Ronald J. Papa et al.,, Appellants,v.Associated Indemnity Corporation et al., Respondents.BriefN.Y.June 20, 2017To be Argued by: STEVEN E. PEIPER (Time Requested: 15 Minutes) Erie County Clerk’s Index No. 2012-600077 New York Supreme Court Appellate Division—Fourth Department RONALD J. PAPA and THERESA M. PAPA d/b/a Muir Lake Associates One NFA Park Amherst, NY 14228, Plaintiffs-Respondents, – against – ASSOCIATED INDEMNITY CORPORATION 777 San Marin Drive Novato, CA 94998 and D&D POWER, INC. 501 New Karner Rd., Ste. 2 Albany, NY 12205, Defendants-Appellants. –––––––––––––––––––––––––––––– (For Continuation of Caption See Inside Cover) BRIEF FOR DEFENDANT-APPELLANT ASSOCIATED INDEMNITY CORPORATION HURWITZ & FINE, P.C. Attorneys for Defendant-Appellant Associated Indemnity Corporation 1300 Liberty Building 424 Main Street Buffalo, New York 14202 (716) 849-8900 NATIONAL FIRE ADJUSTMENT CO., INC. One NFA Park Amherst, NY 14228, Plaintiff-Respondent, – against – D&D POWER, INC. 501 New Karner Rd., Ste. 2 Albany, NY 12205, Defendant-Appellant. Table of Contents Page TABLE OF AUTHORITIES ........................................ ...... .. ..... .. ..... .. .... ... .. ....... .. .. ........ ................ ii QUESTIONS PRESENTED ... .................. .................................................................................... iii PRELIMINARY STATEMENT ....................................... ....... ............. ........... .......... ..................... 1 STATEMENT OF FACTS ................................................. .................. .............. ............................. 1 ARGUMENT ........................... ................................................ .................................. ............ .......... 8 I. THE WATER DAMAGE EXCLUSION AND RELATED WATER DAMAGE ENDORSEMENT UNAMBIGUOUSLY CONTROL THE EXTENT OF COVERAGE AFFORDED BY THE POLICY FOR PLAINTIFFS' CLAIM ............... .. ... 8 II. ALTERNATIVELY, THERE IS A TRIABLE ISSUE OF MATERIAL FACT WHETHER COVERAGE IS EXCLUDED UNDER THE POLICY BECAUSE THE OPENING IN THE ELECTRICAL CONDUIT WAS THE RESULT OF CORROSION ..... ............................. ...... ...... .......... .. ............ .......... ........ ......... ............ ....... . 14 CONCLUSION ................ ... ....... ......... ...... .................. ...................... ... ............ ................... .......... 17 Table of Authorities Cases Album Realty Corp. v. American Home Assur. Co., 80 NY2d 1008, 1011 [1992] ........ ......... 12, 13 Alvarez v. Prospect Hosp., 68 NY2d 320,325 [1986] .................... .. ........................ ... ................... 8 Broome Cty. v. The Travelers Indemn. Co., 125 AD3d 1241, 1242 [3d Dep't 2015] .. ........... 10, 11 Cragg v. Allstate Indem. Corp., 17 NY3d 118, 122 [20 11] .. .... ........................................... ... 1 0, 11 Gravino, 73 AD3d at 1448 ... ......... ............ ....... ........ ... .............. ......................... ..................... 12, 13 Kosich v. Metropolitan Prop. & Cas. Ins. Co., 214 AD2d 992, [4th Dep't 1995]. .... ... ............. .. . 13 Kula v. State Farm Fire & Cas. Co., 212 AD2d 16, 19 [4th Dep' t 1995] ................ .......... 9, 12, 14 Matter of Most ow v. State Farm Ins. Co., 88 NY2d 321 , 326-27 [1996] ...... ... ......... ......... ........... 1 0 Moshiko, Inc. v Seiger & Smith, 137 AD2d 170, 175 [4th Dep't 1988] ............. .. ................ .. .. 9, 14 Mount Vernon Fire Ins. Co. v. Creative Hous., 88 NY2d 347,352 [1996] ...... ........... ............. ...... 9 National Fire Adjustment Co., Inc., v. D&D Power, Inc . ............... ....... ........................... ........ ... ... 1 Ortiz v. Varsity Holdings, LLC, 18 NY3d 335, 340 [2011] ...... ..... ........... ...................................... 8 Papa eta!. v. Associated Indemnity Corporation et a!. ....... ..................................................... ....... 1 Platek v. Town of Hamburg, 24 NY 3d 688, 697 [20 15] ......... ...... ................................ .. .............. 13 Rachlin v. Michaels Arts & Crafts, 118 AD 3d 1391 , 1392 [4th Dep' t 2014] ........................ .... ... 