JRS Ltd. v. ACE American Insurance Co.

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
____________________________________________
JRS LTD.,
Plaintiff,
vs. 	1:25-CV-730
(MAD/PJE)
ACE AMERICAN INSURANCE COMPANY,
Defendant.
____________________________________________
APPEARANCES: 	OF COUNSEL:
COHEN ZIFFER FRENCHMAN 	CHELSEA IRELAND, ESQ.
& MCKENNA LLP 	KENNETH H. FRENCHMAN, ESQ.
1325 Avenue of the Americas, 31st Floor
New York, New York 10019
Attorneys for Plaintiff
FORAN GLENNON PALANDECH 	CHARLES J. ROCCO, ESQ.
PONZI & RUDLOFF 	DAWN M. BREHONY, ESQ.
40 Wall Street, 54th Floor
New York, New York 10005
Attorneys for Defendant
CLYDE & CO US LLP 	GARION T. LIBERTI, ESQ.
2 Grand Central Tower
140 East 45th Street, 26th Floor
New York, New York 10017
Attorney for Defendant
Mae A. D'Agostino, U.S. District Judge:
MEMORANDUM-DECISION AND ORDER
I. INTRODUCTION
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On June 9, 2025, JRS Ltd. ("Plaintiff"), as assignee of nonparty Gravity Renewables, Inc.
("Gravity"),1 brought this diversity action against ACE American Insurance Company
("Defendant") for breach of an insurance agreement. See Dkt. No. 1. The complaint lists three
causes of action: (1) breach of contract – property damage; (2) breach of contract – business
interruption; and (3) consequential damages. See id.
On August 7, 2025, Defendant moved to dismiss the complaint under Federal Rule of
Civil Procedure 12(b)(6), arguing that Plaintiff's complaint is untimely. See Dkt. No. 12.
Plaintiff opposed the motion on September 3, 2025, see Dkt. No. 18, and Defendant filed a reply
on September 19, 2025, see Dkt. No. 21. For the following reasons, Defendant's motion is
denied.
II. BACKGROUND
This action arises out of a large-scale operational failure at Gravity's Dahowa
Hydroelectric Plant ("the Plant"), a renewable energy facility in Greenwich, New York. See Dkt.
No. 1 at ¶¶ 1-3. The Plant uses waterflow to generate electricity and relies on "various gates and
seals" to control the waterflow. Id. at ¶ 13. Two of the apparatuses are tailwater gates and turbine
blade seals. See id.
Plaintiff alleges that "[i]n December 2020, several turbine blade seals failed, allowing
river water to contaminate the hydraulic power unit . . . system." Id. at ¶ 14. Because of the
failure, Gravity shut down the Plant for an emergency repair. See id. During the emergency
repair, "Gravity discovered that the tailwater gates were not sealing properly[.]" Id. at ¶ 15. The
1 As alleged in the complaint, on December 4, 2024, Plaintiff, Gravity, and a third party executed
an agreement that assigned Gravity's insurance policy claims to Plaintiff. See Dkt. No. 1 at ¶¶ 88-
91. Defendant does not dispute that Plaintiff is the real party in interest with respect to this action
or otherwise question Plaintiff's status as a proper litigant. See id. at ¶ 91; see also Dkt. No. 12-1.
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emergency repair was finished by January 2021, but Gravity determined that further investigation
and repairs were needed. See id. at ¶¶ 14-16. Gravity decided to have commercial divers
investigate the problem. See id. at ¶ 16. The dive was postponed until August 2021, when water
temperatures and river flows were expected to be safer for the divers. See id. at ¶ 18.
To facilitate the August 2021 investigation and repairs, Gravity needed to dewater the
Plant. See id. at ¶ 19. The divers installed custom aluminum sealing plates on September 9,
2021. See id. at ¶ 21. However, problems persisted because a drain line was clogged with
sediment. See id. at ¶ 22. The drain line was cleared on October 7, 2021. See id. at ¶ 23. The
divers eventually completed the seal after several safety-related delays, and the dewatering
process began on November 10, 2021. See id. at ¶ 26.
On January 12, 2022, Gravity was able to inspect the tailwater gate chambers for the first
time since the Plant's construction in 1991. See id. at ¶ 33. The inspection revealed that decades
of concrete cracking and deterioration caused the seal issues. See id. at ¶¶ 34-35. Gravity
developed a repair plan, completed the necessary repairs, and returned the Plant to service on May
25, 2022. See id. at ¶¶ 36-37.
Plaintiff alleges the Plant was inoperable from August 2021 through May 2022, and due to
the shutdown, Gravity incurred at least $1,668,313 in repair costs. See id. at ¶¶ 2, 39.
Additionally, Plaintiff claims that Gravity lost at least $3,905,192 of income during that period.
See id. at ¶ 39. Gravity had purchased an insurance policy (the "Policy") from Defendant for
these types of losses, and the Policy was in effect during the relevant period. See id. at ¶¶ 40-41.
Gravity notified Defendant of its claim for coverage under the Policy, see id. at ¶ 52, and Plaintiff
alleges that after a "protracted and frustrating investigation[,]" Defendant paid "less than half of
the total covered loss to which Gravity was entitled[,]"id. at ¶ 53.
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According to the complaint, Defendant appointed Sedgwick CMS ("Sedgwick") as its
claim adjuster to investigate Gravity's purported loss. See id. Sedgwick began its investigation
on March 3, 2022. See id. at ¶ 54. Approximately one month later, on April 4, 2022, Sedgwick
sent a letter on Defendant's behalf summarizing Defendant's understanding of the loss. See id. at
¶ 55 (quoting Dkt. No. 1-2 at 2). Defendant also hired an engineering firm and an accounting
firm to assist with its investigation. See id. at ¶ 57 (quoting Dkt. No. 1-2 at 2).
