NY: Discussion board-Purchasing Insurance coverage Case Dismissed

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Mac Mum or dad LLC v. North American Elite Insurance coverage Firm, Index No. 906489/2020, Supreme Court docket, Albany County

On March 29, 2021, Justice Richard J. Platkin, of the Albany County Industrial Division, dismissed an insurance coverage protection dispute pursuant to CPLR § 3211(a)(4) as a consequence of one other motion that was pending in New York County, making clear that New York courts don’t tolerate forum-shopping within the face of clear discussion board choice clauses.  Mac Mum or dad LLC v. North American Elite Insurance coverage Firm, 2021 NY Slip Op 50268(U) (Sup. Ct. Albany Cnty 2021).

Plaintiff Mac Mum or dad LLC (“Mac Mum or dad”) filed its case in Albany County searching for a dedication that its chain eating places had been coated beneath an all-risk business insurance coverage coverage (the “Coverage”) issued by defendant North American Elite Insurance coverage Firm (“NAE”) for the lack of enterprise earnings and further bills incurred as a consequence of governmental orders issued in response to the COVID-19 pandemic.  Again in July 2020, Mac Mum or dad (and different, unrelated restaurant house owners) initially introduced go well with towards NAE in Illinois state courtroom (the “Illinois Motion”), together with over a dozen different carriers, regardless of the Coverage’s discussion board choice clause, which required that New York regulation govern the interpretation of the Coverage and that the events undergo the “unique jurisdiction of the Courts of the State of New York.” Mac Mum or dad finally agreed to dismiss NAE from the Illinois Motion, with out prejudice.

Quickly thereafter, on October 12, 2020, NAE commenced an motion in New York County towards Mac Mum or dad (the “New York County Motion”), searching for a declaration that the NAE coverage didn’t cowl Mac Mum or dad’s losses arising out of the government-mandated closures of its eating places as a consequence of COVID-19.  It additionally sought damages ensuing from Mac Mum or dad’s breach of the Coverage by initially suing NAE in Illinois, regardless of the discussion board choice clause.  The very subsequent day, on October 13, 2020, Mac Mum or dad commenced an motion in Albany County (the “Albany County Motion”), searching for a declaration that the governmental shutdown and reopening orders precipitated “direct bodily loss or injury” to its coated eating places, in addition to causes of motion for breach of the insurance coverage coverage and unjust enrichment.

NAE moved to dismiss the Albany County Motion pursuant to CPLR § 3211 (a)(4) and (8) primarily based upon, inter alia, the pendency of a previous motion within the Supreme Court docket, New York County between the identical events in regards to the similar protection dispute. Whereas the Court docket declined to dismiss the Albany County Motion on the premise of improper service and lack of private jurisdiction, it discovered dismissal was warranted pursuant to CPLR § 3211(a)(4) and in mild of the New York County Motion.

In granting the dismissal movement, the Court docket thought-about the large discretion afforded to it pursuant to CPLR § 3211(a)(4). Citing Cherico, Cherico & Assoc. v. Midollo,, 67 A.D.3d 622, 622 (second Dep’t 2009), Justice Platkin famous that dismissal of an motion as a result of pendency of a previous motion is acceptable if there’s a substantial identification of the events and the causes of motion.  Whereas the Court docket acknowledged that New York courts sometimes comply with the first-in-time rule, which gives that the courtroom which has first taken jurisdiction is the one through which the matter needs to be decided, it discovered that this was not dispositive of the problem on this occasion as a result of the 2 actions had been commenced solely someday aside, despite the fact that the New York County Motion was initiated first. The Court docket thus undertook a extra substantive evaluation and thought of every motion’s ties to its respective boards.

The Court docket acknowledged that New York County was the “correct and logical discussion board” for the insurance coverage protection dispute as a result of NAE maintained a considerable bodily presence in addition to its principal place of work in New York.  In distinction, nonetheless, the Court docket discovered that Mac Mum or dad’s ties to each New York County and Albany County had been insignificant – Mac Mum or dad is a Delaware firm with its headquarters in Colorado and its solely tie to Albany County was a single closed restaurant.  Justice Platkin additionally discovered the New York County Motion to be “extra complete”, citing to Specialty Ins. Co. v. AR Capital, 181 A.D.3d 546, 546 (1st Dep’t 2020) and AIG Fin. Prods. Corp. v. Penncara Vitality, LLC, 83 A.D.3d 495, 495 (1st Dep’t 2011).  The Court docket discovered that each actions sought comparable (however opposite) reduction regarding protection beneath the Coverage, however that the New York County Motion included the extra subject of NAE’s declare for damages primarily based upon the purported breach of the Coverage’s discussion board choice clause.

Mac Mum or dad argued that NAE improperly rushed to sue in New York County after Mac Mum or dad agreed to dismiss   NAE from the Illinois Motion.  It additionally burdened that, primarily based on discussions between the events, NAE knew that Mac Mum or dad wouldn’t conform to file go well with in New York County.  NAE due to this fact filed the New York County Motion over a vacation weekend to beat Mac Mum or dad to the courthouse steps.

The Court docket, nonetheless, was not persuaded.  It acknowledged that comparable, preemptive/discussion board purchasing arguments might likewise be made towards Mac Mum or dad, which initiated the motion in Illinois in disregard of the discussion board choice clause. The Court docket thus discovered that NAE “moderately selected to see the dispute litigated in its dwelling county, a correct and logical discussion board” thus granting the dismissal movement pursuant to CPLR § 3211(a)(4).

The Mac Mum or dad case reinforces the truth that improper discussion board purchasing within the face of a discussion board choice clause is not going to be tolerated by New York courts.  Quite than merely apply the “first in time” rule, the courts are keen to scrutinize the events’ contacts and a reference to the state in analyzing a dismissal movement pursuant to CPLR § 3211(a)(4).

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.
Nationwide Legislation Assessment, Quantity XI, Quantity 104

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