16 Teichman v. Cmty. Hosp. ofW Suffolk, 87 NY2d 514, 520 [1996] ................................................ 9 Universal Am. Corp. v. Nat'! Union Fire Ins. Co. of Pittsburgh, Pa. , 25 NY3d 675,680 [2015] .. 9 Zuckerman v. City of New York, 49 NY2d 557, 562 [1980]) ......... .................................... ........... .. 8 11 QUESTIONS PRESENTED The questions raised by the present appeal are: 1. Whether the water damage exclusion and related water damage endorsement unambiguously control the extent of coverage afforded by the relevant insurance policy for Plaintiffs' claim of water damage? a. The trial court did not write on this issue, but by denying summary judgment to Associated Indemnity Corporation and granting the same to Plaintiffs, it implicitly found that the provisions were ambiguous. 2. Whether there is a triable issue of material fact whether coverage is excluded under the insurance policy because any break or hole in the electrical conduit was the result of corrosion or normal wear and tear. a. The trial court implicitly found that there was no triable issue of material fact. iii PRELIMINARY STATEMENT These Consolidated Appeals are taken from a single Order and Judgment of the Hon. Diane Y. Devlin, J.S.C., granted on February 22, 2016, and entered on February 23, 2016. In Papa et al. v. Associated Indemnity Corporation et al., Index No. 2012-600077, Judge Devlin denied the summary judgment motions of both Defendant-Appellant D&D Power and Defendant-Appellant Associated Indemnity Corporation against Plaintiffs-Respondents Ronald J. Papa and Theresa M. Papa d/b/a Muir Lake Associates, and granted the cross-motion for summary judgment of these Plaintiffs against Associated Indemnity Corporation with respect to liability. In National Fire Adjustment Co., Inc., v. D&D Power, Inc., Index No. 2012-0000023, Judge Devlin denied Defendant D&D Power's motion for summary judgment against National Fire Adjustment Co., Inc. As for its appeal, Defendant-Appellant Associated Indemnity Corporation ("AIC") appeals from those portions of the Order and Judgment that denied its motion for summary judgment granting declaratory relief in its favor and dismissing the complaint against it and that granted the summary judgment cross-motion of Plaintiffs Ronald J. Papa and Theresa M. Papa d/b/a Muir Lake Associates against AIC with respect to liability. STATEMENT OF FACTS Plaintiffs' action against Associated Indemnity Corporation ("AIC") arises out of a claim for damages under an insurance policy resulting from when, "[o]n or about June 6, 2010, Muir Lake suffered water damage when water entered the Premises basement." (R. 74). Plaintiffs 1 Ronald J. Papa and Theresa M. Papa d/b/a Muir Lake Associates ("Plaintiffs" or "Muir Lake") is a partnership which owns a real property and improvements at 1 NF A Park, Amherst, New York ("the Premises"). (R. 72-73). National Fire Adjustment Co., Inc. ("NF A"), a corporation of which Plaintiff Ronald J. Papa is the president, is a tenant of Muir Lake at the Premises. (R. 300, 389-90). a. The Occurrence As relevant to AIC's appeal, Plaintiffs allege that their claim for damages, both under the insurance policy issued to Muir Lake by AIC and due to the alleged negligence of co-Defendant D&D Power, Inc., resulted from the actions of D&D Power, Inc., on May 1, 2010 in its replacement of a utility pole outside the Premises. (R. 73-7 4 ). An electrical conduit ran parallel down the side of this utility pole into the ground, turned by means of an elbow piece of conduit, or "sweep", and then continued underground to the Premises where it entered the building through a basement wall, ending in an electrical box or cabinet. (R. 152-55, 510, 886-87). Plaintiffs argue that D&D Power failed to appropriately support the wires that ran up through the conduit from the ground while the utility pole was replaced, and the resulting stress from that unsupported weight caused the electrical conduit to break and disconnect around the elbow portion located underground. (R. 404, 510-11, 859-60, 886, 911-12). The utility pole and the underground conduit elbow are situated in a drainage swale that collects rainwater. (R. 890-91). Approximately one month after D&D Power replaced the utility