In May 2023, more than a year later, Defendant valued Gravity's claim at approximately
$1,444,897. See id. at ¶ 59. After Defendant and Gravity executed proofs of loss as to that
amount, Defendant paid Gravity $1,176,802 (the valuation amount, minus deductibles). See id. at
¶¶ 60-61.
Three months later, in August 2023, Sedgwick wrote to Gravity on Defendant's behalf
with an update on the investigation and additional coverage. See id. at ¶ 62. Sedgwick informed
Gravity that the Policy covered some of the claimed property damage, but not all. See id. at ¶ 63
(quoting Dkt. No. 1-4 at 2). Sedgwick also stated that "'the period of interruption should be
limited to 80-days.'" Id. (quoting Dkt. No. 1-4 at 2). According to Plaintiff, Sedgwick "assured
Gravity that" Defendant had not made a final coverage determination and would "continue its
investigation." Id. at ¶ 64; Dkt. No. 1-4 at 7. A section of the August 2023 letter labeled "Suit
Limitation Period" reads in part: "You requested a 180-day extension of the Policy's suit
limitation period. In response to your request, [Defendant's agent] consents to extend the suit
limitation 120 days to March 10, 2024, to the extent that it has not yet expired." Dkt. No. 1-4 at 7.
On January 31, 2024, Sedgwick sent another letter as a "supplement" to its August 2023
letter. Dkt. No. 1 at ¶ 65; see Dkt. No. 1-5. Therein, Sedgwick reiterated Defendant's position
regarding which costs were covered and agreed to increase the interruption period to 88 days. See
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Dkt. No. 1 at ¶ 65 (citing Dkt. No. 1-5 at 2-3). Sedgwick re-confirmed that the investigation was
ongoing. See id. at ¶ 66; see Dkt. No. 1-5 at 4.
On June 10, 2024, Sedgwick sent a letter with what Plaintiff considers to be Defendant's
"final coverage position." Dkt. No. 1 at ¶ 67; Dkt. No. 1-6. That coverage position provided for
an additional property damage payment of $134,386 and an additional business interruption
payment of $145,893. See Dkt. No. 1 at ¶ 68; Dkt. No. 1-6 at 4. The parties executed an updated
proof of loss on July 10, 2024. See Dkt. No. 1 at ¶ 68; Dkt. No. 1-7. Plaintiff alleges that
Defendant undervalued the covered costs by more than $700,000.2 See Dkt. No. 1 at ¶ 69 (citing
Dkt. No. 1-7).
The parties disagree on (1) which part of their insurance agreement governs the applicable
suit limitation period; and (2) when the limitation period began. See Dkt. Nos. 12-1, 18, 21. The
parties' arguments rely on limitation periods mentioned in the Policy and related documents. See
Dkt. Nos. 12-1, 18, 21. Plaintiff appended the Policy to its complaint and opposition to
Defendant's motion to dismiss. See Dkt. Nos. 1-1, 18-1. The relevant provisions include the
Policy's Property All Risk Insurance ("PARI") part and Commercial Property Conditions ("CPC")
part, as well as a New York-specific endorsement. See Dkt. Nos. 12-1, 18; see also Dkt. Nos. 1-
1, 18-1. Also at issue is a document labeled "Legal Liability Coverage Form" (the "Form"),
which Defendant attached as an exhibit to its motion. See Dkt. No. 12-3; see also Dkt. No. 1-1 at
85.
The text of the CPC part requires lawsuits to be brought "within 2 years after the date on
which the direct physical loss or damage occurred." Dkt. No. 1-1 at 9. The Legal Liability
2 Because Defendant argues for dismissal on timeliness grounds only, see Dkt. No. 12-1, the
Court will not summarize in detail the computation of the loss amounts.
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Coverage Form states that "[v]arious provisions in this policy restrict coverage." Dkt. No. 12-3 at
2. The Form does not include a specific statute of limitations, but contains a section titled "Legal
Action Against Us." Id. at 4. The New York endorsement also includes a "Legal Action Against
Us" provision and states as follows: "No person or organization has a right under this Coverage
Form: a. To join us as a party or otherwise bring us into a 'suit' asking for damages from you; or
b. To sue us on this Coverage Form unless all of its terms have been fully complied with." Dkt.
No. 18 at 10 (quoting (Dkt. No. 1-1 at 85).
Plaintiff argues that the New York endorsement modifies the CPC part by removing the
two-year suit limitation and opposes introduction of the Form. See id. at 14-18. Plaintiff
contends the endorsement "replaces the CPC Section's Suit Limitation Clause and removes any
contractual requirement to bring suit against ACE within a specific time period." Id. at 10.
Defendant argues that the two-year CPC limitation period applies because the endorsement
modifies the Form, not the CPC part. See Dkt. No. 12-1 at 9-10; Dkt. No. 21 at 5-6. Defendant
avers the Form "is not part of the Policy." Dkt. No. 12-1 at 10. Defendant also argues that the
"endorsement specifically states that it applies only to the Legal Liability Coverage Form." Dkt.
No. 21 at 5.
However, Plaintiff contends that none of this matters. Plaintiff argues that, regardless of
which document the New York endorsement modifies, the CPC part does not provide the
governing statute of limitations. See Dkt. No. 18 at 20-21. Instead, Plaintiff advocates for an
entirely separate limitation period set forth in the PARI part. See id. The PARI part of the Policy
requires a party to sue "within twelve (12) months from the date of the Occurrence[,]" Dkt. No. 1-
1 at 23, with "occurrence" defined as "any loss or series of losses arising out of one event[,]" id. at
31.
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Defendant argues that, even if the PARI part applies, the date Plaintiff proposes as
beginning the statute of limitations is incorrect. See Dkt. No. 21 at 8-10. Plaintiff seeks to rely on
the date Defendant denied insurance coverage, see Dkt. No. 18 at 23-27; whereas Defendant seeks
to rely on the date damage occurred at the Plant, see Dkt. No. 21 at 8-10.
