The action sought a declaration of coverage for the much publicized May 12, 2005 retaining wall collapse on the property of Castle Village Owners Corporation, located along the Henry Hudson Highway in Riverside, New York. Castle Village was ordered by New York City to reconstruct the wall. After spending more than $20,000,000 in repairs and exhausting its primary layer of insurance, Castle Village sought coverage from AISLIC, its excess insurer.
The court’s ruling was based on an exclusion in the AISLIC policy that excluded coverage for damage to Castle Village’s own property. Castle Village fought aggressively for the Court to adopt the reasoning of several pollution cases decided under New York law that extended coverage for repairs to an insured’s property (despite an “owned property” exclusion) if such repairs are for the purpose of protecting third party property damage. The court disagreed that such cases applied, and dismissed the case against AISLIC in its entirety. The court also made a further ruling that AISLIC’s coverage denial was not untimely, and accordingly, it did not waive its right to assert the owned property exclusion.