In a June 7, 2011 decision by Justice Fried, the Court granted in part and denied in part cross-motions for summary judgment. Defendant Lexington issued two consecutive excess healthcare professional liability insurance policies with plaintiff as the first named insured. The Court concluded that plaintiff and Lexington entered into two contracts, i.e., the 2004 and 2005 policies, and that plaintiff paid the standard premiums for each contract. The Court also found that there was no question that a Letter of Credit was issued after the first retrospective rating adjustment.   As a result of the 2008 retrospective rating adjustment, defendants claimed additional premium was due. Plaintiff sued, claiming breaches of contract and fiduciary duty by the insurer. In addition, plaintiff sought injunctive relief barring draw downs from the Letter of Credit.

Both plaintiff and Lexington contend that the other party breached the contracts. Lexington and AIG by making retrospective rating adjustments outside of what was agreed upon between the parties and memorialized in the contract; and plaintiff by failing to pay the additional premium that Lexington determined and thereafter billed to plaintiff.

The Court dismissed the breach of fiduciary duty claim, since plaintiff failed to establish the existence of a fiduciary relationship between it and AIG or Lexington. As to the breach of contract claims, the Court concluded, after analyzing the parties’ agreement, that it could not determine, as a matter of law, the intentions of the parties concerning undefined terms in the Retrospective Rating Endorsement, thus denied the motions for summary judgment on those claims.

Plaintiff also moved for leave to amend the complaint to add fraud claims against both defendants and tortuous interference claim against AIG. The Court rejected the defendants’ argument that plaintiff’s delay in seeking leave should preclude amendment, since there appears to have been no prejudice to defendants. However, after analyzing the proposed amendments, the Court allowed plaintiff leave to amend only to add one cause of action for fraud against AIG.

Finally, the Court considered defendants’ motion, pursuant to CPLR 3126, to strike portions of plaintiff’s summary judgment submission on the ground that plaintiff was relying on actuarial reports not produced during discovery. The Court held there was no proffered evidence that plaintiff failed to disclose the requested documents and therefore denied the motion to strike.

Lenox Hill Hosp. v. Amer. Int’l Group, Inc., Sup Ct, New York County, June 7, 2011, Fried, J, Index No. 602635/08.