Defamation
470 4th Ave. Fee Owner, LLC et al v. Wesco Ins. Co., 2021 WL 6097478 (N.Y.Sup.), 2021 N.Y. Slip Op. 32780(U) (Trial Order) (Sup. Ct. NY Co. Dec. 23, 2021)
Plaintiffs alleged over $6.1M in damages for the insurance company's denial of coverage for a new residential apartment building in New York that suffered ongoing water infiltration. Plaintiffs sued not only the insurance company that issued the policy but also its parent company.
Plaintiffs alleged that the letter denying coverage was defamatory because it was sent to the Plaintiffs mortgage company and stated that, to the extent a false date of loss was intentionally provided in the first notice of loss, the claim is barred by the policy's fraud provision. The court held that such statements were not defamatory. The court reasoned: "defendant merely quoted the portions of the policy justifying its disclaimer and cited the facts upon which it relied thereupon. The truth of the terms of the policy are not capable of defamatory meaning and the conditions which satisfy such disclaimer terms similarly are not defamatory."
The court also dismissed all claims against the parent company, as it was not a signatory to the insurance contract and no facts were alleged to suggest domination and control.
This decision is important because it confirms that insurance companies cannot be held liable for defamation by denying a claim based on fraud and stating the facts upon which the denial is based. It also reinforces the well-established rule that a mortgagee has an insurable interest in a policy it is named in, and a right to be notified of coverage decisions.
Partners Kevin F. Buckley and Jodi S. Tesser, and associate Rachel M. Horzempa represented Wesco Ins. Co.
You can read the decision here.
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