III. DISCUSSION
A. 	Motion to Dismiss Standard
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the "legal
sufficiency" of the pleader's claim for relief. Patane v. Clark, 508 F.3d 106, 111-12 (2d Cir.
2007) (citation omitted). Although a court's review of a motion to dismiss is generally limited to
the facts presented in the pleading, courts may still consider documents attached to the pleading
as an exhibit or incorporated by reference into the pleading. See Mangiafico v. Blumenthal, 471
F.3d 391, 398 (2d Cir. 2006) (quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d
Cir. 2002)). A court may also consider documents that are "integral" to the pleading, even if they
are not physically attached or incorporated by reference. Id. (quoting Chambers, 282 F.3d at 152-
53).
In deciding a motion to dismiss under Rule 12(b)(6), courts must accept as true all well-
pleaded facts in the pleading and draw all reasonable inferences in the pleader's favor. See ATSI
Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (citation omitted). This
presumption of truth does not extend to legal conclusions. See Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (citation omitted). Additionally, "[w]hen documents attached to the complaint as
exhibits or incorporated by reference in the complaint contain statements that contradict the
allegations in the complaint, the documents control and the Court need not accept the allegations
as true." Endemann v. Liberty Ins. Corp., 390 F. Supp. 3d 362, 370 (N.D.N.Y. 2019), partial
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reconsideration granted, No. 5:18-CV-701, 2020 WL 5027241 (N.D.N.Y. Aug. 25, 2020)
(quoting Roth v. Jennings, 489 F.3d 499, 510-511 (2d Cir. 2007)) (other citations omitted). To
survive a motion to dismiss, a party need only plead "a short and plain statement of the claim[,]"
see F ED. R. C IV. P. 8(a)(2), with sufficient factual "heft to 'sho[w] that the pleader is entitled to
relief[,]'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007). Under this standard, the
pleading's "[f]actual allegations must be enough to raise a right to relief above the speculative
level," id. at 555 (citation omitted), and present claims that are "plausible on [their] face," id. at
570. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than
a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (citation
omitted). A complaint that "pleads facts that are 'merely consistent with' a defendant's liability"
generally does not meet the pleading standard. Id. (quoting Twombly, 550 U.S. at 557).
Further,
Rule 12(b) gives district courts two options when matters outside
the pleadings are presented in response to a 12(b)(6) motion: the
court may exclude the additional material and decide the motion on
the complaint alone[,] or it may convert the motion to one for
summary judgment under [Federal Rule of Civil Procedure] 56 and
afford all parties the opportunity to present supporting material.
Fonte v. Bd. of Managers of Cont'l Towers Condo., 848 F.2d 24, 25 (2d Cir. 1988). "If, on a
motion under Rule 12(b)(6) . . . , matters outside the pleadings are presented to and not excluded
by the court," the court must convert the motion into one for summary judgment. FED. R. C IV. P.
12(d). Conversion is not required if the court disregards the extrinsic material. See Cleveland v.
Caplaw Enters., 448 F.3d 518, 521 (2d Cir. 2006).
B. 	Consideration of Extrinsic Document
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Before the Court can analyze the parties' arguments regarding the applicable statute of
limitations, it must determine whether to consider a document introduced with Defendant's
motion: the Legal Liability Coverage Form. See Dkt. No. 12-3. All the other relevant documents
were submitted as exhibits to the complaint. If the Court deems the Form extrinsic evidence and
chooses to consider it, the Court must convert Defendant's motion to dismiss into a motion for
summary judgment. See Looby v. Safeco Nat'l Ins. Co., No. 1:25-CV-533, 2025 WL 3467652, *2
(N.D.N.Y. Dec. 3, 2025) (quoting FED. R. C IV. P. 12(d)). The Court may also choose not to
consider the Form and decide the motion under the Rule 12(b)(6) standard. See id. (citing
Cleveland, 448 F.3d at 521). The Court has discretion on which approach to take, and "[t]he
'essential inquiry[]' . . . is whether the parties 'should reasonably have recognized the possibility
that the motion might be converted to one for summary judgment or [whether they were] taken by
surprise and deprived of a reasonable opportunity to meet facts outside the pleading." Garcha v.
City of Beacon, 351 F. Supp. 2d 213, 216 (S.D.N.Y. 2005) (quoting In re G. & A. Books, Inc., 770
F.2d 288, 294-95 (2d Cir. 1985)) (other citation omitted).
The Form is not mentioned in the complaint.3 See Dkt. No. 1. The Form is not attached
to the complaint, nor does the complaint rely on it so pervasively as to render the Form integral to
the complaint. See Dkt. Nos. 1, 1-1. Thus, the Form is not part of the pleadings, and the Court
must decide whether to consider the Form as extrinsic evidence and convert the motion.
Defendant contends "the Legal Liability Coverage Form was only included as an exhibit
for illustrative purposes. It was not submitted to resolve ambiguity in the Policy, nor does it
affect the substantive interpretation of the Policy." Dkt. No. 21 at 7. Defendant claims it
3 In its motion to dismiss, Defendant notes that the Form is referenced in Exhibit 1 to the
complaint. See Dkt. No. 12-1 at 10 n.5. The complaint itself does not make any allegations
regarding the Form.
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introduced the Form, "which is not part of the Policy," to show that the Form would have been
modified by the New York endorsement. Id.
Both parties acknowledge the possibility of Defendant's motion to dismiss being converted
to a motion for summary judgment and had the opportunity to submit extrinsic evidence with their
motion papers. See Dkt. No. 18 at 18; Dkt. No. 21 at 7. However, the motion papers focus
primarily on the issue of timeliness and rely on various provisions within the Policy. Because
Defendant expressly states the Form is not intended to influence the Court's interpretation of the
Policy or resolve any potential ambiguities, Defendant appears to admit that the Form is
unnecessary to the Court's resolution of its motion. This admission, coupled with the limited
availability of evidence because discovery has not yet occurred, supports a decision not to
consider the Form and to refrain from converting the motion to dismiss into a motion for
summary judgment. See Islip U-Slip LLC v. Gander Mountain Co., 2 F. Supp. 3d 296, 305
(N.D.N.Y. 2014) (declining to convert a motion to dismiss into a motion for summary judgment
because "conversion would not be 'likely to facilitate the disposition of the action'") (quoting
Stephens v. Bayview Nursing & Rehab. Ctr., No. 07-CV-596, 2008 WL 728896, *2 (E.D.N.Y.
