Date: Mar 28, 2026

Arruda v. New York Central Mutual: Water-Backup and Earth-Movement Exclusions Bar Coverage Beyond Limited Endorsement; CPLR 3212(f) Requires a Concrete Showing

1. Introduction

In Arruda v New York Cent. Mut. Fire Ins. Co. (2026 NY Slip Op 01902 [4th Dept Mar. 27, 2026]), Manoel C.D. Arruda and Louise C.K. Arruda (the insured homeowners) sued New York Central Mutual Fire Insurance Company (the insurer) for breach of contract after the insurer paid only $10,000 under a limited water back-up coverage but denied additional coverage for substantial basement and home damage caused by sewage backing up through a floor drain.

The appeal presented two core questions: (1) whether policy exclusions—particularly the water back-up exclusion and an earth movement exclusion—unambiguously barred coverage for the loss beyond the $10,000 sublimit; and (2) whether summary judgment should be denied as premature under CPLR 3212(f) to permit additional discovery about the cause and location of the blockage.

2. Summary of the Opinion

The Fourth Department reversed Supreme Court, granted the insurer’s motion for summary judgment, denied the insureds’ discovery cross-motion, and dismissed the complaint. The majority held:

The loss “fell within” the policy’s water exclusion because it involved water that “[b]acks up through sewers or drains.”
The loss was also excluded by the earth movement exclusion (including “earth sinking, rising or shifting”) because the insureds’ own engineer attributed the sewage back-up to soil erosion and settlement affecting the sewer pipe slope.
The insurer therefore established that exclusions applied, limiting coverage to the already-paid $10,000 water back-up coverage.
The insureds did not raise a triable issue of fact as to any exception to the exclusions, and their reliance on an “exception to paragraph 2.d” was misplaced and, in any event, defeated by the clause “[u]nless the loss is otherwise excluded.”
CPLR 3212(f) did not justify denying summary judgment: the insureds failed to show that essential facts “may exist but cannot then be stated,” particularly where the insurer relied on the insureds’ own engineer report and affidavit and accepted their version of facts, leaving a pure policy-interpretation question.

Dissent: Two justices would have affirmed, reasoning that the motion was properly denied as premature under CPLR 3212(f) because discovery could reveal the specific cause and location of a downstream blockage, and the insureds’ engineer affidavit supported a theory potentially fitting an exception for discharge from an off-premises sewer pipe.

3. Analysis

3.1. Precedents Cited

Burden on insurer seeking summary judgment

Blair v Allstate Indem. Co., 124 AD3d 1224 (4th Dept 2015): Cited for the rule that an insurer moving for summary judgment must present admissible evidence that the loss is not covered or is excluded. The majority treated the policy text plus the insureds’ engineer materials as sufficient to meet this initial burden.
Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377 (2003): Provides New York’s frequently repeated standard for exclusions: to negate coverage the insurer must show the exclusion is “clear and unmistakable,” not reasonably susceptible to another interpretation, and applicable to the facts. The majority’s discussion is a direct application: the water-backup and earth-movement language was deemed unambiguous and factually triggered.

Water-backup exclusions

Platek v Town of Hamburg, 24 NY3d 688 (2015): Used to support enforcing unambiguous water-related exclusions. The majority invoked Platek both to confirm that the sewer/drain backup exclusion applied and to frame the insureds’ failure to establish an exception.
Lattimore Rd. Surgicenter, Inc. v Merchants Group, Inc., 71 AD3d 1379 (4th Dept 2010): Cited for applying similar exclusions and for the proposition that once an exclusion is established, coverage is precluded (here, beyond the $10,000 limited water back-up payment). The court analogized this case to the policy structure in Lattimore.

Earth movement exclusions tied to settlement/erosion

Valente v Utica First Ins. Co., 173 AD3d 1642 (4th Dept 2019), lv denied 34 NY3d 913 (2020): Supports reading “earth sinking, rising or shifting” to capture settlement/soil-related movement leading to loss. The majority used it to validate applying the exclusion where soil conditions contributed “directly or indirectly.”
Cali v Merrimack Mut. Fire Ins. Co., 43 AD3d 415 (2d Dept 2007), lv denied 9 NY3d 818 (2008): Reinforces that earth movement exclusions can apply where settlement/earth movement causally contributes to damage, even if the immediate manifestation is different (here, sewage backup).

Exceptions to exclusions; insured’s burden to raise triable issue

Copacabana Realty, LLC v Fireman’s Fund Ins. Co., 130 AD3d 771 (2d Dept 2015), lv denied 26 NY3d 911 (2015): Cited for the proposition that once the insurer establishes an exclusion, the insured must raise a triable issue that an exception restores coverage. The majority found the insureds did not do so, particularly because their invoked exception was textually limited and also defeated by “[u]nless the loss is otherwise excluded.”
Platek v Town of Hamburg, 24 NY3d 688 (2015) (again): Serves as a general reference point for how New York treats exclusion/exception interplay in coverage disputes.

Prematurity and CPLR 3212(f) (summary judgment discovery)

Newman v Regent Contr. Corp., 31 AD3d 1133 (4th Dept 2006): Cited by the majority for the CPLR 3212(f) requirement that a party opposing summary judgment must show that “facts essential” may exist but cannot yet be stated.
Kula v State Farm Fire & Cas. Co., 212 AD2d 16 (4th Dept 1995), lv dismissed in part & denied in part 87 NY2d 953 (1996): Crucial to the majority’s procedural holding: because the insurer “accepted plaintiffs’ version of the facts for the purpose of the summary judgment motion,” the dispute became one of contract interpretation, undermining the claim that more discovery was essential.

