In an action arising from losses and claims alleged in connection with a multi-million dollar oceanfront Hampton home construction project, Insurance and Reinsurance partner Tracey K. Wishert successfully obtained summary judgment in favor of client Scottsdale Insurance Company in the Southern District of New York.
The insured had sought to build a luxury oceanfront home in Quogue, New York, but problems arose during construction when, after the concrete foundation was installed, testing revealed that the concrete could not hold the load required to support the structure. This shut down the project, causing significant losses and claims.
The insured made a claim under the policy it purchased from Scottsdale. The Scottsdale policy contained an exclusion that precluded coverage for faulty, inadequate or defective workmanship, construction and materials. However, the policy that was delivered to the insured did not contain the appropriate forms, including the exclusion at issue, even though it was clear from the proposal and other documents that the policy should contain the applicable exclusion. When Scottsdale later learned of the error, it issued a policy with the appropriate forms and terms. After multiple depositions of Scottsdale representatives, the insurance intermediaries, and the insured, the parties moved for cross-motions for summary judgment.
In a 41-page written opinion that quoted liberally from Riker Danzig’s brief, Judge Cathy Seibel found that the incorporation by reference doctrine applied so that the applicable forms and exclusion were part of the policy and that, even if they were not, Scottsdale established the basis for reformation of the policy. Judge Seibel also dismissed the bad faith claims alleging that Scottsdale had improperly back-dated the exclusion, providing a complete win for our client.
Results may vary depending on your particular facts and legal circumstances.