2008)); Wajilam Exps. (Sing.) Pte. Ltd. v. ATL Shipping Ltd., 475 F. Supp. 2d 275, 278 (S.D.N.Y.
2006) ("There would be little point in considering a summary judgment motion when significant
relevant facts may yet be discovered").
Accordingly, the Court declines to consider the Legal Liability Coverage Form and
proceeds under the Rule 12(b)(6) standard.
C. 	Contract Interpretation Under New York Law
"[F]ederal courts sitting in diversity apply state substantive law and federal procedural
law." Gasperini v. Ctr. for Humans., Inc., 518 U.S. 415, 427 (1996). Courts in this circuit have
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previously followed state substantive law when deciding diversity cases involving insurance
policy disputes, including with regard to statutes of limitation. See Endemann, 390 F. Supp. 3d at
370-71 & n.2 (collecting cases); Looby, 2025 WL 3467652, at *3. The Court does the same here,
as the insured property is located in New York, see Dkt. No. 1 at ¶ 1, and both parties apply New
York substantive law in their motion papers, see Dkt. No. 12-1 at 7-8 (referring to New York law
regarding time limitations in insurance policy disputes); Dkt. No. 18 at 24-27 (same).
"For a defendant to prevail on a motion to dismiss for breach of contract, the contract must
unambiguously support the defendant's position." Pro. Fighters League, LLC v. Takeover Indus.,
Inc., 770 F. Supp. 3d 718, 724 (S.D.N.Y. 2025) (citation and internal quotation marks omitted).
Although courts are not required to "accept the allegations of the complaint as to how to construe
a contract, they should resolve any contractual ambiguities in favor of the plaintiff on a motion to
dismiss." Id. (citation and internal quotation marks omitted). "[I]f a contract is ambiguous as
applied to a particular set of facts, a court has insufficient data to dismiss a complaint for failure
to state a claim." Eternity Glob. Master Fund Ltd. v. Morgan Guar. Tr. Co. of N.Y., 375 F.3d
168, 178 (2d Cir. 2004).
In insurance coverage disputes, New York law requires that courts "first look to the
language of the policy[.]" Consol. Edison Co. of N.Y., Inc. v. Allstate Ins. Co., 98 N.Y.2d 208,
221 (2002) (citing Breed v. Ins. Co. of N. Am., 46 N.Y.2d 351, 354-55 (1978)). A court must
construe an insurance policy "in a way that 'affords a fair meaning to all of the language
employed by the parties in the contract and leaves no provision without force and effect.'" Id. at
221-22 (quoting Hooper Assocs., Ltd. v. AGS Computs., Inc., 74 N.Y.2d 487, 493 (1989)). Courts
are to interpret insurance policies "liberally in favor of the insured and strictly against the
insurer." Penna v. Fed. Ins. Co., 28 A.D.3d 731, 731 (2d Dep't 2006) (citing Gov't Emps. Ins. Co.
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v. Kligler, 42 N.Y.2d 863, 864 (1977)). They must also read endorsements together with the
policy they purport to modify. See id. at 731-32 (quoting Cnty. of Columbia v. Cont'l Ins. Co., 83
N.Y.2d 618, 628 (1994)) (other citations omitted). "The Court . . . need not follow the literal
meaning of the language used if doing so would, based on the structure and purpose of the
agreement, produce a result that is absurd, commercially unreasonable, or contrary to the
reasonable expectation of the parties." Pro. Fighters League, 770 F. Supp. 3d at 725 (citation and
internal quotation marks omitted); see also Atlas Partners, LLC v. STMicroelectronics, Int'l N.V.,
No. 14-CV-7134, 2015 WL 4940126, *5 (S.D.N.Y. Aug. 10, 2015).
The presence of ambiguity in a contract "is a threshold question of law to be determined
by the court." Duane Reade, Inc. v. St. Paul Fire & Marine Ins. Co, 411 F.3d 384, 390 (2d Cir.
2005). A contract is ambiguous when its terms "could suggest more than one meaning when
viewed objectively by a reasonably intelligent person who has examined the context of the entire
integrated agreement and who is cognizant of the customs, practices, usages and terminology as
generally understood in the particular trade or business." Id. (quoting Morgan Stanley Grp. Inc. v.
New Eng. Ins. Co., 225 F.3d 270, 275 (2d Cir. 2000)); see also Mostow v. State Farm Ins. Cos.,
88 N.Y.2d 321, 326-27 (1996) ("[T]he test to determine whether an insurance contract is
ambiguous focuses on the reasonable expectations of the average insured upon reading the policy
. . . and employing common speech") (citations omitted). Applying New York law, the Second
Circuit has characterized "ambiguity" as "the inadequacy of the wording to classify or
characterize something that has potential significance." Eternity, 375 F.3d at 178.
