Appellate Division Finds that Illinois Law Applies in Business’ Declaratory Action for Liability Insurance Coverage

Obtaining insurance coverage for legal liabilities can sometimes be a challenge.  A recent opinion from the New York State Supreme Court, Appellate Division, First Department, is illustrative of a fight that a business had with its insurance company to obtain coverage for entities they purchase or merge with. The case involved issues of insurance law, business law, civil procedure and conflicts-of-law.

The case, International Flavors & Fragrances, Inc. v. National Union Fire Insurance Company of Pittsburgh, PA et al, 2012 N.Y. App. Div. LEXIS 6050 (1st Dept September 11, 2012), involved the 1991 purchase of a company which makes artificial butter flavoring by another company, and a suit against the purchased company for damages sustained prior to the purchase. The trial court had found that New York law applied, and that New York law required the insurer for the company which was purchased to provide coverage for the purchasing company. On appeal, the Appellate Division reversed, stating that Illinois law applied, and that under Illinois law the insurer would not be required to provide coverage under Illinois’ restrictive de facto merger doctrine.

At Tesser, Ryan & Rochman, LLP, our attorneys have litigated issues relating to business mergers and dissolutions, insurance coverage, and the application of conflicting laws. We advise businesses, professionals and individuals concerning the availability and extent of liability insurance coverage.