Insurer Not Required to Provide Separate Defense Counsel to Dual Insureds Where Policy Limit Far Exceeds Claim Exposure
Our client was sued by its named insured, a condominium association, for bad faith, because the insurer refused to appoint separate defense counsel to defend the association and its property manager (also covered under the policy) in a personal injury suit. The underlying plaintiff was a condominium owner injured in a fall on the premises. . The insurer declined to follow the association’s demands that separate counsel be appointed for it and the property manager, and that defense counsel for the association pursue a cross-claim for indemnification from the property manager. We defended the insurer, establishing that there was no conflict between the association and the property manager, that the value of the case was well below the $1,000,000 policy limit, and that pursuing a cross-claim would be frivolous: the insurer would still have to pay the judgment. The claim was settled by the insurer for $34,500. In the bad-faith declaratory judgment action, the Superior Court of New Jersey ruled that under the circumstances the insurer was free to control the defense and settle the claim as it deemed best, that there was no bad faith on the part of the insurer, and that the declaratory judgment complaint should be dismissed.
Meadows at the Renaissance Condominium Association, Inc. v. Philadelphia Indemnity Insurance Company, Superior Court of New Jersey, 2005
Successful Management of Coverage Issues, Primary and Excess, in Construction Death Claim; Insurer Fully Exonerated from Coverage in Wrongful Death Lawsuit in Bronx County:
Our client, a general liability insurer, insured the owner of a building in lower Manhattan undergoing renovation. In the early stages of demolition, a beam fell, killing a foreman employed by the general contractor. Suit was soon commenced against the owner, for alleged negligence and statutory causes of action. We had been retained within days of the accident, and we were thus prepared to act immediately to protect the insurer’s interests, through litigation if necessary. We demanded that the primary and excess insurers for the general contractor (immune from suit by its employee because of the worker’s compensation exclusivity provisions) undertake the defense and indemnity of our client’s insured, because the owner was an additional insured under their policy, and because of an indemnity provision in the construction contract. The contractor’s primary insurer agreed, providing a defense under a reservation of rights. We then insisted, over vigorous resistance, that their appointed defense counsel implead the contractor to seek common-law and contractual indemnity, and thus to reach the contractor’s excess and employee-liability coverages. The case was ultimately settled for approximately $8.8 million. Our client, thus fully exonerated, paid nothing, all without the need to commence coverage litigation.
Wersan v. Downtown Development Corp., Supreme Court, Bronx County, 2004
Surety for Estate Administrator Not Responsible for Breach of Fiduciary Duty
Beneficiaries of an estate brought suit in state supreme court in Kings County, New York, for losses resulting from the alleged defalcation of the estate administrator. The administrator, wishing to protect his assets, persuaded the claimants to enter into a consent judgment against him, to be funded by pursuit of a claim against the administrator’s fiduciary bond. If the scheme worked, the administrator would get away scot-free, and the claimants would collect from the surety. The claimants then brought a proceeding in the Surrogate’s Court to recover on the bond. We represented the surety and successfully opposed the attempted collection in the Surrogate’s Court. On appeal, the Appellate Division affirmed in an abrupt opinion holding that no such recovery could be had without first obtaining a determination of fiduciary liability in a separate proceeding in the Surrogate’s Court. The scheming claimants received nothing.
In the Matter of Estate of Michael L. Guzzo v. United States Fire Ins. Co., 739 N.Y.S.2d 615 (2d Dept. 2002)
No Coverage for Assault and Battery Lawsuit
We brought a declaratory judgment action for our insurance company client against its insured, an auto repossession business, for a declaration that no coverage was owed in respect of a lawsuit that alleged in unusually explicit terms the purported unruly conduct of the insured’s employees. They allegedly went to the claimant’s home at 2 a.m., banged on doors and windows, shined flashlights into the home, used vile language, and misrepresented themselves as law enforcement officers. The family sued the insured for trespass, unlawful entry, false imprisonment, assault, and negligence. In our lawsuit we argued that the claim, when distilled, involved assault and battery. The U.S. District Court for the Southern District of New York agreed that under New York law, the policy provides no coverage, because an assault and battery incident is not an occurrence, because it is not an “accident.” Moreover, the negligence claim was also not covered, as New York applies the “but for” test: “if no cause of action would exist but for the assault, the claim is based on the assault.” The district court thus granted our motion for summary judgment.
First Financial Ins. Co. v. XLNT Recovery Specialist, Inc., 2000 WL 043499 (S.D.N.Y. 2000)