Sometimes the Best Court Decision is to Do Nothing
Post 5209
Read the full article at https://www.linkedin.com/pulse/abstention-protects-against-risk-potentially-fact-zalma-esq-cfe-chkzc, and at https://zalma.com/blog plus more than 5200 posts.
In Starr Indemnity & Liability Company v. Scottsdale Insurance Company, No. 24-CV-3309 (PKC) (TAM), United States District Court, E.D. New York (September 30, 2025) the parties C.C.C. and HCC filed actions against Scottsdale in New York state court regarding Scottsdale’s insurance coverage obligations.
FACTS
Underlying Labor Litigation:
Hector David Campoverde sustained injuries from a scaffold fall at a construction site in Brooklyn, New York, on September 14, 2015. Campoverde, an employee of Vazquez Bro Restoration Inc., was working for C.C.C. Renovation Inc., a subcontractor of L&M Builders Group LLC.
LEGAL ISSUES
Declaratory Judgment:
Starr sought a declaratory judgment regarding Scottsdale’s obligations under the 2014-2015 and 2015-2016 policies.
Abstention Doctrine:
The court considered whether to abstain from exercising jurisdiction under the Declaratory Judgment Act (DJA) due to the ongoing State Court Action.
Priority of Coverage:
Dispute over whether Scottsdale or Starr should provide primary coverage for the claims against L&M.
Unjust Enrichment:
Starr claims that Scottsdale has been unjustly enriched by denying coverage.
DISCUSSION
Abstention is Appropriate in this Matter
The parties do not dispute that the Court has jurisdiction under the DJA; rather, they dispute whether the Court should exercise its jurisdiction.
Scottsdale moved to dismiss this action on the ground that abstention is appropriate. The primary basis for Scottsdale’s argument is that the underlying issue to be resolved-whether Scottsdale had an excess liability insurance policy in effect at the time of the accident-is currently being litigated in the pending State Court Action. Starr opposed the motion, asserting, inter alia, that there are several differences between this case and the State Court Action.
Scottsdale argued that this litigation is wholly duplicative of the litigation already pending in state court. The Court agreed. In the State Court Action, though C.C.C. discontinued its claims, Scottsdale, its agents, and HCC- the primary insurer for Starr’s insured, L&M-continue to litigate the very issue at the core of Starr’s requested relief in this action: whether Scottsdale had an excess insurance coverage policy in effect at the time of the accident.
Because the underlying question of Scottsdale’s coverage obligations is still unresolved in the State Court Action, the “risk of potentially contradictory fact finding between the state and federal court on this critical issue means that entertaining jurisdiction in this action would not clarify or settle the legal issues involved.
CONCLUSION
The Court concluded that exercising jurisdiction at this time would only further confuse them as this Court and the state court may come to differing conclusions as to whether Scottsdale had an insurance policy in effect on the date of the accident. Defendant’s motion to dismiss was denied, but its request for a stay, in the alternative, was granted and the matter was stayed pending resolution of the State Court Action.
ZALMA OPINION
I recently had a fight with a neighborhood sidewalk and fractured my nose and the base of my right eye. I went to an ENT specialist who gave me the same advice that the court gave the parties: To heal the best choice is to do nothing. The doctor, I and the USDC agreed. The best option for the case is to do nothing until the state court decision is final. Nothing can be gained from two courts with contradictory factual and legal findings.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Post 5396
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Post 5421
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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.
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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.
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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.
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