Reidy Contracting Group, LLC v. Mt. Hawley Insurance Company
727 F.Supp.3d 399
W.D.N.Y.2024Background
- Reidy Contracting Group, LLC sought coverage under an excess-liability policy issued by Mt. Hawley Insurance Co. after a workplace incident led to personal injury litigation.
- The case centers on whether certain policy exclusions and limitations (notably the "Employer's Liability Exclusion" and "Endurance Limitation") preclude coverage.
- In a prior July 2023 order, the court ruled the Employer's Liability Exclusion did not bar Reidy's claim; attention then shifted to the Endurance Limitation.
- Mt. Hawley argued late in the litigation that the Endurance Limitation applies; Reidy responded this disclaimer was untimely under New York Insurance Law § 3420(d)(2).
- The court permitted rounds of supplemental briefing to address whether Mt. Hawley’s disclaimer was timely and whether § 3420(d)(2) precluded Mt. Hawley's denial of coverage.
- The underlying personal injury case reached settlement before this decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of Mt. Hawley's disclaimer under § 3420(d)(2) | Mt. Hawley did not timely assert the Endurance Limitation; § 3420(d)(2) applies and bars late disclaimer. | § 3420(d)(2) does not apply: (a) only applies to claims between insurers, (b) only for insured-status denials, (c) could not deny coverage while facts unresolved in underlying case. | Mt. Hawley's disclaimer was untimely; § 3420(d)(2) applies and precludes denial of coverage based on this limitation. |
| Applicability of § 3420(d)(2) to exclusions vs. insured status | Applies to exclusions such as Endurance Limitation. | Denial based on lack of insured status, so notice not required. | Endurance Limitation is an exclusion; § 3420(d)(2) applies. |
| Effect of underlying settlement on Reidy’s right to notice | Reidy is entitled to notice, even after settlement; Merchants (the insurer) may not be, but Reidy is also a party. | Only insurers involved now, so notice provision does not apply. | Reidy entitled to notice up to time of settlement; § 3420(d)(2) still applies. |
| Whether insurer could delay disclaimer pending underlying litigation | No bar to earlier disclaimer; Mt. Hawley was not precluded from timely disclaimer. | Insurer not permitted to disclaim until underlying liability facts were resolved. | Insurer not barred from issuing exclusion-based disclaimer during ongoing litigation. |
Key Cases Cited
- Zappone v. Home Ins. Co., 55 N.Y.2d 131 (N.Y. 1982) (clarifies distinction between denial for lack of insured status versus disclaimer based on exclusion)
- Strauss Painting, Inc. v. Mt. Hawley Ins. Co., 24 N.Y.3d 578 (N.Y. 2014) (insured status and exclusions under CGL policy)
- Worcester Ins. Co. v. Bettenhauser, 95 N.Y.2d 185 (N.Y. 2000) (timely disclaimer required for exclusions, not for claims outside coverage)
- George Campbell Painting v. Nat'l Union Fire Ins. Co., 92 A.D.3d 104 (N.Y. App. Div. 1st Dep't 2012) (real party in interest concept for insurance claims)
- American Ref-Fuel Co. of Hempstead v. Employers Ins. Co. of Wausau, 265 A.D.2d 49 (N.Y. App. Div. 2d Dep't 2000) (interpretation of coverage grants and their limitations)