Contra Proferentem Doctrine Does Not Apply
Post 5093
See the full video at https://lnkd.in/ghpSaHHH and at https://lnkd.in/gAgJiCHe, and https://zalma.com/blog plus more than 5050 posts.
Polluter's Insurer Loses 25 Year Litigation Over Interpretation of Ambiguous Policies
The Plaintiff (Century) insurer's motion to set aside and modify a jury verdict and for a new trial on certain issues were presented after 25 years of litigation while the defendant sought that its motion to modify the verdict, unanimously modified, on the law.
In Century Indemnity Company v. Brooklyn Union Gas Company, American Reinsurance Co, et al., Brooklyn Union Gas Company v. Century Indemnity Company, Munich Reinsurance America Inc., Appeal Nos. 3551, 3552, 2025 NY Slip Op 03379, Index Nos. 603405/01, 403087/02, Case Nos. 2024-00848, 2024-00850 Supreme Court of New York, First Department (June 5, 2025) the judgment of the trial court was affirmed.
FACTS
Almost 25-year-old litigation continued with a focus on three manufacturing gas plants (MGPs) defendant formerly owned and operated at the Fulton (1880-1928), Citizens (1860-1963) and Metropolitan (1872-1928) sites (collectively, the three sites) in Brooklyn, all of which bordered the Gowanus Canal.
It was undisputed that when processing gas, these MGPs environmentally contaminated the canal and the subsoil at the three sites. In the early to mid-2000s, defendant received a series of orders from both the New York State Department of Environmental Protection and the U.S. Environmental Protection Agency requiring it to investigate and remediate the pollution in the canal and at the three sites.
Century was the excess liability insurer that issued six policies to defendant during the period 1941-1969 to cover liability for third-party property damage. Each of these policies was for a one-year term, contained a self-insured retention of $100,000, and was renewed yearly.
The court was faced with this 2001 action where Century sought a declaration that it lawfully disclaimed excess coverage for contamination remediation and related costs based on defendant's untimely notice of an occurrence. Defendant counter sued to compel coverage.
In 2009, the court affirmed the denial of Century's motion for summary judgment on its claim of untimely notice. Ten years later and relevant to the damages issues raised in this post trial appeal, the court affirmed the motion court's holding that Century's successive policies were subject to a pro rata allocation for all losses resulting from long term, continuous contamination that spanned the successive policy periods.
In 2022, the matter proceeded to trial and the jury returned a verdict for defendant, finding that there was excess coverage for the three sites in differing amounts and that Century's defenses, including untimely notice, lacked merit.
Century argued that no controlling precedent permitted an instruction that the jury must simply perform a pro rata allocation calculation of the potential clean-up costs (damages).
In its cross-appeal, Defendant challenged the court's finding as a matter of law that the per-occurrence limits for multi-year policies and multi-year renewals were for the entire period and did not reset annually.
The Court rejected Century's argument that the trial court should not have apportioned the coverage for cleanup costs.
CONCLUSION
The trial court properly refused to apply the doctrine of contra proferentem to resolve ambiguities in the policy as to whether per-occurrence limits in multi-year policies and multi-year renewals applied on an annual basis. Defendant, which has a large in-house insurance department, processes dozens of claims in house monthly, self-insures for large amounts, and has numerous lawyers and brokers, is sophisticated in insurance coverage matters and thus has sufficient knowledge and bargaining power to craft an agreement to its benefit.
ZALMA OPINION
For 25 years the litigants went back and forth to trial and appellate courts expending much money to obtain or refuse the benefits of an excess insurance policy only to find that since the plaintiff insurer and the defendant gas companies were both sophisticated and a large in-house insurance department, processes dozens of claims in house monthly, self-insures for large amounts, and has numerous lawyers and brokers, is sophisticated in insurance coverage matters and thus has sufficient knowledge and bargaining power to craft an agreement to its benefit and had no argument against the policy it accepted. Everyone was unhappy with the result.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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The Largest Residential Burglary of All Time
Post 5407
Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
After ...
Chutzpah is not Enough
Post 5397
Posted on July 20, 2026 by Barry Zalma
See the video and at https://lnkd.in/gNUs2XzT and at https://lnkd.in/g2MawyzX
Magistrate Issues a Search Warrant if there is a Fair Probability that Contraband or Evidence of a Crime will be Found in a Particular Place.
In United States Of America v. Frank Suess, et al., CRIMINAL No. 3:24-308, United States District Court, M.D. Pennsylvania (July 16, 2026) a federal grand jury indicted Frank Suess, Melissa Driscoll, and others in a 55-count health care fraud and anti-kickback prosecution arising from an alleged scheme involving medically unnecessary prescription “foot baths.”
As part of the investigation, the FBI obtained an August 19, 2022 warrant to search Driscoll’s Sterling Pharmacy Yahoo email account for emails from January 1, 2018 through December 31, 2020. Driscoll moved to suppress the resulting evidence, arguing that the warrant lacked probable cause, was overbroad, and rested on material misstatements and omissions.
LAW:
The ...
Fraud Shouldn’t Pay
Post 5396
See the video and at https://rumble.com/v7ctgmq-the-great-jewel-theft.html at https://youtu.be/aRbQ2sJfGwA
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ¬¬¬Perpetrators than any Other Crime.
The Insured purchased, for the first time in his life, a policy of Personal Articles Floater Insurance (PAF) scheduling $125,000 worth of ladies jewelry. He advised the insurer that the jewelry was always kept in a class E safe at his residence. He also told the insurer that he was employed full time as the owner of a gasoline service station and that he had never been canceled or suffered a previous loss.
One month after the policy was ...
Day Care Owner Loses Subsidies Because She Criticized State
Post 5421
Posted on August 11, 2026 by Barry Zalma
First Amendment Right Will be Allowed to Go to Trial
In Betsey J. Grant v. Maine State Department Of Heath And Human Services, No. 1:25-cv-00490-JAW, United States District Court, D. Maine (August 6, 2026), Betsey J. Grant, a licensed childcare provider and operator of Tiny Tikes Daycare in Trenton, Maine, sued Maine DHHS and several employees after she publicly criticized DHHS before Maine’s Government Oversight Committee and alleged that officials retaliated against her.
She claimed DHHS imposed and extended a conditional license, published stigmatizing information, interfered with subsidies and program funding, removed her from a food program, rescinded an expansion grant, and used biased or falsified evidence in licensing proceedings. Following the March 10, 2023, GOC testimony, Ms. Grant alleges that foster children's subsidies (approximately $30,000) were withheld; she was removed from the ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units. After an underlying personal injury action was filed, Union Mutual determined that the property actually contained three apartment units and rescinded the policies on the ground that the defendants had made a material misrepresentation in the applications.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true facts been disclosed. To establish materiality as a matter of law, the insurer must submit documentation of its underwriting practices, such as manuals, guidelines, bulletins, or rules addressing similar risks.
DISCUSSION/ANALYSIS:
As a result, the...
