New York Court Sides with Restaurant in Insurance Dispute
A New York appeals court has ruled in favor of Catskill Barbeque, LLC, allowing the restaurant to continue pursuing a claim for more than $2 million in lost business income against Mid-Hudson Co-Operative Insurance Company. The decision, handed down by the Appellate Division, Third Department on April 24, 2025, keeps the breach of contract case alive after a lower court previously rejected the insurer’s attempt to have it dismissed.
The case stems from a fire that damaged Catskill Barbeque’s property in the Town of Fallsburg, Sullivan County. After the blaze, the business filed a claim with Mid-Hudson, its insurance carrier, seeking indemnification for its losses. Mid-Hudson responded with a payment of $175,000, arguing that this amount represented the maximum allowed under the policy.
Disagreeing with the insurer’s assessment, Catskill Barbeque sued for breach of contract. Mid-Hudson moved to dismiss the lawsuit, claiming the insurance policy’s wording clearly limited the payout. However, both the trial court and the appeals court saw things differently. The issue centered on how the insurance policy was written. The main declarations page didn’t mention business income coverage at all. A supplemental declarations page noted that coverage would last for 12 months of actual income loss but didn’t mention any dollar limit. Only on the 73rd page of the policy did Mid-Hudson include language attempting to limit business income coverage to three months and cap it at $175,000.
The appellate judges found this arrangement troubling, stating that if Mid-Hudson intended to impose such a limit, it should have been stated plainly in the declarations pages where customers expect to find key coverage terms. Instead, the limits were “buried” much later in the policy, creating ambiguity. When insurance policies are ambiguous, the law tends to favor the policyholder. Given the inconsistencies, the court affirmed that the lawsuit could go forward, rejecting Mid-Hudson’s argument that the policy language shut down the claim.
This case serves as a reminder that when it comes to insurance contracts, clarity isn’t just good customer service – it’s a legal necessity. For insurers, making important limitations easy to find is critical. And for policyholders, it shows why it pays to read beyond the declarations page – and why courts may be willing to step in when coverage terms aren’t clearly spelled out.
