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S6 | MONDAY, AUGUST 25, 2014 | Court of Appeals and Appellate Practice
| NYLJ.COM

COURT OF APPEALS: INSURANCE LAW

By Evan H. Krinick

Among Signiicant Decisions,

Court Vacates Prior

Breach of Duty to Defend

Ruling

I

nsurance law is surely an area of the
civil law that occupies more than its
fair share of the docket of the New
York Court of Appeals. This past term, the

court issued nine signiicant insurance law
decisions, including one for which it heard
reargument and vacated a unanimous—and
highly controversial—ruling that it had issued
near the end of its 2012-2013 term. In these
rulings, almost every judge wrote either a
majority or dissenting opinion and the nine
cases generated 14 separate opinions, includ-

ing an unusual number of dissenting opinions.
Certain of the decisions were clear victories
for insurance companies, while others favored
policyholders.
Unlike the divisions among the U.S.
Supreme Court justices on so very many
issues, there does not appear to be any pre-
dictable division among the New York Court
of Appeals judges as to the likelihood of a par-

ticular judge ruling in favor of policyholders
or insurance carriers. In fact, examination of tiffs obtained a default judgment against breached a contractual duty to defend its
the ive insurance law cases that divided the the lawyer, which they sought to recover insured in a personal injury action, and the
court this term revealed that each judge on from his insurance company pursuant to insured thereafter concluded a reasonable
the court voted in favor of the policyholder Insurance Law §3420. The insurer claimed settlement with the injured party, the insur-
and the carrier in at least one instance. Rather that two policy exclusions established that er was not liable to indemnify the insured
than relying on philosophical underpinnings, it had no obligation to provide indemnity even if coverage was disputed. The court
the court seems to address each insurance to its insured.
recognized that Servidone and its June 11
law issue individually based on precedent and In its June 11, 2013 decision, the court holding in K2 could not be reconciled, and

public policy. With New York’s longstanding held that the insurer had wrongly breached it speciically refused to overrule Servidone.
and continuing role as a leader in insurance its duty to defend the lawyer and conclud- In language certainly comforting to carriers
jurisprudence, the court is likely to continue ed that, as a consequence, it had “lost its and policyholders alike, the court stated:
facing dificult insurance law issues for quite right” to rely on the policy’s exclusions in “When our Court decides a question of
some time to come.
litigation over its indemnity obligation to insurance law, insurers and insureds alike
the insured.
should ordinarily be entitled to assume that
Early in this current term, the court
Exclusions
granted reargument. On February 18, it

On June 11, 2013, the court issued its irst vacated its June 11 decision and issued a EVAN H. KRINICK, managing partner of
decision in K2 Investment Group v. American new one.1 The court decided that it had
Guarantee & Liability Ins. This case arose erred in its earlier ruling by failing to take Rivkin Radler in Uniondale, can be reached at
when a lawyer was sued for malpractice but account of a controlling precedent, Servi- [email protected].
his insurance carrier disclaimed coverage done Const. v. Security Ins. of Hartford,2 in
and refused to provide a defense. The plain-
which the court held that when an insurer