SSP SPRINGS LLC v. FIRST SPECIALITY INSURANCE CORPORATION (2023)

Order, Supreme Court, New York County (Margaret Chan, J), entered October 4, 2021, which granted in part defendant's motion to dismiss pursuant to CPLR 3211(a)(1) and (a)(7), unanimously affirmed, without costs.

“A court may neither make nor vary an insurance contract by extending coverage beyond the fair intent and meaning of the agreement, and the liability of the insurer cannot be enlarged by implication beyond the express terms of the contract” (Moshiko, Inc. v. Seiger & Smith, Inc., 137 A.D.2d 170, 175, 529 N.Y.S.2d 284 [1st Dept. 1988]).  However, all ambiguities must be resolved against the insurer, the drafter of the language (Raner v. Security Mut. Ins. Co., 102 A.D.3d 485, 486, 958 N.Y.S.2d 342 [1st Dept. 2013]).  Here, the policy excludes faulty workmanship, repair, construction, renovation, and remodeling from coverage.  There is, however, also a carve-out providing for coverage where such faulty work “results in a Covered Cause of Loss.” “Covered Causes of Loss” is defined in the policy as “direct physical loss unless the loss is excluded or limited in this policy.”  Thus, the meaning of the carve-out as it relates to the rule is ambiguous and, at the very least, plaintiffs have pleaded their complaint sufficiently to survive a motion to dismiss (see Village Mall at Hillcrest Condominium v. Merrimack Mut. Fire Ins. Co., 309 A.D.2d 857, 857–858, 766 N.Y.S.2d 70 [2d Dept. 2003]).  Hence, it is premature to dismiss the complaint based upon the “pollutant” exclusion.

The court also properly dismissed plaintiffs’ bad faith claim as duplicative of their breach of contract claim, as plaintiffs may seek the same damages through their breach of contract claim, including consequential damages, if they can prove that they were foreseeable (Bi–Economy Mkt., Inc. v. Harleysville Ins. Co. of N Y., 10 N.Y.3d 187, 196, 856 N.Y.S.2d 505, 886 N.E.2d 127 [2008]).