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District Court Declines To Reverse Dismissal of $180,000 Superstorm Sandy Property Damage Claim Against Insurer

Case Study

District Court Declines To Reverse Dismissal of $180,000 Superstorm Sandy Property Damage Claim Against Insurer

September 7, 2018
Christian A. Cavallo

Goldberg Segalla partner Christian A. Cavallo and associate Patrick J. Mulqueen, members of the firm’s Global Insurance Services Practice Group and GIS New Jersey team, successfully opposed a motion seeking to have the U.S. District Court for the District of New Jersey reconsider its earlier order granting summary judgment to our client, a top 20 global insurance and reinsurance company, and dismissing the plaintiffs’ complaint with prejudice in a first-party coverage action arising out of Superstorm Sandy.

In the lawsuit, the plaintiffs claimed that our client breached the subject homeowners policy by failing to pay full benefits for property damage to their summer home allegedly caused by wind during Superstorm Sandy. In support of their claim that our client underpaid the loss by approximately $180,000, the plaintiffs produced expert reports calculating the amount of the damage based on replacement cost value (RCV) only. The terms of the policy, however, limited the plaintiffs’ recovery to the actual cash value (ACV) of the damage “until actual repair or replacement is complete.” At summary judgment, the court accepted our client’s argument that since the plaintiffs admittedly had not made any repairs to the home, the correct measure of damages was ACV, not RCV, and since the plaintiffs had put forth no competent evidence to establish the ACV of the loss, they could not prevail on their breach of contract claim as a matter of law. As a result, the court granted our client’s motion and dismissed the lawsuit with prejudice.

Thereafter, the plaintiffs moved for reconsideration of the summary judgment order, arguing that the court ignored the plain language of the policy and that its decision was simply unfair. Consistent with the arguments set forth in the opposition Chris and Patrick filed, the court found no factual or legal basis to reverse its decision, observing that it could not “rewrite the bargain struck by the parties by reading out of the contact a provision that [the plaintiffs] agreed to and now do not like because it limits their claim of damages.”