What happened: An HVAC contractor's insurer paid $850,000 for a settlement that was never finalized, and the recipients refused to return it.
Who's involved: 5 Beekman Property Owner, Broadway Construction Group, and HVAC contractor Henick-Lane, Inc.
What's at stake: $850,000 plus prejudgment interest.
Why it matters: The ruling clarifies when the voluntary payment doctrine shields payment recipients - and when a mistake by the insurer overrides it.
Where it stands: Unanimously affirmed by New York's Appellate Division, First Department, on October 6, 2026.
An insurer paid $850,000 to settle an HVAC dispute that was still being negotiated - and the recipients refused to give the money back.
New York's Appellate Division, First Department, has unanimously affirmed an order forcing the plaintiffs to return the payment, plus interest, and upheld a contempt finding when they dug in.
The dispute started with an allegedly defective HVAC system installed by Henick-Lane, Inc. at a property owned by 5 Beekman Property Owner, LLC. The property owner sued over leaks and damage. During settlement talks, one of Henick-Lane's insurers apparently believed a deal had been struck and paid $850,000 to Broadway Construction Group, LLC, another plaintiff entity.
No deal had been reached.
Supreme Court, New York County, ordered the plaintiffs to return the $850,000, with interest. They did not. The court held them in civil contempt.
The plaintiffs argued the voluntary payment doctrine - which bars recovery of payments made willingly and with full knowledge of the facts - meant the money was theirs. The court was not persuaded. The insurer had written "Settlement Payment for" Henick-Lane on the check. But there was no settlement. A payment made on a mistake does not qualify as voluntary.
The plaintiffs also questioned Henick-Lane's standing to chase the money. The insurer wrote the check, not the contractor. The Appellate Division found Henick-Lane had a direct interest: the $850,000 came from its own policy proceeds, paid on its behalf.
The contempt finding held up too. The plaintiffs argued contempt cannot be used to enforce a money judgment, but the court noted no judgment existed when the contempt order was issued - only an order to return the funds. Broadway Construction Group was not named in that order, the plaintiffs added. The court pointed to an affidavit from the plaintiffs' own corporate representative, who stated both entities jointly received and deposited the check.
When an insurer's settlement payment lands before the ink is dry on a deal - or before any deal exists at all - this decision confirms the money can be clawed back, even over a voluntary-payment defense.
The decision was entered October 6, 2026. It is marked as uncorrected and subject to revision before publication in the Official Reports.
