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Coral Crystal LLC v. Federal Ins. Co.

Insurer's Proposed Defense States Only Abstract Legal Proposition, Is Denied

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OPINION AND ORDER This long-running case, pending here since February 2, 2017, arises from an even longer-running insurance dispute between plaintiffs Coral Crystal, LLC and Coral Realty, LLC (collectively Coral) and defendant Federal Insurance Company (Federal), which issued a policy (the Policy) insuring Coral against property damage to its building at 129 Third Avenue in Manhattan (the Building) and certain related losses. Now before the Court is Federal’s motion (Dkt. No. 74), filed on November 25, 2020, for leave amend its answer to add a conditional defense sounding in fraud. Relying on facts known to it since at least February 21, 2019, Federal alleges, in its proposed Twenty-Fourth Affirmative Defense, that “[i]f it is determined that Plaintiffs misrepresented and/or concealed…the feasibility of performing repairs from the exterior of the building, then the Policy may be void” pursuant to its “Concealment, Misrepresentation or Fraud” clause. Prop. Amend. Ans. (Dkt. No. 74-2) at 23-24 (emphasis added.) For the reasons that follow, Federal’s motion will be denied.1 I. BACKGROUND Eight years ago, on December 5, 2012, the north wall of the Building was damaged as a result of work being performed on a neighboring property. Verified Compl. (Dkt. No. 1-3)

11-12. Coral submitted a Proof of Loss in the amount of $7,225,708 (less a $10,000 deductible), based on an estimate of the repair costs, and sought additional sums for lost income and “extra expense.” Id.

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