Insurance Carrier Secures Summary Judgment in Claims Arising from Coverage Dispute
Case Study

Insurance Carrier Secures Summary Judgment in Claims Arising from Coverage Dispute

In an insurance coverage dispute arising from a first-party property damage claim, Goldberg Segalla’s Jonathan Schapp and Ashlyn M. Capote earned summary judgment on behalf of a leading U.S. insurance carrier in the U.S. District Court for the Northern District of New York. The claims were dismissed and a trial avoided.

In February 2014, a homeowner sustained water damage because of an alleged sump pump backup. He filed a claim with his insurance carrier, quickly received a check for the full amount available under the policy’s sump pump endorsement, and made no complaints about the way the claim was handled. Nevertheless, this is not where the story ends.

Because the homeowner insisted it was his neighbor who caused the water damage, he wanted the neighbor to pay as well. Our client, the insurance carrier, sent the claim to its subrogation department to determine whether to pursue the claim with the neighbor. They decided not to pursue it.

At that point the homeowner began demanding subrogation. He wanted to file a separate lawsuit against his neighbor, and he believed that discovery in the insurer’s subrogation action would help him get information to use in his lawsuit against the neighbor.

The insurer gave in, and began pursuing subrogation against the neighbor’s homeowners’ insurer in Fall 2014. However, the matter was delayed due to the existence of the homeowner’s lawsuit against his neighbor.

In April 2017, the homeowner’s attorney attempted to reopen or widen the original claim with our client. At that point, the insurer explained that the claim had already been paid based on the total available policy limits, and that the policy’s two-year suit limitation had expired.

At that point the homeowner filed a lawsuit against the insurance carrier, asserting that the insurer was estopped from relying on the suit limitation provision, had breached the duty of good faith and fair dealing, and had violated General Business Law (GBL) § 349.

Jon and Ashlyn, partners in the firm’s Global Insurance Services group, developed and presented the motion for summary judgment showing, inter alia, that there had been no concealment or misrepresentation on our client’s part and, therefore, the insurer was not estopped from enforcing the suit limitation clause and the three-year statute of limitations that governs GBL § 349.

In finding that the plaintiff’s claims were untimely as a matter of law, the court dismissed all claims, pointing out the fact that the plaintiff’s “strategy backfired and left him empty-handed in no way entitles him to equitable estoppel. Instead, the record decisively shows that plaintiff never demanded that defendant cover any more of his damages than the $10,500 they initially provided him.” Because the court concluded that the claims were untimely, it never reached that portion of the carrier’s motion seeking dismissal on the merits.

MORE ABOUT GOLDBERG SEGALLA’S GLOBAL INSURANCE SERVICES GROUP:

Goldberg Segalla is one of the premier law firms advising and representing the global insurance and reinsurance industry. Its 75-lawyer Global Insurance Services group, which Law360 ranks among the largest in the U.S., exists to serve insurers, reinsurers, and all others operating in the insurance arena. Our attorneys advise insurers on matters ranging from new policy formation, transactions, and thorny regulatory concerns to complex insurance and reinsurance coverage disputes, bet-the-company litigation, bad faith and extracontractual claims, fraud, and professional liability defense for insurance agents and brokers.