Panasia Estates, Inc., Respondent v. Hudson Insurance Company, Appellant

Summary

The New York Court of Appeals affirmed the Appellate Division’s order rejecting Hudson Insurance’s claim for summary judgment. The Court held that consequential damages are recoverable for a breach of the covenant of good faith and fair dealing in an insurance contract when such damages were within the parties’ contemplation at the time of contracting, and that the contractual exclusion for "consequential loss" does not bar recovery of consequential damages. The Court noted that the record was insufficiently developed to determine foreseeability and remanded the issue to the Supreme Court. Judge Smith dissented, arguing that the majority’s view on consequential damages was erroneous.