Representing Insureds Since 1970

Copr. © West 2000 No Claim to Orig. U.S. Govt. Works




Index No.11954/97



Plaintiff 375 Riverside Drive Owners, Inc. ("375 Riverside Drive") moves for summary judgment against defendant Fireman's Insurance Company of Washington, D.C. ("Fireman's") in the sum of $401,619.78. Alternatively, plaintiff seeks leave to amend its complaint to add various additional parties as defendants. Firemen's opposes summary judgment.

Plaintiff is a cooperative corporation that owns a building located at 375 Riverside Dive. On or about June 1, 1996, Fireman's issued plaintiff a policy covering all risks, with certain exceptions, through June 1, 1997.

This dispute has its genesis in a kitchen renovation performed in apartment 11C by the former sponsor of the corporative in late 1996. As part of the project, gas lines were moved and reconfigured. The apartment was then sold to Peter and Mary Ross. Soon after moving into the premises, Mrs. Ross states that she began to smell gas in the kitchen. Con Edison was called but did not detect a leak. On January 11, 1997, Mrs. Ross states that she again detected the odor of gas in the kitchen. Con Edison came to the premises a second time. On this occasion a gas leak was discovered coming from a kitchen outlet. As a result of the leak, Con Edison shut off gas service to the entire building.

In order to reinstate gas service to a building § 27-922(d) of the Administrative Code of the City of New York requires pressure testing of the entire gas piping system. The gas lines are subjected to pressure six times greater then what the pipes normally carry. This testing was carried out by Gregory Quattlander, a licensed Master Plumber. The gas piping system was unable to pass the mandated integrity tests. There were numerous leaks in the system requiring replacement of the piping.

375 Riverside Drive immediately filed a claim with Firemen's seeking to recoup the loss under the insurance policy. Firemen's disclaimed, inter alia, on the ground that the policy did not cover loss for "wear and tear." It stated as follows:

…We find that there was no physical loss of or damage to Covered Property resulting from any Covered Cause of Loss. The proximate cause of this casualty is attributed to improper gas line work which resulted in leaks thereby necessitating a complete shut down of gas supply to the building and the subsequent discovery of various other leaks in the gas supply system most likely attributable to age related deficiencies of the existing materials…

On or about January 30, 1998 plaintiff commenced this action sounding in breach of contract. After engaging in some discovery proceedings, 375 Riverside moved for summary judgment. Plaintiff's position is straight forward - a direct physical loss was sustained as a result of a fortuitous event beyond its control. The gas piping system was shut down because of leak. The pipes were pressure tested pursuant to the Administrative Code. The system was unable to withstand the vigors of the integrity tests requiring replacement of the pipes.

Firemen's opposes summary judgment on two grounds. It contends that summary judgment is premature because it has not had an opportunity to depose Gregory Quattlander. Second, it urges that there is an issue of fact as to the cause of the damage to the gas pipe system. In support of this latter contention, Firemen's points to an affidavit of its expert, Jerome Levine, who opines that the integrity test did not cause the damage. Rather there were pre-existing cracks or defects in the system "caused by normal vibration of the pipes and normal degradation of the pipe compound over the last 70 years." (Levin Aff. At 8).

I found defendant's arguments sufficiently persuasive at oral argument to order a deposition of Quattlander prior to ruling on summary judgment. Levine was also produced for an examination before trial. The parties were then given an opportunity to supplement the record. The motion is now ripe for review.¹

In order to recover under an all risk insurance policy, the plaintiff must show that the loss was caused by a fortuitous event beyond the insured's control (New York State Electric & Gas Corp., 204 AD2d 226 (1st Dept. 1994). A fortuitous event is an occurrence that happens by chance or accident ( see Black's Law Dictionary 7th ed) and causes a loss. If this is established, the insurer "bears the burden of demonstrating that an exclusion in the policy defeats the claim." ( Moneta Development Corp. v. Generali Insurance Co., 212 AD2d 428, 429 (1st Dept. 1995).

Here, a series of fortuitous events caused the loss. First, a gas leak was discovered by Mrs. Ross and confirmed by Con Edison. As a result of the gas leak in the single gas line, the building's entire gas piping system was shut down. In order to reinstate service, the City mandated high pressure testing of the gas piping system.

Plaintiff's contention that the high pressure tests resulted in numerous leaks requiring replacement of the gas pipes is sustained by Quattlander's deposition testimony. He testified that in June, 1996 he did a "walk-through" (Quattlander Deposition at p.25). A visual inspection revealed that the gas distribution system was in good condition. Prior to January 11, 1997 there were no leaks. Had there been leaks prior to the testing, a "pungent odor" would have been detected (Id., at p. 85). Nor was there any visual evidence of pipe deterioration (Id., at p.87).

In addition, plaintiff has submitted affidavits from other individuals connected to the building who state, without contradiction, that prior to the events culminating in the gas leak discovered n January 11, 1997, there were no reported gas leaks or any problems with the gas piping system.