1. 	Policy Provision Governing Suit Limitation Period
Before determining if Plaintiff's complaint was timely filed, the Court must address the
parties' dispute over which section of the Policy applies to the underlying insurance claim: the
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PARI coverage part or the CPC coverage part. See Dkt. No. 18 at 20 (Plaintiff stating that the
claim "falls within the Policy's All-Risk Coverage"); Dkt. No. 21 at 8 (Defendant questioning
Plaintiff's "strange claim that the coverage in dispute is not in fact commercial property insurance
coverage"). Defendant's motion to dismiss—which is substantively eight pages in length—
appears to assume the CPC part applies, see Dkt. No. 12-1 at 9, but Plaintiff argues "[t]here is no
dispute" that the PARI part governs, Dkt. No. 18 at 20. Defendant reiterates its contrary position
in its reply. See Dkt. No. 21 at 8. Much of the parties' disagreement concerns the New York
endorsement and whether it changes the CPC part's two-year suit limitation. See Dkt. No. 12-1 at
9-10; Dkt. No. 18 at 14-17; Dkt. No. 21 at 5-6. However, as explained below, because the PARI
part plausibly applies, the Court need not reach the New York endorsement dispute.
At the motion to dismiss stage, the Court must look to the pleadings and their attached
exhibits, drawing all reasonable inferences in Plaintiff's favor. Based on the Court's review of the
pleadings, Plaintiff plausibly alleges coverage under the PARI part of the Policy. For example,
the complaint states that "[u]nder the Policy's Property All Risk Insurance Form[,]" ACE
guaranteed insurance coverage to Gravity. Dkt. No. 1 at ¶ 42. The complaint never mentions the
CPC part. Additionally, Sedgwick's letters dated April 4, 2022, August 11, 2023, January 31,
2024, and June 10, 2024, which are attached to Plaintiff's complaint, quote the PARI part in
discussing Defendant's coverage positions. See Dkt. No. 1-2 at 3-6; Dkt. No. 1-4 at 4; Dkt. No. 1-
5 at 2-3; Dkt. No. 1-6 at 3. Despite Sedgwick's letters, Defendant argues in conclusory fashion
that because "Gravity purchased the instant Policy to provide all-risk coverage to Gravity's
commercial property[,]" the CPC part is the source of coverage. Dkt. No. 21 at 8. Defendant's
argument for the application of the CPC part's limitation clause rests on that premise. That
argument, at this stage, however, does not negate Plaintiff's allegations that the PARI part applies.
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The text of the Policy does not definitively clarify which part governs. The PARI part
"insures against all risks of direct physical loss or damage to Property Insured from perils not
otherwise excluded," has an endorsement extending coverage to "loss directly resulting from the
necessary interruption of business incurred by the Insured during the Period of Interruption[,]"
and identifies various types of real and personal property as eligible for coverage. Dkt. No. 1-1 at
12-13, 33. By its terms, the CPC part appears to apply to commercial property. See id. at 9.
Defendant contends that Gravity's insured property is commercial property and therefore covered
by the CPC part. See Dkt. No. 21 at 8.
The Policy's declarations, which are attached to the complaint with the Policy, state that
coverage is provided "as per forms and endorsements attached." Dkt. No. 1-1 at 3. They also
include a notation that reads: "Forms and endorsements attached to policy at inception: Common
Policy Conditions . . . , Commercial Property Conditions . . . , OFAC Advisory Notice to
Policyholders . . . ." Id. At the very least, that notation appears to show that at the Policy's
inception, the CPC part and provisions other than the PARI part provided Gravity's coverage. It
is not clear from the Policy, however, whether that notation is meant to say that forms and
endorsements added later have no effect. Such a reading would make little sense, as it would
disregard the PARI part and dozens of exclusions and endorsements now appended to the
Policy—including the New York endorsement. See Dkt. No. 1-1. Thus, the Policy's declarations
offer no meaningful clarification.
Construing Plaintiff's factual allegations as true and drawing all reasonable inferences in
Plaintiff's favor, the Court determines that Plaintiff has pled adequate facts suggesting that the
PARI part applies. The Policy does not unambiguously support Defendant's position that the CPC
part provided Gravity's coverage and the applicable suit limitation. Thus, for purposes of
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deciding the motion to dismiss, the Court examines the parties' timeliness arguments only under
the PARI part's suit limitation provision.
2. 	Timeliness of Plaintiff's Complaint
"Although New York's general statute of limitations for breach-of-contract claims is six
years, 'New York [c]ourts have consistently allowed parties, by written agreement, to impose a
shorter period within which to commence an action than that provided by statute[,] so long as the
agreed upon limitation is reasonable.'" Looby, 2025 WL 3467652, at *3 (quoting Endemann, 390
F. Supp. 3d at 370-71) (other citation omitted). Plaintiff's preferred limitation period comes from
the Policy's PARI coverage part. See Dkt. No. 18 at 20. Defendant's motion addresses this
limitation period only in a footnote, see Dkt. No. 12-1 at 9 n.4, but its reply offers a fuller
argument of why it believes the claim is untimely under the PARI provision, see Dkt. No. 21 at 8-
11. The provision reads as follows:
B. Action Against Company
No action shall lie against the Company unless, as a condition
precedent thereto, the Insured shall have fully complied with all the
terms of this policy, and unless commenced within twelve (12)
months from the date of the Occurrence.
Dkt. No. 1-1 at 23. The PARI part defines "Occurrence" as follows:
E. Occurrence
The term Occurrence shall mean any loss or series of losses arising
out of one event, regardless of the number of locations affected.
However, as respects the perils of Earth Movement and Flood, the
term Occurrence shall mean the sum total of all the losses sustained
by the Insured as the result of damage from Earth Movement or
Flood which arise during a continuous period of seventy-two (72)
hours. The Insured may elect the moment from which each of the
aforesaid periods of seventy-two (72) hours shall commence; but no
two such seventy-two (72) hour periods shall overlap.
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Occurrence shall not mean "continuous or repeated exposure to
conditions" unless physical loss or damage insured against by this
policy ensues, and then this policy shall only cover such ensuing
loss or damage; nor shall Occurrence mean "loss of use of tangible
property that has not been physically injured or destroyed."
