INSURANCE ADVOCATE - April 1989
Insurer Settles Building fire Loss at Full Value; Had Raised Legal Issues
An insurer agreed to settle a fire claim for the full amount of the loss during the course of a trial in Supreme Court, New York County, after its legal challenges became moot.
The suit was brought by Hudson View Equities, a real estate development firm headed by Lew Futterman, to collect the limit of a fire insurance policy of $2,438,000, on a building in the Clinton section of Manhattan. The property was totally destroyed by fire on January 12, 1985.
Greater New York Mutual Insurance Company in denying liability on the claim raised two legal challenges on the suit by Futterman. It asserted that at the time of the fire the building was being operated by a court-appointed receiver, and that the receiver was the named insured on the policy.
This particular building was located on an assemblage of property---the developer was purchasing a group of contiguous properties in order to build a new structure. The company's assertion that the receiver was the insured, however, became inoperative when it was shown that the ownership had reverted to Hudson View Equities, according to Dennis T. D'Antonio of the law firm of Weg & Myers, P.C., who represented the developer.
The second issue raised by the insurer was that the developer has suffered no economic loss because the building was set for demolition as part of the property assemblage. As a matter of fact, it was pointed out the fire had forced the evacuation of the building tenants and had therefore rendered it closer to a demolished state. This according to the company made the property more valuable than when it was standing and had its tenants.
Responding to this argument, D'Antonio said that the fact that the economic value of the property may have been enhanced was not germane because it was based on the land value and could not be used as an off set on the measure of damages from the insured peril.
The suit was started in 1986 and it was tried on February 22, 1989. The insurer agreed to pay $2.5 million for the fire loss.
The insurer was represented by Dennis Wade of the law firm of White, Fleishner and Fino.