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Jury Awards Insured $20 million in damages against its former insurance broker

On December 19, 2017 the Second Circuit affirmed a verdict previously rendered by a Federal Court jury in the Southern District of New York. As summarized by the Second Circuit, this was the second verdict handed down by a jury against Alliant Insurance Services Inc., a national insurance brokerage firm in connection with its negligently handling insurance coverage for buildings at Industry City/ Bush Terminal ahead of Hurricane Sandy. Cammeby's is a New York real estate management company with an excess of $1.5 billion in properties under management.

Following a claim for $30,000,000.00 worth of hurricane related damages at Industry City on October 29th 2012, Cammeby's insurance company, Affilliated FM, informed it that prior to the loss the coverage had been reduced by $20,000,000.00. Thereafter, Cammeby's retained the Insurance Coverage firm of Weg and Myers to sue Affiliated FM and its insurance broker, Alliant Insurance Services.

In August of 2014, the case was tried for the first time Following a two week trial, a jury returned a $20,000,000.00 verdict in favor of Cammeby's finding that Alliant was negligent. Thereafter, the verdict was set aside by Judge Rakoff based upon an instruction that had been given to the jury after they had begun deliberations The matter proceeded to a second trial before Judge Rakoff that began on June 8, 2016. On June 17, 2016, a second jury in as many years returned a second $20,000,000.00 verdict against Alliant in favor of Cammeby's. Accordingly, the amount now due to Cammeby's, with interest, will exceed $26,000,000.

Cammeby's was represented at trial and at the Second Circuit by Dennis D'Antonio and Joshua Mallin of Weg and Myers , PC, assisted by associate Daniel Belzil.

Alliant was represented at the first trial by Paul Kovner of Rubin Fiorella & Friedman LLP

Alliant was represented at the Second Circuit and at the second trial by Paul Kovner of Rubin Fiorella & Friedman LLP and Richard A. Simpson of Wiley Rein LLP

A copy of the 2nd Circuit decision is attached. Click here to read the Court's decision.

Southern District Court holds that a carrier cannot compel an insured to submit to an appraisal when coverage issues still must be resolved. Read the attached decision.

Second Circuit affirms verdict in warehouse loss against Travelers Insurance Company and confirms damage award of $1.1 million

On September 21, 2017, the Second Circuit Court of Appeals in Manhattan affirmed the District Court's decision finding that Travelers breached its contract with its insured, Warehouse Wine, and subsequently determined that the insured suffered damages in the amount of $1.1 million. Weg and Myers initiated suit against Travelers after it denied coverage for a theft of Warehouse Wines liquor inventory that was temporarily stored in a warehouse by the insured's transportation carrier. The transportation carrier and the warehouse were both operated by James Ceseretti. Mr. Ceseretti subsequently allocuted to the theft in a criminal proceeding. The District Court had granted Weg and Myers' Summary Judgment motion wherein it sought a determination, as a matter of law, that the entity who had stolen the inventory was a "carrier for hire", thus triggering coverage. A trial then took place with respect to the value of the inventory that was stolen. Subsequent to the District Court's entry of judgment in favor of the insured in the amount of $1.1 million, Travelers appealed. In rejecting Travelers' appeal the Second Circuit found that the evidence clearly established that Warehouse Wine had placed its inventory into the hands of a transportation carrier and that the theft of the inventory occurred while in its possession. The Second Circuit also rejected Travelers' attack on the Court's calculation of damages and the application of pre-judgment interest, holding that "Travelers cannot circumvent §5001(b) by denying coverage while conducting a nearly year-long investigation into Warehouse Wines' claims, and then, once it is adjudicated liable, avoid paying prejudgment interest from the 'earliest ascertainable date the cause of action existed'. The trial and appeal were handled by Dennis T. D'Antonio and Joshua L. Mallin and assisted by Amanda Peterson. Click here to read the entire decision.

Jury returns multimillion dollar verdict against a subsidiary of Alliant Insurance Services, Inc. as a result of the broker's failure to notify the carrier of the insured's Hurricane Irene Loss

On February 7, 2017 Weg and Myers successfully obtained a jury verdict in New York Supreme Court Sullivan County in favor of its client, Swan Lake Resort, against Swan Lake's insurance broker, Defendant T&H Brokers, a subsidiary of Alliant Insurance Services. With the inclusion of pre-judgment interest, it is estimated that the verdict will exceed $3.7 million. The case centered upon allegations that the broker failed to report to Swan Lake's property carrier that Swan Lake had suffered a loss as a result of Hurricane Irene. The carrier had successfully denied the claim and extricated itself from liability as a result of its receiving untimely notice of the loss. The broker claimed that it never received any notice from Swan Lake about this loss until February 2012, at the time that the insured changed insurance brokers. The jury, after reviewing all of the evidence, including various phone records, as well as hearing the testimony of representatives from Swan Lake and T&H Brokers, rejected the insurance broker's defense and returned a verdict in favor of Swan Lake after deliberating for less than one hour. The case was tried by Dennis T. D'Antonio and assisted by Joshua L. Mallin and Amanda Peterson.

