Justia U.S. 2nd Circuit Court of Appeals Opinion Summaries

Plaintiff appealed from the district court's grant of summary judgment to defendant. The primary issue one appeal was whether an act performed on adjacent property that caused damage to plaintiff's property could constitute "vandalism" under plaintiff's property insurance. The subsidiary question was whether "malicious damage" could be found to result from an act not directed specifically at the insured property. The court held that certification of the malice issue to the New York Court of Appeals was warranted and certified the question. View "Georgitsi Realty, LLC v. Penn-Star Ins. Co." on Justia Law

Olin brought suit against its insurers, including American Home, regarding environmental contamination at Olin sites in the United States. On appeal, Olin challenged the district court's grant of summary judgment in favor of American Home. At issue was whether the $30.3 million attachment point for American Home's excess policies for the years 1966-69 and 1969-72 could be reached by the alleged property damage at Olin's Morgan Hill, California, manufacturing site. The court held that the plain language of Olin's policies with American Home required American Home to indemnify Olin for that damage. Accordingly, the court vacated and remanded for further proceedings. View "Olin Corp. v. Ins. Co. of North America" on Justia Law

This declaratory judgment action involved a dispute over liability insurance coverage for property damage alleged to have been caused by the policyholder during construction of a residential building. The policyholder filed suit against Interstate seeking a declaration that its insurer was obligated to defend and indemnify. The district court ruled that the property was a "residential property" construction but not an "apartment" at the time the damage occurred and thus, the policyholder had no coverage. Because the court concluded that the property was an apartment building as defined by the insurance policy when the damage occurred, the court held that the policyholder was covered by the policy and therefore reversed the judgment of the district court. View "Ment Bros. Iron Works Co., Inc v. Interstate Fire and Casualty Co." on Justia Law

Plaintiff insured, operator of a number of check cashing stores in the New York City area, contended that a criminal scheme perpetrated at its store constituted "robbery" within the meaning of its crime insurance policy which the defendant insurer issued. Because the court agreed with the district court that the policy was ambiguous and that the insured offered a reasonable interpretation of the policy permitting coverage, the court concluded that the insurer was liable under the policy and therefore affirmed the district court's grant of summary judgment to the insured. View "Vam Check Cashing Corp. v. Federal Ins. Co." on Justia Law

Defendants appealed from a judgment by the district court in favor of insurance companies which had disclaimed any duty to defend or indemnify their policyholders in a separate state court action brought by a third party arising from an accident involving the operation of the policyholders' all-terrain vehicle (ATV). The Connecticut Supreme Court's answers to certified questions left no doubt that the district court correctly found that: (1) the only location relevant in determining whether the homeowner's policy provided the subject coverage was the site of the accident and (2) the accident did not occur at an "insured location," as that language was construed under Connecticut law. Accordingly, the district court properly granted summary judgment to Royal, declaring that the foundational homeowner's policy did not cover the ATV accident that allegedly caused injury to Connor. The court addressed remaining issues and subsequently affirmed the judgment of the district court. View "Arrowood Indemnitv Co. v. King" on Justia Law

LSED sought to rescind an agreement to purchase bond insurance from FGIC and recover its $13 million premium payment. LSED based its claim on failure of cause, a tenet of Louisiana law that required all contracts be supported by cause. Because the court found that the principal cause of the agreement between the parties was the purchase of bond insurance to protect the bondholders in the event of default, not to reduce the interest rate LSED paid to borrow money, the court affirmed the district court's decision. View "In Re: Merrill Lynch & Co., Inc." on Justia Law

National Union appealed from the district court's award of consequential damages to plaintiffs, following a jury trial, for National Union's breach of its duty to defendant plaintiffs in a securities arbitration. At issue was whether consequential damages, which were traditionally available for breach of contract claims, were also available for a claim of breach of a duty to defend an insured under Connecticut law, and if so, whether they could include damages for harm to reputation and loss of income. Absent a precedential decision from the Connecticut courts, the court certified the two issues. View "Ryan v. Nat'l Union Fire Ins." on Justia Law

The 419 Plan was established as a multiple-employer welfare benefit plan, 26 U.S.C. 419A(f)(6). Businesses that enroll contribute to an account, which acquires and pays premiums on life insurance policies for covered employees. Each covered employee determines the type of insurance purchased on his behalf. Participating businesses can choose the number of years for which contributions will be required to fully pay for benefits. The Plan is listed as beneficiary on each policy and passes the death benefit to the covered employee. Participating businesses can withdraw at any time. Testimony indicated that "the beauty" of the Plan "is that you can put away extra money in good times” though the premium is not due, “get a tax deduction today and we don't put the premium in for years to come." Owners of four businesses, enrolled in the Plan, contributed hundreds of thousands of dollars and claimed tax deductions, although only the four owners and a stepson were covered. The IRS determined that the payments were not "ordinary and necessary" business expenses, which resulted in additional pass-through income on which the owners had not paid taxes. The tax court held that the owners owed deficiency payments and accuracy-related penalties. The Second Circuit affirmed.View "Curcio v. Comm'r of Internal Revenue" on Justia Law

In 2005 Truman and partners purchased a vacant commercial building for $175,000, insured for $4,250,000 in fire-related losses. The property, without the building, was worth more than with the building. After a minor accidental fire, Truman told an employee that if it ever caught fire again, just get out. Considering leasing, Truman stated that it would make more money if it burnt. By late 2006, Truman had less than $5,000 in personal bank accounts. Premiums were paid through November 17. The building burned down November 12. Truman, Jr. confessed that he had burned the building at his father’s direction. State charges were dismissed because of inability to corroborate junior’s testimony, as required under New York law. Truman was charged with aiding and abetting arson, 18 U.S.C. 844(i); mail fraud, 18 U.S.C. 1341; use of fire in commission of a felony, 18 U.S.C. 844(h); and loan fraud, 18 U.S.C. 1341. Following a guilty verdict the district court granted acquittal and conditionally granted a new trial. The Second Circuit vacated and remanded for sentencing. Junior’s refusal to answer certain questions did not render his testimony incredible as a matter of law, and his prior state testimony was nonhearsay. Truman was not prejudiced by improper cross-examination or summation argument references to the cooperation agreement. View "United States v. Truman" on Justia Law

Plaintiffs purchased furniture from the Fortunoff store and purchased a furniture protection plan. Defendant sold the plans to Fortunoff, which in turn sold them to plaintiffs. After the Fortunoff store closed and the company went into bankruptcy, defendant rejected plaintiffs’ claims under the plan. Plaintiffs filed a putative class action alleging breach of contract, that the store closing termination clause in the plan violated New York General Business Law 395-a, and deceptive business practices in violation of General Business Law 36 349. The district court dismissed, holding that there was no implied cause of action under 395-a. The Second Circuit certified to the New York Court of Appeals: May parties seek to have contractual provisions that run contrary to General Business Law 395-a declared void as against public policy? May plaintiffs bring suit pursuant to 349 on the theory that defendants deceived them by including a contractual provision that violates 395-a and later enforcing this agreement? View "Schlessinger v. Valspar Corp." on Justia Law