GreenGate Fresh’s romaine lettuce might once have made you ill, but their recent victory in the New York Appellate Division certainly won’t. GreenGate was one of many lettuce producers forced to recall their lettuce amidst two E. Coli outbreaks in 2018. GreenGate sought coverage for the recall from its insurer, Houston Casualty Company, who denied coverage, contending that the government recall was not specifically directed at GreenGate. The trial court disagreed and entered judgment in favor of GreenGate. The New York Appellate Division affirmed, finding it irrelevant that GreenGate was not specifically named in the government’s recall recommendation.Continue Reading Salad Lovers (and Policyholders) Rejoice! Court Affirms Coverage for Romaine Lettuce Recall

Directors and officers should take note of a recent decision from the US Bankruptcy Court for the Southern District of New York concerning access to D&O insurance policy proceeds.  In In re SVB Financial Group, Case No. 23-10367 (Bankr. S.D.N.Y. May 22, 2023)[1], the Bankruptcy Court found cause to lift the automatic stay to allow directors and officers to access the proceeds of SVB Financial Group’s (“SVB”) directors and officers (“D&O”) insurance policies to pay for legal costs incurred in responding to investigations and defending litigation.  Moreover, it declined to impose a “soft cap” on the advance of defense costs. Continue Reading Hard on Soft Caps – Bankruptcy Court Declines to Limit Access to D&O Insurance

A New York federal judge recently ruled that an insurer waived its late notice defense because a generic reservation of rights was insufficient to preserve it. As a result, the policyholder’s claim was preserved despite being submitted more than three months after the loss—a delay which would ordinarily be fatal under New York law. The decision underscores the importance both of timely submission of claims and careful attention to reservation of rights letters.
Continue Reading It’s Too Late, Lloyd’s: New York Federal Court Finds Insurer Waived Late Notice Defense

A New York federal court recently held that an insurance company was entitled to recoup legal fees paid under a directors and officers liability policy in defense of a criminal action against an ex-CEO who was convicted of bribery. On a motion for reconsideration, the court affirmed its earlier ruling that the CEO’s conduct fell within the policy’s “Dishonest and Willful Acts Exclusion,” reasoning that the criminal case had been finally adjudicated despite a pending appeal. Because there was no coverage, the insurer could seek repayment of all defense costs it had paid to date. Not only is the court’s recoupment decision potentially inconsistent with New York law, but it also raises thorny questions regarding just when a judgment is “final” for the purpose of triggering D&O policy exclusions.Continue Reading New York Court Holds Insurer Can Recoup Defense Costs, Appealable Conviction of Former Bank CEO Is “Final” Adjudication of D&O Claim

Last week, a New York federal court ruled that an insurer’s “exceedingly broad duty to defend the insured” extended to the policyholder’s indemnification of its landlords in an underlying tort claim. ConMed Corporation (“ConMed”), a medical technology company, filed suit against Federal Insurance Company (“Federal”), a division of Chubb, alleging that Federal breached the terms of its insurance contract when it refused to defend ConMed’s landlords in a Georgia lawsuit.

The coverage dispute stemmed from ConMed employees’ claims that they were exposed to unsafe levels of ethylene oxide, a chemical used to sterilize ConMed’s equipment. Initially, the employees sued ConMed and its contractor that conducted the sterilization, but in April of 2021 the employees initiated a separate suit against ConMed’s landlords (“Landlord Action”). In the Landlord Action, plaintiff employees alleged negligence, aiding and abetting tortious conduct, fraud, wrongful death, and vicarious liability/respondeat superior claims, all stemming from their exposure to ethylene oxide. Pursuant to the lease agreement with ConMed, the landlords tendered the defense and indemnity of the Landlord Action to ConMed, which subsequently tendered the defense to Federal. Federal failed to accept defense of the Landlord Action, and ConMed filed suit.Continue Reading NY Federal Court Rules Insurer Must Cover Policyholder’s Landlords Under Lease Agreement’s Indemnity Provision

Earlier this year, New York passed a law addressing dogs and homeowners’ insurance. Some insurers selling homeowners’ insurance policies will decide whether and how to issue coverage based on the type of dog residing with the homeowners. For example, these kinds of dogs may result in lower premiums or more favorable terms than other dogs:
Continue Reading Dogs And Insurance, These Are A Few Of Our Favorite Things (Pictures Included!)

A federal court in New York denied an insurer’s attempt to dismiss a coverage dispute, rejecting the insurer’s contention that the individual insured directors were “necessary” parties. The insurer argued that, because the outcome of the coverage suit could jeopardize the directors’ indemnity and thereby implicate the D&O policy’s Side A coverage for non-indemnified losses, the directors had an indispensable interest in the litigation. The court disagreed.

The coverage dispute in LRN Corp. v. Markel Insurance Co., 1:20-cv-08431 (S.D.N.Y. Aug. 23, 2021), arose from an underlying lawsuit in the Delaware Chancery Court brought by an LRN shareholder against the company and three of its directors. The plaintiff in the underlying lawsuit alleged that a self-tender offer by LRN to acquire shares of LRN’s common stock was coercive and part of a scheme that was in part orchestrated by the LRN’s directors. LRN, though dismissed from the underlying lawsuit, continued to pay legal fees for the named directors.
Continue Reading Insured Directors Not “Necessary” for Complete Adjudication of Insurer’s Coverage Obligations

Following New Jersey, where similar legislation remains under informal discussion, lawmakers in Ohio, Massachusetts, and New York have now introduced legislation that would provide relief to small businesses for COVID-19 business interruption losses.  The legislation is conceptually identical to the legislation introduced in New Jersey, discussed here last week.  Although the New Jersey bill was

In an important decision for policyholders, a New York state appellate court rejected AIG’s effort to avoid defending McGraw-Hill in a series of copyright suits.  In doing so, it reversed the trial court and rejected the insurer’s attempted use of the contract exclusion and fortuity doctrine as a bar to coverage under various multimedia liability insurance policies.
Continue Reading New York Appeals Court Finds Contract and Conduct Exclusions No Bar to Defense of Publisher’s Copyright Claims

A New York appellate court recently held that renewable bio-diesel fuel manufacturer BioEnergy Development Group LLC may pursue tens of millions of dollars in damages from its insurers under two all-risk insurance policies, including amounts in excess of the policy limits, where the insurers refused to pay claims in a timely manner.
Continue Reading New York Appellate Court Holds Insurers May Suffer Consequences of Delayed Payment of Energy Company Property and Business Interruption Claims