Id. at 31. The PARI part does not expressly define "loss" or "event."4 The parties advance
different interpretations of the "occurrence" definition and, by extension, identify different dates
when the limitations period began to run. Plaintiff claims that it needed to bring a lawsuit within
twelve months from the date that Defendant denied coverage, which Plaintiff identifies as June
10, 2024. See Dkt. No. 18 at 24-27. On the other hand, Defendant argues that the twelve-month
period began running on the date that damage occurred, which Defendant identifies as November
10, 2021. See Dkt. No. 21 at 8-10.
a. 	Limitation Period Starting at Time of Damage – Defendant's Interpretation
In arguing that the limitation period began on November 10, 2021, the purported date of
damage, Defendant argues that Plaintiff's reliance on the date coverage was denied ignores the
term "occurrence" in the PARI part and "results in an absurd reading" of the Policy. Dkt. No. 21
at 9. Defendant cites a Second Circuit case for the proposition that, unless an insurance policy
specifies otherwise, courts should ascribe ordinary meanings to words in the policy. See id.
(citing Newmont Mines Ltd. v. Hanover Ins. Co., 784 F.2d 127, 135 (2d Cir. 1986)).
4 The PARI part defines "Earth Movement" as "any natural or man-made earth movement,
including, but not limited to, earthquakes, shocks, tremors, landslides, avalanches, subsidence,
sinkhole collapse, mud flow, rock fall, volcano, or any other similar earth movement[,]" and
"Flood" as:
flood waters, waves, tide or tidal water, storm surge, tsunami, the
release of water, the accumulation of rain or surface water, or the
rising (including the overflowing or breaking of boundaries) of
lakes, ponds, reservoirs, rivers, harbors, streams or other natural or
man-made bodies of water, whether or not driven by wind.
Dkt. No. 1-1 at 30. Neither party contends that any of these conditions occurred.
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In Newmont Mines, the Second Circuit applied New York law and interpreted the term
"occurrence" by looking first to the dictionary definition. Newmont Mines, 784 F.2d at 135. The
insurance policy in that case did not define the term. Rather, as summarized by the Second
Circuit: "[t]he term 'occurrence' ordinarily is understood to denote 'something that takes place,'
especially 'something that happens unexpectedly and without design.'" Id. (citations omitted).
The Second Circuit also noted that "the meaning of 'occurrence' must be interpreted in the context
of the specific policy and facts of th[e] case[,]" id. at 136 n.9, and distinguished use of the term in
liability insurance policies from its use in property damage insurance policies, see id. at 135-37.
Under a property damage insurance policy, like the one here, the Second Circuit stated that "[t]he
goal . . . is to provide financial protection against damage to property." Id. at 136. The Second
Circuit construed the term as referring to each individual instance of damage to the insured
property, "unless the damage occurring at one point in time was merely part of a single,
continuous event that already had caused other damage." Id. at 136-37 (footnote omitted).
A similar interpretation is plausible here. Reading "occurrence" as referring to physical
damage comports with the Second Circuit's reasoning in Newmont Mines, as well as the Policy's
mentions of natural disasters in its definition of "occurrence." Through this lens, Defendant
pinpoints November 10, 2021, as the date the limitation period started running. See Dkt. No. 12-1
at 9; Dkt. No. 21 at 9. According to the complaint, divers repaired a critical seal issue and
dewatering of the Plant began on that date. See Dkt. No. 1 at ¶ 26. Under Defendant's
interpretation, the PARI suit limitation period expired on November 10, 2022, more than two-
and-a-half years before Plaintiff filed suit. See Dkt. No. 21 at 9. However, if Plaintiff's
interpretation of the PARI suit limitation is also plausible and would render the action timely,
Defendant's motion must be denied. See Pro. Fighters League, 770 F. Supp. 3d at 724 (stating
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that for the court to grant a motion to dismiss, "the contract must unambiguously support the
defendant's position") (citation omitted); see also Duane Reade, 411 F.3d at 390 (stating that a
contract is ambiguous when a "reasonably intelligent person who has examined the context of the
entire integrated agreement and who is cognizant of the customs, practices, usages and
terminology as generally understood in the particular trade or business" could interpret its terms
more than one way) (citation and internal quotation marks omitted).
b. 	Limitation Period Starting at Time of Coverage Denial – Plaintiff's
Interpretation
Plaintiff argues that the limitation period began not at the time of physical damage, but
when Defendant denied coverage. See Dkt. No. 18 at 24. Citing New York and federal caselaw,
Plaintiff contends that, unless an insurer uses "'exceptionally clear' and 'highly specific' language
to 'tie a limitations period to the date of the accident or peril insured against[,]'" the default rule is
that the clock starts when the insurer refuses to pay. Id. (quoting GEICO Marine Ins. Co. v.
Mandel, No. 19-CV-3107, 2020 WL 6318948, *7 (E.D.N.Y. Sept. 18, 2020), R. & R. adopted,
2020 WL 5939186 (E.D.N.Y. Oct. 7, 2020)) (other citations omitted). Plaintiff's position is that
the PARI suit limitation is worded generically, which triggers the default rule. See Dkt. No. 18 at
25-26. In opposition, Defendant argues that the Policy's language is sufficiently specific to
override the default rule. See Dkt. No. 21 at 9-10.
"[T]he New York Court of Appeals [has] held that generic language setting a contractual
limitations period should be interpreted to start the clock not at the time of the accident itself[,]
but only once 'the right to bring an action exists . . . .'" Fabozzi v. Lexington Ins. Co., 601 F.3d
88, 91 (2d Cir. 2010) (quoting Steen v. Niagara Fire Ins. Co., 89 N.Y. 315, 323 (1882)) (other
citation omitted). The right to bring an action often arises when payment on a claim "becomes
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19
due and enforceable." Id. at 93 (citing Steen, 89 N.Y. at 324). In other words, "unless the
contract provides otherwise, a cause of action for breach of an insurance contract accrues at the
time of breach under New York law." Id. (citing Med. Facilities, Inc. v. Pryke, 62 N.Y.2d 716,
717 (1984)).
