HNRK Coverage Corner

On December 30, 2019, Judge Briccetti of the SDNY issued a decision in Ruiz v. Liberty Mut. Fire Ins. Co., 19 CV 4399 (VB), denying an insurer’s motion to dismiss an insured’s claim for breach of the covenant of good faith and fair dealing, but ruling (contrary to recent First Department case law) that the insured could not recover attorneys’ fees as consequential damages.

This case involves a claim under a homeowners insurance policy for damages sustained to a residence from burst water pipes.  The complaint contained a single cause of action for “breach of contract and implied ...

On November 20, 2019, Judge Ramos of the SDNY issued a decision in United Specialty Ins. Co. v. Lux Maintenance & Ren. Corp., Case No. 18-cv-3083 (ER), holding that property owners were entitled to additional insured coverage under a subcontractor’s CGL policy even though the subcontractor agreement misidentified the corporate names of the owners.

Lux Maintenance arose from injuries sustained by a worker in the course of performing balcony and façade repairs to a building collectively owned by Cornell and Rockefeller Universities, New York Hospital, Manhattan Eye Ear & Throat ...

On December 5, 2019, the First Department issued a decision in Certain Underwriters at Lloyd’s v. BioEnergy Development Group, LLC, 2019 NY Slip Op 08779, reversing a trial court’s dismissal of a claim based on the insurer’s bad faith delay in providing business interruption coverage, explaining:

The breach of the implied duty part of the counterclaim is based on allegations that plaintiffs refused to advance more than $6,806,725 in business interruption coverage until an appraisal panel awarded more than double that amount, and refused to pay the full amount of the property ...

On November 20, 2019, Judge Briccetti of the SDNY issued a decision in Metropolitan Prop. & Cas. Ins. Co. v. Comley, Case No. 18-cv-9259 (VB), holding that a liability insurer properly denied defense coverage, under an exclusion for “intentional and criminal acts”, for a lawsuit alleging “negligent supervision” of the insureds’ minor son, who committed a sexual assault. The policy at issue—a homeowners’ policy—covered both the parents and their “relatives”, who are “resident[s] of the same household.” The policy’s “intentional and criminal ...

On November 8, 2019, Judge Gardephe of the SDNY issued a decision in XL Specialty Ins. Co. v. Prestige Fragrances, Inc., Case No. 18-cv-733 (PGG), holding that issues of fact precluded summary judgment on this issue of whether an insurance broker was an agent of the insurance company such that notice to the broker constituted notice to the insurance company.

Prestige Fragrances involved a first-party insurance claim for losses from a theft at the insured’s warehouse. The insurance company (XL Specialty) denied the claim and asserted that the policy was void ab initio because in ...