Over the last several months, the New York Court of Appeals addressed a panoply of insurance-related issues relating, inter alia, to an insurers’ duty to defend; the statute of limitations for a claim under a fire insurance policy; and the special relationship between an insured and its broker. The Court also addressed diverse questions relating to medical monitoring and the enforceability of an auction sales agreement.
Application of Statute of Frauds to Auction Sale Agreement
Did an “absentee bid form” signed by a successful auction sale bidder satisfy the statute of frauds? Answer: Yes. In William J. Jenack Estate Appraisers & Auctioneers, Inc. v. Rabizadeh, 2013 NY Slip Op 08373 (decided December 17, 2013), the Court of Appeals noted that: The underlying dispute arises from Jenack’s claim for damages resulting from Rabizadeh’s failure to pay for an item offered at a Jenack public auction. The central issue in contention between the parties is whether the sale of the auction item to Rabizadeh is memorialized in a writing that satisfies the Statute of Frauds.
Court Considers Whether Obligation Exists to Implement a Medical Monitoring Program
Does New York recognize an independent cause of action seeking medical monitoring by cigarette manufacturers to assist in the early detection of lung cancer? Answer: No. In Caronia v. Philip Morris USA, 2013 NY Slip Op 08372 (decided December 17, 2013), the Second Circuit Court of Appeals asked the Court “to determine whether [New York] recognizes an independent equitable cause of action for medical monitoring and, if so, what the elements, appropriate statute of limitations and accrual date are for that particular cause of action.” Id. at 1-2. The Court of Appeals summarized the claims and relief sought: Plaintiffs, who… Read more
Special Relationship between an Insured and an Insurance Broker
Does an insurance broker have a special relationship with the insured that may create a liability for failing to advise or direct the client to obtain additional coverage? Answer: Yes (arguably under the facts of the case). In Voss v. Netherlands Insurance Company, 2014 NY Slip Op 01259 (decided February 25, 2014), the question before the Court of Appeals was “whether a special relationship existed between the insureds and the insurance broker” such that “the broker may be liable, even in the absence of a specific request, for failing to advise or direct the client to obtain additional coverage[.]” Id…. Read more
Enforceability of Short Statute of Limitations in a Fire Insurance Policy
Is a two year contractual limitation period in a fire insurance policy reasonable and enforceable where the insured property cannot reasonably be replaced in two years? Answer: No. Executive Plaza, LLC v. Peerless Insurance Company, 2014 NY Slip Op 00898 (decided February 13, 2014), involve[d] a fire insurance policy that contain[ed] a clause limiting the time in which the insured may bring suit under the policy. The limitation period [was] two years, running from the date of the fire. The policy also [said] that the insured may recover the cost of replacing destroyed property — but only after the property… Read more
Consequences of Insurers Breach of Duty to Defend Malpractice Claim
May a liability insurance carrier that breached its duty to defend thereafter refuse to pay a judgment based upon a policy exclusion? Answer: Yes. In K2 Investment Group, LLC v. American Guarantee Liability Insurance Company, 21 N.Y. 3d 384 (2013) [decided June 11, 2013 and featured in Issue No. 2] (“K2-I”), the Court of Appeals held that “when a liability insurer has breached its duty to defend its insured, the insurer may not later rely on policy exclusions to escape its duty to indemnify the insured against a judgment against him.” Id. at 387. Upon re-argument, in a remarkable about-face,… Read more