New York Insurance Coverage Law Update

January 29, 2020 | Insurance Coverage

Southern District Of New York Issues Rulings On Missing Policies, Aggregate Limits And Allocation In “Long-Tail” Asbestos DJ

Danaher Corporation asked the United States District Court for the Southern District of New York to decide various insurance coverage issues as to underlying silica and asbestos-related bodily injury claims asserted against Chicago Pneumatic Tool Company, which Danaher acquired in 1986.  As to certain missing insurance policies, the court found sufficient evidence to demonstrate the existence of the policies, including the insurer’s policy list referencing the policies, certain “binding advices,” and deposition testimony of Chicago Pneumatic’s former treasurer.  The court ruled that, absent evidence sufficient to support a contrary conclusion, the terms of the lost policies should be deemed to be the same as those contained in policies from adjacent years or in form policies from the relevant periods.  The court also found that other policies did not have aggregate limits for bodily injury claims, reasoning that they had “strikethrough marks” where aggregate limits might otherwise be listed.  As to the allocation of indemnification and defense costs to policies without “non-cumulation” or other similar language, the court ruled that the costs must be allocated pro rata to all triggered years including those years in which the insured does not have insurance.  [Danaher Corp. v. Travelers Indem. Co., No. 10-CV-121 (JPO) (S.D.N.Y. Oct. 31, 2019).]

Additional Insured May Recover Its Defense Costs From Insurers Even Where Found Solely At Fault, First Department Rules

The Port Authority of New York and New Jersey was sued by plaintiffs who alleged that they were injured due to the negligence of The Brickman Group Ltd., LLC, a Port Authority contractor, and/or Brickman’s subcontractor.  The Port Authority sought reimbursement of its defense costs as an additional insured under Brickman’s insurance policies, which provided coverage for “loss adjustment expense” which was defined to include costs incurred by the insured in connection with the defense of any “’suit’ to which this policy applies”.  In turn, “suit” was defined as a civil proceeding for damages because of bodily injury “to which this insurance applies are alleged”. Additional insured coverage was provided for bodily injury “caused, in whole or in part, by” the acts or omissions of Brickman or those acting on its behalf.  Even though the Port Authority was ultimately found in the underlying actions to be the sole party at fault for the accident, the Appellate Division, First Department, ruled that the Port Authority was entitled to reimbursement of its defense costs because “damages . . . to which [the additional insured coverage] applie[d]” were “alleged” in those actions from inception until the liability deter-minations.  The First Department concluded that the allegations of the complaints were the “determinative factor” for purposes of finding that the Port Authority’s defense costs were covered. [Port Auth. of New York and New Jersey v. Brickman Group Ltd., LLC, 2019 N.Y. Slip Op. 08958 (1st Dep’t Dec. 12, 2019).]

Insurer Failed To Demonstrate Insured’s Failure To Cooperate, Second Department Rules

The principal of a company sued by a claimant for personal injuries allegedly sustained in a construction-related accident twice failed to appear for his court-ordered deposition, did not respond to an investigator’s efforts to contact him in writing and on the phone, and failed to appear for the rescheduled deposition. The company’s insurer advised the company that it would no longer indemnify the company because of the principal’s lack of cooperation.  After the law firm retained by the insurer to defend the company withdrew as counsel, the trial court in the underlying action entered judgment against the company in the amount of $673,422, and the claimant sued the company’s insurer to recover the amount of the unsatisfied judgment.   The Supreme Court, Queens County, denied the insurer’s motion for summary judgment, and the Appellate Division, Second Department, affirmed. The Second Department ruled that the insurer failed to meet its “heavy burden” of demon-strating the insured’s non-cooperation.  Although the court agreed that the insurer made diligent efforts that were reasonably calculated to bring about the insured’s cooperation, the court concluded that the insurer failed to demonstrate that the insured’s conduct constituted “willful and avowed obstruction.” [Foddrell v. Utica First Ins. Co., 2019 N.Y. Slip Op. 08991 (2d Dep’t Dec. 18, 2019).]

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