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Syvertsen v. Great American Insurance Company (N.Y.App.Div. 12/23/1999)
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Supreme Court12/23/1999
Appeals (1) from an order of the Supreme Court (Ingraham, J.), entered August 21, 1998 in Otsego County, which granted defendants' motions for summary judgment and declared that they were not obligated to defend or indemnify plaintiffs in a Federal action, and (2) from two amended judgments entered thereon.
Plaintiffs purchased a building in November 1972 that had been operated as a college fraternity house in the City of Oneonta, Otsego County. In March 1987, an inspection of the premises resulted in a finding of 41 violations of the City's Housing Code, ordered to be repaired within 30 days of receipt of the notice of violation. It is alleged that the notice further contained a statement that the electrical wiring violations listed on a report of the New York Board of Fire Underwriters, dated June 19, 1985, had never been reinspected as corrected and that such violations were continually cited on inspection notices to plaintiffs between June 19, 1985 and March 10, 1987.
Between March 10 and July 27, 1987, plaintiffs purportedly made certain repairs on the building in an attempt to obtain a certificate of compliance from the City for the purpose of facilitating a sale. After the issuance of the notice of violation but prior to a sale, the City Housing Board of Appeals, then chaired by plaintiff Stanley A. Syvertsen, granted variances to plaintiffs with respect to certain code requirements cited in the notice of violation. In July 1987, a certificate of compliance was issued. At or about such time, plaintiffs entered into an agreement with a corporation to sell these premises and said contract was assigned to Margaret Orezzoli, who is not a party to this action. Orezzoli purchased this building in reliance on the certificate of compliance and the representation by plaintiffs that the building was in habitable condition.
After taking possession, Orezzoli discovered that most of the code violations had not been remedied and that the building was in a general state of disrepair. The City's Code Enforcement Officer thereafter issued a series of inspection reports, beginning July 29, 1988, which alleged numerous old and new violations of various codes, laws and regulations. Later it revoked the certificate of compliance and the City Zoning Board of Appeals terminated the prior nonconforming use of the building as a fraternity house.
In July 1990, Orezzoli commenced an action against plaintiff and others in the US District Court for the Northern District of New York alleging causes of action in common-law fraud, civil conspiracy and the violation of her civil rights under 42 USC ยง1983 (hereinafter the Orezzoli action). As to these plaintiffs, Orezzoli charged a civil conspiracy, fraudulent misrepresentation and, as to Syvertsen, a violation of her constitutional right to due process and equal protection based upon his membership in and acts undertaken by the City's Housing and Zoning Boards of Appeal.
Upon their receipt of the complaint in the Orezzoli action, plaintiffs requested that their insurers -- defendant Utica Mutual Insurance Company, defendant Great American Insurance Company and defendant Royal Insurance Company of America -- defend the action. All three disclaimed coverage, contending that under the terms of the relevant policies they had no obligation to defend or indemnify. Plaintiffs thereafter commenced the instant action seeking a recovery for defense costs and indemnification for the judgment recovered by Orezzoli in the Federal action. After issue was joined, defendants each filed motions for summary judgment which were granted. This appeal emanates from said order and from the two amended judgments entered thereon.
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