pole, there was a significant rainfall at least 2 inches or more. (R. 74, 853, 868-871). Early in the morning of June 6, 2010, water began flowing into the basement of the Premises through the broken electrical conduit. (R. 853, 957). Plaintiffs allege that, as a result of this water damage, 2 they suffered damages in excess of $133,000, "including emergency drying, replacement of carpeting, drywall replacement, painting and repair of the electrical conduits." (R. 74, 420-21, 436). Plaintiffs, through their insurance agent, and NFA notified AIC of the loss shortly after the occurrence. (R. 856). Following the occurrence, an electrical contractor excavated the area at the base of the utility pole where the conduit enters the ground. (R. 853-54, 885-88). An employee of that contractor gave a statement that the elbow portion of the conduit was separated from the portion of the conduit connected to the Premises and opined this resulted from the failure to appropriately support the wires when the utility pole was replaced. (R. 854, 885-88). Similarly, an architect examined the area at the request of Plaintiffs and opined that rainwater had collected in the drainage swale area around the conduit, entered the electrical conduit that was broken during D&D Power's operations, and drained into the basement of the Premises. (R. 854-55, 890-91). In contrast, D&D Power offered evidence that the conduit, particularly the elbow sweep, did not show evidence of suffering an overstress failure, but instead showed failures in multiple areas due to severe corrosion. (R. 231, 257 -60). There was also evidence that water had been leaking through or around the electrical conduit even prior to the occurrence, a fact conceded by Ronald Papa at his deposition. (R. 543-47, 855). On or about September 15, 2010, AIC sent Muir Lake a check for $25,000, indicating that the payment reflected the applicable limit for losses resulting from ground water afforded under the Policy. (R. 341, 856, 904-06). AIC sent a further letter on or about October 12, 2010, stating its finding that any coverage for damage caused by the ground water entering the basement through a broken conduit was limited by the policy's Water Damage Endorsement to no more than $25,000. (R. 907-10). AIC also stated that inspections had revealed that the 3 "elbow in the conduit had deteriorated over time to the point it broke at the connection to the PVC conduit [that connected to the basement] which allowed ground water to enter the conduit and run into the building," and that water had been entering the building in such fashion prior to the claimed loss. (R. 907). b. The Policy AIC issued to Muir Lake Associates its American Business Coverage Policy No. A B3 AZC 80826051, effective for one-year and subject to annual renewals, for the Premises located at 1 NF A Park, Amherst, New York. (R. 641-842). As relevant to this appeal, the Policy in effect during the annual period of May 24, 2010 to May 24, 2011, provided coverage for "direct physical loss of or damage to Covered Property at the premises ... caused by or resulting from any Covered Cause of Loss." (R. 733). Commonly referred to as an "all risk" policy, covered causes of loss included any risk of physical loss unless that loss was excluded in Part B of the Policy or otherwise expressly limited. To that end: B. Exclusions 1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. Unless otherwise stated, the following exclusions apply to all Section !-Coverages. * * * f. Water (1) Flood, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not; (2) Surface water; (3) Mudslide or mudflow; ( 4) Water that backs up from a sewer or drain; or 4 (5) Water under the ground surface pressing on, or flowing or seeping through; (a) Foundations, walls, floors or paved surfaces; (b) Basements, whether paved or not; or (c) Doors, windows or other openings. But if loss or damage by fire, explosion or sprinkler leakage results, we will pay for that resulting loss or damage. (R. 745-46). The Policy was amended by a Water Damage Endorsement that modifies the above Water Damage Exclusion by restoring limited coverage up to $25,000 for water damage caused by: ( 4) Water that backs up from a sewer or drain; or (5) Water under the ground surface pressing on, or flowing or seeping through; (a) Foundations, walls, floors or paved surfaces; (b) Basements, whether paved or not; or (c) Doors, windows or other openings. (R. 708; see 772, 776). The Policy also expressly excludes coverage for loss and damage resulting from wear and tear, rust, corrosion, and cracking as follows: 2. We will not pay for loss or damage caused by or resulting from any of the following. Unless otherwise stated, the following applies to all Section !