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NY Court of Appeals to Review Where Policy "Issued or Delivered"

April 28, 2017

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<p style="text-align: justify;">The underling loss of Carlson v. AIG involved the sad story of Claudia Carlson, who died in a motor vehicle accident when she was struck by a commercial vehicle in upstate New York. Carlson’s estate obtained a judgment against MVP, the company that owned the delivery truck. MVP was carrying property for DHL, and although DHL was exonerated at trial, plaintiff’s sought to enforce the MVP judgment against DHL’s insurers under the theory that MVP was also an insured under the DHL policies.</p>
<p style="text-align: justify;">New York Insurance Law §3420 (d) allows a party to commence a direct action against an insurance company when there is an unsatisfied judgment against their insured, but the statute only applies to insurance policies “issued and delivered in New York.” Prior to a 2014 amendment, Insurance Law §3420 (d) required that the policy must be “issued for delivery” in the state.</p>
<p style="text-align: justify;">One of DHL’s insurers, American Alternative Insurance Co. (AAIC), successfully moved to dismiss on the basis that the judgment was unenforceable because it did not issue or deliver a policy in New York, and this was <a href="http://law.justia.com/cases/new-york/appellate-division-fourth-department/2015/840-ca-14-02027.html">upheld on appeal</a>.</p>
<p style="text-align: justify;">On March 28, 2017, the Court of Appeals heard oral argument in Carlson v American International Group, Inc. In an interesting twist, the <a href="https://www.nycourts.gov/ctapps/news/nottobar/CarlsonNotice.pdf">Court subsequently directed the case to be reargued</a> to invite amicus curiae participation. It appears that the Court wants to evaluate whether the AAIC policy, which presumably insured DHL’s deliveries in New York, was “issued or delivered” in New York for purposes of Insurance Law §3420.</p>
<p style="text-align: justify;">Insurance Law §3420 is a wide ranging statute that also requires timely disclaimers in personal injury actions, so any ruling that expands the scope will be notable for insurers.</p>
<p style="text-align: justify;">We will continue to follow this case on Of Interest.  Thanks to John Collins for his contribution to this post and please write to <a href="mailto: mbono@wcmlaw.com">Mike Bono</a> for more information.
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