You are here: / / “Bankruptcy” Exclusion in a Political Risk Insurance Policy...
, ,

“Bankruptcy” Exclusion in a Political Risk Insurance Policy Applied—Insurer Not Obligated to Cover Loss Occasioned by Bankruptcy Proceedings in Mexico

The First Department, in a full-fledged opinion by Justice Gonzalez, determined that the “bankruptcy” exclusion in a Political Risk Insurance Policy applied to court proceedings in Mexico and the insurer was therefore entitled to disclaim coverage for the related loss to plaintiff.  The core issue was the meaning of “bankruptcy.”  The plaintiff argued the term referred to a final adjudication of bankruptcy. But the court held the definition was much broader, and included the ongoing court proceedings in Mexico.  The fact that the plaintiff and defendant disagreed about the definition of “bankruptcy” did not render the policy-contract ambiguous.  Applying the plaintiff’s narrow definition would have rendered other provisions of the policy-contract superfluous:

We agree with defendant that plaintiff’s definition of bankruptcy (a final judgment of reorganization or liquidation) is overly narrow. Bankruptcy is generally understood to include being under the judicial protection of a bankruptcy court – or, according to dictionary definition – “a statutory procedure by which a (usu[ally] insolvent) debtor obtains financial relief and undergoes a judicially supervised reorganization or liquidation. . . for the benefit of creditors” (Black’s Law Dictionary 175 [10th ed 2014]; see Compact Oxford English Dictionary 934-935 [2d ed 1999][same]).

Plaintiff contends that since the parties have conflicting interpretations of the term “bankruptcy,” the policy must be ambiguous on this point, and points out that settled principles of interpretation of insurance contracts require resolution of any ambiguity in favor of the insured … . However, “provisions in a contract are not ambiguous merely because the parties interpret them differently” … . Here, common understanding supports interpreting the term bankruptcy as the court proceeding in which the debtor is afforded judicial protection while it reorganizes or liquidates.

Further, settled law requires that the terms of a contract be read in context … . Plaintiff’s definition of bankruptcy, i.e. the state of having been declared bankrupt, would render the accompanying alternatives in Section 4.12 of the policy (insolvency and financial default) superfluous. The redundancy can be eliminated only by accepting defendant’s definition, an interpretation that gives meaning to every “sentence, clause, and word of [the] contract of insurance” … . CT Inv. Mgt. Co., LLC v Chartis Specialty Ins. Co., 2015 NY Slip Op 04051, 1st Dept 5-12-15

 

You might also like
No Exigent Circumstances to Justify Search of a Closed Container in Defendant’s Possession Upon His Arrest for Minor Non Violent Offenses to Which the Contents of the Bag Could Have Had No Connection
ALTHOUGH THE PERSON WHO ALLEGEDLY ASSAULTED PLAINTIFF AT JFK AIRPORT WAS AN EMPLOYEE OF AMERICAN AIRLINES, HE WAS NOT ON DUTY AT THE TIME OF THE INCIDENT; THE DEFENDANTS MOTION FOR SUMMARY JUDGMENT ON THE VICARIOUS LIABILITY AND NEGLIGENCE CAUSES OF ACTION SHOULD HAVE BEEN GRANTED (FIRST DEPT).
First Degree Burglary Conviction Upheld Even though the Residential Portion of the Building Was Not Accessible from the Basement of the First-Floor Store Where the Defendant Entered the Building
ALTHOUGH SUPREME COURT USED THE WRONG STANDARD OF PROOF, THE FINDING THAT DEFENDANT’S TESTIMONY AT THE HEARING ON HIS MOTION TO VACATE HIS CONVICTION WAS NOT CREDIBLE JUSTIFIED DENIAL OF THE MOTION, DEFENDANT, WHO HAS BEEN DEPORTED, ARGUED HE WOULD NOT HAVE PLED GUILTY BUT FOR HIS ATTORNEY’S ASSURANCE HE WOULD NOT BE SUBJECT TO DEPORTATION (FIRST DEPT).
THE EXAMINATION UNDER OATH (EUO) WAS SCHEDULED BEFORE THE INSURER RECEIVED A CLAIM FORM; THEREFORE THE INSURER DID NOT HAVE TO DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF 11 NYCRR 65-3.5 TO BE ENTITLED TO A DEFAULT DECLARATORY JUDGMENT; THE UNDERLYING TRAFFIC ACCIDENT WAS FOUND TO HAVE BEEN STAGED AND CLAIMANT FAILED TO APPEAR AT SCHEDULED EOU’S (FIRST DEPT).
ACTION BROUGHT BY EUROPEAN PLAINTIFFS CONCERNING THE OWNERSHIP OF A PAINTING ILLEGALLY CONFISCATED BY THE NAZIS AND SOLD IN NEW YORK BY CHRISTIE’S PROPERLY DISMISSED ON FORUM NON CONVENIENS GROUNDS (FIRST DEPT). ​
BECAUSE THE DEFENDANT EMPLOYER SUFFERED NO DAMAGE AS A RESULT OF PLAINTIFF’S BREACH OF THE CONFIDENTIALITY PROVISION OF THE EMPLOYMENT CONTRACT, DEFENDANT EMPLOYER WAS NOT ENTITLED TO ENFORCEMENT OF THE LIQUIDATED DAMAGES PROVISION IN THE CONTRACT; PLAINTIFF’S BREACH-OF-AN-ORAL-CONTRACT CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED BECAUSE PLAINTIFF SUBMITTED EVIDENCE OF PARTIAL PERFORMANCE BY DEFENDANT AND PLAINTIFF’S RELIANCE ON THE ORAL MODIFICATION (FIRST DEPT).
LONG-ARM JURISDICTION DID NOT REACH AN AUDITING FIRM IN THE UK AND CONVERSION CAUSES OF ACTION FAILED BECAUSE THE CONVERTED FUNDS WERE NOT IDENTIFIABLE AFTER THEY HAD BEEN INVESTED.

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2025 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

Request for Petitioner’s Income Tax Records Properly Denied—Insufficient... Court Should Not Have Dismissed for “Neglect to Proceed”—Criteria...