This Week's Insurance Case To Watch At The Court of Appeals

Tuesday, January 11, 2011

Fieldston Property Owners Association, Inc. v. Hermitage Insurance Company, Inc. - a neighboring landowner sued Fieldston for interference with property rights and "injurious" statements made by Fieldston's directors and officers.  Hermitage had issued Fieldston a $1 million comprehensive general liability (CGL) policy.  Federal Insurance Company had issued Fieldston a $1 million directors and officers (D&O) policy.  At issue is who was required to provide the defense and to what extent.    

Federal conceded that at least some of the claims fell within its D&O policy, but argued that its policy was excess over Hermitage based on an "other insurance clause" within its policy.  When the injurious falsehood claims were dismissed, Federal assumed the defense of Fieldston on the remaining claims and Hermitage demanded reimbursement from Federal for defense costs it previously incurred. 

The First Department held that Federal must reimburse Hermitage for its equitable share of the costs Hermitage incurred in defending Fidelston.  With the exception of the injurious falsehood claim, all other losses are not insured by the CGL policy.  Accordingly, it held that the "other insurance" clause did not make Federal excess with respect to those losses.