Hunton recently won a significant appellate victory for clients Hofstra University and St. John’s University in an insurance coverage dispute arising from Covid-19-related putative class actions. After the pandemic forced campus closures and a switch to remote instruction, students sued Hofstra and St. John’s, claiming they failed to deliver the contracted educational experience and seeking reimbursement of tuition and fees and other relief and damages.
The Universities sought coverage from their insurer, United Educators (UE), for defense costs and potential liability. UE denied coverage based on a policy exclusion for claims seeking the “return of funds,” which they contended included tuition refunds. When mediation failed, Hunton filed suit against UE in New York Supreme Court. UE moved to dismiss, arguing the “funds” exclusion barred coverage. The court agreed that “funds” includes tuition, but held that UE must still defend the Universities because the suits sought additional damages. UE appealed.
On appeal, Hunton argued that an insurer must defend the entire lawsuit whenever any part of the claimed relief may be covered. The New York Appellate Division, First Department, agreed, stating that UE’s duty to defend was triggered because the underlying suits sought damages beyond tuition, and ordered UE to pay the Universities’ defense costs. Because the underlying lawsuits were dismissed without either University incurring liability, the decision was a complete victory.
This is the first US appellate ruling to address insurance coverage for pandemic-related student lawsuits, and has broad implications for other colleges and universities facing similar suits and coverage denials. It has already led to additional work for Hunton, including on behalf of Boston University. The Hunton team was led by partners Mike Levine and Latosha Ellis, and associate Joseph Niczky, with assistance from partner Mike Perry and counsel Nick Stellakis.
Congratulations to all involved in this outstanding result for our clients!
