HNRK Coverage Corner
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 damage claim as determined by the appraisal panel. This part of the counterclaim seeks consequential damages to account for the delayed reconstruction of defendants' plant and for the attorneys' fees caused by plaintiffs' delayed interim payments or denial of payments. It may proceed, because, given the purpose and particular circumstances of the property damage and business interruption policies, it was foreseeable that excessive delay would cause defendants to incur, as alleged, tens of millions of dollars in uncovered business interruption losses and attorneys' fees necessary to recover therefor.
As previously discussed on this blog, 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 Panasia Estates, Inc. v. Hudson Ins. Co., 10 N.Y.3d 200 (2008)—have permitted insureds to recover consequential damages (above the policy limits) on a theory that the insurer’s bad faith conduct violates the implied covenant of good faith and fair dealing. Thus, where an insurance company’s delay in processing a claim causes the insured to incur additional damages, the insured may have a recourse to recover those damages notwithstanding the absence of a separate tort claim under New York law. BioEnergy Development is the second time this year the First Department has taken a broad view of these claims. In D.K. Prop., Inc. v National Union Fire Ins. Co. of Pittsburgh, Pa., 168 A.D.3d 505 (1st Dep’t 2019), the First Department held that an insured need not satisfy a “heightened pleading standard” in alleging consequential damages arising from an insurer’s bad faith claims handling. Of note in the BioEnergy Development decision is the Court’s statement that the recoverable consequential damages can include “attorneys’ fees necessary to recover” for the damages caused by the insurer’s bad faith. This appears to be another exception to the general rule that insureds are not entitled to recover attorneys’ fees incurred in a coverage action.
- Partner
Bradley Nash represents policyholders in insurance disputes and other parties in complex commercial litigation in state and federal courts in New York and across the country. Brad focuses his practice on insurance recovery for ...
Search Blog
Recent Posts
- Delaware Bankruptcy Court Rules That Qui Tam Action Filed Under Seal—and Never Served—Triggers D&O Policy’s Prior and Pending Litigation Exclusion
- “Related Acts” and the Claims Made Policy—The Policy Provision that “Cannot Be Applied Literally”
- California Court Rules that FTC’s Civil Investigative Demand is Not a Covered Claim Under Technology Errors and Omissions Policy
- Delaware Court Dismisses D&O Coverage Action as Premature Under Policy’s “No Action” Clause
- Chubb Prepares to Pay $350 Million to State of Maryland for Baltimore Bridge Collapse
- Sixth Circuit Rules That Insurer is Entitled to Reimbursement of Defense Costs, Holding That Reservation of Rights Letter Created an Implied-In-Fact Contract
- Fifth Circuit Holds Contract Exclusion Does Not Bar Defense Coverage for Ticket Holders Lawsuit Arising From Festival Cancelled During Covid-19 Pandemic
- HNRK Secures Win for Syngenta in Insurance Coverage Appeal at Delaware Supreme Court
- New York Court Considers Evidence Regarding Insurers Handling of Prior Claims in Denying Insurer’s Motion for Summary Judgment
- HNRK Insurance Recovery Partners Author Article for Chambers 2024 Global Practice Guide
Popular Categories
- Insurance Coverage
- Policy Exclusions
- CGL Policies
- D&O Policies
- Duty to Defend
- Damages
- E&O Policies
- Occurrence/Accident
- Related Claims
- Additional Insured Endorsement
- Rules of Interpretation
- Business Interruption Coverage
- Cyber Coverage
- Construction
- Bad Faith Claims Handling
- Indemnification and Advancement
- COVID-19
- Pollution Exclusion
- Duty to Cooperate
- Advertising Injury
- Excess Insurance
- Personal and Advertising Injury
- Insurance Brokers
- Confict of Laws
- Discovery/Disclosure
- Appraisal
- Attorney Fees
- Covered Loss
- Assignment of Claims
- Disability discrimination
- Implied Covenant of Good Faith and Fair Dealing
- Notice
- Privilege/Work Product
- Priority of Coverage
- Intellectual Property
- Contracts
- Professional Malpractice
- Rescission
- Intervention/Joinder
- Subrogation
- Settlements
- General Business Law
- Unfair Claims Settlement Practices
Archives
- July 2024
- June 2024
- May 2024
- April 2024
- March 2024
- February 2024
- January 2024
- December 2023
- November 2023
- September 2023
- August 2023
- June 2023
- May 2023
- April 2023
- March 2023
- January 2023
- December 2022
- September 2022
- May 2022
- April 2022
- March 2022
- November 2021
- June 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018