The Swan Lake verdict represents the fourth trial verdict obtained by Weg and Myers in favor of its clients over a 12 month period. The cumulative amount of these verdicts total $35.5 million.

Court directs verdict in favor of Insurance Agent against Lincoln Benefit Life for unpaid commissions

The United States District Court in Nebraska directed a verdict in favor of a former Lincoln Benefit Life agent against the company as a result of the company's failure to pay him commissions in connection with the conversion of $29 million in life insurance. The directed verdict came after a complete presentation of the evidence and prior to submission of the case to the jury. This dispute was connected to an earlier dispute between Lincoln Benefit Life and a former insured with respect to whether life insurance policies sold by the Company contained a right to convert those policies to whole life policies. In April 2013 a jury in the Southern District of New York found that Lincoln Benefit Life wrongfully refused to convert the policies to universal life policies. Subsequent to that jury verdict, the insurance agent who placed those policies demanded contractually required commissions be paid to him. The company once again refused and resulted in this litigation and Memorandum and Order directing a verdict in favor of the agent. Click here to read this Memorandum and Order.

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Judge Rules Insurer's Failure To Pay Initial Repair Costs, Estops Its Defense On Replacement Value Claim; Jury Rejects Arson Allegation In $1.22 M Award

A jury in New York Supreme Court, Richmond County has awarded $1.22 million, with interest bringing the total to approximately $1.9 million, in a suit brought by a homeowner whose house was destroyed by fire on August 6, 1994.

The suit involved allegations of arson, failure to replace with like kind and quality and the reformation of the policy because it failed to list the wife as a named insured.

The trial of the suit brought by Robert Pate and Jeannie Pate lasted three weeks and the jury deliberated two days, to reach the dollar verdict, after rejecting the arson allegation. Judge Frank Ponterio, who presided at the trial, ruled on several of the legal issues involved. He rejected the position of the Republic Insurance Company, the insurer of the Staten Island home, that under any circumstance, the liability it would owe was the insurable interest of Robert Pate, the husband and the only insured on the policy. The home was actually owned by both parties on a 50/50 basis.

Mr. Pate moved for a reformation of the policy on the grounds that the failure to list his wife Jeannie as a named insured was an innocent mistake, because the character and location of the property was accurate and there was the intention of the carrier to insure the risk. The judge agreed to the reformation adding Mrs. Pate as a named insured.

Another ruling of the judge related to the extent of the claim. Republic had argued that the Pates had failed to repair the home after the fire, with materials of like kind and quality, thereby barring recovery under the replacement cost endorsement of the policy, and limiting such recovery to the lesser amount expended for what was described as patch up repairs.

But William H. Parash, of Weg and Myers, P.C., a New York City-based plaintiff's law firm, responded that Republic Insurance was estopped from this defense because it had breached the terms of the policy, by failing to make available the funds to begin the repairs. Parash pointed out that the insurer should have paid the actual cash value, pending the completion of the repairs at which time it would supply the balance of the claim when it was satisfied that the like kind and quality requirement had been met.

In his decision, based on the arguments and relying on the 1983 Appellate Court, 2nd Department decision of Zaitchick v. American Motorists Ins. Co., Judge Ponterio held that if the court were to hold in favor of the insurance company, Republic and other insurance companies would be awarded a windfall, despite the breach of policy terms, knowing that insureds many times cannot repair their homes without the use of insurance proceeds.

Republic Insurance had made a strong bid to prove its arson allegation. The Pates were in the midst of a marital dispute and, at the time the fire took place, were not on the premises. Mr. Pate was in Europe and Mrs. Pate and their children were at a vacation home in Southampton, L.I.

The insurance company had presented its evidence to show motivation for arson, by citing financial difficulties of the Pates, specifically that they had outstanding debts, including monthly obligations of between $5,000 to $7,000. There was a foreclosure judgment on the house in the amount of $400,000.

The evidence presented by the insurer also showed that the New York City Fire Department had responded to the alarm immediately. The company also presented evidence at the trial, that the fire fighters had to force entry into the burning home. Republic Insurance presented the results of the investigation of the fire marshal as to the cause of the fire. The report included the detection by the marshal, who had subjected some debris to forensic test, that there were positive traces of gasoline, considered incendiary materials.

However, the attorney for the plaintiffs was able to convince the jury that the allegation of arson was not sustainable.

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