A New York appeals court has ruled in favor of Catskill Barbeque, LLC in its ongoing dispute with Mid-Hudson Co-Operative Insurance Company, allowing the restaurant to continue pursuing its claim for more than $2 million in lost business income. The decision, handed down by the Appellate Division, Third Department on April 24, 2025, keeps the breach of contract case alive after a lower court previously rejected the insurer’s attempt to have it dismissed.
The case stems from a fire that damaged Catskill Barbeque’s property in the Town of Fallsburg, Sullivan County. After the blaze, the business filed a claim with Mid-Hudson, its insurance carrier, seeking indemnification for its losses. Mid-Hudson responded with a payment of $175,000, arguing that this amount represented the maximum allowed under the policy. Disagreeing, Catskill Barbeque sued for breach of contract.
Mid-Hudson moved to dismiss the lawsuit, claiming the insurance policy’s wording clearly limited the payout. But both the trial court and the appeals court saw things differently.
The issue boiled down to how the insurance policy was written. The main declarations page - the summary document where coverage limits are typically made clear - didn’t mention business income coverage at all. A supplemental declarations page did note that coverage would last for 12 months of actual income loss, but didn’t mention any dollar limit. Only deep within the 73rd page of the policy did Mid-Hudson include language that tried to limit business income coverage to three months and cap it at $175,000.
The appellate judges found that arrangement troubling. If Mid-Hudson intended to impose such a limit, they said, it should have been stated plainly in the declarations pages where customers expect to find key coverage terms. Instead, the limits were "buried" much later in the policy, creating ambiguity. When insurance policies are ambiguous, the law tends to favor the policyholder.
Given the inconsistencies, the court affirmed that the lawsuit could go forward, rejecting Mid-Hudson’s argument that the policy language shut down the claim. The court also noted that Mid-Hudson did not pursue its earlier claim that the complaint failed to state a cause of action, effectively abandoning that point on appeal.
The case serves as a reminder that when it comes to insurance contracts, clarity isn’t just good customer service - it’s a legal necessity. For insurers, making important limitations easy to find is critical. And for policyholders, it shows why it pays to read beyond the declarations page - and why courts may be willing to step in when coverage terms aren't clearly spelled out.
