The following day, on July 1, 2011, Cammeby's insurance consultant, Stephen Gerber, emailed Alliant to inquire into increasing the flood sublimit to $30 million. Alliant solicited a quote from Affiliated FM, Cammeby's accepted it, and Affiliated FM issued a new policy reflecting the $30 million sublimit.

The increase in the flood sublimit came with an increase in premiums, and some managers of the properties balked. Therefore, on July 26, 2011, Mr. Gerber emailed Alliant about decreasing the flood sublimit back to $10 million.

Alliant responded to Mr. Gerber that the flood sublimit could be reduced, but the parties did not memorialize in writing that the flood sublimit would be reduced.

Cammeby's later argued that this was because there was no agreement and that no authorized person at Cammeby's had ever accepted the offer to reduce the sublimit.

Alliant, on the other hand, contended that Cammeby's vice president, Eli Schron, had verbally accepted the offer at a meeting with Alliant on July 27, 2011. In the alternative, Alliant argued that Cammeby's had ratified the agreement when Cammeby's received a premium reduction and a pro rata refund of $121,815 for premiums already paid.

The Industry City properties flooded in 2012 during Superstorm Sandy, resulting in more than $30 million in damages.

Cammeby's sued Alliant in the U.S. District Court for the Southern District of New York. The district court held two trials. The first lasted eight days, and resulted in a verdict in favor of Cammeby's. The jury found that: (1) the flood sublimit had been reduced to $10 million; and (2) Alliant had acted negligently when it had reduced the flood sublimit.

The district court granted Alliant's motion for a new trial and held a retrial on the issue of ratification. After a seven-day trial, the jury once again returned a verdict in Cammeby's favor, finding that Cammeby's had not ratified the flood sublimit reduction.

Following the second trial, Alliant moved for a judgment as a matter of law or, in the alternative, a new trial. The district court denied the motions, concluding that Alliant "still ha[d] not presented evidence that would justify overturning the jury's assessment of witness credibility and consideration of the weight of the evidence."

Alliant appealed to the Second Circuit, arguing among other things that the district court had erred in denying its motion for judgment as a matter of law on the ratification defense because the documentary evidence proved that Cammeby's had known about and had approved the reduction in the flood policy limit. In particular, Alliant argued that a handful of emails sent in the days immediately following the policy reduction on July 27, 2011 established that Mr. Schron had known and had approved of the reduction. Alliant staked its case, in particular, on two emails sent on August 5, 2011. In the first, Mr. Schron stated that, "We have 10mm of flood coverage." In the second, Mr. Schron's assistant informed Mr. Schron that she was told Cammeby's had "$10MM flood coverage, $500,000 deductible."

The Second Circuit's Decision

The circuit court affirmed.

In its decision, the circuit court explained that under applicable New York law, ratification required full knowledge of the material facts relating to the transaction, and the assent had to be clearly established and could not be inferred "from doubtful or equivocal acts or language." Acquiescence or silence, the circuit court added, could give rise to an inference of ratification.

The Second Circuit then conceded that the two emails relied on by Alliant tended to support its argument that in August 2011 Cammeby's had known and approved of the late-July 2011 flood sublimit reduction. The circuit court added, however, that these emails were not the only evidence presented to the jury. During the seven-day trial, the jury heard seven witnesses testify and considered dozens of exhibits, including an email that Alliant sent to Cammeby's after Superstorm Sandy informing Cammeby's that the flood sublimit was $30 million. Moreover, the circuit court continued, Cammeby's also presented an endorsement amending the Affiliated FM policy that indicated that the flood sublimit was $30 million. Based on these exhibits alone, the circuit court ruled, a reasonable jury could conclude that Cammeby's had not ratified the reduction because Cammeby's thought the policy had a $30 million sublimit.

The Second Circuit also ruled that that conclusion had been corroborated by the testimony of Cammeby's witnesses. For example, Cammeby's insurance consultant, Mr. Gerber, testified that he had never approved the reduction and that he thought that the flood sublimit remained $30 million because the copy of the policy that he received in the mail on August 2, 2011 indicated that the flood sublimit was $30 million. Mr. Schron further testified that he believed Cammeby's had $30 million in flood coverage. And Mr. Schron's assistant testified that Mr. Schron at times failed to read and respond to emails, which supported Cammeby's argument that Mr. Schron had not followed the email traffic concerning the possible reduction.

The circuit court declined Alliant's request to disregard this testimony as self-serving and implausible. It reasoned that where there were conflicts in testimony, it had to defer to the jury's resolution of the weight of the evidence and the credibility of the witnesses. Only in "exceptional circumstances," such as where testimony was "patently incredible" or defied "physical realities," could it "intrude upon the jury function of credibility assessment."

Simply put, the circuit court decided, there was "nothing incredible about the testimony of Cammeby's witnesses – testimony corroborated by documentary evidence – that would justify displacing the jury's credibility determinations."

The Second Circuit also rejected Alliant's contention that Cammeby's had ratified the policy reduction when it had accepted the reduced premiums, explaining that ratification required knowledge and a reasonable jury could find that Cammeby's did not have the requisite knowledge of the reduction.

Accordingly, the circuit court affirmed the district court's denial of Alliant's motion for judgment as a matter of law on its ratification defense, concluding that a reasonable juror could find that Cammeby's had lacked either the knowledge or intent necessary to ratify the policy limit reduction.

The case is Cammeby's Management Co., LLC v. Alliant Ins. Services, Inc., No. 17-88-cv (2d Cir. Dec. 19, 2017). Attorneys involved include: FOR PLAINTIFFS-APPELLEES: DENNIS T. D'ANTONIO (Joshua L. Mallin, on the brief), Weg & Myers, P.C., New York, NY. FOR DEFENDANT-APPELLANT: RICHARD A. SIMPSON (Kimberly A. Ashmore, Bonnie T. Wise, Wiley Rein LLP, Washington, DC, Paul Kovner, Rubin Fiorella & Friedman LLP, New York, NY, on the brief), Wiley Rein LLP, Washington, DC.