Kurland v. Fireman's Fund Insurance Company, 2:21-cv-06440

Background:

Plaintiff Jason Kurland is insured by Fireman’s Fund; dispute centers on whether a criminal Indictment in an underlying federal case constitutes a covered “Claim” seeking “Damages” under the Policy.
On June 29, 2022 the Court granted Kurland partial summary judgment on liability (duty to defend) and denied Fireman’s Fund’s cross-motion; Fireman’s Fund moved for reconsideration and, alternatively, modification of timing of defense-cost payments and Rule 54(b) certification.
Fireman’s Fund argues the Policy’s definitions exclude criminal proceedings as a “Claim” and that restitution is not “Damages” under comparable insurance-policy law.
Kurland argues the Indictment triggers the duty to defend because the Policy’s “Claim”/“Damages” definitions encompass suits and compensatory relief (including restitution); the Indictment charges wire fraud, which can trigger MVRA restitution.
The Court denied reconsideration and denied Rule 54(b) certification, but modified the June 29 Order to permit Fireman’s Fund 30 days to review defense invoices before payment and set a status-report date.

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Indictment is a “Claim” under the Policy	Kurland: the Indictment qualifies as a "Claim/suit" triggering duty to defend	Fireman’s Fund: criminal proceedings are not encompassed by the Policy’s definition of “Claim”	Court denied reconsideration; concluded “suit/Claim” reasonably includes the Indictment and duty to defend applies
Whether the Underlying Action seeks “Damages” (including restitution)	Kurland: restitution is at least partly compensatory and falls within the Policy’s definition of “Damages” (which includes compensatory judgments)	Fireman’s Fund: restitution (ill-gotten profits) is not “damages” for policy coverage; recent authority supports narrowing restitution as non-damages	Court held restitution can constitute “Damages” under the Policy (relying on NY law principles); MVRA makes restitution mandatory if convicted
Timing and procedure for payment of defense costs	Kurland: Fireman’s Fund should immediately pay reasonable and necessary defense costs	Fireman’s Fund: entitled to review invoices and assess reasonableness before paying; not required to pay amounts demanded without review	Court modified order: Fireman’s Fund has 30 days to review invoices for costs through conviction; parties to file status report on agreed amount
Whether the June 29 Order is immediately appealable under Fed. R. Civ. P. 54(b)	(Kurland opposed)	Fireman’s Fund: seeks 54(b) certification for immediate appeal of liability ruling	Denied: liability-only ruling is not final because damages remain to be fixed; Rule 54(b) certification refused

Key Cases Cited

Shrader v. CSX Transp., Inc., 70 F.3d 255 (2d Cir. 1995) (motion for reconsideration standard; must show controlling decisions or overlooked data)
Virgin Atlantic Airways, Ltd. v. Nat’l Mediation Bd., 956 F.2d 1245 (2d Cir. 1992) (grounds for reconsideration: intervening change in law, new evidence, or clear error)
J.P. Morgan Sec., Inc. v. Vigilant Ins. Co., 183 N.E.3d 443 (N.Y. 2021) (New York law on characterizing restitution as compensatory for insurance coverage purposes)
Zurich Ins. Co. v. Shearson Lehman Hutton, 642 N.E.2d 1065 (N.Y. 1994) (awards with compensatory and punitive components may require coverage)
United States v. Parnell, 959 F.3d 537 (2d Cir. 2020) (wire fraud is subject to the Mandatory Victims Restitution Act)
Linde v. Arab Bank, PLC, 882 F.3d 314 (2d Cir. 2018) (Rule 54(b) requires a final determination; liability-only rulings usually not certifiable)
Mead v. Reliastar Life Ins. Co., 768 F.3d 102 (2d Cir. 2014) (partial summary judgment on liability that leaves damages unresolved is not final for appeal)
Liberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737 (U.S. 1976) (Supreme Court discussion that liability rulings reserving relief are not final for appellate jurisdiction)