New York Law Review

Tag: excess insurance

  • Ragins v. Hospitals Ins. Co., 22 N.Y.3d 1021 (2013): Interpreting Excess Insurance Policy Coverage for Post-Judgment Interest

    Ragins v. Hospitals Ins. Co., 22 N.Y.3d 1021 (2013)

    An excess insurance policy that covers “all sums” exceeding the primary policy’s limit encompasses post-judgment interest, obligating the excess insurer to pay interest accruing after the primary insurer has paid its policy limit, even if the primary insurer is insolvent.

    Summary

    Ragins sued Hospitals Insurance Company (HIC), asserting HIC owed interest on a malpractice judgment under an excess insurance policy. The primary insurer became insolvent and its liquidator paid the $1,000,000 primary policy limit. Ragins argued this triggered HIC’s excess policy. The Appellate Division sided with HIC. The Court of Appeals reversed, holding the primary insurer’s payment triggered HIC’s duty to cover all remaining amounts, including interest. The court reasoned the excess policy covered “all sums” exceeding the primary limit, which includes interest, and rejected HIC’s argument that it was being forced to “drop down” to cover the primary insurer’s obligations.

    Facts

    Ragins was subject to a medical malpractice judgment. Ragins held a primary insurance policy with a $1,000,000 limit and an excess policy with HIC. The primary insurer became insolvent, and a liquidator was appointed. The liquidator paid the $1,000,000 limit of the primary policy. Post-judgment interest continued to accrue on the remaining balance of the judgment. HIC refused to pay the post-judgment interest, arguing it was not obligated under the excess policy.

    Procedural History

    Ragins sued HIC for breach of contract in Supreme Court. The Supreme Court’s decision is not detailed in this opinion. The Appellate Division held that HIC was not obligated to indemnify Ragins for the unpaid interest and remitted the matter to the Supreme Court for entry of a judgment. The Court of Appeals granted Ragins leave to appeal.

    Issue(s)

    Whether an excess insurance policy obligates the excess insurer to pay post-judgment interest on a judgment against the insured, where the primary insurer has paid its policy limits, but additional interest has accrued?

    Holding

    Yes, because the plain language of the excess policy requires HIC to cover any professional liabilities, including interest, above the primary policy’s $1,000,000 limit once that limit has been paid.

    Court’s Reasoning

    The Court of Appeals focused on the language of both the primary and excess insurance policies. The court noted that the primary policy’s “supplementary payments” section only obligated the primary insurer to pay post-judgment interest until it had paid its $1,000,000 liability limit. The excess policy stated that HIC would pay “all sums” exceeding the primary policy limit that Ragins was legally obligated to pay as damages. The court reasoned that the term “sums” included interest. The court stated that “damages” retained its most common meaning, namely, “[t]he sum of money which the law awards or imposes as pecuniary compensation… for an injury done or a wrong sustained.” The court also stated, “even if there were any ambiguity as to whether the covered sums under the excess policy include interest, that ambiguity must be construed against HIC and in favor of plaintiff, thus providing coverage for that amount under the excess policy”. The court distinguished the case from Dingle v. Prudential Prop. & Cas. Ins. Co., noting that unlike the policy in Dingle, the primary policy here did not expressly cover interest above the policy’s liability limit, and the excess policy plainly covered “all sums” in excess of the primary policy’s limit, necessarily including interest. The court rejected HIC’s argument that it was being forced to “drop down” and cover the insolvent primary insurer’s obligations, stating that HIC’s responsibility for the remaining interest was simply its obligation under the plain language of the excess policy.

  • Fieldston Prop. Owners Assn., Inc. v. Hermitage Ins. Co., Inc., 14 N.Y.3d 232 (2010): Primary Insurer’s Duty to Defend Entire Action

    Fieldston Prop. Owners Assn., Inc. v. Hermitage Ins. Co., Inc., 14 N.Y.3d 232 (2010)

    When a complaint against an insured contains at least one claim potentially covered by a primary insurance policy, the insurer has a duty to defend the entire action, precluding any duty of an excess insurer where its policy provides excess coverage when “any Loss arising from any claim” is covered by other insurance.

