Orient Overseas Associates v. XL Insurance America, Inc., 2014 N.Y. Misc. LEXIS 867 (N.Y. Supreme Ct., New York County 2/26/14) (unpublished)

There is no separate cause of action for bad faith clams handling and the insured’s claim for attorney’s fees was not permitted by the policy.

Orient Overseas argued that Westport had acted in bad faith in resolving its insurance claim with respect to a commercial property that was damaged in Superstorm Sandy. Orient sought recovery for extra-contractual damages, including legal fees incurred in pursuing its claim against Westport, and punitive damages. Westport argued that it had immediately investigated the claim and was in regular communication with the insured. Orient brought an action for breach of contract and bad faith claims handling for failure to pay anything under the Westport policy. The insurer filed a motion to dismiss for failure to state a cause of action. The court determined that there is no separate cause of action for bad faith claims handling and that the bad faith cause of action was duplicative of the breach of contract claim. The insured’s claim for attorney’s fees was also dismissed since the policy specified that “this additional coverage will not include the fees and costs of attorneys.”

Case Law Alerts, 3rd Quarter, July 2014