Madelaine Chocolate’s $49M Hurricane Sandy insurance case could go to trial
Federal judge found ambiguity in policy N.Y. chocolate company had with Great Northern Insurance Co.
A federal judge has decided Madelaine Chocolate Co.’s $49 million case against Great Northern Insurance Co. should go to trial after he wasn't able to rule in favor of the chocolatier nor the insurance company.
In a July 19 order, U.S. District Court Judge Raymond J. Dearie said ambiguity exists in the policy Madelaine had with Great Northern, noting a clause excluding flood coverage conflicts with a windstorm endorsement. Dearie also said evidence presented from outside the agreement is not enough to resolve the ambiguity in favor of one side or the other.
No further pre-trial conferences or hearing dates have been scheduled, according to online court records.
The ruling comes after a federal appeals court reopened the case last year. The Eastern District Court of New York originally sided in 2017 with Great Northern, which contended the flood exclusion kept it from covering all $53 million in damages, lost income and operational expenses resulting from storm surges brought on by Hurricane Sandy in October 2012.
Great Northern paid Madelaine $3.9 million for damage to roofs, rooftop HVAC units, inventory, data processing equipment and associated business income losses. Madelaine Chocolate argues Great Northern is liable to cover claims for the remaining damage and income loss.
Rejecting past cases the District Court cited in previous proceedings, the appeals court ruled more review of the flood exclusion and the windstorm endorsement was needed.
Madelaine Chocolate, based in Rockaway Beach, Long Island, N.Y., is located three blocks north of the Atlantic Ocean and one block south of Jamaica Bay on Long Island’s west side. Strong winds pushed water from both sources into Madeline’s three facilities, rising four feet above slab.
The storm left most of Madelaine’s chocolate moulding lines inoperable, damaged packaging equipment and ruined thousands of pounds of chocolate. The company also was unable to rehire many of its employees. However, in 2015 New York City granted Madelaine $13.2 million in recovery aid, helping Madelaine stay and rebuild in the city.
“It’s not just about rebuilding or buying machines, but it’s about regaining our customer base, regaining our market share that we had before,” Jorge Farber, Madelaine president and ceo, told Candy Industry in 2015. “When Sandy hit, we were unable to get our products to our customers; they couldn’t replace those items that late in the game, so they also suffered significant losses.
“We did, however, promise that we would be back next season and that we would be able to supply them with most of their needs. It was with great difficulty that we were able to do so, but that solidified the idea that we really were back and provided us with additional credibility.”
Crain’s New York reported in October 2018 that eight of Madelaine’s 14 lines were again in operation.