HNRK Coverage Corner

On September 13, 2019, Justice Borrok of the New York County Commercial Division issued a decision in Colony Ins. Co. v. International Contr. Servs., LLC, 2019 NY Slip Op 32717(U), holding that issues of fact precluded summary judgment on a liability insurer’s disclaimer based on the insured’s failure to cooperate with the defense.

In the underlying personal injury litigation at issue in this case, the defendant ICS had its answer stricken based on its failure to cooperate in discovery (including failing to present a witness for a court-ordered deposition and to provide an ...

On September 17, 2019, Judge Hurd of the NDNY issued a decision in Lohnes v. Liberty Mut. Ins. Co., Case No. 19-cv-00068, dismissing a claim for bad faith claims handling for failure to plead “specific conduct” by the insurer distinct from the underlying breach of the policy.

As previously discussed on this blog (see here, here, and here), New York law does not recognize a separate tort claim for bad faith claims handling.  However, the courts—beginning with a pair of Court of Appeals decisions, Bi-Economy Market, Inc. v. Harleysville Ins. Co. of N.Y., 10 N.Y.3d 187 (2008) and ...

On August 27, 2019, Judge Pauley of the SDNY issued a decision in Gemini Ins. Co. v. Titan Construction Servs., Case No. 17-cv-8963, dismissing a declaratory judgment claim as premature because the lability insurer’s duty to indemnify would depend on facts to be developed in the underlying lawsuit against the insured.  The court explained:

It has long been well-established that a liability insurer may bring an action for a declaratory judgment against the parties in an underlying lawsuit involving its insured without waiting for the underlying action to proceed to judgment ...

On August 29, 2019, the California Supreme Court issued a decision in Pitzer College v. Indian Harbor Ins. Co., Case No. S239510, ruling (in response to a certified question from the Ninth Circuit) that New York’s no-prejudice rule—under which a first-party insurer can avoid coverage based on delayed notice without showing prejudice—is contrary to a “fundamental public policy” of California.

Unlike the majority of states, New York common law does not require an insurer to demonstrate prejudice to disclaim coverage based on late notice by the insured. As previously ...

On September 10, 2019, Judge Reiss of the WDNY issued a decision in Korn v. Federal Ins. Co., Case No. 1:17-cv-00188, ruling that an insurance carrier providing a defense to the insured in a criminal prosecution had no obligation to “monitor” the fees incurred by defense counsel to ensure that the coverage was not exhausted prior to trial.

Korn, an insured brought breach of fiduciary duty and breach of contract claims against a liability insurer, alleging that the insurance company failed “to monitor his criminal defense attorneys, audit the legal fees they incurred, and ...