Relying on past New York precedent, a New York state trial court
determined the language of certain reinsurance certificates at
issue were unambiguous, declining to accept plaintiff's
extraneous evidence "that the custom and practice in the
insurance trade is contrary" to such precedent.
The Court relied on the following three cases: Utica Mut. Ins.
Co. v. Clearwater Ins. Co., 2014 WL 6610915 (N.D.N.Y. Nov. 20,
2014) (currently on appeal); Excess Ins. Co. Ltd. v. Factory Mut.
Ins. Co., 3 N.Y.3d 577 (2004); and Bellefonte Reins. Co. v. Aetna
Cas. & Sur. Co., 903 F.2d 910 (2d Cir. 1990), wherein the
courts "concluded that the [reinsurance] certificates as to
the limit of liability are unambiguous, and therefore, extrinsic
evidence should not be considered." Notably, other courts have
reached different results on this issue.
Although the certificate language here – "reinsurance
accepted" – was different than the "limit"
language considered by the New York Court of Appeals in Excess, the
Court in Excess relied, in part, on the decision by the Second
Circuit in Bellefonte – which involved reinsurance
certificates with the same or similar language to the certificates
at issue here. Citing to Excess in support of its decision, the
Of course, both parties were well aware of the type of product
that was being reinsured. It would be far from unreasonable to
expect that at the time of procuring reinsurance, [the reinusred]
could anticipate the possibility of incurring loss adjustment
expenses in settling a claim... Certainly, nothing prevented [the
reinsured] from insuring that risk either by expressly stating that
the defense costs were excluded from the indemnification limit or
otherwise negotiating an additional limit for loss adjustment
expenses that would have been separate and apart from the
reinsurer's liability on the insured property. Failing this,
the reinsurers were entitled to rely on the policy limit as setting
their maximum risk exposure. (Excess, at 584-585).
The Court granted the moving defendants partial summary judgment
on their affirmative defense pertaining to a cap on liability for
both loss and expenses in the face amount of the reinsurance
certificates. , Index. No. CA2013-002320 (Sup. Ct. N.Y. County Aug.
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It feels like a black swan event: last month, in GEICO Gen. Ins. Co. v. Harvey, No. 4D15-2724 (Fla. Ct. App. Jan. 4, 2017), a Florida appellate panel unanimously overturned a jury verdict, on the ground that the plaintiff's bad faith claim was insufficient as a matter of law.
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