February 18, 2019

The Supreme Court of New York, Appellate Division, has overturned the decision of the motion court to dismiss a consequential damages claim when the plaintiff fulfilled the pleading requirement by specifying the types of consequential damages claimed and alleging that such damages were reasonably contemplated by both parties prior to entering into the contract. The case is D.K. Prop. Inc. v. Nat'l. Union Fire Ins. Co. of Pittsburgh, Pa., 2019 NY Slip Op 00347 (App. Div.)

Here, D.K. Property, Inc. (D.K. Property) owned a building in Manhattan that was damaged by a neighboring construction project in or around October of 2014. D.K. Property alleged that the rear wall of the neighboring building provided lateral support to the east exterior wall of their building, and when that wall was demolished the building owned by D.K. Property suffered structural movement and damage. D.K. Property had an insurance policy through National Union Fire Insurance Company of Pittsburgh, Pa. (National Union). According to the amended complaint, National Union did not pay the claim, and also failed to disclaim coverage, despite having a consultants' agreement with the insured regarding the cause of loss, but while still making unreasonable and burdensome information demands throughout the three years since the property was damaged. Particularly, D.K. Property claimed that the property damage had worsened over the course of the extended investigation.