Retroactive Application of New York's Proposed Anti-Concurrent Causation Bill Faces Uphill Battle

by Zelle LLP
Contact

If the recently proposed anti-concurrent causation bill in New York (Assembly No. A07455/ Senate No. S05581) is enacted, it is unclear what arguments will be made regarding its application. However, any arguments that the proposed anti-concurrent causation law can be retroactively applied to insurance policies in effect prior to the law’s enactment, including those which might respond to insurance claims arising from Sandy, appear to face an uphill battle under New York law.

Under New York law, “[i]t is a fundamental canon of statutory construction that retroactive operation is not favored by courts and statutes will not be given such construction unless the language expressly or by necessary implication requires it.” Majewski v. Broadalbin-Perth Cent. Sch. Dist., 696 N.E.2d 978, 980 (N.Y. 1998). An exception to this rule is that “remedial” legislation or statutes governing procedural matters should be applied retroactively. Id. However, classifying a statute as “remedial” does not automatically overcome the strong presumption of prospectivity since the term may broadly encompass any attempt to “supply some defect or abridge some superfluity in the former law.” Id.  

Here, as reflected in the language of the proposed bill itself and the legislative intent behind the bill, the proposed anti-concurrent causation law appears to be forward looking in nature. Most notably, the bill clearly states that “[t]his act shall take effect immediately and shall apply to claims made on or after such effective date” (emphasis added). Thus, it would not apply to Sandy claims made before the legislation was enacted.

Further, the legislative “justification” for the proposed bill does not contain an express statement that the bill is to be retroactively applied to insurance policies already in place or to Sandy claims. Rather, the “justification” merely provides that “[i]n the aftermath of Superstorm Sandy, many homeowners were surprised when insurance companies denied their claims for perils that should have been covered under the policy (such as windstorm damage) because the perils occurred at the same time as a flood, which is excluded under most homeowners policies. As a result, these homeowners found themselves without adequate insurance coverage at a time when they needed it the most.” This “justification” concludes that “[t]his bill would rectify this by prohibiting insurance companies from denying claims under these circumstances.”

In addition, certain comments made at a February 26, 2013 public hearing held by the New York State Assembly Standing Committee on Insurance regarding insurance coverage issues arising from Sandy points to the future application of anti-concurrent causation legislation. At the outset of this hearing, New York Assemblyman Kevin Cahill noted that the purpose of the hearing was “to deal with future disasters.” During a discussion of the application of anti-concurrent causation clauses to Sandy claims, Benjamin Lawsky, the superintendent of New York’s Department of Financial Services, testified that “[i]f they get litigated, it’s a little unclear how things will shake out in New York, but it is, I think, for the future, something worth exploring about what we can do preemptively so at the very least people know what they’re signing up for when they have such clauses or possibly taking other action” (emphasis added). In responding to whether the Department of Financial Services could “by regulation, eliminate [the anti-concurrent causation clause] from future policies,” Mr. Lawsky stated that “[m]y guess is we probably could, but let me check and be sure” (emphasis added).

However, the analysis set forth above does not necessarily address the situation of a claim being made for a Superstorm Sandy loss after the statute is passed under a policy which was in force and effect prior to the statute’s effective date.  In these circumstances, a policyholder might argue that the statute should apply to the claim “made on or after such effective date.”  (One can also imagine policyholders withdrawing existing claims, submitting new claims and seeking the benefit of the statute.)  In such a situation, the question becomes whether the statute can be applied retroactively to alter pre-existing contract rights.

New York’s highest court, the Court of Appeals, has held that newly enacted statutes or amendments to statutes “are, generally, not to be applied retroactively to policies already in force on the effective date of the statutory amendment.” Char-Mo Investors, Inc. v. Mkt. Ins. Co., 377 N.E.2d 478, 479 (N.Y. 1978) (amendment to standard fire policy suit limitation period). In addition, the Court of Appeals refused to retroactively apply certain amendments to labor law statutes because “[t]o reach a contrary result … would serve to impose new conditions upon and impair the obligations of a contract already existing, under which the parties had fully entered into the performance of their work...” Deutsch v. Catherwood, 294 N.E.2d 193, 195 (N.Y. 1973).   Some New York courts have even gone so far to hold that “[e]ven express indication that retrospective application is intended cannot effectuate such application if the result be to impair the obligation of contracts.” Phillips v. Agway, Inc., 389 N.Y.S.2d 977, 979 (Sup. Ct. 1976). The concern regarding the retroactive application of a statute which modifies existing contract rights arises directly from the United States Constitution, which provides that “No State shall . . . pass any . . . Law impairing the Obligation of Contracts . . .”  Article I, §10. 

Since this proposed bill is in the early stages of the legislative process, the final language of the bill and any floor testimony or debate on the proposed bill may impact this analysis. We will continue to report on any future developments.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Zelle LLP | Attorney Advertising

Written by:

Zelle  LLP
Contact
more
less

Zelle LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!