Insurer’s Denial Goes To Jury If Policyholder’s Expert Report Contradicts Insurer’s Grounds for Denial (NY)
December 16, 2022
The United States District Court for the Western District of New York recently determined that summary judgment is inappropriate where competing expert reports make it impossible to determine whether an insurance company’s asserted exclusions apply. In <em><a href="https://www.wcmlaw.com/wp-content/uploads/2022/12/James-P.-Pronti-Kelly-A.-Pronti-v.-Hanover-Insurance-Company.pdf">James P. Pronti & Kelly A. Pronti v. Hanover Insurance Company</a>,</em> the Court addressed this issue in a breach of contract case where the Prontis, plaintiff homeowners, alleged that the defendant insurance company, Hanover, breached the policy of insurance by denying coverage for damages caused by a leaking pipe. Both parties obtained expert reports, which reached differing conclusions regarding what caused the pipe to leak. Based on its expert report and its interpretation of the relevant policy provisions and exclusions, Hanover disclaimed coverage.
The Court found that there was a genuine dispute of material fact regarding whether Hanover had established an applicable exclusion under the Policy, and accordingly denied both parties’ motions for summary judgment. The Court held that because the expert reports “clearly dispute” what caused the leak in the Prontis’ piping, it was impossible for the Court to determine whether Hanover’s asserted exclusions apply on a summary judgment motion.
Notably, the Court rejected Hanover’s assertion that the Prontis’ expert report had failed to actually contradict Hanover’s expert report because it did not affirmatively state what caused the pipe to leak. The Court agreed that the Prontis’ expert report did not expressly state what specifically caused the pipe to leak, but noted that the report did state that general wear and tear did not cause the leak, which contradicted Hanover’s report. The Court held that because an insurer that is relying on an exclusion to disclaim coverage has the burden of demonstrating that the exclusion applies, in order to prevent Hanover from carrying its burden of proof regarding the policy exclusion, the Prontis’ report needed only to dispute Hanover’s report, and was not required to state its own reason for the leaking pipe. Because the Prontis’ report disputed the findings in Hanover’s report, the Court held, it created a genuine dispute, and therefore made summary judgment inappropriate.
This decision, of course, reiterates the insurer’s high burden to disclaim coverage. An insured’s expert report does not necessarily need to make specific conclusions regarding causation, but needs only to contradict an insured’s expert report in order to raise a genuine dispute of material fact on summary judgment.
Thanks to Erin Gallagher for her contribution to this article. Should you have any questions or would like to discuss this decision, please feel free to contact <a href="mailto:firstname.lastname@example.org">Tom Bracken</a>.