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Dismissal of golf range’s breach of contract suit against insurer upheld


A federal appeals court has upheld dismissal of breach of contract litigation filed by a golf driving range that suffered property damage two months after its policy was canceled by its insurer.

Elma, New York-based Cybercreek Entertainment Inc., which operates an indoor and outdoor golf range and restaurant, had a commercial general liability policy with U.S. Underwriters Insurance Co., a unit of Wayne, Pennsylvania-based United States Liability Insurance Co., that provided building damage coverage of up to $900,000 and business damage coverage of up to $150,000, according to court papers in Cybercreek Entertainment L.L.C. v. U.S. Underwriters Insurance Co.

U.S. Underwriters canceled the policy by providing written notice on Aug. 27, 2014 that was effective Sept. 30, 2014. On Nov. 20,2014, snow and ice damaged the building, causing damages totaling $800,000.

Cybercreek filed suit against Underwriters in U.S. District Court in Rochester, New York, charging breach of contract in connection with the cancelation, and seeking actual and punitive damages. The court dismissed the case.

The District Court’s December 2016 ruling said: “Plaintiff has not specifically pointed to any part of the insurance policy contract allegedly breached by defendant … Plaintiff asserts only that Defendant was ‘unjustified’ in requesting non-mandatory improvements to the building,” and that those actions were a breach of contract.

“However, by Plaintiff’s own admission, the policy was canceled with sufficient notice according to the policy’s cancellation clause.”

A three-judge panel of the 2nd U.S. Circuit Court of Appeals in New York upheld the lower court’s ruling on appeal in its ruling Thursday.

“Cybercreek first argues that the District Court relied on facts outside the complaint when it noted in its opinion that Underwriters was an excess-line broker and, on that basis, concluded that Underwriters was not subject to New York Insurance Law,” said the brief opinion.

“But the District Court’s dismissal was not based on Underwriters’ status in relation to New York Insurance Law” and the reference is not a basis for reversal, said the appeals court, in affirming the lower court’s ruling.