Falls Lake National Insurance Company v. Best Interior Solutions Inc., et al.

Background

After a May 19, 2025 conference, the parties submitted letter briefs concerning whether Falls Lake National Insurance Company could select counsel to represent Best Interior Solutions Inc. and Professional Interior Contracting, Inc. in an underlying action. The issue was addressed during an October 8, 2025 conference.

The opinion states that Judge Caproni had already concluded in a summary judgment decision that Falls Lake breached its duty to defend in the underlying action. The opinion also states that liability had not been established and that a factual dispute remained over whether PIC negligently supervised Best. Falls Lake had reserved its right to deny coverage on that ground.

Court’s reasoning

The court determined that a potential conflict of interest existed between PIC and Falls Lake. Falls Lake had an incentive to direct the defense in a way that reduced its exposure on covered claims while allowing liability to rest on excluded theories, such as negligent supervision. The court also found that appointing the same lawyer for Best and PIC would prevent PIC from pursuing its cross claims against Best in the underlying action.

Ruling

Judge Valerie Figueredo ordered that Best and PIC may select counsel of their choosing in the underlying action and that Falls Lake is responsible for their reasonable attorney’s fees. The court stated that the amount of those fees had been briefed and remained pending. This order decided the counsel-selection and fee-responsibility issue; it did not establish liability in the underlying action.