Justia Insurance Law Opinion SummariesArticles Posted in New York Court of Appeals
J.P. Morgan Securities Inc. v. Vigilant Insurance Co.
The Court of Appeals reversed the decision of the Appellate Division reversing Supreme Court's order granting summary judgment to Bear, Stearns & Co. Inc. and Bear Stearns Securities Corp. (collectively, Bear Stearns) in this action brought by Bear Stearns' successor companies alleging that its insurers (Insurers) had breached insurance contracts, holding that the $140 million disgorgement for which Bear Stearns sought coverage was not a "payment" within the meaning of the relevant policy.When the Securities and Exchange Commission (SEC) censured Bear Stearns for securities law violations, Bear Stearns agreed to a $160 million disgorgement payment and a $90 million payment for civil money penalties. Both payments were to be deposited in a fund to compensate mutual fund investors allegedly harmed by Bear Stearns' improper trading practices. Bear Stearns transferred the payments to the SEC. Plaintiffs then brought this action against Insurers seeking coverage under a "wrongful act" liability for the disgorged funds. Supreme Court granted summary judgment to Bear Stearns. The Appellate Division reversed, concluding that Bear Stearns was not entitled to coverage for the SEC disgorgement payment. The Court of Appeals reversed, holding that Insurers failed to establish that the $140 million disgorgement payment clearly and unambiguously fell within the policy exclusion for "penalties imposed by law." View "J.P. Morgan Securities Inc. v. Vigilant Insurance Co." on Justia Law
Chen v. Insurance Co. of State of PA
The Court of Appeals affirmed the order of the Appellate Division affirming Supreme Court's conclusion that an excess insurer did not have an obligation to pay interest on an underlying personal injury judgment after the primary policy was voided.Plaintiff was injured at a construction site and sued the general contractor, which maintained an excess liability insurance policy with Defendant. Supreme Court granted partial summary judgment for Plaintiff. Plaintiff then commenced this action asserting that Defendant was obligated to pay the entire underlying damages award. Supreme Court ultimate determined that Defendant was obligated to pay $1.3 million in excess damages, prejudgment interest on those damages and interest that accrued from the date partial summary judgment was granted to Plaintiff until the entry of judgment. The Appellate Division affirmed. The Court of Appeals affirmed. At issue on appeal was whether Defendant was obligated to pay interest on the underlying personal injury judgment after the primary policy was voided. The Court of Appeals affirmed, holding that the excess policy did not provide overlapping coverage for certain interest payments covered in the primary policy. View "Chen v. Insurance Co. of State of PA" on Justia Law
American International Specialty Lines Insurance Co. v. Allied Capital Corp.
The Court of Appeals held that an arbitration panel acted within the bounds of its broad authority by reconsidering an initial determination - denominated a "partial final award" - that addressed some, but not all, of the issues submitted for arbitration.Insureds sought payment of their costs resolving through a settlement a federal qui tam action under two insurance policies issued by Insurer. After Insurer denied coverage Insureds demanded arbitration under arbitration clauses contained in the policies. The arbitration panel issued what it called a "partial final award" determining that only one insurance policy was applicable and that one insured was entitled to defense costs but not indemnification. Insureds sought reconsideration, which the arbitration panel granted. The panel then issued a "final award" granting one insured recovery for damages constituting of both the settlement and defense costs. The Appellate Division reversed, vacated the final award, and confirmed the partial final award. The Court of Appeals reversed, holding that the arbitration panel did not exceed its authority by reconsidering the partial final award. View "American International Specialty Lines Insurance Co. v. Allied Capital Corp." on Justia Law
Plavin v. Group Health Inc.
The Court of Appeals accepted questions certified to it by the United States Court of Appeals for the Third Circuit and answered that, in this case, Plaintiff sufficiently alleged consumer-oriented conduct to assert claims under N.Y. Gen. Bus. Law 349 and 350 for damages incurred due to an insurance company's alleged materially misleading representations.Plaintiff brought this action based on Defendant-insurance company's allegedly misleading representations made directly to the City of New York's employees and retirees about the terms of its insurance plan to induce them to select its plan from among the eleven health insurance plans made available to over 600,000 current and former City employees. The district court dismissed the complaint for failure to state a claim, concluding that the claims failed to plead consumer-oriented conduct. On appeal, the federal court of appeals certified questions to the Court of Appeals regarding whether Defendant had engaged in consumer-oriented conduct. The Court of Appeals answered the questions in the affirmative, holding that, under the circumstances, the complaint adequately alleged consumer-oriented conduct. View "Plavin v. Group Health Inc." on Justia Law
Carothers v. Progressive Insurance Co.
