New York Court: Undefined Word “Occurrence” in a Deductible Provision Must be Construed by the Finder of Fact

Many property policies expressly define the term “occurrence” to encompass a series of similar and related events.  Last month, however, in Rokeach v. Hanover Ins. Co., 2015 WL 2400097, U.S. Dist. LEXIS 6580 (May 19, 2015, S.D.N.Y.), a New York federal court held that when the word is employed in the policy’s deductible provision without either emphasis or quotation marks, it is effectively undefined, and the question of whether it should be understood to denote a single occurrence or a series of multiple occurrences must be determined by the jury.

shutterstock_35357998The policyholder operated a welding business in Uniondale, and the company stored scrap metal in an ungated yard on the property.  As summarized by the court, the undisputed facts were as follows:

Thieves collected and carted away multiple separate loads of Mr. Rokeach’s property between mid-June 2011 and the date of their arrest on July 21, 2011.  The evidence suggests that the thefts were linked – the two thieves who were ultimately arrested were seen on the property multiple times, the thieves “staged” material during some trips for removal in other trips; they used the same means to steal the property – pulling up in the same truck in the same location multiple times to load the material.

The policy defined an “occurrence” to mean “all loss or damage that is attributable directly or indirectly to … [o]ne cause, act, event, or a series of similar, related causes, acts or events involving one or more persons[.]”  The businessowners contract of insurance also had a deductible provision that required that loss or damage “in any one occurrence” exceed $1,000, however, and the load tickets that the insured provided to the police department after the theft was reported indicated that the value of each separate load of pilfered scrap metal was less than $1,000.  The insurer therefore denied the claim.  The carrier noted that the policy stated that “words and phrases that appear in quotation marks have special meaning,” and it argued that because the term “occurrence” in the deductible provision was not in quotes, that meant that the word “must be read in a way that does not permit a series of related events to be treated as a single ‘occurrence’.”

The Southern District of New York disagreed.  Judge Gregory Woods’ opinion looked to the Second Circuit’s well-known decision in World Trade Center Properties, LLC v. Hartford Fire Ins. Co., 345 F.3d 154 (2d Cir. 2003) – a case arising out of the events of September 11, 2001 that turned on whether the terrorist attacks on the World Trade Center should be deemed to be a single occurrence or two separate occurrences.  The word was undefined in the primary property policy at issue in that case, and the Court of Appeals held that that meant that it was ambiguous because “in a first-party property insurance case, the meaning of the undefined term ‘occurrence’ is an open question as to which reasonable finders of fact could reach different conclusions.

Judge Woods was of the same opinion, and he therefore denied the insurance company’s motion for summary judgment.  As the court explained, the insurance company

is correct that the term “occurrence” does not appear in quotation marks in the deductibles provision of the Policy.  As a result, the expansive meaning of the defined term “occurrence” does not necessarily apply in that context.  However, it is not clear that the undefined term “occurrence” must be interpreted in a manner that would preclude the aggregation of multiple visits by a set of thieves to a single property into a single ‘occurrence[.]’ . . . Because the undefined term “occurrence” is ambiguous, a finder of fact must determine its meaning.

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About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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