Dissent’s CPLR 3212(f) support

Beck v City of Niagara Falls, 169 AD3d 1528 (4th Dept 2019), amended on rearg on other grounds 171 AD3d 1573 (4th Dept 2019): Used to support that summary judgment may be denied as premature when the opposing party makes the requisite evidentiary showing.
Feldmeier v Feldmeier Equip., Inc., 164 AD3d 1093 (4th Dept 2018) and Resetarits Constr. Corp. v Elizabeth Pierce Olmstead, M.D. Center for the Visually Impaired [appeal No. 2], 118 AD3d 1454 (4th Dept 2014): Cited by the dissent to emphasize that prematurity is especially apt where key facts are in the movant’s “exclusive knowledge and possession” and obtainable by discovery.
Fellows v County of Onondaga, 2 AD3d 1462 (4th Dept 2003) and Freier v Amax, Inc., 217 AD2d 981 (4th Dept 1995): Additional Fourth Department authority supporting discretionary denial “without prejudice” under CPLR 3212(f).
R.C.S. Farmers Mkts. Corp. v Great Am. Ins. Co., 56 NY2d 918 (1982): Cited as a Court of Appeals reference point in the dissent’s prematurity analysis (though the dissent also “cf.” cites it, reflecting the fact-specific nature of CPLR 3212[f] rulings).

3.2. Legal Reasoning

Two independent exclusions applied. The majority treated the coverage denial as overdetermined: (a) sewage backing up through a drain is squarely within the water exclusion for water that “[b]acks up through sewers or drains”; and (b) the insureds’ own engineering proof established a causal chain involving soil erosion and pipe settlement, bringing the loss within “earth sinking, rising or shifting.”
“Directly or indirectly” language expands causal reach. By emphasizing “caused directly or indirectly,” the court applied a broad causation approach: even if sewage overflow is the immediate mechanism of harm, earth movement contributing to the system’s failure suffices to trigger the exclusion.
The limited water back-up payment functioned as a sublimit/endorsement, not a grant of broader coverage. The insurer paid $10,000 under limited water back-up coverage, but the majority held the exclusions still controlled the rest of the claim. The limited payment did not waive or narrow the exclusions for the balance of loss.
The insureds failed to connect the cited “exception to paragraph 2.d” to an applicable exclusion pathway. The majority’s reading is structural: the exception restores only what “paragraph 2.d” excludes; the insurer did not rely on 2.d, and the insureds could not identify a 2.d provision that fit. Even beyond that, the exception’s prefatory phrase—“[u]nless the loss is otherwise excluded”—meant that independent exclusions (water back-up and earth movement) still defeated coverage.
Prematurity was rejected because the motion was decided on the insureds’ own proof and policy interpretation. The majority’s key procedural move was to treat the case as one where additional discovery could not alter the dispositive analysis: defendant relied on the insureds’ engineer report and affidavit and accepted plaintiffs’ narrative for purposes of the motion. With facts assumed in the insureds’ favor, only contract interpretation remained, so CPLR 3212(f) did not apply.

3.3. Impact

Reinforces exclusion-first coverage analysis in sewage-backup losses. Policyholders often characterize sewer events as “sudden discharge” or “off-premises pipe” failures to fit exceptions. Arruda underscores that where the policy contains a sewer/drain back-up exclusion and the loss matches it, courts may enforce the exclusion even if the insured argues alternative mechanisms—especially if the policy also contains a separate exclusion (like earth movement) that captures contributing causes.
Signals the strength of “otherwise excluded” clauses in exceptions. The decision highlights a drafting feature with real bite: exceptions that begin with “Unless the loss is otherwise excluded” can be neutralized by any independent exclusion found applicable, limiting the insured’s ability to “restore” coverage through a narrow exception.
Narrows CPLR 3212(f) when the movant accepts the opponent’s facts. The majority’s approach suggests that, in insurance cases, an insurer can reduce the risk of a “prematurity” denial by expressly accepting the insured’s version of causation for summary-judgment purposes and presenting the dispute as purely interpretive.
Practical litigation consequences. Policyholders will likely respond by: (a) developing early, specific proof tying causation to a covered peril and away from “directly or indirectly” excluded mechanisms; and (b) making CPLR 3212(f) showings with detailed affidavits identifying the exact discovery sought, why it is unavailable, and how it would change the exclusion/exception analysis—not merely the narrative of the loss.

4. Complex Concepts Simplified

Summary judgment: A decision without trial. The moving party must show there is no real factual dispute requiring a jury or judge to hear evidence, and that the law entitles the movant to win now.
Policy exclusion: Contract language that removes certain losses from coverage even if the event otherwise looks like a covered claim.
Exception to an exclusion: A “give-back” provision that restores coverage for a narrow subset of losses that would otherwise be excluded. Here, the court held the insureds did not show the exception applied—and even if it did, it would not help if the loss was “otherwise excluded” elsewhere.
“Directly or indirectly” causation language: Wording that expands an exclusion beyond the immediate cause to include contributing causes. If earth movement indirectly produced the sewage backup, the exclusion can still apply.
CPLR 3212(f) (premature summary judgment): A rule allowing courts to deny summary judgment when the opponent shows, with evidentiary support, that essential facts likely exist but cannot yet be stated because discovery has not been completed.

5. Conclusion

Arruda is a forceful application of New York’s exclusion principles to sewage-backup property losses: clear sewer/drain back-up and earth movement exclusions can independently bar coverage beyond a limited sublimit payment, especially where the insured’s own engineering evidence supplies the causal link to excluded perils. Procedurally, the decision also tightens the use of CPLR 3212(f) where the insurer accepts the insured’s factual account and frames the dispute as policy interpretation—placing a premium on concrete, specific showings of what discovery will reveal and why it matters to the exclusion/exception analysis.