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First Department Decision Sets New Precedent for New York Policyholders


HNRK secured, on behalf of D.K. Property, Inc., a significant decision for New York policyholders, making clear—for the first time—the minimal standard needed to plead a bad faith claim and confirming that New York recognizes that a policyholder may assert a claim damages, including attorneys' fees, arising from an insurance company’s bad faith claims handling.

Reversing the Supreme Court’s decision in D.K Property, Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa., which had dismissed D.K. Property’s claim for consequential damages for breach of the implied covenant of good faith and fair dealing, the First Department rejected AIG’s attempt to impose a heightened standard of pleading of bad faith claims—an argument often made by insurance companies and accepted by courts. Additionally, in what stands to be another significant and unheard of move by a New York court, the First Department stated that New York recognizes a claim “for bad faith handling of an insurance claim” and rejected AIG’s attempt to dismiss D.K. Property’s breach of the implied covenant of good faith and fair dealing claim through a backdoor “duplicative” argument.

HNRK partners Andrew Bourne and Josh Blosveren represented D.K. Property in the matter. The decision is available here.


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