Peleus Insurance Company v. Atlantic State Development Corp.
- John Cronan
- 1:20-cv-02971
- U.S. District Court · Southern District of New York
- 4
In Peleus v. Atlantic State Development, Judge Cronan ordered supplemental briefing before deciding Peleus’s request to recover defense costs.
Peleus Insurance Company and Atlantic State Development Corp.; both parties were required to file supplemental briefing on Peleus’s request to recover defense costs.
What happened
Peleus Insurance Company asked for summary judgment declaring that it could recover defense costs from Atlantic State Development Corp. after defending Atlantic in an underlying New York case. Atlantic argued that Peleus could not deny coverage but did not otherwise respond to the recovery request.
The court said more briefing was needed before it could decide whether Peleus could recover those costs. The requested briefing assumes that Peleus had no duty to defend or indemnify Atlantic and addresses the two reservation-of-rights letters, whether recovery could cover only part of the defense, whether the insurance contract allows recovery, whether New York law permits recovery without an express policy provision, and whether Atlantic could receive summary judgment if Peleus was not entitled to recover.
Judge John P. Cronan ordered the parties to file supplemental briefs by February 21, 2022. The order did not decide Peleus’s request for summary judgment or whether Peleus could recover defense costs.
The detailed version
- Peleus Insurance Company v. Atlantic State Development Corp. · No. 1:20-cv-02971
- John Cronan
- Feb. 15, 2022
Background
Peleus Insurance Company moved for summary judgment seeking a declaration that it was entitled to recover defense costs incurred while defending Atlantic State Development Corp. in an underlying New York case. Atlantic’s stated response, as described by the court, was that Peleus could not disclaim coverage in that underlying case; Atlantic did not otherwise counter Peleus’s defense-cost claim.
Issues Identified by the Court
The court found that supplemental briefing was warranted. The parties were instructed to assume, for purposes of the briefing, that the court would find Peleus had no duty to defend or indemnify Atlantic. The court requested briefing on:
- Whether Peleus’s September 30, 2019 reservation-of-rights letter adequately reserved a right to recover defense costs, including whether New York law requires an insurer to expressly tell the insured that it reserves that right and whether Peleus’s letter met that requirement.
- Whether Peleus’s March 3, 2020 letter adequately reserved the right to recover defense costs.
- Whether New York law permits an insurer to recover defense costs for only part of the defense—for example, costs incurred after the March 3, 2020 letter if the earlier letter was insufficient.
- Where the contract between Peleus and Atlantic contains a provision allowing recovery of defense costs.
- Whether New York law permits recovery when an insurance policy imposes a duty to defend but contains no express provision allowing recovery of defense costs.
- If Peleus was not entitled to recover defense costs, whether the court could grant summary judgment on that issue to Atlantic, the nonmoving party, after notice and a reasonable opportunity to respond.
Ruling and Effect
The court ordered the parties to file supplemental briefing on these issues by February 21, 2022. It did not decide Peleus’s motion for summary judgment, whether Peleus had a duty to defend or indemnify Atlantic, or whether Peleus was entitled to recover any defense costs. Judge John P. Cronan signed the order dated February 14, 2022.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.