Thursday, December 13, 2012

Court of Appeals Grants Leave to Decide Excess Insurer's Obligation to Pay Interest

On December 11, 2012, the Court of Appeals granted leave in Ragins v. Hospitals Ins. Co., Inc.  In Ragins, the plaintiff was insured under a $1,000,000 professional liability insurance policy issued by Group Counsel Mutual Insurance Company and an Excess Professional Liability Insurance Policy issued by Hospitals Insurance Company, Inc. and HANYS Insurance Company, Inc. (HIC).  In an underlying action, a jury rendered a verdict against the plaintiff in the amount of $1,100,000 and judgment was entered.  Group Counsel paid its $1,000,000 policy limit, but because it was in liquidation at the time, it did not pay any pre- or post-judgment interest.  For its part, HIC paid $100,000.  The trial court in the underlying action then entered an amended judgment against the plaintiff for the balance of the judgment, which represented costs and accumulated interest.  HIC then paid its share of pre-judgment interest in direct relation to that portion of the underlying judgment that it was obligated to pay under its excess policy.  The plaintiff was left responsible for the remainder of the amended judgment.  As such, the plaintiff sued HIC for breach of the excess policy, arguing that HIC was responsible to indemnify plaintiff for the entire amended judgment amount.  On pre-answer motion to dismiss pursuant to CPLR 3211(a)(1) and (5), the trial court denied HIC's motion.  On appeal, the Second Department reversed, finding that HIC had conclusively established that it was only responsible for pre-judgment interest in relation to that portion of the underlying judgment that it was obligated to pay and that HIC had no obligation to pay post-judgment interest or costs. 

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