Venezia v. Landmark Ins. Co., 56 N.Y.2d 443 (1982)
A contractual property damage policy exclusion for “property damage to work performed by or on behalf of the named insured arising out of the work or any portion thereof” denies coverage for damage to the insured’s own work product, but not for damage the insured causes to the work product of others.
Summary
Venezia, a subcontractor, installed steel shelf angles on a building’s exterior, which were meant to support the masonry facing. Due to incorrect installation, the masonry failed, and Venezia was back-charged for the repair costs. Venezia sought coverage from Landmark Insurance, but Landmark argued that the damage fell under a policy exclusion for damage to Venezia’s own work. The court held that the exclusion applied only to the cost of repairing Venezia’s own defective work (the shelf angles), but not to the costs associated with repairing damage to other parts of the building (masonry, air conditioning enclosures, etc.) caused by the defective angles. The court differentiated between damage to the insured’s specific component and damage to the larger project.
Facts
Venezia was a subcontractor responsible for installing steel shelf angles on the exterior walls of a 19-story building. These angles were intended to transfer the weight of the masonry facing onto the building’s structure. The masonry facing failed because the shelf angles were incorrectly installed. Venezia was back-charged $56,438.43 for repair and replacement costs. Venezia then sought coverage for these costs under its insurance policy with Landmark Insurance Company.
Procedural History
Venezia sued Landmark Insurance Co. to recover the costs associated with repairing the damage. The lower courts’ decisions are not specified in the Court of Appeals opinion. The Court of Appeals reversed the Appellate Division’s order and remitted the case for entry of judgment consistent with its memorandum decision.
Issue(s)
Whether the insurance policy’s exclusion for “property damage to work performed by or on behalf of the named insured arising out of the work or any portion thereof” bars coverage for all the costs incurred by the insured subcontractor, including both the repair of its own defective work and the repair of damage to other parts of the building caused by the defective work.
Holding
No, because the exclusion only applies to the cost of repairing the insured’s own defective work product and not to the costs of repairing damage to the work of others caused by the insured’s defective work. The court distinguished between the damage to the shelf angles themselves and the damage to the surrounding masonry and other building components.
Court’s Reasoning
The court relied on the language of the insurance policy, which excluded coverage for “property damage to work performed by or on behalf of the named insured arising out of the work or any portion thereof.” The court interpreted this clause to mean that the exclusion only applied to damage to the insured’s own work product. The court distinguished this case from situations where the insured’s defective component caused damage to a larger unit of which the insured’s product was but a component, citing Sturges Mfg. Co. v Utica Mut. Ins. Co., where coverage was found for damage to ski bindings caused by defective straps. The court reviewed the breakdown of Venezia’s claimed damages, noting that Landmark conceded coverage for items (a) through (e), which related to damage to other contractors’ work. The remaining item, (f), represented the cost of repairing Venezia’s own defective shelf angle installation, and was therefore excluded from coverage. The court stated, “[T]hat item consists of damages to the work product of the insured itself and accordingly is excluded from coverage under the insurance policy in this case.”