New York Insurance Coverage Law Update

Court Finds That Professional Services Exclusion Barred Additional Insured Coverage To Property Owner And Contractor

After a worker was fatally injured at a construction site, the owner of the property and a contractor hired by the owner to construct a hotel at the site brought an action seeking additional insured coverage under an insurance policy issued to an engineering consultant. The policy provided additional insured coverage for liability due to the consultant’s negligence under its contract, but excluded coverage for bodily injury “arising out of the rendering or failure to render any professional services.” The court held that the insurer did not owe additional insured coverage to the owner or contractor because the engineer’s con-sulting work at the project constituted “professional services.” [New York Marine & Gen. Ins. Co. v. American Empire Ins. Co., 2018 N.Y. Slip Op. 30439(U) (Sup.Ct. N.Y. Cty. Mar. 13, 2018).]

Insurer Did Not Induce Insured To File Untimely Suit, Fourth Department Rules

Kotecki’s Grandview Grove Corporation, the insured, reported a loss to its insurance broker, which prepared a property loss notice listing the date of loss as June 10, 2013. The insurer investigated the claim, partially denied it in October 2013, and reaffirmed that denial in February 2014. The insurer’s correspondence listed the date of loss as June 10, 2013.  The insured sued the insurer on June 3, 2015. After learning that the actual date of loss was May 28, 2013, the insurer moved for summary judgment, maintaining that the insured had not commenced its suit within two years of the date of loss as required by the policy. The Supreme Court, Erie County, denied the motion. The Appellate Division, Fourth Department, reversed, finding the insured’s lawsuit untimely and that the insured had not been induced by the insurer to refrain from filing a timely suit. The Appellate Division pointed out that the insurer incorrectly listed the date of loss as a result of incorrect information provided by the insured’s broker and that the insured was “aware of the actual date of loss.” [Kotecki’s Grandview Grove Corp. v. Acadia Ins. Co., 2018 N.Y. Slip Op. 00994 (4th Dep’t Feb. 9, 2018).]

Third Department Finds No Coverage For Water Damage To Building, Rejecting Proposed Expert’s Affidavit

An Albany hotel was damaged in August 2011 during Hurricane Irene when wind drove rainwater into the building.  The insured filed a claim for the damage, which the insurer denied, citing the policy’s wear and tear exclusion.  The insured sued and the insurer moved for summary judgment, relying on an expert engineer’s affidavit and report. In opposition, the insured submitted the affidavit of a proposed window expert who opined that rain entered the building as a result of high winds, a covered cause of loss.  The Third Department affirmed sum-mary judgment to the insurer based upon the wear and tear exclusion, rejecting the affidavit of the insured’s proposed window expert as “lack[ing] probative value.” The Appellate, Division, Third Department, pointed out that the insured’s proposed expert inspected the hotel several years after the hurricane, and added that neither his resume nor his affidavit demonstrated that he had engineering training or specific knowledge or education in identifying the causes of window failure. [Superhost Hotels Inc. v. Selective Ins. Co. of Am., 2018 N.Y. Slip Op. 02519 (3d Dep’t Apr. 12, 2018).]

Exclusions Preclude Coverage For Grubhub’s $8 Million Settlement Of TCPA Suit

The plaintiff sued Grubhub Seamless Inc., alleging that it sent unauthorized text messages to thousands of consumers in violation of the Telephone Consumer Protection Act (“TCPA”). The parties settled, with Grubhub consenting to an $8 million judgment payable only from its insurance policy. The plaintiff sued Grubhub’s insurer, which moved to dismiss. The United States District Court for the Southern District of New York granted the motion. The court ruled that the plaintiff’s claim that Grubhub sent text messages “en masse to thousands of customers in violation of the TCPA” was excluded from coverage by the policy exclusion for claims based on an “unsolicited electronic dissemination of . . . communications by or on behalf of the Insured to multiple, actual or prospective customers.” The court also decided that the plaintiff’s claims were precluded by the exclusion for claims based on any “violation of consumer protection laws,” concluding that the TCPA “is a consumer protection statute.” [Flores v. ACE Am. Ins. Co., No. 17-cv-8674 (S.D.N.Y. Apr. 30, 2018).]