    Summary

    This case involves a dispute between two insurers, Hermitage (CGL policy) and Federal (D&O policy), over the cost of defending Fieldston against two lawsuits. Hermitage argued Federal should contribute to defense costs, claiming Federal’s D&O policy covered most claims. The Court of Appeals held that because Hermitage’s CGL policy potentially covered one claim (injurious falsehood) in each lawsuit, Hermitage had a primary duty to defend the entire action. Federal’s D&O policy’s “other insurance” clause made its coverage excess since Hermitage’s policy covered at least one claim. Thus, Hermitage bore the entire defense cost, illustrating the broad duty to defend.

    Facts

    Hermitage issued a CGL policy to Fieldston, and Federal issued a D&O policy. Chapel Farm sued Fieldston in federal court, alleging “injurious falsehood” and other claims. Hermitage defended Fieldston under a reservation of rights, arguing Federal’s D&O policy was primary. After the federal suit was dismissed, Villanova (formerly Chapel Farm) sued Fieldston in state court with similar claims. Hermitage again defended under a reservation of rights, seeking reimbursement from Federal. The state court dismissed the injurious falsehood claim, and Federal then assumed the defense.

    Procedural History

    Two declaratory judgment actions were filed to determine the insurers’ responsibilities. In the first action (federal lawsuit), the Supreme Court ruled Hermitage was primary. In the second action (state lawsuit), the Supreme Court found neither insurer had proved their position as a matter of law. The Appellate Division reversed both rulings, holding Federal was required to contribute to defense costs. The Court of Appeals reversed the Appellate Division, reinstating the Supreme Court’s initial ruling on the federal case and granting summary judgment to Federal on the state case.

    Issue(s)

    Whether Hermitage’s primary duty to defend against the injurious falsehood claim triggers a primary duty to defend against all causes of action in the complaints, precluding any obligation by Federal under its “other insurance” clause.

    Holding

    Yes, because under the terms of Federal’s D&O policy, there existed “other insurance” (Hermitage’s CGL) that covered the “loss” arising from the defense of the underlying actions; when a policy has a clause making it excess to other valid insurance, the insurer is not required to contribute to a defense already covered by another policy.

    Court’s Reasoning

    The court emphasized that an insurer’s duty to defend is broader than the duty to indemnify and is triggered when a complaint alleges any cause of action that creates a reasonable possibility of recovery under the policy. The court quoted Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 65 (1991), stating that the duty to defend “arises whenever the allegations in a complaint state a cause of action that gives rise to the reasonable possibility of recovery under the policy.” The court further explained, quoting Town of Massena v Healthcare Underwriters Mut. Ins. Co., 98 NY2d 435, 443 (2002), that if “ ‘ any of the claims against an insured arguably arise from covered events, the insurer is required to defend the entire action.’ ” The court reasoned that because Hermitage’s CGL policy potentially covered the injurious falsehood claim, it had a duty to defend the entire action. Federal’s D&O policy had an “other insurance” clause that made its coverage excess when any loss was covered by another policy. “Loss” included “Defense Costs.” Therefore, Hermitage had the primary duty to defend without contribution from Federal. The Court stated, “If the policies were drafted using different language, we might hold differently, but we may not judicially rewrite the language of the policies at issue here to reach a more equitable result”. The court prioritized the plain language of the insurance contracts, even if the result appeared inequitable.

  • Union Carbide Corp. v. Affiliated FM Ins. Co., 16 N.Y.3d 420 (2011): Interpreting “Follow-the-Form” Clauses in Excess Insurance Policies

    16 N.Y.3d 420 (2011)

    When an excess insurance policy incorporates an underlying policy’s terms through a “follow-the-form” clause, those terms, including annual aggregate limits, apply unless the excess policy’s declarations explicitly and unambiguously state otherwise.

    Summary

    Union Carbide (UCC) sought coverage for asbestos claims under a layered insurance program. The dispute centered on a fifth-layer excess policy and whether its aggregate limit of $30 million was renewed annually or applied to the entire three-year policy period. The policy contained a “follow-the-form” clause incorporating the terms of an underlying policy with an annual aggregate limit. UCC argued for annual renewal, while the insurers claimed a single aggregate limit. The court held that the “follow-the-form” clause meant the limit was renewed annually. The court also considered whether a two-month policy extension triggered a new limit but determined UCC hadn’t proven it was entitled to summary judgement on this issue. The court emphasized the importance of uniform coverage in complex insurance programs.

