New York Insurance Coverage Law Update

Private Dispute Over Policy Coverage Did Not Support Insured’s GBL § 349 Claim Against Insurer, Fourth Department Rules

A building owner sued its insurance company for deceptive acts and practices under New York General Business Law § 349, alleging that the insurer had retained a non-engineer to conduct an investigation into its claim for damage to its building and had misrepresented the investigator’s credentials in disclaiming coverage. The trial court denied the insurer’s motion for summary judgment, but the Appellate Division, Fourth Department, reversed. The court ruled that the insurer’s allegedly deceptive conduct stemmed from a private contract dispute over policy coverage, and was not “consumer-oriented” such that it impacted consumers at large, as required to assert a valid § 349 claim. [JD&K Assoc., LLC v. Selective Ins. Group, Inc., 2016 N.Y. Slip Op. 06563 (4th Dep’t Oct. 7, 2016).]

Second Department Affirms Judgment Against Insurer Based Upon Inadequate Disclaimer

The plaintiff fell on snow and ice outside her condominium and notified the snow removal company, Florite Maintenance Corp., which notified its insurer.  The plaintiff subsequently sued Florite, which did not answer and did not notify the insurer of the suit. Before seeking a default judgment, the plaintiff notified the insurer of the action. In a letter addressed to Florite and copied to the plaintiff’s counsel, the insurer notified Florite that it was disclaiming coverage due to Florite’s failure to provide timely notice of the lawsuit.  The plaintiff was awarded a $3 million default judgment against Florite, and then brought a direct action against the insurer seeking coverage for the unsatisfied judgment.  The Appellate Division, Second Department, held that the insurer’s disclaimer of coverage was invalid as to plaintiff because it addressed only Florite’s failure to provide timely notice of the underlying lawsuit, and not whether the plaintiff’s notice to the insurer of her lawsuit had been untimely. Therefore, the Second Department ruled that the insurer was precluded from disclaiming coverage to plaintiff. [Pollack v. Scottsdale Ins. Co., 2016 N.Y. Slip Op. 06693 (2d Dep’t Oct. 12, 2016).]

Contractor or Subcontractor Limitation Precluded Coverage Even If Worker Was Independent Contractor, First Department Holds

A worker, claiming that he had been injured while working, sued the property owners. The property owners’ insurer denied that it had a duty to defend or to indemnify them, and the Appellate Division, First Department, agreed.  The court reasoned that the worker had been hired either by the property owners or the general contractor and that coverage, therefore, was excluded by the policy’s “contractor or subcontractor limitation”, which precluded coverage for bodily injury to a “contractor or subcontractor of the insured.”  That the worker might be an independent contractor did not preclude him from being considered a contractor or subcontractor for purposes of the exclusion, the court concluded. [Tudor Ins. Co. v. Sundaresen, 2016 N.Y. Slip Op. 07084 (1st Dep’t Oct. 27, 2016).]

District Court Finds In Favor Of Insurers Where Company Failed To Provide Policies Or Evidence Of Their Terms

Troy Belting & Supply Company was sued in lawsuits alleging bodily injury caused by exposure to asbestos from products it allegedly manufactured. After settlements, Troy Belting asserted claims in the United States District Court for the Northern District of New York against insurers it contended had issued  insurance policies to Troy Belting. These insurers moved for summary judgment, maintaining that no evidence supported Troy Belting’s claim that the insurers provided insurance covering asbestos claims between 1949 and 1974. Moreover, they added, even if Troy Belting had provided some evidence of coverage, it had not provided any information about the terms of the policies, the policy limits, or whether the policies had provided coverage for injuries caused by asbestos exposure. The district court ruled in favor of the insurers, deciding they had no duty to provide coverage to Troy Belting. The court pointed out that no copies of any insurance policies issued by the insurers existed and explained that, even if Troy Belting had produced evidence that created a question of fact as to the existence of a policy, it had not produced sufficient evidence by which a jury could find the terms and conditions of the policy by a preponderance of the evidence. Speculation as to the terms and conditions was “insufficient” to defeat summary judgment, the district court concluded. [Pacific Employers Ins. Co. v. Troy Belting & Supply Co., 2016 U.S. Dist. Lexis 134224 (N.D.N.Y. Sept. 28, 2016).]