-Coverages. * * * e. Wear and tear; f. Rust, corrosion, fungus, mold, decay, deterioration, hidden or latent defect or any quality in property that causes it to damage or destroy itself; 5 * * * h. Settling, cracking, shrinking or expansion; * * * But if loss or damage by the specified causes of loss results, we will pay for that resulting loss or damage. * * * Section III- Property, Liability and Medical Payments Definitions * * * 23. Specified Causes of Loss means the following: Fire; lightning; explosion; windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; falling objects; weight of snow, ice or sleet; water damage. (R. 746, 767-68). a. Sinkhole collapse means the sudden sinking or collapse of land into underground empty spaces created by the action of water on limestone or dolomite. It does not include the cost of filling sinkholes or sinking or collapse of land into manmade underground cavities. b. Falling objects does not include loss of or damage to: (1) Personal property in the open; or (2) The interior of a building or structure, or property inside a building or structure, unless the roof or an outside wall of the building or structure is first damaged by a falling object. c. Water damage means accidental discharge or leakage of water or steam as the direct result of the breaking or cracking of any part of a system or appliance containing water or steam. 6 c. The Actions Plaintiffs commenced the instant action against AIC and D&D Power on January 4, 2012, alleging causes of action for declaratory relief and breach of contract against AIC and a cause of action for negligence against D&D Power. (R. 70-77 (another defendant, Fibertech Networks, LLC, was initially named in both actions, but was subsequently stipulated out of both)). At the same time, NF A commenced the parallel action against D&D Power for negligence. (R. 297- 302). Following Judge Devlin's Order and Judgment denying the summary judgment motions of AIC and D&D Power and granting Muir Lake' s cross-motion for summary judgment with respect to liability against AIC, (R. 38-44), this appeal ensued. 7 ARGUMENT As this Court is well aware, an award of summary judgment is appropriate any time after issue has been joined if it is clear that no triable issue of fact exists and the movant is entitled to such relief as a matter of law. (see generally CPLR 3212[a], [b]; Alvarez v. Prospect Hasp., 68 NY2d 320, 325 [1986]; Zuckerman v. City of New York, 49 NY2d 557, 562 [1980]). Here, the plain and unambiguous terms of the Policy limit coverage for water damage, whether resulting in whole or in part, concurrently or consecutively, from any other cause, to no more than $25,000. Inasmuch as it is undisputed that this full amount has already been tendered by AIC and accepted by Plaintiffs (R. 371-72, 484-85, 904-05), there is neither a breach of the Policy nor any further obligation thereunder, and AIC is entitled to a declaration to that effect as a matter of law. I. THE WATER DAMAGE EXCLUSION AND RELATED WATER DAMAGE ENDORSEMENT UNAMBIGUOUSLY CONTROL THE EXTENT OF COVERAGE AFFORDED BY THE POLICY FOR PLAINTIFFS' CLAIM. In their arguments to the trial court, Plaintiffs contended that there is an ambiguity whether the Water Damage Exclusion and the Water Damage Endorsement apply to facts of their claimed loss, and that this ambiguity must be resolved in favor of coverage. However, even viewing the facts in a light most favorable to Plaintiffs, as this Court must in considering AIC' s entitlement to summary judgment, (see generally Ortiz v. Varsity Holdings, LLC, 18 NY3d 335, 340 [2011]), Plaintiffs' claimed loss falls completely within the $25,000 Policy limitation