    Facts

    UCC purchased multiple layers of liability insurance, including a fifth excess layer covering losses between $70 million and $100 million. This layer was subscribed to by several insurers, including Continental Casualty Company and Argonaut Insurance Company. The fifth-layer policy incorporated the terms of an underlying Appalachian Insurance Company policy through a “follow-the-form” clause. The Appalachian policy had an “annual aggregate” limit. UCC faced substantial asbestos claims and sought coverage under the excess policies, arguing that the $30 million limit should be applied annually. Continental extended its policy for two months and UCC argued that this created an additional year of coverage.

    Procedural History

    UCC moved for partial summary judgment, arguing that the aggregate limit in the fifth-layer excess policy was renewed annually and that the Continental extension triggered a new limit. The Supreme Court granted UCC’s motions. The Appellate Division reversed. The Court of Appeals modified the Appellate Division’s order, granting UCC’s motion on the annualization issue but affirming the denial on the extension issue.

    Issue(s)

    1. Whether the aggregate limit in the fifth-layer excess insurance policy was renewed annually, given the “follow-the-form” clause incorporating the underlying policy’s annual aggregate limit.
    2. Whether the two-month extension of the Continental policy created a new “year” for policy limit purposes, entitling UCC to an additional $5 million in coverage.

    Holding

    1. Yes, because the “follow-the-form” clause incorporated the underlying Appalachian policy’s annual aggregate limit, and the excess policy’s declarations did not unambiguously negate this annualization.
    2. No, because UCC failed to meet its burden on summary judgment to demonstrate that the policy extension created a new “year” with a new policy limit. The record was unclear on whether the parties intended the extension to provide a fresh set of policy limits.

    Court’s Reasoning

    Regarding the annualization issue, the court reasoned that “follow-the-form” clauses are intended to provide insureds with uniform coverage across multiple layers of insurance. It would be illogical for a sophisticated insured like UCC to bargain for differing coverage periods between its primary and excess layers. The court noted that the policy language included both a per occurrence and aggregate limit of the same amount ($30 million), suggesting that there was an intent for the limit to be applied for each occurrence, annually. While the court acknowledged the general principle that extrinsic evidence is unnecessary when a writing is clear, it noted that even considering UCC’s extrinsic evidence showing the universal custom of annualization, UCC’s position was overwhelmingly supported. Regarding the policy extension, the court noted the conflicting arguments and the lack of clear evidence showing a mutual intent to create a new policy limit. The court stated, “We conclude, as the Appellate Division majority did, that UCC has not met its burden on summary judgment of establishing coverage for an additional year’s policy limits”.

  • Hartford Accident and Indemnity Co. v. Michigan Mutual Insurance Co., 59 N.Y.2d 569 (1983): Insurer’s Duty of Good Faith to Excess Carrier

    Hartford Accident and Indemnity Co. v. Michigan Mutual Insurance Co., 59 N.Y.2d 569 (1983)

    A primary insurer owes a duty of good faith to an excess insurer, similar to the duty owed to its own insured, when handling a claim that could trigger excess coverage.

    Summary

    This case addresses the duty of a primary insurer to an excess insurer when both companies insure the same entities. Michigan Mutual, the primary insurer for three affiliated companies, also provided worker’s compensation insurance. When an employee of one company sued the other two, Hartford, the excess insurer, demanded the employer be impleaded. Michigan Mutual refused, and the case settled, triggering Hartford’s excess coverage. Hartford then sued Michigan Mutual for bad faith. The New York Court of Appeals held that Michigan Mutual owed Hartford a duty of good faith and that factual questions existed regarding breach of that duty, precluding summary judgment.

    Facts

    DeFoe Corporation and its subsidiaries, L.A.D. Associates, Inc., and D.A.L. Construction Corporation, were insured by Michigan Mutual under a general liability policy ($1,000,000 coverage) and a worker’s compensation policy. Hartford provided excess coverage ($5,000,000) to the same companies. Davor Gobin, an employee of D.A.L., was injured on the job. Because worker’s compensation law prevented him from suing his employer, he sued DeFoe and L.A.D. Hartford, the excess carrier, demanded that Michigan Mutual implead D.A.L. in the lawsuit. Michigan Mutual refused. The Gobin action settled for $1,400,000, with Hartford paying $400,000 while reserving its rights against Michigan Mutual.

    Procedural History

    Hartford sued Michigan Mutual and its law firm for inducing breach of contract and bad faith. Michigan Mutual moved for summary judgment, which Special Term partially granted. The Appellate Division modified, reinstating Hartford’s individual claims, finding triable issues of fact. The Appellate Division granted Michigan Mutual leave to appeal to the Court of Appeals, certifying the question of whether its order was properly made.

