NYU Loses Lawsuit to Insurer Over Flood Damage Caused By Hurricane Sandy

Hurricane Sandy caused damage to NYU School of Medicine and NYU Langone. After years of litigation, NYU plans to appeal a lawsuit requesting more money from the insurer for the damages.

The aftermath of Hurricane Sandy was devastating for many. (via flickr.com)

NYU plans to appeal a recent lawsuit between the university and its insurer, FM Global, regarding payments for the damages caused by Hurricane Sandy. The Southern District Court of New York ruled in favor of FM Global on March 19.

“We are disappointment [sic] in the outcome and will appeal the decision,” Senior Director of Institutional Communications at NYU Langone Medical Center Lisa Greiner said.

NYU alleged that the language of the policy it had with FM Global was vague and that the university was entitled to more compensation for the hurricane’s damages. Judge Naomi Reice Buchwald ruled in favor of FM Global, stating the policy was clear and the insurance company paid the correct amount.

“For reasons set forth below,” the court summary read, “FM’s motion is granted in all material respects, while NYU’s motion is denied in its entirety.”

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The lawsuit dates back to Oct. 29, 2015, when NYU filed a legal complaint regarding the 2012 flooding damages caused by Hurricane Sandy. Langone experienced major flooding, power outages and lost its main communications and emergency systems due to the storm. The Federal Emergency Management Agency granted Langone $1.1 billion in federal aid after the hurricane struck New York City. In the complaints, NYU argued that FM Global was withholding proper payments for flood damage around the NYU School of Medicine and NYU Langone.

According to the court briefings, NYU has an extensive insurance policy with FM Global that includes an overall coverage limit of $1.85 billion. In it, there is a flood sublimit policy covering the “superblock,” an area that consists of land between First Avenue, 34th Street, FDR Drive and 30th Street. According to FM Global, the medical school and hospital are located within the superblock, and according to this policy, the university would be entitled to up to $40 million in compensation.

NYU argued that surrounding facilities were outside the “superblock,” and so not included in the sublimit policy. The university asserted that the facilities were covered by the overall insurance policy, so NYU should have been entitled to more than the $40 million compensation that flood sublimit policy offered.

NYU also argued that they were entitled to more money because of faulty workmanship by contractors that resulted in further damages, which would entitle them to compensation outside of the flood sublimit policy.

FM Global claimed that all the buildings in the superblock were part of the flood sublimit and that the insurance company was not required to pay more.

“All of the claims NYU sought to add were untimely and meritless, rendering [the] amendment futile,” the court Memorandum and Order said.

A motion for summary is made by a defendant when they feel the plaintiff has raised no legitimate point and asks the judge to rule in favor of the defendant before the trial, rather than going to court. FM Global’s motion for summary was granted by the judge after a year of litigation. NYU still plans to appeal.

FM Global did not provide comment by the time of publication.

Email Lachlan Hyatt at [email protected]

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