New York Insurance Coverage Law Update

April 30, 2019 | Alan C. Eagle | Insurance Coverage

No Advertising Injury Coverage For Suit Against Fashion Designer, Southern District Of New York Concludes

A New York fashion designer and related parties sued for allegedly violating the terms of a license agreement asked the United States District Court for the Southern District of New York to compel their insurer to defend them. The court granted summary judgment in favor of the insurer, explaining that the insurance policies excluded coverage for “personal and advertising injury” arising out of any actual or alleged infringement or violation of any intellectual property right and any injury or damage alleged in any claim or suit that also alleged infringement or violation of any intellectual property right. The court found that the suit against the designer and related parties alleged a number of intellectual property violations, “any one of which” sufficed to bring the suit within the exclusion. In addition, the court ruled that the allegations were “wholly bound up” in the fashion designer’s contractual obligations, which also fell within the policies’ exclusion for claims arising out of a breach of contract.  [Lepore v. Hartford Fire Ins. Co., No. 18 Civ. 689 (KPF) (S.D.N.Y. March 12, 2019).]

First Department Finds Duty To Defend Additional Insured

Breeze National, Inc. was sued and sought additional insured coverage under a policy providing it with additional insured coverage with respect to liability for bodily injury “caused, in whole or in part, by” the named insured’s acts or omissions. The insurer argued against additional insured coverage

on the basis that the named insured had never been adjudged negligent and had no control over the means and methods of the work that allegedly caused the injury. Citing Burlington Ins. Co. v. New York City Transit Authority, 29 N.Y.3d 313 (2017), the Appellate Division, First Department, found the insurer’s argument “misplaced” because the phrase “caused, in whole or in part, by” did not require a finding of negligence, but simply meant more than “but for” causation.  The court concluded that the named insured’s work that allegedly caused the underlying injury was “sufficient to establish proximate causation” and a duty to defend Breeze. Because of “issues of fact as to whether Breeze was solely responsible, or partially responsible for the accident,” the court held that “indemnification cannot be determined at this time.”  [Breeze National, Inc. v. Century Surety Co., 2019 N.Y. Slip Op. 02290 (1st Dep’t March 26, 2019).]

Criminal Case Against Harvey Weinstein Did Not Warrant Stay Of Coverage Action, Southern District Of New York Decides

An insurer that issued a number of insurance policies to Harvey Weinstein, his company, and/or members of his family asked the United States District Court for the Southern District of New York to declare that it had no obligation under the “personal injury” coverage of any of its policies to defend or to indemnify Weinstein in any of 18 civil and criminal cases and claims pending against him. Weinstein moved to stay the insurer’s action pending the resolution of those underlying actions, but the court found a stay was not

warranted. The court explained that questions of fault and liability in the underlying actions were “wholly irrelevant, and in fact, inadmissible evidence,” to its analysis of the insurer’s duty to defend.  The court added that Weinstein’s pending criminal case did not change the analysis, given the “limited nature of the duty to defend inquiry.”  The court concluded that any testimony from Weinstein as to his guilt, innocence, or potential liability in the underlying actions was “immaterial” to its assessment of whether the insurer’s policies contemplated coverage for the underlying actions, which would be assessed “on the face of their pleadings.” [Federal Ins. Co. v. Weinstein, No. 18 Civ. 2526 (PAC) (S.D.N.Y. March 28, 2019).]

Northern District Of New York Dismisses Insured’s Punitive Damages Claim Against Insurer

The owner of a fraternity house at Syracuse University sued its property insurer over its claim for damage caused by a ruptured sprinkler pipe.  They argued over the amount to be paid and the timeliness of acting on the claim.  The insurer moved to dismiss the punitive damages cause of action, and the United States District Court for the Northern District of New York granted its motion. The court ruled that the owner’s failure to specifically enumerate any independent tortious conduct on the part of the insurer foreclosed recovery of punitive damages from the insurer. [Phi Epsilon Building Ass’n of Alpha Chi Ro, Inc. v. RSUI Indemnity Co., No. 5:18-cv-547 (GLS/ATB) (N.D.N.Y. March 29, 2019).]

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