for water damage claims. An insurance agreement is subject to principles of contract interpretation, and as such unambiguous policy provisions must be given their plain and ordinary meaning. (Universal Am. 8 Corp. v. Nat'! Union Fire Ins. Co. of Pittsburgh, Pa., 25 NY3d 675, 680 [2015]). " '[A] court may neither make nor vary an insurance contract by extending coverage beyond the fair intent and meaning of the agreement, and the liability of the insurer cannot be enlarged by implication beyond the express terms ofthe contract.'" (Kula v. State Farm Fire & Cas. Co., 212 AD2d 16, 19 [4th Dep't 1995], lv denied in part, dismissed in part 87 NY2d 953 [1996], quoting Moshiko, Inc. v Seiger & Smith, 137 AD2d 170, 175 [4th Dep't 1988], affdfor reasons stated 72 NY2d 945 [1988]; see also Teichman v. Cmty. Hosp. ofW Suffolk, 87 NY2d 514,520 [1996]). "Ambiguity in a[n insurance] contract arises when the contract, read as a whole, fails to disclose its purpose and the parties' intent, or where its terms are subject to more than one reasonable interpretation." (Universal Am. Corp., 25 NY3d at 680 [2015] [internal citation omitted]). "However, parties cannot create ambiguity from whole cloth where none exists, because provisions ' are not ambiguous merely because the parties interpret them differently.' " (Universal Am. Corp., 25 NY3d at 680, quoting Mount Vernon Fire Ins. Co. v. Creative Hous., 88 NY2d 347, 352 [1996]). Instead, the determination of whether a particular policy provision is ambiguous is a question of law for the court. (Universal Am. Corp., 25 NY3d at 680; Vigilant Ins. Co. v. Bear Stearns Cos., 10 NY3d 170, 177 [2008]). Here, the plain terms of the Policy, by any reasonable interpretation, clearly limits coverage for damages caused by the entry of groundwater onto an insured's property. Further, coverage for such damage is expressly limited regardless of whether there is an additional or concurrent cause of the damage, such as the prior alleged negligence of D&D Power. Finally, under New York law, it is the flow of groundwater into the basement of the Premises that is the dominant, and therefore dispositive, cause of Plaintiffs' water damage for the purpose of 9 coverage. Accordingly, there is no breach of the Policy as a matter of law where AIC has paid the full amount of coverage available under the Water Damages Endorsement of the Policy. A. A Reasonable Insured Would Expect that, under the Plain Language of the Policy, Coverage for Plaintiffs' Claim of Water Damage Would Be Limited to the $25.000 Already Paid by AIC "To determine whether a policy provision is ambiguous, courts are guided by 'the reasonable expectations of the average insured upon reading the policy."' (Broome Cty. v. The Travelers Indemn. Co., 125 AD3d 1241, 1242 [3d Dep't 2015], lv denied 25 NY3d 908 [2015], quoting Matter of Mostow v. State Farm Ins. Co., 88 NY2d 321, 326-27 [1996]; see Cragg v. Allstate Indem. Corp., 17 NY3d 118, 122 [2011] [insurance contracts are interpreted in accordance with common speech)). Here, it is undisputed that Plaintiffs claim is for water damage, specifically "water damage to the Premises when water entered the Premises basement." (R. 74, 367-68, 404, 420- 21, 436, 494). There is also no dispute that it was groundwater that entered the conduit and flowed into the basement. (R. 404, 510-11, 886, 890-91, 911-12). As noted above, the Policy explicitly excludes coverage for water damage resulting from groundwater pressing on, or flowing or seeping through ... [t]oundations, walls, floors or paved surfaces;" "[b]asements, whether paved or not;" and "[d]oors, windows or other openings." (R. 745-46). The Water Damages Endorsement modifies this exclusion by restoring $25,000 in coverage for such damage, an amount to which AIC has not only acknowledged that Plaintiffs are entitled, but which AIC has also paid to Plaintiffs in full. (R. 708; see 772, 776, 904-06). Plaintiffs attempt to create an ambiguity regarding the applicability of the coverage limitation in the Water Damages Endorsement by arguing that the electrical conduit through 10 which the water entered the Premises was allegedly broken or damaged by Defendant D&D Power, Inc., during the May 1, 