zurich North America, for summary judgment dismissing the complaint, is denied.

The foregoing constitutes the decision and order of the Court.

The parties shall appear for a Preliminary Conference on May 8, 2008, at 9:30 A.M. in the Differentiated Case Management Part ("DCM"), Nassau County Supreme Court, to schedule all discovery proceedings. A copy of this order shall be served on DCM Case Coordinator Richard Kotowski.

Dated: April 15, 2008

_________________________

Anthony L. Parga, J. S. C.