HNRK Coverage Corner

On October 18, 2019, Justice Crane of the New York County Supreme Court issued a decision in Cookies on Fulton, Inc. v. Aspen Specialty Ins. Co., 2019 NY Slip Op 33111(U), holding that an exclusion for claims arising from “any construction or renovation-related activity except for janitorial or maintenance related work” did not excuse a CGL carrier’s duty to defend the insured business owner in a lawsuit for injuries sustained in the course of “changing light fixtures.”

The vague allegations in the complaint (typical in personal injury actions) “suggest[ed] that the accident was construction-related[,] which would bar coverage.” However, as readers of this blog know, the duty to defend is triggered “where the insurer has actual knowledge of facts establishing [] a reasonable possibility” of coverage—even if those facts do not appear in the complaint. See City of New York v. Wausau Underwriters Ins. Co., 145 A.D.3d 614, 617 (1st Dep’t 2016). Here, documents outside the complaint suggested that the injured worker “may have been performing routine maintenance work”—“changing light fixtures”—at the time of the injury.  The insurer argued that changing a light fixture (unlike changing a lightbulb) constituted “a construction or renovation activity” for purposes of New York’s Labor Law, and therefore fell within the exclusion. Justice Crane disagreed, and granted summary judgment to the insured on the duty to defend, explaining:

Aspen’s reliance on cases applying the Labor Law is misplaced. Those cases may be instructive to some degree, but they are not controlling on the question of what distinguishes construction/renovation activity from janitorial/maintenance work in this action. Rather, it is the language of the Policy that governs. In this connection, an insurance agreement is subject to principles of contract interpretation and as with the construction of contracts generally, unambiguous provisions of an insurance contract must be given their plain and ordinary meaning, and the interpretation of such provisions is a question of law for the court. Moreover, when it comes to exclusions from coverage, the exclusion must be specific and clear in order to be enforced and ambiguities in exclusions are to be construed most strongly against the insurer. The Aspen policy exclusion does not specifically define what constitutes construction, renovation, janitorial or maintenance work. Construing the language against the insurer, the court finds that the changing of light fixtures may fall within the ambit of maintenance work. The ordinary meanings of "construction" and "renovation" implicate [] substantially more ambitious undertakings.

This decision illustrates the important principle that undefined terms in an exclusionary clause are construed narrowly in favor of the insured.