Supreme Court, New York County, January 19, 2022

Mound Cotton Wollan & Greengrass for defendant.

Law Office of Craig A. Blumberg for plaintiff.

Plaintiff is the owner of the premises located at 11-25 Putnam Avenue, Brooklyn, New York. Defendant issued a policy insuring plaintiff's premises, including risk of loss by fire. The policy term commenced on March 8, 2020, and was set to expire on March 8, 2021. On June 11, 2020, plaintiff's building suffered loss and damage caused by a fire. Defendant denied plaintiff's claim on June 17, 2020. As such, plaintiff commenced this action seeking to recover $250,000 in building damage and $40,000 for loss of business income, rental value, and extra expenses that it asserts should be paid for by the policy. Plaintiff alleges that defendant's notice of cancellation or non-renewal dated March 24, 2020, effective April 26, 2020, was invalid as Executive Order (A. Cuomo) No. 202.13 (9 NYCRR 8.202.13) issued on March 29, 2020, imposed a moratorium on an insurer cancelling or non-renewing any property/casualty insurance policy for 60 days for a property/casualty insurance policyholder facing financial hardship as a result of the COVID-19 pandemic. (NY St Cts Elec Filing [NYSCEF] Doc No. 1, summons and complaint.)

Now, defendant moves the court, pre-answer, pursuant to CPLR 3211 (a) (1) and (7) seeking dismissal of the complaint on the grounds that plaintiff was not covered by insurance on the date of the loss (NYSCEF Doc No. 5, notice of mot). Defendant asserts plaintiff fails to allege a valid breach of contract claim for defendant's failure to reimburse for losses sustained to plaintiff's premises as a result of the June 2020 fire since there was no policy in effect at the time. Specifically, defendant submits that it sent plaintiff a notice of cancellation or non-renewal dated March 24, 2020, effective April 26, 2020, and that the basis of the non-renewal was due to several hazardous conditions on the premises. Moreover, as the policy was cancelled [*2]before the executive order was issued and insofar as the cancellation of the policy was not due to a failure to pay the premium, the moratorium does not apply to plaintiff's policy. Notwithstanding same, plaintiff fails to assert that it suffered a financial hardship occasioned by the pandemic.

In opposition, plaintiff asserts that the defendant's motion, while labeled a motion to dismiss, is actually a motion for summary judgment and should be denied (NYSCEF Doc Nos. 14-19, opp). Plaintiff avers that the notice of cancellation and non-renewal sent by defendant was rendered invalid by the March{**74 Misc 3d at 679} 29, 2020 Executive Order 202.13 and the March 30, 2020 emergency regulation promulgated by the New York State Department of Financial Services which modified or suspended various sections of the Insurance Law to impose a moratorium on the cancelling, non-renewing, or conditionally renewing of property/casualty insurance for a period of 60 days for any policyholder facing financial hardship as a result of the COVID-19 pandemic. Plaintiff argues that the emergency regulation was created for situations such as presented here, and that defendant's motion seeks to have the court interpret the executive order in its favor. Plaintiff maintains that the question of financial hardship can be addressed during discovery and that the executive order was meant to prevent insurance companies from taking advantage of insureds during the height of the pandemic.

In reply, defendant maintains that plaintiff does not have a legally cognizable cause of action against it as it is irrefutable that the policy was not cancelled due to financial hardship. Defendant contends that plaintiff's assertion that the executive order and emergency regulation placed a moratorium on the cancellation of policies for any reason, not solely for failure to pay premiums, is incorrect. In fact, the frequently asked questions cited in plaintiff's affirmation in opposition demonstrate that the purpose of the executive order and emergency regulation is to provide reprieve for small businesses that suffered financial hardship and are unable to pay insurance premiums as a result of a suspension of their business operations due to the pandemic. In this instance, defendant avers that it cancelled the policy due to hazardous conditions, not nonpayment, and that plaintiff has failed to allege a financial hardship.

Dismissal is warranted based on documentary evidence only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law (see CPLR 3211 [a] [1]; Leon v Martinez, 84 NY2d 83, 88 [1994]). Dismissal is proper where the documents relied upon definitively disposed of a plaintiff's claim (see Bronxville Knolls v Webster Town Ctr. Partnership, 221 AD2d 248, 248 [1995]).

When considering a motion to dismiss pursuant to CPLR 3211 (a) (7), the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible inference,{**74 Misc 3d at 680} and determine only whether the facts as alleged fit within any cognizable legal theory (Leon). Normally, a court should not be concerned with the ultimate merits of the case (see Anguita v Koch, 179 AD2d 454 [1st Dept 1992]). However, these considerations do not apply to allegations consisting of bare legal conclusions nor to factual claims which are flatly contradicted by documentary evidence (see Simkin v Blank, 19 NY3d 46, 52 [2012]).

After careful consideration, defendant's pre-answer motion is granted. Executive Order 202.13 and the emergency regulation imposed a 60-day moratorium on the cancellation and non-renewal of property/casualty insurance policies for any such policyholder facing financial hardship as a result of the COVID-19 pandemic (Executive Order 202.13; NYSCEF Doc No. 9; Dept of Fin Servs Consolidated Emergency Rulemaking, available at https://www.dfs.ny.gov/system/files/documents/2020/07/re_consolidated_amend_part_405_27a_27c_new_216_text.pdf, cached at https://www.nycourts.gov/reporter/webdocs/DeptFinServsConsolidatedEmergencyRulemaking.pdf; NYSCEF Doc No. 10). In this instance, [*3]defendant sent a notice of cancellation and non-renewal to plaintiff dated March 24, 2020, effective April 26, 2020, pursuant to its 30-day notice provisions. Therefore, the policy was cancelled before March 29, 2020, when the emergency regulation was promulgated. However, assuming arguendo, that the notice of cancellation and non-renewal would have been rendered invalid pursuant to the emergency regulation, such an argument does not lie insofar as the moratorium only applied to policyholders experiencing a financial hardship due to the pandemic. In other words, an insurer could not cancel or refuse to renew a policy based upon nonpayment of a premium or any other financial reason, provided the policyholder could demonstrate that they were suffering from a pandemic related financial hardship. That simply is not the case here. Not only does plaintiff fail to assert in its complaint that it suffered a financial hardship occasioned by the pandemic and/or how the cancellation of its policy may have been occasioned by a financial hardship, plaintiff failed to demonstrate same in its opposing papers. Accordingly, the breach of contract cause of action asserted in the complaint is insufficiently pleaded. Further, the reasons for cancellation indicated in the notice of cancellation include several hazardous conditions such as water intrusion in the basement,{**74 Misc 3d at 681} lack of smoke and carbon monoxide detectors, lack of fire extinguishers, lack of handrails, missing/blank electrical breakers, combustible materials within 36 inches of heat generating sourcing, among others, and not for lack of payment of the policy. (NYSCEF Doc No. 8, notice of cancellation or non-renewal.) Therefore, the notice of cancellation was not invalidated by Executive Order 202.13 and thus, plaintiff was not covered by the policy in question on the date of its loss by fire on June 11, 2020. All remaining arguments have been considered and are either without merit or need not be addressed given the findings above. Accordingly, it is hereby ordered that defendant's motion to dismiss is granted in its entirety and the complaint is dismissed.