Insurance Coverage: Northfield Ins. Co. v. Midtown Restorations LLC, et al. (N.Y. App. Div., 1st Dept.)

June 21, 2017

by Judith Treger Shelton, Esq. and Adam R. Durst, Esq.


In Midtown, the plaintiff insurer sought a declaration as to its obligations under a general liability policy in connection with an underlying claim for property damage allegedly caused by the insured’s waterproofing operations.  The policy contained a classification limitation endorsement stating coverage “applies to ‘bodily injury’ and ‘property damage’ caused by only those operations which are classified and shown on the [declarations], its endorsements, and supplements.”  The declarations listed the following operations: “Contractors – subcontracted work – in connection with building construction, reconstruction, repair or erection – one or two family dwellings,” “Dry Wall or Wallboard Installation,” “Painting – exterior,” and “Painting – interior.”


The insured and underlying claimant property owner were both named as defendants in the coverage action.  The insured defaulted.  The insurer moved for summary judgment, arguing that the insured’s waterproofing operations did not fall within any of the listed classifications and therefore fell outside the scope of coverage of the policy.  The underlying claimant argued in opposition that the insured’s operations fell within the “Contractors – subcontracted work” classification because the claimant had “contracted with” the insured to perform the work.  In its reply, the insurer pointed out that the First Department had rejected this exact argument in a decision published seven days before the claimant filed its opposition.  At oral argument on May 16, 2016, the Supreme Court, New York County – sua sponte and without addressing the claimant’s argument – found a question of fact as to whether “waterproofing” fell within the “Painting – exterior” or “Painting – interior” classifications listed in the policy declarations because of the method by which the waterproofing product was applied (i.e., rolled on).


On April 4, 2017, the First Department rejected the Supreme Court’s reasoning, finding the policy’s classification limitation endorsement limits the scope of coverage to four classifications, none of which encompass waterproofing, thereby precluding coverage under the policy.