INSURANCE CARRIER MUST PAY DEFENSE COSTS FOR INSURED BEING CRIMINALLY PROSECUTED IN FEDERAL COURT UNTIL FINAL DECISION THAT INSURED'S ALLEGED WRONGDOING FELL UNDER EXCLUSIONS OF INSURANCE POLICY

Court: Supreme Court, Appellate Division, First Department, New York

Case: Courtney Dupree v. Scottsdale Insurance Company

Date: June 14, 2012

From: New York attorney Gary E. Rosenberg (personal injury and accident attorney and lawyer; serving Queens; Queens accident lawyer)

**************************************************

RELATED POSTS:

ACCIDENT VICTIM'S LAWSUIT TO COLLECT JUDGMENT FROM INSURER FAILS TO SURVIVE DISMISSAL MOTION WHERE SHE DIDN'T SHOW INSURER'S DISCLAIMER NOT VALID

ACCIDENT VICTIM SUED INSURER TO COLLECT INJURY JUDGMENT; INSURER DENIED SUMMARY JUDGMENT BECAUSE ISSUE AS TO ITS PROPER DISCLAIMER

************************************************

Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered January 4, 2012, which, to the extent appealed from, sua sponte, granted plaintiff insured a temporary restraining order directing defendant insurer to pay, from the date of the order until the determination of plaintiff's motion for a preliminary injunction, attorneys' fees and costs related to plaintiff's defense of a criminal action pending against him in federal court, unanimously affirmed, with costs.

Supreme Court providently exercised its discretion in granting the temporary restraining order (see CPLR 6301; Wyndham Co. v. Wyndham Hotel Co., 236 A.D.2d 220 [1997]). The failure of an insurance company to advance payments covering defense costs and fees under a directors and officers liability policy, like the one at issue here, constitutes a direct, immediate and irreparable injury, as it would deprive the insured of the benefit bargained for through payment of the policy premium (see Wedtech Corp. v. Federal Ins. Co., 740 F.Supp. 214, 221 [SD N.Y.1990]; Nu-Way Envtl. ., Inc. v. Planet Ins. Co., 1997 WL 462010, *3, 1997 U.S. Dist LEXIS 11884, *9 [SD NY, Aug. 12, 1997, No. 95-Civ-573(HB) ] ). Defendant's argument that it has been relieved of the requirement to provide coverage and/or advance legal costs and fees under the policy because plaintiff's conduct violated the policy's exclusions is unavailing at this juncture. Absent a final adjudication that plaintiff's alleged wrongdoing does indeed fall under the policy's exclusions, the policy remains in effect and defendant is required to pay attorneys' fees and defense costs, subject to recoupment in the event it is ultimately determined that the exclusions apply (see Federal Ins. Co. v. Kozlowski, 18 A.D.3d 33, 42 [2005]).

Categories