Pizza On 23rd Corp v. Liberty Mutual Insurance Company

Background

Pizza On 23rd Corp brought claims for breach of an insurance contract and bad-faith denial of coverage. The caption names Liberty Mutual Insurance Company as the defendant, but the opinion states that Ohio Security Insurance Company was the proper defendant because Liberty Mutual did not issue the policy or enter into a contract with Pizza On 23rd. Ohio Security moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), a motion asking the court to decide the case from the pleadings and documents properly considered with them.

The insurance policy stated that no legal action could be brought unless it was filed within two years after the date on which the direct physical loss or damage occurred. Ohio Security argued that this provision barred the claims. Pizza On 23rd did not argue that the shortened deadline was unenforceable. Instead, it argued that the phrase “direct physical loss or damage” was ambiguous and that the deadline should begin on May 12, 2021.

Court’s Analysis

The court applied New York contract-interpretation law. It explained that a contract is ambiguous only when its language reasonably supports more than one interpretation; the absence of a definition does not by itself make a term ambiguous.

The court held that “direct physical loss or damage” plainly refers to a negative change in the tangible condition of property. The policy’s reference to the date on which that loss or damage occurred also unambiguously points to the physical event that caused the damage, rather than to a later date when the damage ended or when the insured surrendered the premises.

Because the First Amended Complaint alleged that the water leak began on July 1, 2020, the court held that the policy’s two-year limitations period began on that date. Continuing damage after that date did not change the start of the contractual deadline. The court therefore concluded that the November 4, 2022 lawsuit was filed too late and that Pizza On 23rd’s claims were time-barred under the policy.

Disposition

Judge Paul G. Gardephe granted Ohio Security’s motion for judgment on the pleadings. The Clerk was directed to terminate the motion, enter judgment, and close the case. The opinion does not state that the judgment was entered with or without prejudice.