In this insurance dispute involving an insurer withholding payments to a medical service corporation improperly controlled by nonphysicans the Court of Appeals ruled that the trial court did not err in declining to give a charge requiring the jury to find fraudulent intent or conduct "tantamount to fraud" in order to reach a verdict in favor of the insurers.Plaintiff Andrew Carothers, M.D., P.C., a professional service corporation, filed multiple collection actions against insurance carriers seeking to recover unpaid claims of assigned first-party no-fault insurance benefits. The jury found that Defendants had proved that Plaintiff was "fraudulently incorporated" and that Carothers did not engage in the practice of medicine. Plaintiff appealed, arguing that the court erred in failing to give a jury instruction on "the traditional elements of common-law fraud and fraudulent intent. The Appellate Division affirmed. The Court of Appeals affirmed, holding that the court's instructions to the jury were proper. View "Carothers v. Progressive Insurance Co." on Justia Law
Nadkos, Inc. v. Preferred Contractors Insurance Co. Risk Retention Group LLC
The Court of Appeals affirmed the decision of the Appellate Division affirming the judgment of Supreme Court granting Defendant summary judgment in this insurance dispute, holding that a general business practice of failing promptly to disclose coverage within the meaning of N.Y. Ins. Law 2601(a)(6) does not include violations of the timely liability disclaimer requirement of N.Y. Ins. Law 3420(d)(2).This dispute arose between Plaintiff, the general contractor in an underlying personal injury action by an employee of Plaintiff's subcontractor, and Defendant, the subcontractor's general liability insurer. Defendant's policy named Plaintiff as an additional insured, extending coverage to Plaintiff for liability related to the "ongoing operations" of the subcontractor and other members of the risk retention group. After Defendant disclaimed coverage Plaintiff sought a declaratory judgment that the policy obligated Defendant to defend and indemnify Plaintiff in the employee's personal injury action. Supreme Court granted summary judgment for Defendant, and the Appellate Division affirmed. The Court of Appeals affirmed, holding that section 2601(a)(6) does not encompass the liability disclaimer requirement of section 3420(d)(2). View "Nadkos, Inc. v. Preferred Contractors Insurance Co. Risk Retention Group LLC" on Justia Law
Ambac Assurance Corp. v. Countrywide Home Loans, Inc.
The Court of Appeals affirmed the judgment of the Appellate Division concluding that the claims asserted by plaintiff Ambac Assurance Corporation in its appeal from Supreme Court’s judgment in a suit against defendant Countrywide Home Loans, Inc. lacked merit.Ambac, a monoline financial guaranty insurer, agreed to insure payments of principal and interest owed to the holders of residential mortgage-backed securities sponsored by Countrywide. Many of the loans backing those securities went into default following a market downturn, causing substantial losses. Ambac filed suit against Countrywide, alleging that Countrywide breached several contractual representations and warranties and fraudulently induced Ambac to enter into the insurance agreements. The Court of Appeals held that the Appellate Division correctly determined that (1) justifiable reliance and loss causation are required elements of a fraudulent inducement claim; (2) Ambac may only recover damages on its fraudulent inducement claim that flow from nonconforming loans; (3) the remedy for Ambac’s contract claims was limited to the repurchase protocol provided for in the contract’s sole remedy provision; and (4) Ambac was not entitled to attorneys’ fees. View "Ambac Assurance Corp. v. Countrywide Home Loans, Inc." on Justia Law
Contact Chiropractic, P.C. v. New York City Transit Authority
The three-year statute of limitations set forth in N.Y. C.P.L.R. 214(2) applies to no-fault claims against a self-insurer.Girtha Butler sustained personal injuries in a motor vehicle accident involving a New York City Transit Authority (Defendant) bus in which she was a passenger. Plaintiff provided health services to Butler for her injuries, and Butler assigned to Plaintiff her right to recover first-party benefits from Defendant, who was self-insured. Plaintiff then brought this action seeking reimbursement for allegedly outstanding invoices it had submitted to Defendant. Defendant moved to dismiss the complaint based on Plaintiff’s failure to bring the action within the three-year statute of limitations under N.Y. C.P.L.R. 214(2). Civil Court denied the motion, ruling that the six-year statute of limitations set forth in N.Y. C.P.L.R. 213(2) controlled this case. The Court of Appeals reversed, holding that the three-year period of limitations in N.Y. C.P.L.R. 214(2) should control this case. View "Contact Chiropractic, P.C. v. New York City Transit Authority" on Justia Law
Keyspan Gas East Corp. v Munich Reinsurance America, Inc.
At issue in this case involving long-tail insurance claims was whether, under the “pro rata time-on-the-risk” method of allocation, Century Indemnity Company was liable to its insured, KeySpan Gas East Corporation, for years outside of its policy periods when there was no applicable insurance coverage available on the market.KeySpan sought a declaration of coverage and determination of liability owed under the policies issued by Century. Supreme Court denied Century’s motion for partial summary judgment with respect to those years in which the relevant insurance coverage was otherwise unavailable in the marketplace. The Appellate Division reversed, determining that, under the applicable insurance policies, Century did not need to indemnify KeySpan for losses that were attributable to time periods when liability insurance was otherwise unavailable in the marketplace. The Court of Appeals affirmed, thereby rejecting application of the unavailability rule for time-on-the-risk pro rata allocation. View "Keyspan Gas East Corp. v Munich Reinsurance America, Inc." on Justia Law
Global Reinsurance Corp. of America v. Century Indemnity Co.
The Court of Appeals answered a question certified to it by the United States Court of Appeals in the negative, answering that under New York law generally, and particularly in light of the New York Court of Appeals’ decision in Excess Insurance Co. Ltd. v. Factor Mutual Insurance Co., 3 NY3d 577 (N.Y. 2004), there is neither a rule of construction nor a presumption that a per occurrence liability limitation in a reinsurance contract caps all obligations of the reinsurer, such as payments made to reimburse the reinsured’s defense costs. The court held definitively that Excess did not supersede the “standard rules of contract interpretation” otherwise applicable to facultative reinsurance contracts. Therefore, New York law does not impose either a rule or a presumption that a limitation on liability clause necessarily caps all obligations owed by a reinsurer, such as defense costs, without regard for the specific language employed therein. View "Global Reinsurance Corp. of America v. Century Indemnity Co." on Justia Law