Upon the following papers numbered 1-45 read on these motions for summary judgment ; Notice of Motion and supporting papers 1-26; 32-43 ; Notice of Cross Motion and supporting papers[*2]; Answering Affidavits and supporting papers 27-31; 44 ; Replying Affidavits and supporting papers 45 ; it is,

ORDERED that the motion by the defendant Southwest Marine and General Insurance Company for summary judgment dismissing the complaint and any cross claims insofar as they are asserted against it is denied; and it is further

ORDERED that the motion by the defendant Black Diamond Development LLC, in effect, for summary judgment on its cross claim for a declaratory judgment is denied.

In 2009, the plaintiff, Racanelli Construction Company, Inc. ("Racanelli") entered into an agreement with the New York Air National Guard, inter alia, to install new water mains at Gabreski Airport in Westhampton Beach, New York. Racanelli subsequently entered into a subcontract with the defendant Black Diamond Site Development LLC ("Black Diamond"). The subcontract required Black Diamond to install two 8-inch pipes connecting hangars A and B at the airport with a 10-inch water main (the "water main") that had been installed several years earlier. It is undisputed that no testing was performed on the water main before it was connected to the 8-inch pipes that ran to the hangars. Black Diamond performed the work in the spring of 2010, and completed the job on or about April 16, 2010. Pressure tests were conducted after the work was completed. The 8-inch pipes passed the tests, but the water main did not. Subsequent testing by Racanelli failed to identify a leak in the water main. In June 2011, Racanelli found a leak at the T-fitting that connected the 8-inch pipe to the water main near hangar B. In September 2011, Racanelli found another leak at the L-fitting near the entry to hangar B. Both leaks were repaired, and the cost thereof was charged to Racanelli.

The defendant Southwest Marine and General Insurance Company ("Southwest Marine") issued a commercial general-liability insurance policy to Black Diamond for the period from October 7, 2009, to October 7, 2010. Racanelli was named as an additional insured on the policy, which was not renewed. In July 2011, Southwest Marine received a notice of claim from Racanelli regarding the aforementioned leaks. By letters dated November 11, 2011, to Racanelli and Black Diamond, Southwest Marine disclaimed coverage on the ground that the losses had occurred in June and September 2011, after the expiration of the policy. By a letter dated December 14, 2011, Racanelli advised Southwest Marine that the work had been performed by Black Diamond between May and September 2010, during the applicable policy period. Southwest Marine responded by a letter dated January 5, 2012. It advised Racanelli that the policy issued to Black Diamond was an occurrence policy, which was based on when the loss occurred, not when the work was performed. It also advised Racanelli that, since the loss occurred in June 2011, there was no coverage because policy was not in effect at that time. By a second letter to Black Diamond dated January 5, 2012, Southwest Marine again disclaimed coverage. [*3]

Racanelli commenced this action on or about December 14, 2011. The complaint, as amended, seeks damages in the amount of $152,394 against Black Diamond, Southwest Marine, and Black Diamond's principal Michael LoTurco, as well as a judgment declaring that Southwest Marine is obligated to provide coverage under the policy issued to Black Diamond and to indemnify Racanelli for its losses. Black Diamond and LoTurco cross claimed against Southwest Marine for a judgment declaring that it had a duty to indemnify Racanelli for its losses. Southwest Marine now moves for summary judgment dismissing the complaint and the cross claim, and Black Diamond moves for a judgment declaring that Southwest Marine has a duty to defend and indemnify it. In effect, Black Diamond is moving for summary judgment on the cross claim for declaratory relief.

In support of summary judgment, Southwest Marine argues that Racanelli cannot establish that the leaks, which were not discovered until 2011, actually occurred during the period when the policy was in effect. As a general rule, a party does not carry its burden in moving for summary judgment by pointing to gaps in its opponent's proof, but must affirmatively demonstrate the merits of its claim or defense (see, Corrigan v Spring Lake Building Corp., 23 AD3d 604, 605). The failure of the proponent of a summary-judgment motion to make a prima facie showing requires denial of the motion regardless of the sufficiency of the opposing papers (see, Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853). The court finds that Southwest Marine's reliance on deficiencies in Racanelli's proof is insufficient to establish its entitlement to judgment as a matter of law.

Southwest Marine also argues that coverage is barred by the policy's exclusions, which exempt from coverage faulty workmanship causing damage to the insured's work product. While it is true that commercial general-liability insurance policies do not insure against faulty workmanship in the work product itself, such policies do insure against property damage caused by faulty workmanship to something other than the work product (see, I.J. White Corp. v Columbia Casualty Co., 105 AD3d 531, 432, citing George A. Fuller Co. v United States Fid. & Guar. Co., 200 AD2d 255, 259). In opposition to Southwest Marine's motion, Racanelli has presented evidence that, in installing the 8-inch pipes, Black Diamond may have caused damage to the existing water main. Accepting this evidence as true, as the court must in reviewing a motion for summary judgment (Kuang v Board of Managers of the Biltmore Towers Condominium Assoc., 22 Misc 3d 854, 865, affd 70 AD3d 1004), the court finds that it is sufficient to raise a triable issue of fact as to whether Racanelli's claim falls within the policy's exclusions. Accordingly, Southwest Marine's motion for summary judgment is denied.

Turning to Black Diamond's motion, it is well-established that when an insurance policy includes the insurer's promise to defend the insured against specified claims, as well as to indemnity it for actual liability, the insurer's duty to furnish a defense is broader than its obligation to indemnify (Seaboard Sur. Co. v Gilette Co., 64 NY2d 304, 310). The duty to defend arises whenever the allegations in the complaint against the insured fall within the scope of the risks undertaken by the insurer, regardless of how false or groundless those allegations may be (Id.). An insurer, however, may be relieved of the duty to defend if it can demonstrate [*4]that the exclusions or exemptions to the policy coverage apply in the particular case (Foley v Foley, 158 AD2d 666, 668, citing Seaboard, supra at 311). When an issue of fact exists as to whether an exclusion is applicable, the issue of coverage is subject to the submission of extrinsic proof at trial (Foley, supra at 669). Thus, summary judgment on the insurer's obligation to defend is inappropriate (Id.).

Since there is a triable issue of fact as to whether Racanelli's claim falls within the policy's exclusions in this case, it would be inappropriate to award summary judgment to Black Diamond on Southwest Marine's duty to defend and indemnify it. Accordingly, Black Diamond's motion is also denied.

Dated:January 24, 2014

J.S.C.