Goldberg Segalla Succeeds in Defending Insurer Against Consequential Damages Claim
Goldberg Segalla partner Ashlyn M. Capote succeeded in having a policyholder’s claim for consequential damages dismissed pursuant to FRCP 12(b)(6) by the Northern District of New York. The lawsuit arose from a dispute about the extent of covered damages in a homeowner’s policy.
The plaintiff alleged that Liberty Insurance Corp. breached a homeowner’s policy by failing to timely investigate storm damage to a rental property, resulting in alleged significant loss of rental income. In addition to breach of contract damages, the plaintiff sought consequential damages based on alleged bad faith and breach of the covenant of good faith and fair dealing.
The court dismissed the consequential damages claim on multiple, independent grounds. First, it held that New York law requires consequential damages to have been within the parties’ contemplation at the time the insurance policy was issued, and the plaintiff failed to identify any policy language supporting such damages. Allegations of delay and improper claims handling alone were insufficient.
Second, the court ruled that the plaintiff’s claim for breach of the implied covenant of good faith and fair dealing was duplicative of the breach of contract claim, as both were based on the same alleged conduct. Under New York law, duplicative bad‑faith claims cannot serve as a standalone basis for consequential damages.
Finally, the court emphasized that consequential damages must be pleaded with specificity. A generalized request for damages without identifying particular losses or amounts attributable to consequential harm does not meet the pleading standard.
This decision reinforces the high pleading bar policyholders must meet to pursue consequential damages in first-party property damage insurance coverage disputes under New York law.
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The case: Strelkovski v. Liberty Ins. Corp., No. 3:25-CV-107, 2026 LX 13279 (N.D.N.Y. Feb. 13, 2026). To discuss the impact of this matter on first-party insurance coverage lawsuits, contact Ashlyn Capote at acapote@goldbergsegalla.com.