Foran Glennon Palandech Ponzi & Rudloff
On January 25th and 26th, Charles Rocco and Paul Ferland conducted a workshop at the Loss Executives Associationâ€™s 87th Annual Meeting and Educational conference in St. Petersburg, Florida. Mr. Rocco and Mr. Ferland were joined in the workshops by John Kinneary, Executive General Adjuster â€“ Property Claims at AEGIS Insurance Services, Inc.
The workshop, titled â€śDeposition Guidelines for Insurance Adjusters,â€ť was held once each day, and was focused on helping insurance adjusters to understand the basics of a deposition, how to prepare for a deposition, and how to conduct themselves during a deposition. In addition, the workshop reviewed the significant differences between a percipient witness deposition and the deposition of a corporate representative under the Federal Rules of Civil Procedure and state court rules of civil procedure.
The workshop was well-attended and received overwhelmingly positive feedback from those in attendance. Thank you to LEA for letting us be a part of this conference, as well as everybody that attended one of the workshops! We look forward to the opportunity to do it again in the future!
Charles Rocco and Rodrigo Tordecilla Obtain Summary Judgment on $2.6 Million Dollar Hurricane Sandy Claim
Charles Rocco and Rodrigo Tordecilla obtained summary judgment on behalf of Firemanâ€™s Fund Insurance Company (â€śFFICâ€ť) in a case filed by homeowners, Mark and Esther Stern (the â€śPlaintiffsâ€ť).Â The litigation arose out of a claim for alleged damages to a residential property in Monsey, New York (the â€śPropertyâ€ť), caused by Hurricane Sandy on October 29, 2012.Â The Property was covered by a homeowner insurance policy (â€śPolicyâ€ť) issued by FFIC.Â FFIC issued three denials, in 2013, for portions of the claim based on certain exclusions in the Policy.Â The adjustment of the remaining portions of the claim continued.Â Plaintiffs eventually filed a lawsuit against FFIC in October of 2016.Â The lawsuit sought a declaration that Plaintiffsâ€™ losses, incurred as a result of Hurricane Sandy, were covered under the Policy, and that FFIC was obligated to pay Plaintiffs for their losses.
The Policy contained a suit limitation provision, which required Plaintiffsâ€™ to bring a lawsuit against FFIC â€świthin two years after the occurrence.â€ťÂ The Policy defined â€śoccurrenceâ€ť as â€śaccidental loss and damage to covered property which occurs during the policy period and is caused by one or more causes of loss we cover.â€ťÂ FFIC moved for summary judgment based on Plaintiffsâ€™ failure to commence a lawsuit within two years after the occurrence.Â Plaintiffsâ€™ opposition attacked the authenticity of the copy of the Policy submitted by FFIC with its motion, and argued that the suit limitation provision was ambiguous.Â Further, Plaintiffs argued that FFIC did not make its final coverage decision until April 1, 2015.Â Thus, even if the suit limitation provision applied, it accrued from April 1, 2015.Â Therefore, according to Plaintiffs, their lawsuit filed in October of 2016, was within the Policyâ€™s two year suit limitation.
Judge Robert M. Berliner of the Supreme Court of the State of New York, County of Rockland, found that FFICâ€™s motion â€śestablished [FFICâ€™s] prima facie entitlement to judgment as a matter of law.â€ťÂ The Court noted that FFIC effectively refuted Plaintiffsâ€™ attack on the authenticity of the Policy.Â The Court acknowledged FFICâ€™s argument that Plaintiffsâ€™ own admissions in the complaint, including references to the terms of the Policy, proved the Policyâ€™s authenticity.Â Likewise, the Court rejected Plaintiffsâ€™ claim of ambiguity, and agreed with FFICâ€™s argument that the action was time-barred, pursuant to the Policy.Â In reaching its conclusion, the Court held that Plaintiffs were unable to substantiate their allegation that FFIC denied the claim on April 1, 2015.Â Accordingly, the Court held that the lawsuit was untimely regardless of whether the suit limitation period commenced on October 29, 2012 (the date of the loss), or in 2013 (during which FFIC issued the three denial letters).Â Based on the foregoing, the Court found the action time-barred, and granted FFICâ€™s motion for summary judgment.
Foran Glennon Becomes Founder Member of Insurance Law Network Spanning Four Continents
Foran Glennon announced today it has become a founder member of newly launched Global Insurance Law Connect, a formal network with member firms in eight countries. This will enable Foran Glennon to efficiently and effectively serve clientsâ€™ global needs by offering an extensive network of local lawyers with specialized insurance law knowledge.
