Extra-Contractual Damages

Great American Ins. Co. of NY v. L. Knife & Son, Inc., No. 157164/2013, 2019 WL 529276 (N.Y. Sup. Ct. Feb. 11, 2019)

In granting Great American Insurance Company’s motion to dismiss L. Knife’s counterclaims for attorneys’ fees and other extra-contractual damages, the court held that ‘‘neither counterclaim cites any statutory or contractual provision permitting the recovery of attorneys’ fees and costs’’ and that ‘‘New York law is clear that ‘in the absence of any pertinent contractual or statutory provision with respect to the recovery of amounts expended in the successful prosecution or defense of an action, each party is responsible for its own legal fees,’’’ citing Chapel v. Mitchell, 84 NY2d 345, 349 (1994).


As to no bad faith:

The court held that L. Knife’s counterclaim for breach of the duty of good faith and fair dealing was redundant of its breach of contract claim and ‘‘simply recasts Great American’s alleged conduct as ‘wrongful’ or in bad faith.’’ Specifically, L. Knife had not identified any specific acts by Great American that would constitute bad faith. “Rather, L. Knife alleges that Great American acted in bad faith by denying the claim and by asserting that material facts were misrepresented in the application. Without more, these allegations are insufficient to support a claim of bad faith denial of insurance coverage.’’ Also, L. Knife had failed to assert that it had incurred any specific damages due to the purported bad faith other than damages related to the breach of contract claim. ‘‘For this reason alone, the demand for consequential damages should be dismissed.’’

As to no egregious conduct:

The court also dismissed L. Knife’s punitive damages claim because L. Knife failed to allege any facts showing that Great American had committed a pattern of egregious conduct towards the public at large.


This decision was reported in Mealey’s Litigation Report: Catastrophic Loss, Vol. 14, #6 March 2019.

Great American Insurance Company of NY was represented by partners Kevin F. Buckley and Daniel M. O’Connell.


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