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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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Federal Plaza 52 Duane Street, New York, NY 10007

Jury Awards $1.2 M In Water Damage Claim;
Finds Insurer Acted In Bad Faith

A jury in Supreme Court, New York County, after a one week trial and one hour of deliberation, found that Colonial Cooperative Insurance Company had failed to sustain its allegation that its insured-claimant had been engaged in a fraud by intentionally and grossly exaggerating the claim and by submitting false documentation in support of the amount of damage, delivered a verdict awarding plaintiffs $1.2 million including interest. The jury also concluded that the defendant insurance company had acted in bad faith, and awarded the plaintiffs consequential damages in the form of attorneys’ fees.

The 6 member jury (with two alternates) adhering to Judge Emily Jane Goodman’s charge that explained the meaning of bad faith, found that Colonial Cooperative had acted in reckless disregard of policy obligations and was disingenuous or dishonest in its failure to honor its policy obligations.

Colonial Cooperative was the insurer for Apollo Express, Inc., and its president, Mohamad Rammal, retailers for high-end and upscale garments, located in Harlem, next to the Apollo Theatre. On April 15. 1999, a pipe burst sending a cascade of water into the premises. It remained for over six hours, damaging both inventory and the improvements that they had made to their leasehold.

Apollo submitted its claim under the all risk policy issued by Colonial Cooperative, for $925,941.25, representing the replacement cost, plus $26,235 for the improvements and betterments made to the premises.

The insurance company denied liability - alleging fraud by exaggeration and falsified documentation. Apollo Express retained the law firm of Weg & Myers, P.C. to bring an action for breach of contract and breach of the implied covenant of good faith and fair dealing. William H. Parash, a partner in the law firm, was counsel for the plaintiff.

During the course of the trial, Mr. Parash established that a joint inventory had been taken by Apollo’s representatives and Colonial’s salvors and that Apollo had provided proof of the replacement cost of each item as of the time of the loss. Evidence was introduced by Mr. Parash, which established that Colonial Cooperative had attempted to conceal the fact that a forensic accountant it hired had confirmed the amount of the loss suffered. Colonial Cooperative, according to Parash, then hired a second accountant but did not provide all of the documents submitted by the insured, which would have verified plaintiff’s loss. Predictably, this second accountant came to a different conclusion than the first accountant retained by the earner, Parash said.

In her charge to the jury, Justice Goodman, citing Worm v. Commercial Union Insurance Company, (NYLJ October 15, 2001) instructed jurors that they could find bad faith if Colonial Cooperative evidenced a reckless or gross disregard for its policy obligation, or was disingenuous or dishonest in its failure to carry out the contract. The jury was further instructed that bad faith could not be based upon an arguable difference of opinion, or upon ordinary negligence. Moreover, the judge said in her charge, the jury could conclude bad faith if it found that Colonial Cooperate searched its files, or made an investigation, in an effort to determine a bogus basis from which to escape its policy obligation. In connection with the charge to the jury for consequential damages, Justice Goodman instructed the jury that an insurer’s “breach of a duty to investigate, bargain and settle claims in good faith” triggers potential damages to the insured that extend beyond the “amount specified in the insurance policy.” She said that such damages include, inter alia, consequential damages, and “the allegation that an insurer makes a practice of inordinately delaying and then denying a claim without reference to itsviability,” and she concluded that these factors may be deemed a “cognizable claim for unfair practices under General Business Law Section 349.”

Colonial Cooperative Insurance Company was represented by Louis M. Rohrberg of Rohrberg & Associates.

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