This newsletter contains summaries of New York and New Jersey insurance coverage decisions entered during the previous month. If you see a topic that interests you, click the link to read more and obtain a full copy of the case.
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For further information, please contact the Newsletter Editors,
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CONNELL FOLEY LLP
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Roseland
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Roseland, NJ 07068
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New York, NY 10106
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Philadelphia, PA 19101
215.246.3403
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Harborside Financial Center
2510 Plaza Five
Jersey City, NJ 07311
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Cherry Hill, NJ 08002
856-317-7100
Jersey City
Port Liberte
23 Chapel Avenue
Jersey City, NJ 07305
201.521.0200
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Estoppel
- Reservation of Rights
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District Court Denies Motion to Dismiss Insurer's Declaratory
Judgment Action
N. Am.
Specialty Ins. Co. v. Diantonio,
2015 U.S. Dist.
LEXIS 22461 (D.N.J. Feb. 25, 2015)
The District Court of New Jersey denied a policyholder's motion
to dismiss its insurer's declaratory judgment action, reasoning that the
policyholder's position that the insurer must be estopped from denying
coverage was grounded in reservation of rights letters that could not
properly be at the motion to dismiss stage of the matter.
A passenger aboard a commercial charter boat slipped and sustained an injury
while on the vessel. He brought suit against the boat's owner, who, in turn,
sought coverage from the vessel's insurer. Although the insurer argued it did
not owe coverage because the injury occurred while more passengers were on
the boat than the maximum allowed by the policy, the insurer provided a
defense in the underlying action pursuant to a reservation of rights. The
subsequent declaratory judgment action brought by the insurer fell under the
federal district Court's admiralty jurisdiction because the matter concerned
a marine insurance contract.
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Bad
Faith
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Bad Faith Component of Suit Severed from Underlying
Coverage Dispute
Wacker-Ciocco v. Government Emples. Ins. Co., 2015 N.J. Super. LEXIS 38 (App.Div.
Mar. 16, 2015)
Appellate Division reverses trial court that failed to sever bad
faith claim and attendant discovery from consideration of whether the
policyholder was entitled to uninsured/underinsured motorist coverage.
The policyholder was seriously injured in a motor vehicle
accident when she was rear-ended by another vehicle. She settled her claim
with the other vehicle's driver for $99,000 ($1,000 less than the limit on
his policy). Her medical expenses, though, exceeded $300,000, so she demanded
$200,000 from her insurer in uninsured/underinsured motorist benefits. She
also insisted that her UIM claim be arbitrated. The parties were unable to
resolve their dispute. The policyholder then filed suit, asserting a claim
for the UIM benefits and alleging that the insurer acted in bad
faith.
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Homeowner's
Policy - Water Exclusion
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Court of Appeals Declines to Interpret Exception to
Exclusion as Providing Coverage Under Homeowner's Policy for Loss Caused by
Flood
Platek v. Town of Hamburg, et al., 2015 N.Y. LEXIS 252 (N.Y. Feb. 19,
2015)
The New York Court of Appeals reversed the judgment of the
Appellate Division and granted the insurer's motion for summary judgment
finding that the damage to the policyholder's property was excluded under the
applicable insurance policy.
The policyholder's property was damaged when a subsurface water
main abutting their property ruptured, causing water to flood into their
finished basement. The policyholders submitted their claim to their
homeowner's insurance carrier. The applicable insurance policy specifically
excluded loss to property consisting of or caused by "water...on or
below the surface of the ground, regardless of its source[, including]
water...which exerts pressure on, or flows, seeps or leaks through any part
of the residence premises." An exception to this exclusion, however, stated
that the Insurer does cover sudden and accidental direct physical loss caused
by fire, explosion or theft resulting from water on or below the surface of
the ground.
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Estoppel
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Insurer Estopped from Denying Coverage for Untimely
Disclaimer
First Mercury Ins. Co. v. Masonry Servs., Inc., 2015 N.Y. Misc. LEXIS 521 (N.Y. Sup.
Ct. Feb. 23, 2015)
The Supreme Court of New York grants Harleysville Insurance
Company of New York's ("Harleysville") motion for summary judgment
seeking a declaration that First Mercury Insurance Company ("First
Mercury") must defend Harleysville's Named Insured, Great American
Construction Corp. ("GA") in an underlying personal injury action.
The plaintiff in the underlying action
alleges that he was injured while working on a construction project where GA
was the general contractor. Masonry Services, Inc. ("MSI"), another
defendant in the underlying action was the subcontractor on the project pursuant
to a written agreement between MSI and GA, which required that MSI obtain
additional insured coverage for GA.
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