In Fabozzi, the Second Circuit recognized the phrase "'after the inception of the loss[,]'" or
similar language, as a sufficiently specific "term of art which fixes the limitations period to the
date of the incident." Id. at 91. Likewise, an express, precise statement that the limitation period
starts running at the time of physical loss or damage overcomes the default rule. See id. at 92
(citing Myers, Smith & Granady, Inc. v. N.Y. Prop. Ins. Underwriting Ass'n, 85 N.Y.2d 832
(1995)). For example, a provision requiring a lawsuit to be brought "'within two years after the
date on which the direct physical loss or damage occurred'" is sufficiently specific to start the
limitation period at the time of damage. Id. (quoting Brief for Defendant-Respondent, Myers,
Smith & Granady, 85 N.Y.2d 832, 1994 WL 16045369, at *11).
Conversely, a suit limitation stating the following is considered generic and subject to the
default rule: "No action can be brought unless the policy provisions have been complied with and
the action is started within two years after the date of loss." Id. at 90; see also Mercedes-Benz
Fin. Servs. USA, LLC v. Allstate Ins. Co., 162 A.D.3d 1183, 1184 (3d Dep't 2018) (holding that a
policy provision requiring lawsuits to be brought "within one year after the date of loss" is generic
and starts the limitation period when the insurer denies coverage) (emphasis removed); Lobello v.
N.Y. Cent. Mut. Fire Ins. Co., 152 A.D.3d 1206, 1208-09 (4th Dep't 2017) (holding, based on the
distinction between loss and inception of loss, that a requirement to sue "'within two years after
the date of loss'" is generic and starts the clock at the time coverage is denied). To depart from
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the default rule, the Court must find "an unmistakable intention" to start the limitation period at
the time of physical loss. Mercedes-Benz, 162 A.D.3d at 1184-85 (collecting cases).
Here, the contested suit limitation requires commencement of legal action "within twelve
(12) months from the date of the Occurrence[,]" Dkt. No. 1-1 at 23, with "Occurrence" defined as
"any loss or series of losses arising out of one event, regardless of the number of locations
affected[,]" id. at 31. Thus, the suit limitation can be construed as requiring a lawsuit to be
brought within twelve months of any loss or series of losses arising out of one event.
In arguing that this language is not generic, and therefore permits a departure from the
default rule, Defendant cites numerous cases which found that suit limitation language
referencing "the occurrence causing loss or damage" was sufficiently specific to start the clock at
the time of damage. Dkt. No. 21 at 10 (citing Keita v. Am. Sec. Ins. Co., No. 17-CV-879, 2021
WL 5865734, *2 (E.D.N.Y. Dec. 10, 2021); Ciobanu v. State Farm Fire & Cas. Co., No. 21-CV-
288, 2022 WL 889024, *5 (E.D.N.Y. Mar. 25, 2022); Franco Apparel Grp., Inc. v. Nat'l Liab. &
Fire Ins. Co., No. 10-CV-8205, 2011 WL 2565287, *3 (S.D.N.Y. June 28, 2011)) (emphasis
added). In Franco Apparel Group, the Southern District stated that "the word 'loss' is ambiguous
standing alone, because it can refer either to the damage incurred or to the accrual of the claim."
Franco Apparel Grp., 2011 WL 2565287, at *3 (citing Fabozzi, 601 F.3d at 93). Including the
word "inception" or some similar term in the policy definition "clarifies that the 'loss' at issue is
the first of the two meanings[.]" Id.
Defendant relies on this reasoning to argue that "[r]eading the term 'occurrence' to mean
the date of denial renders the provision incoherent." Dkt. No. 21 at 10. Defendant's
interpretation, however, does not address an important point that Plaintiff makes: "As written, the
limitation period runs from the date of the 'loss' rather than the 'event' . . . ." Dkt. No. 18 at 25. In
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other words, by its plain language, the suit limitation ties the start of the period to the loss or
series of losses arising out of a certain event, not the event itself. See id. Thus, the instant suit
limitation is distinguishable from those in Defendant's cited cases. The insurance policies in those
cases tied the limitation period to the event(s) giving rise to the loss or damage, which is not what
the PARI suit limitation can plausibly be interpreted to prescribe. Therefore, the Court disagrees
with Defendant that construing "occurrence" as referring to the date of denial renders the
provision incoherent. The provision can reasonably be read to state that a party must bring its suit
within twelve months of the loss (denial of coverage) stemming from an event (the physical
damage).
However, the analysis does not end there. The parties dispute the date that Defendant
denied coverage and, by extension, whether the action is timely under this understanding of the
suit limitation. See id. at 26-27; Dkt. No. 21 at 11. Plaintiff asserts that the limitation period
began on June 10, 2024, when Defendant "confirmed its final partial payment and denied
coverage for the remainder of Gravity's claim" in a letter from Sedgwick. Dkt. No. 18 at 26; see
Dkt. No. 1 at ¶ 67 (alleging that Defendant stated its final coverage position on June 10, 2024).
Defendant contends that, under the PARI suit limitation, the clock started running on January 31,
2024. See Dkt. No. 21 at 11. On that date, Defendant sent a letter explaining its coverage
position and stating that its investigation would continue. See Dkt. No. 1-5 at 4. Defendant
argues that it provided its final coverage position via letter on that date because the June 10, 2024,
letter did not change its position. See Dkt. No. 21 at 11. Rather, according to Defendant, the June
letter was simply "a response to a letter from Gravity asking ACE to reconsider its position[,]" in
which it declined to reconsider and reiterated its denial. Id.
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Defendant's argument does not undermine Plaintiff's factual allegations. The complaint
alleges that Defendant sent the January letter to "supplement" a letter it sent in August 2023, and
had not yet made a coverage determination. Dkt. No. 1 at ¶¶ 65-66. Defendant's January letter,
which is considered part of the pleadings, contains an invitation for Gravity to write back with
any objections to Defendant's coverage position. See Dkt. No. 1-5 at 4. The letter notes that the
investigation was not yet complete as of January 31, 2024, the agencies working on Defendant's
behalf "ha[d] made no determination on coverage" at that point, and the letter was meant "to
advise [Plaintiff] of potentially applicable Policy provisions in a complete reservation of rights."
