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The Rogak Report: 03 May 2005 ** Declaratory Judgment - Coverage **

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  • Lawrence Rogak
    PLAINTIFF HAS NO STANDING TO BRING DJ ACTION AGAINST DEFENDANT S INSURER UNTIL AFTER HE OBTAINS A JUDGMENT AGAINST DEFENDANT Murphy v. Federal Insurance Co.,
    Message 1 of 1 , May 3, 2005
      PLAINTIFF HAS NO STANDING TO BRING DJ ACTION AGAINST DEFENDANT'S
      INSURER UNTIL AFTER HE OBTAINS A JUDGMENT AGAINST DEFENDANT

      Murphy v. Federal Insurance Co., NYLJ 5/03/05 (USDC - SDNY 2005)
      (SWAIN, j)

      Plaintiffs brought this DJ action against Federal Insurance Company,
      The Chubb Corporation and Guilford Mills, Inc. seeking a declaratory
      judgment that the claims which plaintiff brought against Guilford in
      an underlying lawsuit are covered by a policy which Federal issued to
      Guilford.

      In the underlying action, Plaintiffs claimed that as a result of
      misinformation provided to Plaintiff Kevin Murphy through Guilford's
      negligence, Murphy delayed seeking treatment for prostate cancer, and
      as a result, has suffered injuries. Plaintiffs alleged that Defendant
      Federal issued an insurance policy that covers Defendant Guilford's
      negligent conduct.

      "The key question presented," stated the Court, "is whether
      Plaintiffs have standing under New York State Insurance Law §3420 to
      seek a declaratory judgment against an insurer prior to obtaining a
      judgment against the alleged insured."

      "The New York Court of Appeals resolved this issue in Lang v. Hanover
      Ins. Co., 820 N.E.2d 855. The court there held that a plaintiff suing
      an insured lacks standing under Section 3420 to seek a declaratory
      judgment under CPLR §3001, the New York statute governing declaratory
      relief, against the defendant's insurer regarding coverage until the
      plaintiff has obtained a judgment in the underlying action against
      the defendant insured."

      "Plaintiff has no common-law right to seek relief directly from a
      tortfeasor's insurer, and the statutory right created in Insurance
      Law §3420 arises only after plaintiff has obtained a judgment in the
      underlying personal injury action."

      "Under Section 3420, as interpreted by the New York Court of Appeals,
      this Court concludes that Plaintiffs' claims are premature. Having
      failed to obtain a judgment in the underlying action, Plaintiffs lack
      standing to seek a declaratory judgment against Defendant Federal
      Insurance Company as to the insurance policy at issue."

      The Complaint was dismissed.

      Larry Rogak
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