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Delaware court stops insurers from reclaiming $50 million Sandy payout
The ruling said the insurers reserved their rights but the policies did not spell out any right to recoup, so Turner kept the $50 million settlement.
A Delaware court has ruled that Lexington Insurance Company and National Union Fire Insurance Company of Pittsburgh cannot reclaim $50 million they paid to settle a Hurricane Sandy coverage dispute.
The insurers each contributed $25 million to resolve litigation between New York University and Turner Construction tied to flooding at NYU's Langone Medical Center campus. In earlier filings, NYU accused the builder of failing to properly cover a large opening around a ventilation shaft as Superstorm Sandy approached in October 2012, and its demand ultimately rose to allegations of damages topping $2.2 billion.
The insurers made the settlement payment under reservation of rights after a January 2022 mediation in which NYU sought full tower limits of roughly $516 million. But the court, applying New York law, said recoupment would require the policies to explicitly provide that right or the insured to agree, and it found the policies were silent while Turner did not consent.
The court granted summary judgment for Turner and dismissed the insurers' recoupment and unjust-enrichment counterclaims, while also rejecting Turner's breach-of-contract claim. It did allow Turner's bad-faith allegation, claiming the insurers allegedly stalled payment despite knowing they owed it, to move into further discovery.