CUMIS Specialty Insurance Company, Inc. v. Kaufman
- Denise Cote
- 1:21-cv-11107
- U.S. District Court · Southern District of New York
- 6
In CUMIS Specialty Insurance v. Kaufman, Judge Cote denied Kaufman’s motion to reconsider excluding insurance coverage for his appeal costs.
The ruling affects Alan Kaufman’s ability to obtain insurance coverage for legal fees connected with his criminal appeal and leaves CUMIS Specialty Insurance Co., Inc.’s favorable coverage ruling in place.
What happened
CUMIS Specialty Insurance Co., Inc. v. Kaufman concerned whether an insurance policy covered Alan Kaufman’s legal fees for appealing his criminal conviction. CUMIS had paid his defense costs during trial, but argued that policy exclusions applied after his conviction and barred coverage for the appeal.
Kaufman asked the court to reconsider its earlier ruling granting CUMIS judgment on the pleadings. He argued that “final adjudication” meant the criminal case was not final until his appeal ended, and that applying the exclusions before the appeal would make the policy’s coverage for “any appeals” meaningless.
The court rejected those arguments because they had already been considered and because Kaufman identified no basis for reconsideration. Judge Denise Cote denied the motion, leaving in place the ruling that the policy excluded coverage for Kaufman’s appeal costs.
The detailed version
- CUMIS Specialty Insurance Company, Inc. v. Kaufman · No. 1:21-cv-11107
- Denise Cote
- Oct. 18, 2022
Background
A jury in the Southern District of New York convicted Alan Kaufman of two counts of accepting a gratuity in violation of 18 U.S.C. § 215(a)(2). CUMIS issued an insurance policy that covered Kaufman’s defense costs during trial. After sentencing, Kaufman appealed and asked CUMIS to advance legal fees for the appeal.
The parties disagreed about whether the policy covered those fees. CUMIS relied on two exclusions: one for losses related to deliberately dishonest, fraudulent, intentional, or willful misconduct or acts, and another for claims arising from an insured’s receipt of profit, unjust enrichment, remuneration, or an advantage to which the insured was not legally entitled. The policy stated that these exclusions applied after a “final adjudication.” CUMIS and Kaufman agreed that CUMIS would provisionally pay the appeal fees, subject to possible repayment if a court later determined that the policy did not cover them.
CUMIS filed this action seeking a declaration that the policy excluded Kaufman’s appeal fees. On September 28, 2022, the court granted CUMIS’s motion for judgment on the pleadings. The court held that, under New York law, a criminal trial is finally adjudicated upon conviction, so the exclusions barred coverage for the appeal costs. It also held that the policy’s coverage for “any appeals” was not meaningless because some appeals would not fall within the exclusions.
Motion for Reconsideration
Kaufman moved for reconsideration. Reconsideration is an extraordinary remedy generally available only when a party identifies a change in controlling law, new evidence, or a clear error or manifest injustice. The court explained that reconsideration is not a means to relitigate issues, present new theories, or obtain a second hearing on the merits.
Kaufman argued that the court had improperly relied on cases involving exclusions triggered by a “final judgment,” while his policy used the phrase “final adjudication.” The court declined to reconsider that issue because it had already been raised and rejected. It explained that New York courts had used “final judgment” and “final adjudication” interchangeably and that Kaufman had not shown why the terms should have different meanings here.
Kaufman also argued that applying the exclusions before the appeal would make the policy’s coverage for “any appeals” superfluous. The court again declined to reconsider the argument because it had already been presented. The court reiterated that the policy could still cover appeals that did not fall within the exclusions, including certain civil-case appeals and appeals not involving unlawful remuneration or willful wrongdoing. The court further stated that Kaufman’s fuller quotation of the dishonest- or willful-acts exclusion did not change that reasoning.
Disposition
The court found that Kaufman had not presented new arguments or shown a basis for disturbing the earlier ruling. Judge Denise Cote denied Kaufman’s motion for reconsideration. The conclusion states that the defendant’s October 13, 2022 motion for reconsideration is denied.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.