Addressing a question of first impression in Grace v. Law, et al., the Court of Appeals adopted the plaintiff-client's contention that a "likely to succeed" standard should be applied, rejecting the defendant-attorneys' contention that a malpractice claim should be barred when the client fails to pursue a nonfrivolous or meritorious appeal that a reasonable lawyer would pursue.
On 10/22/14, the Court of Appeals heard argument in Sierra v. 4401 Sunset Park. The Court had granted Scottsdale leave to appeal from the Second Department's ruling that Scottsdale's disclaimer to GNY, which had tendered an additional insured claim on behalf of its insured, 4401 Sunset Park, was invalid under 3420(d) because the disclaimer was not sent to 4401 Sunset Park. For years, insurers have been tendering and responding to each other in this situation with nary a thought of the insured until GNY (as the likely party behind its insured's challenge) got the bright idea in this case to challenge the disclaimer on a 3420(d) technicality.
The New York State Insurance Department has issued an ambiguous opinion taking the position that the amendment to Insurance Law §3420(a)(5), changing the "no prejudice" rule, applies to all liability policies, which arguably would include Lawyer Professional Liability ("LPL") Policies. See Circular Letter No. 26 (2008) and Office of General Counsel Opinion No. 09-01-05 (2009). The new subdivision (5) changing the "no prejudice" rule applies to all policies insuring against "injury to person" or "injury to property."
Sometimes the legal result in a case just seems to make no sense. Here is one of those instances. A defendant was on trial. Another defendant had pled guilty in connection with the same crime. The defendant who was on trial wanted the jury to be informed that the other defendant had pled guilty. Apparently, he thought this would make the jury think he was not guilty. The defendant's court-appointed lawyer said that he did not want the jury to be told that the other defendant had pled guilty. The judge ruled in favor of the defendant himself and overruled his attorney.
In a highly unusual decision, Judge Shirley Kornreich in Madison 96th Associates v. 17th East Owners Corporation, 43 Misc.3d 1210(A), denied an attorney-fee award to a prevailing plaintiff-insured in a declaratory judgment action but encouraged the insured to appeal her decsion. In ruling as she did, the court followed the well-known and long-standing "Mighty Midgets" rule where a prevailing insured commencing an affirmative action against its insurer is not entitled to recover the costs of the DJ whereas a prevailing insured who is "cast in a defensive position" by its insurer is entitled to recover the DJ costs. Mighty Midgets v. Centennial Ins. Co., 47 N.Y.2d 12 (1979).