Advisory Council Recommends Amending NY’s Commercial Division Rules

The Administrative Board of the Courts is seeking public comment on a proposal by the Commercial Division Advisory Council to amend the Commercial Division rules (22 NYCRR § 202.70) to clarify what types of insurance cases may be heard.

Under the current rules, the Commercial Division may hear “environmental insurance coverage” and “commercial insurance coverage” disputes meeting a monetary threshold. But the rules offer limited explanation as to what comprises “commercial insurance coverage.” And even where the monetary threshold is met, the rules forbid the Commercial Division from hearing “[c]ases seeking a declaratory judgment as to insurance coverage for personal injury or property damage,” or “[f]irst-party insurance claims and actions by insurers to collect premiums or rescind non-commercial parties.”

This has led to confusion. Recently, insurance claims by a maker of aqueous film-forming foam facing liability of upward of $300 million, a commodities trader who lost over $11 million in grain, and a consulting firm caught up in the opioid crisis were all found to involve “non-commercial” disputes under the rules. Yet these types of insurance disputes are commonly heard by business courts in other states.

Some judges have flexibly applied the rules, focusing instead on the rules’ intent.  The cases addressing this jurisdictional issue are sparse and usually unpublished. The Advisory Council urges that litigants need clear rules that can be applied consistently. And judges should not have to choose between what the rules intend and what they say.

The Advisory Council urges that the rules be amended to:

• clarify that cases involving “environmental insurance coverage” must relate to environmental damage or mass torts
• clarify that “commercial insurance coverage” includes coverage under policies insuring (i) directors and officers; and (ii) liability, loss, or damage related to commercial property (including cargo and stored property), commercial liabilities, errors or omissions, cyber activities, commercial representations or warranties, title to commercial property, and business interruption
• allow first-party insurance claims (except for claims under individual homeowners and auto policies) to be heard

The amendments also explain that the Commercial Division will not hear cases underlying the insurance dispute simply because they relate to the insurance coverage action.

The public comment period is open until August 8, 2025. If you would like to comment on the proposal, you can email your submission to [email protected] or write to David Nocenti, Office of Court Administration, 25 Beaver Street, 10^th Fl., New York, NY 10004.