Founder member firms are Batini Traverso Grasso & Associati (Italy), BLM (UK), Byrd & Associates (France) and Foran Glennon Palandech Ponzi & Rudloff PC (USA). Other members are Blanco & Asociados (Spain), Khaitan Legal Associates (India), Riisa & Co (Norway) and Santo Bevilaquo Advogados (Brazil).
Jim Glennon, Partner, said: â€śWe were all inspired by client demand. In this highly competitive rating environment, underwriters are looking for income growth in new markets or from new products â€“ extending their business into often unfamiliar territory. The insurance industry is asking for specialist advice across multiple markets and delivered in a comprehensive manner.
â€śWe are pleased to have formalized our relationship with our fellow member firms by putting in place the broadest network underpinned by stringent due diligence and rigorous quality control. This gives insurers comfort that they can use the strength and breadth of the network to access the right advisors, in the right places, in the right way, and reduce the time and money they spend on managing their risks.
â€śOver the past year and a half, we have gotten to know the principals from the other founding firms to ensure they are committed to providing the insurance industry with excellent service in a cost-effective and efficient manner.Â The alliance also makes sense since many of us share common clients.Â In fact, we have already worked jointly with other member firms on matters that obtained successful results for our clients.â€ť
Mike Brown, Chairman of Global Insurance Law Connect, said â€śWe are delighted to have Foran Glennon as one of our founder members. Their disciplined approach, skilled team and the reputation of their insurance practice in the US makes them a perfect fit for this extensive global network of specialist legal insurance practitioners.â€ť
Recognizing the wide range of issues that insurers face today, Global Insurance Law Connect has been created to help insurers:
- develop best-in-class products,
- advise on coverage,
- resolve disputes, manage claims and litigation, and
- understand the impact of regulation.
A cornerstone of the offering is 14 special legal and risk interest groups that will work throughout the Global Insurance Law Connect network to share expert knowledge with clients across classes of business such as product liability, D&O, marine, energy and cyber. Additional groups will be added as the alliance grows in the next six months.
Please visit www.globalinsurancelaw.com for more details.
Robert Boylan and Eric Shukis Obtain Summary Judgment on $30 Million Dollar Indemnification Claim
Robert Boylan and Eric Shukis obtained summary judgment on behalf of Xchanging Solutions Limited and Xchanging Solutions USA, Inc. (together, â€śXchangingâ€ť) in a case filed by Xerox State & Local Solutions, Inc. (â€śXeroxâ€ť).Â The litigation arose out of an asset purchase agreement (â€śAPAâ€ť) executed by the parties.Â Through the APA, which was governed by New York law, Xchanging sold Xerox its remaining rights and obligations under information and technology contracts with various states, including the State of Tennessee.
The contract with the State of Tennessee obligated Xchanging to design and build a complex software application related to the Stateâ€™s various eligibility systems.Â In the APA, Xchanging made certain representations and warranties regarding the estimated cost and time to complete the project.Â Xerox claimed that Xchangingâ€™s estimates were inaccurate and incomplete, arguing that cost and scheduling overruns had forced it to spend nearly $100 million on the project â€“ far in excess of what it originally anticipated.Â Accordingly, Xerox sought indemnification from Xchanging for the APAâ€™s full purchase price of roughly $30 million, plus interest.
Notably, the APA included a â€śsurvival clause,â€ť which provided that Xchangingâ€™s liability for breach of representations and warranties â€śsurvivedâ€ť the closing for the applicable statute of limitations plus thirty days.Â In other words, the statute of limitations was arguably extended by thirty days.Â Relying on the APAâ€™s survival clause, Xerox filed suit after the limitations period expired but just before the expiration of the additional thirty-day window.
Xchanging moved for summary judgment because under New York law an agreement to waive or extend the statute of limitations is unenforceable unless made in a writing signed after the cause of action has accrued.Â Furthermore, under New York law, contractual representations and warranties are breached, if at all, at the time they are made. Synthesizing these two points, Xchanging argued that the APAâ€™s survival clause was unenforceable because, at best, the alleged breach of representations and warranties occurred â€“ and Xeroxâ€™s indemnification claim accrued â€“ simultaneously with the promise to extend the statute of limitations.