    Issue(s)

    1. Whether the cooperation clause in Hartford’s policy obligated DeFoe and L.A.D. to implead D.A.L.?

    2. Whether Michigan Mutual, as primary insurer, owed a duty of good faith to Hartford, as excess insurer?

    3. Whether Hartford’s payment toward the settlement was voluntary, precluding recovery?

    Holding

    1. Yes, because Hartford’s policy obligated its insured to “enforce any right of contribution or indemnity against any person or organization who may be liable to the insured”.

    2. Yes, because Michigan Mutual, as the primary liability insurer, owed Hartford, as the excess carrier, the same duty to act in good faith that it owed to its own insureds.

    3. This issue is to be determined at trial.

    Court’s Reasoning

    The court distinguished American Sur. Co. v Diamond, noting that Hartford’s policy contained an explicit obligation to enforce rights of contribution or indemnity. The court rejected Michigan Mutual’s argument that an insurer cannot maintain a subrogation action against its own insured, because Michigan Mutual provided two separate policies: a general liability policy and a worker’s compensation policy. The worker’s compensation policy created a separate obligation to defend and indemnify D.A.L. if impleaded. The court emphasized the duty of good faith owed by a primary insurer to an excess insurer, stating, “Michigan Mutual as the primary liability insurer owed to Hartford as the excess carrier the same duty to act in good faith which Michigan owed to its own insureds”. The court reasoned that whether Michigan Mutual acted in good faith to protect its insureds or in its own self-interest to trigger Hartford’s excess liability without sharing in the costs was a question of fact for trial. The court also noted that the voluntary payment issue was a factual question best resolved through trial. The court affirmed the Appellate Division’s order, finding triable issues of fact existed and answering the certified question in the affirmative.

  • Lumbermens Mut. Cas. Co. v. Allstate Ins. Co., 51 N.Y.2d 647 (1980): Prioritizing Excess Insurance Coverage Based on Policy Language

    Lumbermens Mut. Cas. Co. v. Allstate Ins. Co., 51 N.Y.2d 647 (1980)

    When multiple insurance policies provide excess coverage for the same event, the court will prioritize the order in which the policies must contribute based on the specific language of each policy, rather than applying a pro rata contribution rule.

    Summary

    This case addresses how to allocate responsibility among multiple insurance policies providing excess coverage for the same automobile accident. The New York Court of Appeals determined that when policies contain specific language defining their role in relation to other excess policies, the court should enforce that language. The court rejected a pro rata contribution approach, holding that the policies should contribute in the order specified by their terms. This decision allows insurers to define their risk and price their policies accordingly, ensuring that policyholders can purchase specific layers of excess coverage.

    Facts

    Jack Tantleff was involved in an automobile accident while driving a car registered to One Eleven South Street Number 2, Inc., resulting in injuries to two passengers. The passengers sued and reached a settlement totaling $780,000. Allstate provided primary insurance to the car’s owner up to $300,000, which was paid. Three other policies provided potential excess coverage: 1) Allstate policy to Judith Tantleff (Jack’s mother) with an “excess insurance” clause for non-owned autos; 2) Allstate executive policy to Irwin Tantleff (Jack’s father), providing excess coverage above underlying policies, including Judith’s; 3) Lumbermens “Catastrophe Policy” to Twin County Grocers, providing coverage above all other insurance, including excess coverage.

    Procedural History

    After settling the underlying personal injury claims, Allstate and Lumbermens disputed the order in which their respective excess policies should contribute to the settlement balance. Allstate sought a declaratory judgment. The lower courts’ decisions are not specified in this opinion. The New York Court of Appeals reviewed the case to determine the order of contribution among the excess insurance policies.

    Issue(s)

    Whether, when multiple insurance policies provide excess coverage for the same loss, the court should apply a pro rata contribution rule, or prioritize the order in which the policies contribute based on the specific language of each policy defining its relationship to other excess coverage.

    Holding

    No, the court should not apply a pro rata contribution rule; rather, the court should prioritize the order of contribution based on the specific language of each policy because the policy language dictates the intent of the parties.