When questioned as to what caused the leaks, Quattlander testified as follows:

A. Whenever a building is subjected to pressure tests above and beyond gas pressure - - gas is free flowing. There's always pilot lights in the building. Gas is at a quarter to a half-pound only so it reaches the top floor. When you subject a buildingto a pressure test of three pounds, every threaded joint has a compound in it, which was installed as both a sealant and a lubricant upon original installation. The sealant hardens and makes a solid joint that is subjected to a maximum of a half-pound over its life. You now subject it to three pounds of air pressure and you create more leaks then were ever present in the time frame of the building [Quattlander Deposition at pp. 85-86].

Q. Were you able to determine why any of those five that you examined leaked, in other words, why pressure was allowed to escape from those?

A. No. The jointing was not disconnected to look at the actual internals of the fittings. We know they were not leaking prior to performing the pressure test.

Q. And because they leaked afterwards, you concluded that the test had something to do with the leak?

A. Absolutely [Quattlander Deposition at pp. 95].

Accordingly, the burden now shifts to the defendant to demonstrate that the loss is excluded under the terms of the policy. As noted earlier, Firemen's urges that an issue of fact precludes summary judgment. Defendant argues that Jerome Levine contradicts Quattlander's conclusion as to what caused the leak. Levine opines that the tests did not rupture the piping system. Rather the pipe compound utilized to seal the pipes was no longer effective in preventing gas leaks. Levine testified that the pipe compound had a finite shelf life of 30 to 35 years (Levine Deposition at p. 74). Thus, according to Levine, the pipes had been leaking for 30 to 35 years (Id. At p. 74). However, the leaks were minor. The leaks dissipated into the atmosphere and did not cause any problems (Id. At p. 79). Since the leaks were immaterial, it was not necessary to replace the pipe joint (Id., at p. 80).

Firemen's contention that "wear and tear" caused the defect in the gas piping system and was disclosed by the integrity test is insufficient as a matter of law. "Wear and tear" is a natural deterioration that occurs over age and gradually brings the sys to a halt. That is not what happened in this case. The basic undisputable fact that goes to the core of this controversy is that there was a functioning gas piping system at 375 riverside Drive prior to January 11, 1997. Gas may have leaked, as Levine contends, in miniscule amounts. However, he concedes that it was not necessary to change the pipes because the leaks were immaterial. Accordingly, prior to January 11, 1997, the pipes functioned, as designed to deliver gas to the apartments at 375 Riverside Drive. This functioning system came to an abrupt halt when Con Edison ordered the building to shut off the gas in the entire building because of the leak in apartment 11-C. The integrity test subjected the pipes to higher pressure then what the pipes normally carried causing the pipes to fail.

The court's finding here is supported by the holding of 20 East 35 Owners Corp. v. Great American Insurance Company, 1996 WL 438172 9SDNY). In that case a gas leak required Con Edison to shut off the gas supply to a building in New York City. Similar to the facts in this case, the building's gas values locks could not withstand the pressure test conducted pursuant to § 27-922(d) pf the Administrative Code.

Plaintiff sought recovery under an all risk policy. Defendant insurer denied the claim. Judge Duffy granted summary judgment in favor of the plaintiff funding that the loss was covered under the express terms of the policy. The Court stated in relevant part, as follows:

Paragraph C(2) of the insurance coverage policy states that the policy does not cover "loss or damage caused by or resulting from wear and tear…rust, corrosion, fungus, decay." Presumedly, Defendants cited this exclusion because of Critelli's statements that the cocks were worn through the years and would not withstand the extreme pressure test. Even though the gas supply system would have failed the extreme pressure test due to wear and tear, the fact remains that, until that time, the system was in proper working order and the gas cocks could withstand the gas pressure under normal working conditions. In fact, the building superintendent reported that the building had "no history of gas leaks or repairs to the gas supply over the past seven years." (Sweet Aff., Ex. C). Prior to the mandatory pressure testing, the deterioration of the gas supply system was inconsequential. As such, the damages complained or herein, that is the required replacement of the gas cocks and portions of the walls, resulted not from deterioration or wear and tear, but from the rupturing of the gas pipe.

Similarly here, the gas piping system was old and may have had some inconsequential leaks. The leaks, however, did not prevent the gas system from functioning. Its replacement can be traced directly to the gas leak in Apartment 11C and the inability of the gas piping system to pass the pressure tests.

Accordingly, the Court finds that as a mater of law the loss falls within the provisions of he all risk policy and that defendant has failed to establish that the loss meets any policy exclusion.

For these reasons, plaintiff is granted summary judgment in the sum of $401,619.78 with interest from January 11, 1997. The motion to amend the complaint is denied as moot.

This decision constitutes the order of the Court.


1. Firemen's contends that further deposition of non-party witnesses - Con Edison and City employees - are necessary. I disagree. this action has been pending since October, 1997. Depositions of non-party witnesses should have taken place in this two year period.