Judge Louis B. Stanton of the Southern District of New York agreed with Xchanging, ruling that the APAâ€™s thirty-day extension was invalid and Xeroxâ€™s $30 million indemnification claim was accordingly time-barred.Â The opinion is located here: Xerox State & Local Sols., Inc. v. Xchanging Sols. (USA), Inc., — F.3d —, No. 13 CIV. 3472 (LLS), 2016 WL 6135660 (S.D.N.Y.).
Charles Rocco, Tom Orlando, and Venice Yoo Win Appeal in Dispute over Deductible Interpretation in Sandy Claim.
The Appellate Division, Second Judicial Department, of the State of New York ruled in favor of ACE American Insurance Company (â€śACEâ€ť) in a fight over the interpretation of a deductible provision in a Sandy claim.Â In a unanimous opinion, the Appellate Division reversed the Westchester County Supreme Court and agreed with ACEâ€™s interpretation of the flood deductible applicable to Castle Oil Corporation (â€śCastle Oilâ€ť)â€™s losses.
This litigation arises out of Castle Oilâ€™s insurance claim for flood damage caused by Superstorm Sandy to its Port Morris Terminal location. Â At issue was the interpretation of the flood deductible provision, which states that the flood deductible is â€ś2% of the total insurable values at risk per location subject to a minimum of $250,000.â€ťÂ Castle Oil moved for partial summary judgment, arguing that the deductible should be calculated as 2% of the $2.5 million flood sublimit.Â According to Castle Oil, therefore, the appropriate deductible was the minimum $250,000 flood deductible as 2% of the $2,500,000 sublimit was less than $250,000.Â ACE opposed and cross-moved for summary judgment, arguing that the deductible should be 2% of $124,701,000, the total valuation of the Port Morris Terminal listed in the policyâ€™s â€śSchedule of Locations Endorsement.â€ťÂ According to ACE, the deductible was $2,494,020, and as such, Castle Oil could not recover because Castle Oilâ€™s claimed $2,284,239.95 did not exceed that amount.
Judge Smith of the Westchester County Supreme Court agreed with Castle Oilâ€™s position and granted Castle Oilâ€™s motion.Â She found that the language â€śvalues at riskâ€ť was not defined in the policy, and must necessarily refer to the sublimit amount of $2.5 million.Â She reasoned that this interpretation was the only way to give meaning to the language â€śat riskâ€ť because the insurer is â€śat riskâ€ť of paying only the full amount of the sublimit.Â Judge Smith also held that the total insurable values of $124,701,000 could not be used to calculate the deductible because the endorsement included a disclaimer that those values were set forth for â€śpremium purposes only.â€ťÂ She further concluded that ACEâ€™s position rendered Castle Oilâ€™s flood protection illusory.
The Appellate Division disagreed with the lower courtâ€™s interpretation of the flood deductible provision, and concluded that the only reasonable interpretation of the flood deductible provision was that set forth by ACE â€“ namely, that the applicable deductible was 2% of $124,701,000, or $2,494,020.Â Castle Oilâ€™s interpretation, on the other hand, was unreasonable as it would render much of the deductible provision entirely superfluous.
In reversing Judge Smithâ€™s decision, the Appellate Division found that the â€śtotal insurable values at riskâ€ť refers to an insuredâ€™s own risk of loss and damage, not the insurerâ€™s limit of liability.Â In addition, the Appellate Division rejected Judge Smithâ€™s finding that the values in the endorsement cannot be the values referred to in the deductible provision because of the â€śfor premium purposes onlyâ€ť notation.Â That note simply indicated that the values were used to determine the premiums only, not the limitations of the policy.Â As such, it did not preclude the use of these values in the calculation of the applicable flood deductible.Â The Appellate Division also rejected Judge Smithâ€™s finding that ACEâ€™s interpretation would render the policyâ€™s coverage illusory.Â While the claim at issue fell within the $2,494,020 deductible, the Appellate Division explained that there were loss scenarios pursuant to which Castle Oil would have been out the $2,494,020 deductible, but also would have been paid the entire $2,500,000 sublimit for flood.Â Therefore, as ACEâ€™s interpretation of the flood deductible was the only reasonable interpretation, the Appellate Division reversed the lower courtâ€™s decision and ruled in favor of ACE.
Attorney-Client Privilege Derailed By Custom and Practice
Paul Ferland and Venice YooÂ Obtain Dismissal of an $18 Million Dollar Claim for Violations of New York General Business Law Â§ 349
Paul Ferland and Venice YooÂ obtained dismissal on behalf of Bankers Standard Insurance Company (â€śBankers Standardâ€ť) of an $18 million dollar claim for violations of New York General Business Law Â§ 349 (â€śGBL Â§ 349â€ť), in a coverage litigation arising out of Superstorm Sandy (â€śSandyâ€ť). Federal Judge Joanna Seybert in the Eastern District of New York agreed with Bankers Standardâ€™s argument that Plaintiffâ€™s complaint failed to allege consumer-oriented conduct, as required to maintain a claim under GBL Â§ 349. Accordingly, the $18 million claim was dismissed.