    Court’s Reasoning

    The court rejected the general rule of pro rata contribution among excess insurers, finding it inapplicable because it would distort the plain meaning of the insurance contracts. The court emphasized that the Allstate executive policy to Irwin Tantleff was explicitly designed to provide coverage only after Judith Tantleff’s policy was exhausted. Similarly, the Lumbermens catastrophe policy provided coverage above all other insurance, including excess coverage. The court reasoned that insurers can structure their policies to provide different levels of excess coverage and price their premiums accordingly. Enforcing the specific language of the policies allows insurers to manage their risk effectively. The court stated, “The plain meaning of the language embodied within the terms of these contracts compels the conclusion that the rule of ratable contribution is inapplicable in this case.” The court concluded that Allstate’s policy to Judith should contribute first, followed by Allstate’s executive policy, and finally by Lumbermens’ catastrophe policy. The court recognized that allowing parties to contract for different tiers of excess coverage allows the insurance buyer to purchase additional coverage at a premium reduced to reflect the lesser risk to the insurer.

  • Mount Vernon Fire Insurance Co. v. Travelers Indemnity Co., 47 N.Y.2d 579 (1979): Interpreting “Follow Form” Clauses in Excess Insurance Policies

    Mount Vernon Fire Insurance Co. v. Travelers Indemnity Co., 47 N.Y.2d 579 (1979)

    An excess insurance policy’s “follow form” clause, which incorporates exclusions from the primary policy, will be interpreted strictly against the excess insurer, preventing it from invoking an exclusion that the primary insurer could not invoke.

    Summary

    Mount Vernon Fire Insurance Company sought a declaratory judgment that it was not liable under an excess insurance policy due to an exclusion clause incorporated from the primary policy issued by Travelers Indemnity Company. The exclusion applied when a trailer was used with a tractor not covered by “like insurance in the company.” Travelers insured both the tractor and trailer involved in an accident. The New York Court of Appeals held that Mount Vernon could not invoke the exclusion because Travelers, the primary insurer and drafter of the exclusionary language, could not do so, given that it insured both vehicles. The “follow form” clause meant the exclusion operated as it would under the primary policy.

    Facts

    Smolowitz Brothers Van Lines, Inc. was insured by Travelers Indemnity Company under a primary automobile liability policy covering its fleet. The Travelers policy contained an exclusion stating it was inapplicable “while any trailer covered by this policy is used with any [tractor] owned or hired by the insured and not covered by like insurance in the company.” Smolowitz also had an excess insurance policy with Mount Vernon Fire Insurance Company, which stated its coverage was subject to “all the conditions, agreements, exclusions and limitations of and shall follow the Primary Insurance in all respects.” Gino Trotta was injured in an accident involving a tractor-trailer owned and operated by Smolowitz. Travelers insured both the tractor and trailer, while Mount Vernon’s excess policy only covered the trailer. Mount Vernon sought a declaration that it was not liable, arguing the exclusion applied because the tractor was not insured by Mount Vernon.

    Procedural History

    Mount Vernon brought a declaratory judgment action in Supreme Court, which ruled that the exclusionary clause was against public policy. The Appellate Division modified the Supreme Court’s judgment in respects not relevant here, but declared that Mount Vernon was obligated to indemnify Smolowitz for any judgment exceeding the limits of the Travelers policy. Mount Vernon appealed to the New York Court of Appeals.

    Issue(s)

    Whether an excess insurer can invoke an exclusion clause incorporated from a primary insurance policy via a “follow form” clause, when the primary insurer itself could not invoke that exclusion under the facts of the case.

    Holding

    No, because the “follow form” clause incorporates the limitations on the exclusion’s applicability that exist within the primary policy itself.

    Court’s Reasoning

    The Court of Appeals emphasized the principle of construing exclusions strictly against the insurer, especially when the policy language is standardized and non-negotiable. Citing Thomas J. Lipton, Inc. v Liberty Mut. Ins. Co., 34 NY2d 356, 361, the court noted such language is the insurer’s own. Because Travelers insured both the tractor and the trailer, it could not invoke the exclusion. The “follow form” clause in the Mount Vernon policy meant that the exclusions were to “follow” the primary insurance “in all respects.” The court reasoned that if Mount Vernon intended to reserve the right to invoke the exclusion independently, it should have explicitly stated so or reiterated the exclusionary language in its own policy, citing Miller v Continental Ins. Co., 40 NY2d 675, 678-679. The court concluded that the exclusion clause remains dormant or comes to life according to the terms of the primary insurance policy. The court further reasoned that the phrase “in the company” should be read to mean “in Travelers,” further solidifying the interpretation that Mount Vernon could only assert the exemption when the tractor was not covered by like insurance in Travelers.

