Failure to Acquire Required Insurance Breaches Contract
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Posted on March 21, 2022 by Barry Zalma
The Supreme Court, New York County (Barbara Jaffe, J.) [the trial court], ruled, granted the motion of defendants/third-party plaintiffs Hyatt Corporation and Hyatt Equities, L.L.C. (together, Hyatt) for summary judgment on their third-party claim for breach of an insurance procurement obligation because the Defendant Securitas failed to acquire a Commercial General Liability policy with limits of no less than $3 million.
In Dominick Benedetto et al. v. Hyatt Corporation et al., Hyatt Corporation, Sued Herein as Hyatt Corporation, Doing Business as Grand Hyatt New York, et al. v. Securitas Security Services USA Inc., Appeal No. 15506-15507 Nos. 2021-00256, 2020-00374, No. 2022-01732, Index Nos. 160322/14, 595457/15, Supreme Court of New York, First Department (March 15, 2022) the appellate court affirmed the decision of the trial court without costs.
DISCUSSION
A party moving for summary judgment on its claim for failure to procure insurance meets its prima facie burden by establishing that a contract provision requiring the procurement of insurance was not complied with. The burden then shifts to the opposing party, who may raise an issue of fact by tendering the procured insurance policy in opposition to the motion. As with any summary judgment motion, the evidence submitted both in support of and in opposition must be tendered in admissible form.
The appellate court found that Securitas failed to raise an issue of fact precluding summary judgment in Hyatt’s favor on their third-party claim for failure to procure insurance. The parties’ agreement required Securitas to procure $3 million worth of commercial general liability insurance coverage, but both the certificate of liability insurance and the policy declarations that Securitas submitted in support of its cross motion and in opposition to Hyatt’s motion only indicate $2 million worth of commercial general liability insurance coverage. While the certificate of liability insurance also indicates that Securitas procured an additional $1 million in umbrella liability coverage per occurrence – for a total of $3 million of coverage – this does not raise an issue of fact as to whether Securitas procured the $3 million of commercial general liability insurance coverage it was required to procure by the parties’ agreement.
Securitas also failed to raise an issue of fact as to whether Hyatt waived the insurance procurement provision in the parties’ agreement. A waiver, by definition, is the intentional relinquishment of a known right, it must be clear, unequivocal and deliberate. Hyatt’s annual acceptance of the certificates of insurance from Securitas constituted “mere silence” or, at most, “mistake, negligence, or thoughtlessness,” but never amounted to any intentional act “to relinquish a known right”. Securitas’s alternative argument that Hyatt was comparatively negligent does not bar summary judgment in Hyatt’s favor on this claim.
The trial court properly adhered to its original determination on renewal and reargument, since the policy that Securitas submitted in support of its motion for leave to renew and reargue was also a commercial umbrella liability policy, and therefore could not satisfy its contractual obligation to procure $3 million worth of commercial general liability insurance coverage.
To the extent Securitas sought to cure defects in its moving papers, raised by Hyatt in opposition, by submitting the complete policies in reply, this was new evidence submitted in reply that the court properly declined to consider.
ZALMA OPINON
Although this decision seems to be form over substance since Securitas did maintain $3 million in liability insurance, an umbrella policy is not a CGL. An umbrella simply adds (with different terms and condition unless it is a “follow form” policy) and, therefore, is not compliance with the contract terms. If Securitas could not obtain a $3 million limit on a CGL they were unable to fulfill the terms of the contract. Recognizing that they should have immediately advised Hyatt and requested a modification of the contract to read a CGL with a $2 million limit plus a $1 million umbrella.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.comand [email protected].
Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
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Notice of Claim Later than 60 Days After Expiration is Too Late
Post 5089
Injury at Massage Causes Suit Against Therapist
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Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.
In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.
FACTUAL BACKGROUND
Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma
Post 5087
See the full video at and at
Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf
Zalma’s Insurance Fraud Letter – June 1, 2025
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ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at ...
No Coverage if Home Vacant for More Than 60 Days
Failure to Respond To Counterclaim is an Admission of All Allegations
Post 5085
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In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.
BACKGROUND
On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.
Plaintiff filed suit ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
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Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
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Post 5062
Posted on April 30, 2025 by Barry Zalma
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Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...