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Aquatectonics, Inc. Doing Business As Loebs & Gordon v. the Hartford Casualty Insurance Company

March 26, 2012

AQUATECTONICS, INC. DOING BUSINESS AS LOEBS & GORDON POOLCRAFT, PLAINTIFF,
v.
THE HARTFORD CASUALTY INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Hurley, Senior District Judge:

MEMORANDUM AND ORDER

Plaintiff Aquatectonics, Inc. doing business as Loebs & Gordon PoolCraft ("Loebs") commenced this action against defendant The Hartford Casualty Insurance Company ("Hartford") in New York State Supreme Court, Suffolk County seeking a declaratory judgment that Hartford is obligated to defend and indemnify Loebs in a separate underlying suit for negligence and breach of contract. Loebs also asserts a breach of contract claim against Hartford. On June 24, 2010, Hartford removed the action to this Court based upon diversity jurisdiction. Presently before the Court is Loeb's motion for summary judgment, as well as Hartford's cross- motion for summary judgment. For the reasons set forth below, Loeb's motion is denied and Hartford's motion is granted.

BACKGROUND

The material facts, drawn from the Complaint and the parties' Local Rule 56.1 Statements, are undisputed unless otherwise noted.

The Parties

Hartford is an insurance company that was, at all relevant times, licensed and authorized to underwrite and issue commercial and property insurance coverage, including commercial general liability ("CGL") coverage, in the State of New York. Hartford issued a CGL policy of insurance to Loebs with a coverage period of February 15, 2008 through February 15, 2009 (the "Policy.")

The Policy

Pursuant to the Policy, Hartford agreed to "pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage'" that is "caused by an 'occurrence.'" (Decl. of Deborah Hauser, dated May 6, 2011 ("Hauser Decl."), Ex. A-2 at 1.) The Policy defines an "occurrence" as "an accident, including continuous or repeated exposure to substantially the same generally harmful conditions." (Id. at 15.) "Property damage" is defined as "[p]hysical injury to tangible property." (Id. at 16.)

The Policy contains numerous exclusions from coverage. The "Damage to Property" exclusion precludes coverage in two situations relevant here. First, it excludes coverage for property damage to "[t]hat particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it."*fn1 (Id. at 4.) Second, it excludes from coverage any property damage to "[t]hat particular part of real property 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." (Id.)

Finally, the "Damage to Your Work" exclusion precludes coverage for property damage to "'your work' arising out of it or any part of it and included in the 'products-completed operations hazard.'" (Id.) The "Damage to Your Work" exclusion contains an exception, which states as follows: "This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor" (hereinafter, the "Subcontractor Exception"). (Id.)

The Project

In or about 2008, non-party K&D Wright & Co. Construction, Inc. ("K&D") was retained as a general contractor in connection with a residential construction project at 175 Mohawk Avenue, Water Mill, New York (the "Residence"). In 2008, K&D engaged Loebs as a subcontractor to construct and install a swimming pool (which would include the installation of glass mosaic tiles) at the Residence. Loebs, in turn, retained a sub-subcontractor, Pawel Bancerz d/b/a Top Tile ("Top Tile"), to install the glass mosaic tiles in the swimming pool. According to Richard Signoretti, the Loebs employee "primarily responsible for actual performance of the tile work in issue," "[p]rior to the job's completion, a mild 'shading' condition was visible at several locations, consisting of geometric shapes that tracked some of the sheets of installed tiles; some of the shapes of the shading were straight lines, others were right angles, which I have heard called 'picture-framing.'" (Aff. of Richard Signoretti, dated Mar. 4, 2011 ("Signoretti Aff.") ¶¶ 1, 6.) Because the tiles used were a "custom blend," "when [K&D] personnel on the job asked [Signoretti] whether the mild shading they were seeing was part of how the tile installation was supposed to look, [he] told them that [he] didn't know." (Id. ¶ 7.) According to Signoretti, "[a]fter the pool was filled with water, [ ] the mild shading conditions that no one had previously stated to be unacceptable dramatically darkened and expanded," making it clear to Signoretti that "a dynamic process was going on." (Id. ¶¶ 8,9.) K&D ultimately determined that the installation of the glass mosaic tiles was unsatisfactory, and the work had to be re-done.

Signoretti, who participated in demolishing the tile job, is of the opinion "that a contributing factor to the damage was that the pool was filled with water too early in relation to the grouting, so that the grout not having cured sufficiently had allowed moisture to get behind the tiles that was affecting the condition of the setting bed." (Id. ¶¶ 11, 14.)*fn2 According to Signoretti, the darkening was attributable to "a physical change to the substrate" that lay beneath the pool tile. (Id. ΒΆ 15.) Signoretti asserts that "[m]uch of the work applying substrate and affixing tile was performed by Top Tile," and that "Top Tile grouted portions of the pool that ultimately sustained physical damage to the substrate." (Id. ...


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