Insurers Challenge Amtrak’s Wind Claims In Sandy Litigation – Read More Here

Insurers Say Amtrak Can’t Force Wind Claims Into Sandy Suit
Share us on: By Joe Van Acker

Law360, New York (June 30, 2015, 7:37 PM ET) — Excess insurers told a New York federal judge on Tuesday not to undo a recent decision dismissing them from Amtrak’s suit seeking compensation for rail damage caused by Superstorm Sandy, claiming that Amtrak has contradicted itself by trying to shoehorn wind-related claims into its suit.

Arch Specialty Insurance Co., Lexington Insurance Co., Steadfast Insurance Co. and others said Amtrak changed course after the court granted their motion for summary judgment by claiming that it’s seeking payment for damage caused by high winds and other factors when its corporate representatives previously testified that Amtrak was only pursuing coverage for flood losses.

“The clear record of undisputed facts that was before the court on summary judgment cannot be altered by Amtrak’s belated attempt to point to vague references in materials that were prepared long before the sworn testimony of Amtrak’s corporate representatives conceding that Amtrak was not pursuing any wind-only claim,” the insurers said.

Earlier this month, U.S. District Judge Jed S. Rakoff capped Amtrak’s potential recovery at $125 million, and dismissed the excess insurers on the grounds that their obligations therefore couldn’t be triggered by the suit.

Amtrak moved for reconsideration a day later, claiming that the insurers shouldn’t have been dismissed because even they had acknowledged that it’s seeking coverage for wind damage, including trees blown onto tracks, so the excess insurers will have to pay up once the $125 million limit is exhausted.

The insurers shot back Tuesday that, aside from contradicting its own representatives, Amtrak had waived its claim to any non-flood losses by failing to raise that argument during its opposition to the motion for summary judgment.

Only about 80 trees were blown onto tracks, requiring cleanup costs of less than $1 million, according to the insurers, who expressed puzzlement at why Amtrak seeks to keep them in the suit.

The insurers speculated that Amtrak will attempt to prove that any damage to any structure requires the replacement of the entire structure, and said there’s nothing in Amtrak’s policies or cases that it cited that would entitle it to the automatic replacement of buildings, furniture, machinery and other “structures.”

“Insurance is a contract of indemnity, not a lottery ticket,” the insurers said.

The dismissed insurers’ opposition to Amtrak’s motion for reconsideration came after Judge Rakoff agreed on Monday to allow Amtrak to pursue its breach of contract claims against the remaining defendants and said he’d allow a jury to determine the value of the physical damage to Amtrak’s property.

The judge also said that he’d rule on Amtrak’s motion for reconsideration by July 2, and said that if he grants the motion, the excess insurers will be pulled into the trial phase later that month.

Attorneys for the parties did not immediately respond to requests for comment late Wednesday.

Amtrak is represented by Rhonda D. Orin, Daniel J. Healy, Finley T. Harckham and Marshall Gilinsky of Anderson Kill PC.

The insurers are represented by Matthew M. Burke and Catherine A. Mondell of Ropes & Gray LLP, Costantino P. Suriano and Bruce R. Kaliner of Mound Cotton Wollan & Greengrass LLP, Arjang Victory and Timothy G. Church of Bruckmann & Victory LLP, and Christopher S. Finazzo of Finazzo Cossolini O’Leary Meola & Hager LLC.

The suit is National Railroad Passenger Corp. v. Arch Specialty Insurance Co. et al., case number 1:14-cv-07510, in the U.S. District Court for the Southern District of New York.

–Additional reporting by Jeff Sistrunk. Editing by Emily Kokoll.