On October 13, 2011, the New York Court of Appeals granted to leave hear American Bldg. Supply Corp. v. Petrocelli Group, Inc., 2011 N.Y. Slip Ip. 01324 (1st Dept. February 22, 2011).
Petrocelli procured coverage for American Building Supply’s (“ABS”) operations. According to ABS, it requested coverage for, among other things, “general liability for the employees…if anybody was to trip and fall and get injured in any way.” The policy procured was a general liability policy, but contained a cross-liability exclusion, which eliminates coverage for any “present, former, future or prospective partner, officer, director, stockholder or employee of any insured.” An employee of ABS was injured at ABS’ facility and commenced an action which implicated ABS as a defendant. When the insurer denied coverage based on the exclusion, ABS sued the broker for failure to procure.
The trial court found a question of fact based on ABS’ purported request for coverage. While a “general request” for overage will not satisfy the requirement for a specific request for a certain type of coverage, the trial court held that a jury could find ABS made a specific request for coverage requiring Petrocelli to either procure the coverage or advise ABS of its inability to do so.
The Appellate Division reversed the order, holding that while issues of fact may exist regarding whether there was a specific request for coverage, the insured’s receipt of the policy precluded recovery. In other words, the presumption that a policy holder has read and understood a policy of insurance meant ABS knew what coverage had and had not been procured, excusing Petrocelli’s failure to procure even if a specific request for coverage had been made.
The Court of Appeals has now granted leave to hear the case. Given the issues and the relatively settled area of law, it is unclear on why the Court granted leave. We will, of course, follow up and report any further developments.
For a copy of the decision see here