Cullen and Dykman Secures Appellate Victory in Declaratory Judgment Action on Additional Insured Coverage
January 30, 2025Olivia M. Gross, partner in the firm’s Construction Litigation department, recently secured a significant appellate victory on behalf of an owner, general contractor, and their insurer in a declaratory judgment action seeking additional insured coverage under a policy issued by the defendant-appellant to a subcontractor.
In this case, the defendant-appellant, an insurance carrier, denied coverage to the subcontractor—its named insured—and copied our clients, the additional insureds, on the denial letter. The denial was based on several policy exclusions. Olivia argued that the denial of coverage to our clients was late, and that the earlier denial to the named insured was ineffective as it did not directly address the additional insureds' tender for coverage.
She moved for summary judgment, asserting that the carrier’s attempt to piggyback the denial of coverage to its named insured onto the additional insureds was inadequate. The defendant-appellant argued before both the trial court and appellate court that copying our clients on the denial letter to the named insured was sufficient to constitute notice of denial. However, both courts rejected this argument.
The appellate division affirmed the lower court’s decision, agreeing with Olivia’s argument that the initial disclaimer to the named insured was insufficient to disclaim coverage for the additional insureds. Furthermore, the court found that the denial to the additional insureds was untimely under New York Insurance Law 3420(d).
As a result of this ruling, our clients secured the limits of an additional insurance policy that will serve as primary coverage to their own policy, and allowing their insurer to recover defense costs.