United Specialty Ins. Co. v. LIC Contracting Inc.

MEMORANDUM & ORDER United Specialty Insurance Company sued its insured, LIC Contracting, Inc., and two of LIC’s officers, Seungho Kim and Jeewha Kim, seeking a declaratory judgment that it owes no duty to defend or to indemnify them for structural damage Defendants caused to a neighboring building during construction and excavation work. Defendants now seek leave to amend their Answer to add a counterclaim alleging that United Specialty breached the insurance contract by violating the duty of good faith and fair dealing. The defendants would seek consequential damages under New York state law, in an amount exceeding the policy limits, based on the insurer’s alleged breach. For the reasons stated on the record following oral argument, and as more fully explained below, that motion is denied. I. Background The facts set out here are taken from United Specialty’s Complaint and the plaintiffs’ complaint in the underlying state-court action. Compl., ECF No. 1; State Compl., ECF No. 6. In the fall of 2015, LIC began excavation and construction work at property on Northern Boulevard in Bayside, New York. Compl. 23; State Compl.

28-38. The Kims owned this property, together with others, and worked for LIC. Compl.