The opinion of the court was delivered by: MORRIS E. LASKER
William Crawford, Inc., is a general contractor specializing in high end residential renovation work. The company is family run and was incorporated in 1895. Travelers Insurance Company, has insured Crawford for over sixty years. Crawford has brought this suit as a result of Travelers' refusal to indemnify Crawford for a claim arising out of Crawford's renovations of an apartment owned by Sid Richardson Bass.
Towards the end of 1989 or the beginning of 1990, Crawford entered into an agreement with Sid Bass to renovate the Bass' New York apartment located on the corner of Fifth Avenue and 66th Street on the Upper East Side of Manhattan. The apartment occupies the entire ninth floor of the building there and sprawls over approximately 7000 square feet. The renovations encompassed the entire apartment and were lavish by any standard: the project was initially estimated by Crawford to take three years and cost $ 15,000,000 to complete.
In January 1992, a problem arose as to the plastering Crawford had done in the apartment's living room and library because it would not dry properly unless adequately humidified. Crawford's steam humidifier, installed in the apartment's foyer, was too far away from the area requiring humidification and Crawford attempted to solve the problem by placing a number of electric fans in the foyer to blow the steam into the remoter parts of the apartment.
On January 6, 1992, one of the fans ignited causing a fire. The fire damage occurred primarily in the entrance area. However, there was also smoke damage requiring restorative work both in other rooms of the Bass apartment and in other parts of the building. Travelers was notified of the accident the day it happened and Crawford immediately set about repairing the damage to the Bass' apartment.
The repair work in the apartment was extensive. Crawford ultimately invoiced Bass for $ 447,922.88. Not surprisingly, Bass refused to pay. Two days later, on April 23, 1992, Crawford filed a formal claim with Travelers which had already been actively investigating the cause of the fire and its attendant damage since the time of the accident in January. On August 18, 1992, after a review of the claim by Richard Woollams of Travelers' strategic claims division, the insurance company declined coverage.
Crawford and Travelers have filed cross-motions for summary judgment.
Travelers' relies on Section I(2)(j) of the commercial liability part of Crawford's insurance contract which excludes from coverage:
(5) That particular part of real property damage on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the "property damage" arises out of those operations; . .
Travelers maintains that the plain language of Section I(2)(j)(5) (Section "(j)(5)") precludes Crawford's recovering on its claim for damage to the Bass apartment.
Crawford responds that the exclusion does not prevent recovery because it would be "meaningless" to read the phrase "that particular part of real property on which you . . . are performing operations" in Section (j)(5) as applying to the entire Bass apartment. Instead, Crawford contends that Section (j)(5) only excludes coverage for the damage to that specific ...