Madelaine Chocolate Novelties, Inc. v. Great N. Ins. Co., 23-212

Madelaine Chocolate Novelties, Inc. suffered major property and economic damage to its factory during Superstorm Sandy in October 2012 and sought over $53 million under its insurance policy with Great Northern.
Great Northern paid approximately $4 million, denying the rest based on a policy exclusion for loss or damage caused by flood or wind-driven water (Flood Exclusion with an anti-concurrent causation (ACC) clause).
The insured (Madelaine Chocolate) argued the loss was covered as a “windstorm” under a Windstorm Endorsement in the policy, which had its own ACC clause and potentially created an ambiguity regarding coverage.
District court initially granted summary judgment to Great Northern, but this was vacated and remanded by the Second Circuit for further analysis of the potential endorsement-policy ambiguity.
After remand, a jury found in favor of Great Northern; the district court denied Madelaine Chocolate’s post-trial motions for judgment as a matter of law and new trial; Madelaine appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the policy covers storm-surge losses caused by Superstorm Sandy	"Windstorm" coverage and the Windstorm Endorsement create ambiguity, should cover losses	Flood Exclusion (with ACC clause) bars coverage for storm-surge regardless of wind contribution	For Great Northern – jury found intent excluded storm-surge coverage
Required burden of proof for insurer on ambiguous contract terms	Insurer must show its reading is the only reasonable one to exclude coverage	Insurer must prove its interpretation is correct (not necessarily only one)	District court properly instructed jury; no error found
Admissibility of insurer’s uncommunicated subjective intent at trial	Should not be considered in contract interpretation by the jury	Can shed light on negotiations and objective conduct	District court did not err in admitting such evidence
Whether law-of-the-case doctrine barred defendant’s trial arguments about endorsement scope	Court’s earlier decision precludes further arguments on endorsement’s meaning	Remand left scope open for trial interpretation	Court allowed jury consideration; no error

Chimart Assocs. v. Paul, 66 N.Y.2d 570 (N.Y. 1986) (discussing when to consider subjective intent in contract ambiguity)
Cross v. N.Y.C. Transit Auth., 417 F.3d 241 (2d Cir. 2005) (Rule 50 motion standard for sufficient evidentiary basis post-verdict)
Parks Real Est. Purchasing Grp. v. St. Paul Fire & Marine Ins. Co., 472 F.3d 33 (2d Cir. 2006) (burden shifting and contra proferentem in insurance policy disputes)