New York CM Report of Recent Decisions
2005 Volume 1
A summary of significant recent developments in the law focusing on substantive issues of litigation and featuring analysis and commentary on special points of interest.
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Articles in this report
Court of Appeals Limits Reinsurer's Obligation for Adjustment Loss Expenses Under "Follow the Settlement" Clause to Policy Indemnification Limit
The New York Court of Appeals held in Excess Insurance Company Ltd., et al. v. Factory Mutual Insurance Company, 3 N.Y.3d 577, 822 N.E.2d 768, 789 N.Y.S.2d 461 (2004), that a reinsurer's obligation to pay loss adjustment expenses arising from a “follow the settlements” clause may not exceed the indemnification limits contained in the reinsurance policy.
The New York Court of Appeals held in U.S. Underwriters Insurance Company v. City Club Hotel, LLC, 2004 WL 2902402 (N.Y. 2004), that an insured can recover attorneys' fees expended in defending a declaratory judgment action against its insurer regarding the insurer's duty to defend, regardless of whether the insurer defended the underlying action. In deciding this issue, the Court resolved a previously unsettled question of state law.
Judgment Against a Tortfeasor is a Condition Precedent to an Injured Party's Direct Suit Against Tortfeasor's Insurer
The New York Court of Appeals held in Lang v. Hanover Ins. Co., 3 N.Y.3d 350, 787 N.Y.S.2d 211 (2004), that an injured party must first obtain a judgment against the tortfeasor before the injured party may invoke its statutory right to bring a direct suit against the tortfeasor's insurer.
Maine's Highest Court Rejects Argument That Gross Negligence is an Exception to a Waiver of Subrogation Provision
Various types of contracts (i.e., construction, leases, etc.) commonly contain a provision wherein the parties agree to waive claims for damages against each other to the extent the damages are covered by an injured party's insurance. Several courts have held that this contract provision effectively waives the subrogation rights of the injured party's insurer.
New York Court Refuses to Apply Six-Year Statute of Limitations, Despite Architect's Failure to Comply with the Terms and Conditions of a Contract
The New York Court of Appeals held in Kliment v. McKinsey, 3 N.Y.3d 538, 2004 N.Y.Slip Op 09319 (2004), that while an architect’s failure to comply with the building code may have been a “particular bargained-for result,” that result is not inconsistent with the architect’s ordinary professional obligations for statute of limitations purposes pursuant to CPLR 214(6). In Kliment, the Court held that ordinary professional obligations which are contained in a contract will not remove a claim from the realm of negligence, nor convert the claim from malpractice to contract. Kliment, at 543.
