Soon after, 4 NYP submitted claims totaling $20 million for “Flood” losses, which FM paid. Subsequently, 4 NYP claimed that the policy included “a specific grant of coverage for the peril of 'Named Storm,'” and that 4 NYP could collect on that peril up to $500 million.

4 NYP sued after FM refused to make further payments.

FM moved for summary judgment, arguing that the $20 million “Flood” limit was applicable, and that FM had satisfied its policy obligations by paying 4 NYP $20 million for its losses.

The Factory Mutual Policy

The Factory Mutual policy's

Deductibles

section set a baseline deductible of $10,000 and higher deductibles in the event of, among other things,

Flood

and

Named Storm

losses.

It defined

Named Storm

as:

Wind and/or Flood, when such Wind and/or Flood is associated with or occurs in conjunction with a storm or weather disturbance which is identified by name by any meteorological authority, such as the U.S. National Weather Service or National Hurricane Center, whether or not such storm or weather disturbance is named prior to loss or damage. 

The Policy listed 31 categories of

Additional Coverages

, including

Flood

but not Named Storm. The

Flood

section stated:

This Policy covers physical loss or damage caused by or resulting from Flood.

It defined

Flood

as, among other things, physical loss or damage caused by

surface waters

rising waters

storm surge

or

sea surge

as well as

[p]hysical loss or damage from Flood associated with a storm or weather disturbance whether or not identified by name by the U.S. National Hurricane Center or any other meteorological authority. 

The court granted FM's motion, holding that the FM policy did not provide for distinct “Named Storm” coverage. The court ruled that “Flood” damage had caused 4 NYP's losses, and that FM had paid 4 NYP all that 4 NYP was entitled to under the policy.

In its decision, the court decided that the FM Policy was “clear and unambiguous” and that it provided an “expansive definition” of what constituted “Flood” damage, which included the losses caused by Sandy. The court added that any doubts were removed by 4 NYP's first and second claims, which listed “Flood” as the cause of loss.

Accordingly, the court found, because the losses were caused by “Flood” damage, the $20 million “Flood” sublimit applied and was the “maximum amount payable for all loss or damage.” Because FM already had paid 4 NYP $20 million, it had no further liability to 4 NYP regarding Sandy losses, the court ruled.

The court then addressed 4 NYP's argument that Sandy was a “Named Storm” as defined in the FM policy; that the FM policy included a specific grant of coverage for the peril of “Named Storm”; and that losses from a “Named Storm” were covered up to the full policy limit of $500 million and without regard to the $20 million “Flood” sublimit.

First, the court agreed that Sandy was a “Named Storm” because the storm was identified by name by the National Weather Service.

However, the court found that nothing in the FM policy said that “Named Storm” was a distinct peril entitled to independent coverage. It said that, beyond the definition, the term “Named Storm” appeared seven times in the FM policy and that six instances were in the “Deductibles” section, which set forth higher than normal deductibles for damages caused by a “Named Storm.” The seventh instance, the court continued, was in the “Limits of Liability” section, setting forth a $200 million sublimit for “Named Storm in Tier I Wind Counties.” The court said that this provision was “irrelevant” because the property was “not in a Tier I Wind County.” Therefore, the court ruled, nothing in the FM policy explicitly provided for distinct coverage for losses incurred due to a “Named Storm.”

The court also found it “telling” that “Named Storm” was not included in the “Additional Coverages” section of the policy, which set forth “a full range of possible causes of damages that might occur at the property” that the FM policy covered. The court observed that, in addition to “Flood,” it included “Brand and Labels,” “Data, Programs or Software,” “Debris Removal,” “Earth Movement,” “Fine Arts,” “Terrorism,” and “dozens more” – but that “Named Storm” did not appear on that list, which “belie[d] any inference” that the FM policy implicitly covered “Named Storm” as a distinct peril.

The court also reasoned that because the policy defined “Named Storm” as “Wind and/or Flood” damage, when that damage was related to a storm named by a meteorological authority, and because 4 NYP never claimed any “Wind” damages, its claim for “Named Storm” damages collapsed “into simply a claim for 'Flood' damages.” There was “no independent 'Named Storm' coverage.”

Finally, the court concluded that even if the FM policy permitted “Named Storm” coverage, it would not follow that the limit on that coverage would be $500 million because the losses fell under the $20 million “Flood” sublimit. Under the “explicit terms” of the FM policy, the court ruled, that was “the maximum amount” that FM was liable for all losses or damages. It concluded:

So even if 4 NYP could classify the losses as “Named Storm” in addition to “Flood,” the most it could collect would still be $20 million.

The case is 4 NYP Ventures LLC v. Factory Mutual Ins. Co., No. 14 Civ. 8602 (PAC) (S.D.N.Y. July 12, 2016).