The Uvinos asked the jury to award them over $1.1 million in damages. It awarded them $317,840 in general damages and $83,788 in consequential damages. The Uvinos then filed an action against Harleysville, contending that the jury award was covered by the policy it had issued to JBI.

The parties moved for summary judgment.

The district court granted partial summary judgment in favor of the Uvinos on the issue “whether any of the claims submitted to the jury in the [underlying action] may fall under” the policy. The district court held that the policy was a commercial general liability insurance policy and that such policies did not cover a contractor's defective work. It also ruled that insofar as the Uvinos sought damages from JBI attributable to work that JBI performed ultra vires to the parties' contract, such damages arguably were covered under the policy.

Nonetheless, the district court subsequently granted summary judgment in favor of Harleysville because the Uvinos had “simply not presented . . . an intelligible method of separating those damages awarded to them by the jury that the Harleysville policy covers and those that it does not.”

The Uvinos appealed to the Second Circuit, arguing that Harleysville had failed to discharge its duty to advise JBI of its interest, as the insured, in using special interrogatories in the underlying action to allocate between covered and non-covered damages. Harleysvilles failure in this regard, the Uvinos argued, had shifted the burden to it to prove that none of the damages awarded in the underlying action were covered by the policy it had issued to JBI.

The Second Circuit's Decision

The circuit court affirmed.

In its decision, it pointed out that the Uvinos had cited no case applying New York law in which an insurer had incurred a burden to disprove coverage by virtue of its failure to advise its insured of the insured's interest in using special interrogatories to allocate between covered and non-covered damages.

The circuit court then ruled that the Uvinos had not met their burden on allocation in the district court and had offered the circuit court “no reason to think they could do so in a subsequent allocation trial.” It pointed out that the Uvinos sought over $1.1 million in damages but were awarded just $317,840 in general damages and $83,788 in consequential damages – amounts that did “not correspond with any of the figures that the Uvinos submitted into evidence.”

The Uvinos, the Second Circuit added, had not suggested an alternative method of allocating the verdict, and their theory of allocating damages rested on “pure speculation and conjecture.” Accordingly, it concluded that Harleysville was entitled to summary judgment because the Uvinos had failed to adduce evidence from which a reasonable factfinder could conclude which, if any, of the damages awarded by the jury were covered by the policy.

The case is Uvino v. Harleysville Worcester Ins. Co., No. 16-3225-cv(L), 16-3356-cv(XAP) (2d Cir. Sep. 19, 2017). Attorneys involved include: FOR PLAINTIFFS-APPELLANTS-CROSS-APPELLEES: WILLIAM F. DAHILL (Mara R. Lieber, on the brief), Wollmuth Maher & Deutsch LLP, New York, New York. FOR DEFENDANTS-THIRD-PARTY-PLAINTIFFS-APPELLEES-CROSS-APPELLANTS: LANCE J. KALIK (Margriet A. Schaberg, on the brief), Riker Danzig Scherer Hyland & Perretti LLP, Morristown, New Jersey.