Court of Appeals to Reconsider Controversial K2 Coverage Case (NY)

The ground shifted under well established New York insurance law  on June 11, 2013 when the New York Court of Appeals released its decision in K2 Investment Group, LLC v. American Guarantee Liability Co. We analyzed the significance of K2 in our post of June 28, 2008.

The backlash was swift and sustained: Did K2 really mean what it said, namely, that automatic indemnity was imposed on an insurer who breached its duty to defend? What coverage defenses were still available after such breach?

The Court of Appeals may have taken notice of the stir it caused. On September 3, 2013, it granted a motion to reargue the K2 decision at the request of the defendant insurer, American Guarantee, joined by the Complex Insurance Claims Litigation Association and the American Insurance Association who submitted their own motion as friends of the court.  The amici politely suggested, “The Court’s Decision creates an unexplained conflict with longstanding New York law reflected in Servidone Construction Corp v. Security Insurance Co., misapprehends Lang v. Hanover Insurance Co., and will substantially impact insurers and policyholders throughout the State.”  No briefing schedule has been established but some clarification of K2 seems likely from New York’s highest court.

Stay tuned!

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