Initial Victory Proves Costly in Still Ongoing Superstorm Sandy Coverage Dispute (NY)
As we endure the current crisis, New York courts are still adjudicating insurance disputes arising out of Superstorm Sandy, which is now almost eight years old. Specifically, in Ain v. Allstate Ins. Co, homeowners and their insurer have been litigating whether or not damage to the insured’s residence is covered under their homeowners’ policy, or whether the damage is excluded because the primary cause of the damage was flooding as opposed to wind or rain breaching a home compromised by the storm.
The insurer submitted three expert witness reports—including the insured’s expert’s report—in support of a motion for summary judgment, which was granted in March 2017. The trial court granted the motion, despite disagreements between the experts, finding several exclusions in the policy applied. However, on appeal, the First Department observed plaintiff’s expert persuasively highlighted the uncertainty underlying his colleague’s conclusions, and found a question of fact to reverse the granting of summary judgment to the insurer.
Now the parties have sunk eight years of litigation costs, including the retention of experts, into the dispute and now the cost of appeals and the insurer will have to make difficult arguments to a likely unsympathetic jury. Although we are not privy to the amount of damage at stake or how settlement negotiations unfolded, this case highlights that an initial summary judgment victory—particularly on narrow grounds—may better be used as leverage for settlement rather than as the end of the discussion. It seems likely a settlement at that stage would represent a significant savings as compared to what may be available in the current posture.
Thanks to Nicholas Schaefer for his post. If you have any questions or comments, please contact Vincent Terrasi.