DLA Piper secured a significant victory for Houston Casualty in Houston Casualty Co. v. Cavan Corp. of N.Y., et al. before the New York State Supreme Court on June 27, 2019.

In a decision that is likely to have a major impact on the New York construction and insurance industry, Justice Tanya Kennedy ruled that the Construction Management for a Fee exclusion, which bars coverage for losses arising out of construction management, not only barred coverage for the named insured’s activities as a construction manager, but also applied to the additional insureds/project owners.

Rejecting the additional insureds’ claims that waiver and estoppel applied and the exclusion was inapplicable to them, the trial court ruled that the exclusion was plain and enforceable and extended it to apply to the additional insureds. Justice Kennedy also rejected the additional insureds’ claim that the exclusion should not be enforced because the insurer’s denial was untimely under Insurance Law Section 3420 (d).

The decision is only the third in New York to address the Construction Management for a Fee exclusion. It clarifies a critical developing issue in construction and insurance law by focusing on long-standing New York precedent that clear and unambiguous policy language should be enforced as written, and ultimately stating that the exclusion is clear and unambiguous.

The DLA Piper team representing Houston Casualty was led by partner Aidan McCormack (New York) and included attorney Cyril Smith (Miami).