Id. Accordingly, Plaintiff has furnished enough factual allegations for the Court to infer that
Defendant had not yet made a final denial of coverage on January 31, 2024.
The June letter explains that Plaintiff responded to Sedgwick regarding the January letter
on March 11, 2024. See Dkt. No. 1-6 at 1. Sedgwick stated that it "reviewed [Plaintiff's] letter
and determined that no new information ha[d] been provided that would alter ACE's coverage
position." Id. Sedgwick again invited Gravity to write back with any objections to Defendant's
coverage position, and stated that "ACE . . . will continue its investigation under a reservation of
all rights." Id. at 4. Importantly, the complaint specifically alleges that Defendant issued its final
coverage determination on June 10, 2024. See Dkt. No. 1 at ¶ 67. The pleadings therefore permit
a reasonable inference that the final coverage determination did not occur prior to that date.
Accordingly, the Court determines that Plaintiff has adequately pled that the twelve-month
PARI limitation period started running on June 10, 2024. Thus, to timely file suit, Plaintiff must
have commenced this action by June 10, 2025. Plaintiff filed its complaint on June 9, 2025, see
Dkt. No. 1, which means that under the Rule 12(b)(6) pleading standard, the action survives
dismissal on timeliness grounds.
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c. 	Suit Limitation Note in the August 2023 Sedgwick Letter
Defendant notes that in the August 11, 2023, letter, Defendant agreed to Plaintiff's
"request to 'extend the [Policy's] suit limitation 120 days to March 10, 2024, to the extent that it
has not yet expired.'" Dkt. No. 12-1 at 6 (quoting Dkt. No. 1-4 at 7). Additionally, Defendant
argues that Plaintiff's "[c]omplaint is void of any allegations that the suit limitation period was
extended so that the lawsuit was timely filed. Thus, Plaintiff's lawsuit is time-barred, and should
be dismissed." Id. at 9. Plaintiff attached the letter to the complaint; therefore, the Court may
consider it. See Dkt. No. 1-4. Plaintiff does not address the quoted language regarding an
extension in its complaint or its opposition to Defendant's motion. See Dkt. Nos. 1, 18.
When a document attached to a complaint as an exhibit contradicts allegations in the
complaint, the Court need not accept the complaint's allegations as true. See Endemann, 390 F.
Supp. 3d at 370 (citing Roth, 489 F.3d at 510-11) (other citation omitted); Brown v. N.Y.C. Hous.
Auth., No. 05-CV-10332, 2006 WL 1378599, *1 (S.D.N.Y. May 17, 2006) ("[W]here allegations
set out in the complaint are contradicted by other matters asserted or by materials attached to or
incorporated by reference in the complaint, the Court is not obliged to credit the allegations in the
complaint") (citations omitted). The Second Circuit has stated that "the contents of [a] document
[considered on a Rule 12(b)(6) motion] are controlling where a plaintiff has alleged that the
document contains, or does not contain, certain statements." Roth, 489 F.3d at 511. "[S]uch
documents may properly be considered only for 'what' they contain, 'not to prove the truth' of their
contents." Id.
Plaintiff's complaint alleges that the August 2023 letter contains updates on Defendant's
coverage position. See Dkt. No. 1 at ¶¶ 62-64. Those allegations are uncontradicted; the letter
does provide Defendant's coverage position. See Dkt. No. 1-4. However, the updates are separate
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from the letter's discussion of the applicable limitation period. The complaint does not make any
allegations concerning Plaintiff's apparent extension request or Defendant's approval of such as
noted in the letter. Although that portion of the letter appears to contradict Plaintiff's version of
the applicable limitation period, it does not specifically nullify Plaintiff's allegations that support a
plausible inference of timeliness under the PARI coverage part. For example, the August 2023
letter's extension of the suit limitation to March 10, 2024, does not negate Plaintiff's allegation
that Defendant sent the June 10, 2024, letter which stated "its final coverage position." Dkt. No. 1
at ¶ 67 (emphasis added).
Likewise, crediting the letter as dispositively true—as Defendant wants the Court to do—
and extinguishing Plaintiff's complaint on that basis alone would exceed the Court's scope of
review at this stage. See Roth, 489 F.3d at 511 (vacating a district court's dismissal of the
plaintiff's complaint because, inter alia, the district court improperly deferred to the defendants on
issues of fact "that should not have been determined at the pleading stage"). "In the context of a
motion to dismiss brought under Rule 12(b)(6), '[a] court's task is to assess the legal feasibility of
the complaint; it is not to assess the weight of the evidence that might be offered on either side.'"
Doe v. N.Y. Univ., No. 1:20-CV-1343, 2021 WL 1226384, *9 (S.D.N.Y. Mar. 31, 2021) (quoting
Lynch v. City of New York, 952 F.3d 67, 75 (2d Cir. 2020)). If the parties indeed negotiated
extensions of a suit limitation, and the agreed-upon deadline expired before Plaintiff brought this
action, Defendant will have opportunities to introduce such evidence at later stages of the case.
Because the Policy's suit limitation language is ambiguous and Plaintiff's complaint is
timely under at least one reasonable interpretation of the Policy, the complaint survives dismissal.
IV. CONCLUSION
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After carefully reviewing the entire record in this matter, the parties' submissions, and the
applicable law, and for the reasons set forth above, the Court hereby
ORDERS that Defendant's motion to dismiss (Dkt. No. 12) is DENIED; and the Court
further
ORDERS that the Clerk of the Court shall serve a copy of this Memorandum-Decision
and Order on the parties in accordance with the Local Rules.
IT IS SO ORDERED.
Dated: March 26, 2026
Albany, New York
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