2010 replacement of a utility pole. (R. 74, 367-68, 498, 510-11). However, the plain language of both the Water Damage Exclusion and the Endorsement makes clear that the manner in which the water enters a basement is not dispositive. Instead, the non- exhaustive list includes "doors, windows, and other openings." (R. 708, 745-46 [emphasis added]). Thus, the fact that the water damage occurred because the groundwater "flow[ ed] through" the "other opening" of an electrical conduit into the basement, rather than (for example) seeping through cracks in the foundation wall, does not create an ambiguity in this case. (R. 708, 745-46; see 512 [damage caused was underground]). Instead, an insured could not reasonably interpret these facts as falling outside the plain language of the water damage provisions of the Policy. (See Cragg, 17 NY3d at 122; Broome Cty. Co., 125 AD3d at 1242). B. The Policy's Anti-Concurrent Causation Clause Renders Plaintiffs' Causation Argument Irrelevant Further, no ambiguity or question of fact is created by the allegation that D&D Power negligently caused the break in the underground electrical conduit line. The lead-in clause to the Policy's Part B "Exclusions" section expressly states that there is no coverage for any "loss or damage caused directly or indirectly" by an excluded cause, such as the groundwater flowing or seeping into the basement of the Premises, "regardless of any other cause or event that contributes concurrently or in any sequence to the loss." (R. 745 [emphasis added]). Notably, New York law recognizes the validity of such anti-concurrent causation clauses. (See Kula, 212 AD2d at 20-21 ). Thus, Plaintiffs' allegation that, but for D&D Power's alleged pnor negligence in breaking the conduit line in May 2010, they would not have suffered the extent of the water 11 damage that they did is irrelevant. Even assuming the truth of the allegation, the resulting damage from the flow of groundwater into Plaintiffs' basement in June 2010 is still excluded under the plain and unambiguous terms of the Policy, except to the limited extent restored by the Water Damages Endorsement, i.e. the $25,000 already paid by AIC. (See Gravino, 73 AD3d at 1448 [expert opinion that the damage would not have occurred if plaintiff had not emptied the pool did not remove the loss from the policy exclusion where policy expressly provided that, where the damage has two or more causes, the predominant cause of loss was excluded]). C. The Dominant Cause of Plaintiffs' Claimed Damages was the Flow of Groundwater into the Basement Finally, even if the anti-concurrent causation clause did not eliminate any potential ambiguity Plaintiffs assert was raised by D&D Power's alleged negligence, the flow of groundwater into Plaintiffs' basement was the dominant, and therefore dispositive, cause of the loss. Under New York law, "the principles of causation should not be strictly applied to circumvent the intent of the parties." (Kula, 212 AD2d at 21). Instead, "[o]nly the most direct and obvious cause should be looked to for purposes of the exclusionary clause." (Kula, 212 AD2d at 20-21; see Album Realty Corp. v. American Home Assur. Co., 80 NY2d 1008, 1011 [1992]). To determine causation, courts must look to "the ' efficient or dominant cause of the loss', not the event that 'merely set the stage for that later event.' " (See Gravino v. Allstate Ins. Co., 73 AD3d 1447, 1448-49 [4th Dep't 2010], lv denied 15 NY3d 705 [2010], quoting Kosich v. Metropolitan Prop. & Cas. Ins. Co., 214 AD2d 992, [4th Dep't 1995], lv. denied 86 NY2d 707 [1995]). Here, by Plaintiffs' own admission, they suffered no water or other claimed property damage at the time D&D Power allegedly broke the underground conduit, but instead they are 12 seeking coverage for water damage that occurred a month later, when rainfall in the days leading up to the occurrence saturated the ground. (R. 74, 512, 853, 868-871, 957). Thus, D&D Power's alleged negligent breaking of the conduit line on May 1, 2010, merely set the stage for the flow of groundwater into Plaintiffs' basement June 6, 2010, following 2 to 3 days of rain. (see Gravino, 73 AD3d at 1448-49; see also Kosich, 214 AD2d at 992 [although