CENTURY INDEMNITY COMPANY v. BROOKLYN UNION GAS COMPANY (2022)

The following e-filed documents, listed by NYSCEF document number (Motion 046) 823, 824, 825, 826, 827, 828, 829, 830, 831, 832, 833, 834, 835, 836, 837, 838, 839, 840, 841, 842, 843, 844, 845, 846, 852, 853, 854, 855, 856, 857, 858, 859, 860, 861 were read on this motion to EXCLUDE EVIDENCE AT TRIAL.

This decision addresses another pretrial motion in limine filed in this action about whether Brooklyn Union Gas Company has insurance coverage from Century Indemnity Company and other excess insurers for the costs of the government-mandated cleanup of the Gowanus Canal.

One of the issues that will be contested at trial is whether Century waived its late-notice defense against coverage. Brooklyn Union has indicated it intends to introduce New York's statutory and regulatory requirements for handling of insurance claims as evidence in support of waiver. Century now moves to preclude Brooklyn Union from introducing those legal requirements into evidence. The motion is granted.

DISCUSSION

In moving to preclude, Century argues that (i) New York's claims-handling statute and regulations is irrelevant here; and (ii) introduction of evidence about that statute and regulations risks confusing the jury and usurping the role of this court. Century's argument is persuasive.

Brooklyn Union's case for relevance is that Insurance Law § 2601 (the governing statute) and 11 NYCRR part 216 (the governing regulations) call for insurers to investigate claims promptly, communicate with insureds during the investigation, and notify insureds as soon as an investigation has been completed. Therefore, Brooklyn Union asserts, Century's substantial delay between receiving notice of Brooklyn Union's claims and disclaiming liability supports, indirectly, Brooklyn Union's position that Century waived its late-notice defense to liability. (See NYSCEF No. 852 at 6-9.) But this conclusion does not follow.

As Brooklyn Union candidly concedes, “New York does not prescribe a firm timetable for completing an investigation and notifying a policyholder of a disclaimer of coverage.” (NYSCEF No. 852 at 8.) Rather, New York regulations require that insurers have procedures in place for beginning a claims investigation promptly (see 11 NYCRR 216.5 [a] [1]); and that if an investigation will take more than 15 business days, the insurer must explain the reasons it needs more time and communicate with the insured every 90 days thereafter while the investigation remains ongoing—at least until the “matter is in litigation or arbitration” (11 NYCRR 216.6 [c] [1]-[2]). Once the investigation has concluded, the insurer must promptly notify the insured if it determines that “it is disclaiming liability because of a breach of policy provisions by the policyholder.” (Id. § 216.6 [d].) If Century complied with these requirements here—and Brooklyn Union does not attempt to show otherwise—the duration of Century's investigation, standing alone, does not implicate the claims-handling guidelines on which Brooklyn Union relies.

Put differently: Brooklyn Union has not identified any statutory or regulatory provision governing claims-handling that Century assertedly violated in investigating Brooklyn Union's claims.¹ Brooklyn Union appears instead to be implying that the length of time that Century professes to have spent investigating Brooklyn Union's claims is inconsistent with the spirit of New York's statutory and regulatory claims-handling guidelines and what those guidelines evidence about “how insurers are expected to behave in New York”—and therefore that those guidelines are relevant evidence of waiver. (NYSCEF No. 852 at 2.) This court declines to permit Brooklyn Union to wander so far afield.

Brooklyn Union suggests it has evidence that Century had longstanding pre-disclaimer “knowledge of facts it now claims show that notice was late.” (Id. at 3.) But Brooklyn Union has not provided, or even described, that evidence on this motion. Regardless, if Brooklyn Union does have admissible evidence on this point, it may introduce that evidence to support its waiver argument. But adding on top a contention that Century's conduct also violated New York's claims-handling regulations would have limited probative value on waiver. And, as Century contends (see NYSCEF No. 824 at 14-15), this contention has the obvious potential to confuse the jury about what legal principles are relevant to its determinations—and to whom the jury should be looking to define the law that it is to apply.

Accordingly, for the foregoing reasons, it is

ORDERED that Century's motion to preclude is granted.

FOOTNOTES

1.   Brooklyn Union asserts that it is “illogical and unsupported” for Century to distinguish between promptly beginning and promptly resolving a claims investigation (and to say that only the former is necessarily required). (NYSCEF No. 852 at 9.) But Brooklyn Union cites no authority for this assertion. Nor can this critique of Century's position be reconciled with Brooklyn Union's own concession—made on the previous page of its memorandum of law—that New York law does not impose a definite deadline to complete a claims investigation.

Gerald Lebovits, J.