  • New York Stock Exchange, Inc. v. Continental Insurance Company, 40 N.Y.2d 269 (1976): Fraudulent Scheme Exception to Perjury Rule

    New York Stock Exchange, Inc. v. Continental Insurance Company, 40 N.Y.2d 269 (1976)

    A cause of action for fraud and deceit will lie, even when perjury is involved, if the perjury is merely a means to accomplish a larger fraudulent scheme that extends beyond the issues determined in the prior proceeding.

    Summary

    The New York Stock Exchange (NYSE) and its subsidiary, Newin Corporation, sued Continental Insurance Company and its subsidiary, Fidelity & Casualty Company, alleging fraud and deceit during the bankruptcy proceedings of Ira Haupt & Co., a member firm of the NYSE. The NYSE claimed that the defendants suborned perjury to minimize the recovery on Haupt’s primary insurance bonds, thereby frustrating the NYSE’s ability to recover losses under its excess insurance coverage. The court held that a cause of action for fraud exists, even with perjury, when the perjury is part of a broader scheme to defraud that extends beyond the issues in the original case.

    Facts

    Ira Haupt & Co., an NYSE member, went bankrupt following the “salad oil swindle” of 1963. As required by NYSE rules, Haupt carried blanket bonds underwritten by Fidelity & Casualty Company. The NYSE also had excess insurance coverage, with Continental Insurance Company as one of the carriers. Haupt’s bankruptcy trustee sued on the primary bonds, alleging employee infidelity caused the firm’s collapse. The NYSE alleged that Continental and Fidelity corrupted a key witness, Jack E. Stevens, causing him to change his testimony, which led to a settlement for a fraction of the claim’s value. Subsequently, the insurers refused to pay under the excess coverage, claiming the primary coverage hadn’t been exhausted.

    Procedural History

    The NYSE and Newin Corporation filed suit against Continental and Fidelity, alleging fraud and other causes of action. Special Term rejected the defendants’ motion to dismiss. The Appellate Division affirmed but granted leave to appeal to the New York Court of Appeals on a certified question.

    Issue(s)

    Whether a civil action for damages can be maintained based on alleged subornation of perjury in a prior civil proceeding, where the perjury is part of a larger fraudulent scheme designed to defeat claims beyond those litigated in the initial proceeding.

    Holding

    Yes, because a cause of action for fraud and deceit will lie, even though perjury is present, where the perjury is merely a means to the accomplishment of a larger fraudulent scheme. The rule against civil actions for subornation of perjury does not apply when the perjury is part of a broader scheme extending beyond the issues of the original lawsuit.

    Court’s Reasoning

    The Court of Appeals acknowledged the general rule that civil actions for damages arising from subornation of perjury in a prior civil proceeding are barred, based on the policy of preventing endless litigation and re-trials of cases. However, the court recognized an exception to this rule: “A cause of action for fraud and deceit will lie, even though perjury is present, where the perjury is merely a means to the accomplishment of a larger fraudulent scheme.” The court cited Verplanck v. Van Buren, 76 N.Y. 247, in support of this exception. The court reasoned that the plaintiffs had alleged a fraud that extended beyond the scope of the trustee’s lawsuit involving only the Haupt bonds. The alleged fraud was intended to defeat recovery under the excess coverage as well. The court distinguished this case from those where recovery was precluded because the plaintiffs had no effective remedy in the prior action. According to the court, “Plaintiffs have alleged that the fraud committed in the bankruptcy proceedings is extrinsic and part of a larger scheme which goes beyond the scope of the trustee’s law suit, which involved only the Haupt bonds… Rather, they accept the fact of settlement but seek damages because Fidelity’s fraud was intended to extend beyond those bonds, so as to defeat or make more difficult any recovery under the excess coverage as well.” The court emphasized that the plaintiffs were not seeking to re-litigate the Haupt bonds issue but rather sought damages for the broader fraud impacting their excess coverage. The court further held that the plaintiffs could potentially sue as third-party beneficiaries of the Haupt bonds, despite not being named insureds, if the circumstances evidenced a clear intent to protect them, citing McClare v. Massachusetts Bonding & Ins. Co., 266 N.Y. 371. Therefore, the court found that the plaintiffs had pleaded legally sufficient causes of action.