contractor' s cutting of vinyl flooring with chain saw set chain of events in motion, the dominant cause of plaintiffs' losses was asbestos contamination, and as such coverage was precluded under by the terms of the policy]). "A reasonable business person would conclude in this case that plaintiffs loss was caused by water damage and would look no further for alternate causes." (Album Realty Corp., 80 NY2d at 1010 [" a loss caused by freezing could not be found to incorporate a loss visibly occasioned by water damage by virtue of the mere fact that the presence of water can best be explained by the rupturing of a sprinkler head which had frozen"]). In contrast, "interpreting the insurance policy as [P]laintiffs propose would contravene the water loss exclusion' s purpose, as expressed in unambiguous language, which is to preclude coverage for damages caused by the entry of water onto an insured's property." (Platek v. Town of Hamburg, 24 NY3d 688, 697 [2015] [rejecting the plaintiffs' attempt to characterize damage from water flowing into a basement following a burst off-property water main as being caused by an explosion]). Accordingly, even considering the record in a light most favorable to Plaintiffs, the dominant cause of their claimed loss is damage from groundwater flowing into their basement through an opening in the basement wall, a cause which is clearly and unambiguously excluded from coverage under the Policy. The additional Water Damage Endorsement restored coverage for such damage, but only to the extent of the $25,000 limit already acknowledged and paid by AIC. As such, there is no breach of contract as a matter of law, and the trial court therefore erred 13 in denying AIC's motion for summary judgment and granting Plaintiffs' cross-motion on AIC's liability. In doing so, the trial court improperly "extend[ ed] coverage beyond the fair intent and meaning ofthe agreement." (Moshiko, Inc., 137 AD2d at 175 ["liability ofthe insurer cannot be enlarged by implication beyond the express terms of the contract"]; see Kula, 212 AD2d at 19). The Order and Judgment should therefore be reversed and remanded for a declaration in favor of AIC and dismissal of Plaintiffs' complaint as against it. II. ALTERNATIVELY, THERE IS A TRIABLE ISSUE OF MATERIAL FACT WHETHER COVERAGE IS EXCLUDED UNDER THE POLICY BECAUSE THE OPENING IN THE ELECTRICAL CONDUIT WAS THE RESULT OF CORROSION Here, even assuming arguendo that any break and/or hole in the electrical conduit could be considered the dominant cause of Plaintiffs' claimed damage (and, in light of the Policy's anti-concurrent causation clause, the sole cause), Plaintiffs nonetheless failed to establish their entitlement on AIC's liability as a matter of law. Specifically, there is a triable issue of material fact whether the failure of the integrity of the electrical conduit was the result of rust, corrosion, or general wear and tear. As such, the trial court erred in granting Plaintiffs summary judgment on the issue of AIC's liability. In addition to the plain and unambiguous language of the Water Damage Exclusion and Endorsement, AIC specifically referenced the deterioration and the corrosion of the electrical conduit in its determination that no coverage above the $25,000 water damage limit was available under the Policy. (R. Papa Aff Ex J). As noted above, the Policy excludes coverage for loss or damage caused by "[w]ear and tear;" "[r]ust, corrosion, ... decay, deterioration .. . ;" and "[s]ettling, cracking, shrinking or expansion." (R. 746). 14 Here, Ronald Papa testified that there was evidence of water leaking into the basement through or around the conduit prior to the date of the loss claimed, specifically rust inside an electrical cabinet where the conduit entered the building. (R. 532, 534-35, 537, 543-47). Papa also described evidence of one apparent attempt prior to the June 2010 occurrence to prevent groundwater infiltration by placing putty around the conduit. (R. 547-48). Further, there is additional evidence in the record that corrosion, rather than an acute stress incident, allowed water to enter the electrical conduit. The expert for D&D Power opined that, based on his examination the "conduit