Plaintiff, Yucel Edebali, sued Bankers Standard in connection with his insurance claim for property damage caused by Sandy and a subsequent vandalism claim. Plaintiff asserted claims for breach of contract, violations of GBL Â§ 349, and declaratory relief. In support of his GBL Â§ 349 claim, Plaintiff alleged that Bankers Standard engaged in deceptive conduct in handling Plaintiffâ€™s Sandy claim. Specifically, Plaintiff alleged that he did not rent an alternative premises after Sandy because he relied on Bankers Standardâ€™s representation that it would rent a house for him. When Bankers Standard did not rent another house for him, Plaintiff alleged that Bankers Standardâ€™s denial of his claim for alternative living expenses was improper. In an attempt to meet GBL 349â€™s consumer-oriented conduct requirement, Plaintiff alleged that this kind of deceptive conduct has the potential to affect the public at large as procuring alternative premises for insureds is a common practice of insurance companies.
Bankers Standard moved to dismiss the GBL Â§ 349 on the ground that Plaintiffâ€™s complaint failed to sufficiently allege that Bankers Standardâ€™s conduct was directed at consumers. Bankers Standard argued that the fact that other consumers may have purchased similar policies and that some of them may have dealt with Bankers Standardâ€™s claim department is not, standing alone, enough to meet the statuteâ€™s consumer-orientation requirement. Judge Seybert agreed with Bankers Standard, finding no factual allegations in the complaint to suggest that the partiesâ€™ dispute was anything more than a private contractual dispute. Therefore, Plaintiffâ€™s $18 million dollar GBL Â§ 349 claim was dismissed in its entirety.
Brian Devilling and Matt Ponzi obtained dismissal of all claims against an excess property insurer in the District Court of Jefferson County, Kentucky. The insured sought damages in excess of $1 million arising from a fire loss, and argued that it was entitled to sue its excess insurer before its primary insurer paid policy limits. The court disagreed, dismissing the case against the excess insurers and holding that primary limits must be exhausted before filing suit against an excess insurer.
Bridget Liccardi and Michael Foran recently won summary judgment on behalf of an insurer in the United States District Court for the Southern District of Illinois. The case involved a $5 million fire loss claim. The insured argued that it was entitled to replacement cost value coverage, since it has replaced its damaged commercial property with residential investment property. On the eve of trial, the court granted summary judgment for the insurer, holding that residential investment property is not â€ślike kind and qualityâ€ť in comparison to the damaged commercial property. Thus, the insurer was not obligated to pay replacement cost value under the policy.
Charles J. Rocco, Malcolm Reilly and Mara Hsiung of the New York office recently secured partial summary judgment on behalf of ACE American Insurance Company (â€śACEâ€ť) and Torus Specialty Insurance Company (â€śTorusâ€ť) (collectively, the â€śInsurersâ€ť) in New York Supreme Court. Judge Cynthia Kern held in favor of the Insurers on the application of the Special Flood Deductible for a Named Storm. This litigation stems from an $86 million insurance claim made by The Howard Hughes Corporation (â€śHHCâ€ť) for damage caused by Superstorm Sandy at the South Street Seaport in New York City. In a motion for partial summary judgment, HHC argued that the Policyâ€™s general $100,000 deductible should apply to the loss rather than the Special Flood Deductible for a Named Storm (approximately $7.7 million). Although HHC recognized that Superstorm Sandy was a Named Storm, it maintained that the Special Flood Deductible was inapplicable because the damage was caused by storm surge, not by flood. In support of its argument, HHC relied upon a definition of â€śfloodâ€ť from an occurrence provision of the Policy that excluded storm surge caused by a Named Storm. The Insurers responded by pointing out that the definition of â€śfloodâ€ť upon which HHC relied was limited to the occurrence provision of the Policy and was inapplicable to the Policyâ€™s deductible provisions. Moreover, HHCâ€™s interpretation would render the Special Flood Deductible for a Named Storm meaningless, as it could never be triggered. Judge Kern agreed with the Insurersâ€™ interpretation, and granted partial summary judgment to the Insurers.