Insurance Coverage: Court Denies Summary Judgment to Insured Seeking Coverage Under Exception to Residential Developments Exclusion
April 9, 2018
Bogen, Inc. v. Mt. Hawley Ins. Co. (N.Y. Sup. Ct. New York Co.)
In Bogen, the plaintiff insured sought a declaration that it was entitled to a defense and indemnification under its general liability policy in connection with an underlying property damage action. The insured was a general contractor retained to renovate and convert a multi-unit townhouse into a single-family residence. When owners of a neighboring property allegedly sustained property damage as a result of excavation and underpinning activities at the insured’s project site, their homeowners insurer commenced the underlying subrogation action against the insured. The general contractor’s insurer disclaimed coverage in connection with the underlying action based on the policy’s “Exclusion – Residential Developments” endorsement, which excludes coverage for “property damage” arising from the insured’s “work” on “residential developments,” defined as “single and multi-family dwellings.”
The insured general contractor moved and the insurer cross-moved for summary judgment. The insured arguing that the project fell within an exception to the exclusion under which a claim could be covered if the insured’s work was “done for the individual dwelling owners, if the individual dwelling and its improvements were completed and certified for occupancy prior to the commencement” of the insured’s work. Specifically, the insured argued that the exception to the exclusion was satisfied because the premises was certified as a multi-family dwelling over 50 years ago. The Supreme Court, New York County (Hon. Jennifer G. Schecter, J.S.C.) disagreed, denying the insured’s motion and granting the insurer’s cross-motion. The court found the insured’s argument untenable because “it fails to take into account the reality of the project,” i.e., a conversion of a multi-family dwelling into an “individual dwelling.” In interpreting the exception to the exclusion, the court focused on the building actually being constructed (i.e., the single family home), not the building that previously existed (i.e., the multi-family dwelling), finding the exclusion clearly and unambiguously applies without exception.