sweep," or elbow piece, the conduit had "various holes resulting from varying degrees of corrosion that were located some distance from the point where it separated from the PVC conduit." (R. 230-31). Similarly, an inspection by James Stromecki, PE revealed that: Based on my observations during the excavation and investigation it is my professional opinion that the steel elbow has deteriorate over time to the point that it broke at the connection to the PVC conduit. This deterioration has also caused the thinning of the steel wall to the point that a wooden stick could easily puncture the wall of the steel conduit. Over time soil settlement and/or frost action has moved the steel and PVC conduit to different elevations. Ground and/or surface water has been entering the building through the conduits for many years as evidenced by the extensive rust on the electrical cabinet where the service conduits terminate. There is no evidence that would associate the settlement of the steel conduits with the replacement of the utility pole. These conditions are a result of improper design/construction, long-term wear and tear, and a lack of timely and proper maintenance. This was not an abrupt, sudden, accidental, or a result of the replacement of the utility pole but gradual, long-term deterioration. (R. 260). Accordingly, there is sufficient evidence in the record to raise a triable issue of material fact whether any holes or perforations in the conduit or around where the conduit connects to the Premises were the result of corrosion or other wear and tear. As such, coverage would still be 15 excluded under the plain terms of the policy. The only exception to this exclusion is where water damage results from the "accidental discharge or leakage of water or steam as the direct result of the breaking or cracking of any party of a system or appliance containing water or steam." (R. 767-68). Because it is undisputed that the conduit was for an electrical system, not a water or steam system, the exclusion applies. In support of their cross-motion for summary judgment and in opposition to both Defendants' own summary judgment motions, Plaintiffs conceded that evidence of corrosion existed, but asserted in conclusory fashion that it was immaterial. Specifically, Ronald Papa averred that there was "no question" that evidence of rust at the electrical box was present, but asserted that "at no point had we ever experienced any amount of water in the Premises basement that would give any cause for concern." (R. 855 [emphasis in original]). Notably, this assertion neither refutes nor disproves the evidence in the record that the integrity of the electrical conduit was undermined by corrosion. Nor does this assertion preclude a reasonable juror from concluding that it was the pressure from the groundwater following the significant rains in June 201 0 that ultimately breached the corroded and compromised electrical conduit. In sum, Plaintiffs failed to establish their entitlement to summary judgment as a matter of law, inasmuch as they cannot establish their prima facie right to such relief by simply pointing to gaps in AIC's proof. (Rachlin v. Michaels Arts & Crafts, 118 AD3d 1391, 1392 [4th Dep't 2014]). The trial court therefore further erred in granting the cross-motion against AIC. 16 CONCLUSION Even considering the facts in a light most favorable to Plaintiffs, the plain and unambiguous terms of the Water Damage Exclusion and Endorsement in the Policy clearly limit coverage for Plaintiffs' claim of damage caused by groundwater flowing through an electrical conduit into the basement. Accordingly, the trial court erred by enlarging the scope of coverage beyond the express terms of the contract. Alternatively, the trial court further erred by granting Plaintiffs' summary judgment on the issue of AIC's liability where a triable issue of material fact exists regarding what caused the failure in the electrical conduit's integrity. Dated: June Z-').2016 By: Respectfully Submitted, HURWITZ & FINE, PC. Steven E. Peiper, Esq. Jennifer J. Phillips, Esq. Attorneys for Defendant-Appellant Associated Indemnity Corporation 1300 Liberty Building Buffalo, New York 14202 716-849-8900 17