Editors’ Note: This article has been updated to reflect a Correction.
Since my last article in the New York Law Journal on Dec. 31, 2013, “What’s So Special About ‘K2′?” the New York Court of Appeals on Jan. 7, 2014, reheard American Guarantee’s appeal in K2 Investment Group v. American Guarantee & Liability Insurance, 21 N.Y.3d 384, 993 N.E.2d 1249, 2013 NY Slip Op 04270 (June 11, 2013) (K2-I). In vacating its decision (See, K2-II, 22 N.Y.3d 578, __ N.E.3d __, 2014 NY Slip Op 01102 (Feb. 18, 2014)), amidst the welter of confusion it generated, the court confirms it never intended to overrule its established precedent which allows a liability insurer to disclaim the duty to indemnify where the defense of non-coverage remains intact, notwithstanding such insurer’s improper refusal to defend.1 The court further reaffirmed that this rule abides unless the grounds for such insurer’s disclaimer would defeat the covered factual and/or legal basis supporting a liability or damages determination already adjudicated against its insured.2
