Liberty Mutual Insurance Co. v. Project Tri-Force LLC (2019)

This was an action by Liberty Mutual against its insured for breach of its subrogation receipt, wherein the insured agreed to subrogate all rights it may have against a third party. When the insurer tried to recover from the third party, the third party demonstrated that the insured had separately reached agreement with it, which agreement precluded the insurer from proceeding against it. Accordingly, Liberty then brought action against its insured for return of all monies paid, and, default having been entered, was awarded a judgment in the amount of the full loss payment. While the result of the decision is the result of a defaulted case, it is hardly startling, or without precedent elsewhere. It is certainly helpful to have a New York court affirm the insurer’s right of subrogation, failing which due to the insured’s fault, the insured has to return all of the money paid.

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