2900 Stillwell Avenue LLC v. U.S. Underwriters Insurance Co.

New York Appellate Division (2019)

In a case just decided by the Appellate Division of the New York Supreme Court, the court upheld a summary judgment secured by this firm on behalf of U.S. Underwriters in a lawsuit brought by an insured following a fire which destroyed its multi-story building. Investigation after the loss disclosed that, to the contrary of representations made in writing in the application for insurance, the insured did not, in fact, secure Certificates of Insurance from its tenant evidencing that the tenant had liability insurance. Based thereon, USLI asserted an entitlement to rescission, even though, in fact, this was a first-party fire claim.

The insured argued below that this was a fire claim and therefore a misstatement on the application for insurance relevant only as to liability because coverage was not material. That argument was rejected below and the decision below was affirmed by the Appellate Division. Because U.S. Underwriters had written underwriting guidelines, indicating that no policy could be written if an owner did not secure from its tenant Certificates of Insurance, the court accordingly upheld U.S. Underwriters’ entitlement to rescission, as a matter of law. (Had there been no underwriting guideline, no summary judgment could have been granted and the issue of materiality would have been left to a jury.)

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