01.29.2020

SACS Appellate Group Scores Major Appeal Victory Limiting $93MM Subrogation Loss Claim to $4MM

This appeal arose out of a 2011 explosion at a major power generating station in Queens owned by Astoria Generating Company that caused $93 million in property loss and consequential damages. The insurers that paid the loss brought subrogation claims against our client, Riley Power, Inc., a contractor that had performed work (and been responsible for another subcontractor's work) in the area of the explosion, which the subrogated insurers claimed had contributed to the explosion. Notwithstanding its liability defenses, Riley's contract with Astoria contained a limitation of liability clause that capped Riley's overall potential liability for any claims to a maximum of approximately $4 million. Our group sought to minimize the litigation costs to our client from anticipated years and years of intensive documentary discovery attendant to a $93 million damages claim by filing a motion at the outset of discovery to limit damages pursuant to the clause. While a full-scale discussion of the lower court's rationale for denying the motion is untenable in this short space allotted, the court basically punted the issue down the road to summary judgment following discovery. The Second Department today disagreed, and unanimously reversed, holding that the clause was enforceable and that the damages would be limited pursuant to the contract.

See Astoria Generating Company, LP, v. Riley Power, Inc., __ A.D.3d __ (2nd Dep't, Jan. 29, 2020).

The appeal was briefed by Tim Capowski, Jonathan Shaub, Jack Watkins, Chris Theobalt and Sofya Uvaydov, and especially well-argued before the Second Department by Jonathan. Special thanks to our friends and defense counsel at Lewis Brisbois for their invaluable assistance on the motion and appeal. Another great team effort leading to a well-deserved win!

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