Five Towns Nissan, LLC v. Universal Underwriters Ins. Co. et. al., 2016 NY Slip Op 32316(U), 2016 N.Y. Misc. LEXIS 4347, 2016 WL 6916478 (Sup Ct. [NY Co.], Nov. 22, 2016) reargument denied (Feb. 8, 2017)

This litigation concerns first-party insurance claims under two commercial property insurance policies, one of which was issued by MCWG client, Tower National Insurance Company (“Tower”), for alleged property damage and business interruption loss to an auto dealership arising out of Superstorm Sandy.  The lower court granted Five Towns summary judgment on its $2M claim for business interruption coverage against Tower, but the appellate court reversed and awarded judgment on that portion of the claim to Tower because flood loss was excluded from the policy’s business interruption coverage.  Five Towns’ reargument motion to the appellate court was denied.

Thereafter, Tower moved for summary judgment to dismiss the remainder of the claim, which was for property damage. Five Towns also moved to amend its complaint to add a cause of action based on alleged violations of the General Business Law.  The policy’s coverage for property damage was subject to the same flood exclusion that applied to the business interruption losses, which was the basis for the Appellate Court’s decision to dismiss the business interruption portion of the claim.  Nevertheless, Five Towns argued that the exclusion did not apply because the loss was caused by a “storm surge,” a term that the Appellate Court allegedly never addressed.  The lower court agreed with Tower’s position that a storm surge was just another type of flood and said a finding to the contrary would be at odds with the Appellate Court’s prior decision.   Accordingly, the complaint was dismissed and Five Towns’ motion to amend its complaint was denied.

Five Towns moved to reargue just on the issue of its motion to amend, contending that the court “overlooked or misapprehended the law.”  Five Towns argued that Tower mislead the public by issuing a policy to it that did not specifically exclude storm surge while at the same time issuing policies to others that did provide an express exclusion.  In essence, Five Towns contended that because an updated and more specific policy form was used in other instances by Tower, it was a misleading business practice to have used the older form in this case.  Since the Appellate Court had already held that the form used by Tower was unambiguous, the lower court would have been at odds with the Appellate Court if it found Tower mislead the public by using that form.  Accordingly, the reargument motion was denied in a brief decision.

This decision on the reargument motion was reported in Law360 on February 8, 2016.  The underlying decision was reported in PLRB Frontlines, December 28, 2016, case 9612; Law360 Insurance on November 29, 2016; Mealey’s Litigation Report, Catastrophic Loss, Vol. 12 Issue 3, December 6, 2016; and The Harris Martin Superstorm Sandy Insurance Coverage Litigation Report, November 29 2016. This decision was preceded by an appellate court decision at 125 A.D.3d 580, 5 N.Y.S.3d 35 (1st Dept. Feb. 25 2015) and was reported in PLRB Frontlines, March 4, 2015 case 14024 and Law360 Insurance on March 2, 2015.

For inquiries about this decision, please contact partners Kevin F. Buckley or Daniel M. O’Connell.

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