United States: New York, New York: These Vagabond Shoes Are Longing To Sue…

Last Updated: February 13 2015
Article by Jimmy S. McBirney

Policyholders hope and expect that their insurance companies will work with them to resolve claims promptly and fairly. We are constantly being told that our insurers, like good neighbors, will be there, and that the insurer's umbrella will protect us. Sometimes, however, the good neighbor will not welcome us, and the umbrella may spring a leak. These situations sometimes lead to litigation, and then the fight becomes where to file suit.

Problems often arise when the claim is large enough, or involves a type of claim, that the insurance company will not want to pay. Even when the insurance company will not pay the claim after a lengthy period of negotiation, many policyholders still prefer not to initiate a lawsuit, especially since they cannot believe that their trusted insurer will not eventually cover the loss. Insurance companies, however, are not always as reluctant to bring suit, especially when it will further their aims. Moreover, when they choose to commence an action, insurance companies typically bring suit in a state that tends to favor insurance companies in litigation, even if that state only has a minimal connection to the dispute.

The choice of forum may determine the outcome of the action. Although insurance policies are written on standard forms, with a goal of having the policies interpreted uniformly, every state has different law on some important insurance coverage issue. Insurance companies are acutely aware of which states tend to favor insurance companies when they resolve insurance coverage claims. When an insurance company is in a dispute with its policyholder that cannot be resolved privately, it often will race to a court in a state that favors insurance companies.

A favorite state for insurance companies long has been New York. There are numerous crucial issues of law involving insurance coverage where courts nationally have split. Many states have "mixed" law, favoring insurance companies sometimes, and policyholders other times. New York law is remarkably consistent. Insurers have the upper hand. As a result, in large coverage disputes, or those involving unsettled areas of the law, insurers often will rush to file suit in New York, even while the policyholder still holds out hope that further negotiations will resolve the claim. After it files suit in New York, the insurance company may continue to negotiate resolution of the claim, but now it will impose a substantial "New York" discount to the value of the claim.

When an insurance company sues the policyholder in New York, and the case only has a tenuous relationship to New York, the policyholder can file a second action in a state with a closer link to the dispute, and then make a motion in the first action to try to get it dismissed to allow the litigation to proceed in the more convenient forum where the second action is pending. This motion argues that the first action should be dismissed for "forum non conveniens."

Many courts will not dismiss the first action simply on the grounds that, because it was filed first, it must be allowed to proceed where it was brought under the "first filed" rule. Courts that will dismiss the first action do so for one of three reasons: because the second action is in a forum that has a much closer tie to the action, and is where the witnesses and evidence are located; because the plaintiff chose the first forum solely because it was forum shopping to be in a venue where the law was favorable, but which has no substantial nexus to the dispute; or because the insurance company brought the first action solely in anticipation that the policyholder was about to file its own coverage action.  

At the outset of negotiations with the insurance company, a policyholder can protect itself from being "jumped" by the insurance company in an unfavorable forum by entering into a standstill agreement with the insurer. The standstill agreement prevents either party from bringing suit while the agreement is in effect, and tolls the statute of limitations during this time. The agreement should be drafted so that the policyholder has a chance to bring suit in the forum of its choosing once the agreement is terminated. On the date that the termination of the agreement becomes effective, the policyholder must be ready to file suit. It will have a lengthy period of time before it must serve the insurance company with the complaint (120 days in federal court), and it can continue to negotiate during this period, knowing that it will have secured its chance to proceed in a favorable forum to resolve the dispute if negotiations fail.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
16 Jan 2019, Other, New York, United States

Intellectual Property partner Paul Fakler will moderate the “The Future of Music Mechanical Licensing” panel at the Copyright and Technology 2019 Conference.

16 Jan 2019, Webinar, New York, United States

LIBOR is the most widely used reference rate in the financial markets and it may be discontinued after 2021. For U.S. dollar-denominated contracts, it is expected to be replaced with SOFR (Secured Overnight Funding Rate).

17 Jan 2019, Speaking Engagement, New York, United States

Orrick Partner Jill Rosenberg will speak at the New York State Bar Association 2019 Annual Meeting, Dispute Resolution Section and Corporate Counsel.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions