The question in this case is whether an excess insurer’s coverage obligation excludes (i) the limit of liability on the underlying insurance policy, even if that policy was declared void, and (ii) all interest that would have been payable under the underlying insurance policy.
Plaintiff was injured on a construction worksite and obtained a $2.3 million judgment against the construction company in 2013. The construction company had insurance through a primary insurer; the company also had excess insurance through defendant. The primary insurance policy, with a $1 million limit, obligated the primary insurer to pay pre-judgment interest on the amount of any judgment it was responsible for paying, as well as post-judgment interest. The excess insurance policy, with a $4 million limit, obligated defendant to pay any loss in excess of the underlying primary insurance up to the excess policy limit.
The primary insurer’s policy was declared void, and so plaintiff sought to recover its judgment under defendant’s excess coverage of the construction company. Supreme Court entered summary judgment in favor of plaintiff for the full amount of the judgment, plus pre- and post-judgment interest, less the $1 million limit that would have been payable under the primary policy. Defendant sought to amend the judgment and also to reargue plaintiff’s summary judgment motion, contending that it was not obligated to pay any interest that would have been payable under the primary insurance policy. Plaintiff complained that defendant had waived this issue by not raising it more directly during summary judgment proceedings, but Supreme Court granted reargument, agreed with defendant, and issued an amended judgment in accordance with its order. (The difference in the two judgments was approximately $41,000.)
The First Department agreed with Supreme Court and affirmed its amended judgment. The court concluded that defendant had not waived its argument with respect to its obligation to pay interest, and that Supreme Court properly considered that issue on reargument. The court also held that defendant’s excess coverage obligation excluded both the $1 million coverage limit of the underlying primary insurance policy, as well as any interest payable under that policy. This was not contrary to the holdings of Ragins v. Hospitals Insurance Company, Inc., 22 N.Y.3d 1019 (2013), or Welsh v. Peerless Casualty Company, 8 A.D.2d 373 (1st Dep’t 1959), aff’d, 8 N.Y.2d 745 (1960), because those cases involved insurance policies with materially different policy language.
The Court of Appeals granted plaintiff leave to appeal.