New York’s Appellate Division, First Department has modified a July 29, 2024 order in interpleader litigation arising from Greenway Mews Realty, L.L.C. v Liberty Insurance Underwriters, Inc., 2025 NY Slip Op 06810. In its December 9, 2025 decision, the court held that Seneca Insurance Company’s motion to dismiss Federal Insurance Company’s unjust enrichment cause of action should have been denied, while upholding dismissal of Federal’s constructive trust claim.
The dispute centers on settlement funds and competing positions among insurers. Seneca argued that Federal had waived its subrogation rights by not joining Seneca in an earlier lawsuit seeking to recover settlement money. The First Department pointed out that Seneca’s waiver arguments had already been raised and addressed in multiple prior actions in the same litigation, and that, consistent with its earlier decisions, Seneca once again failed to establish as a matter of law that Federal had waived its subrogation rights by not including Seneca in that prior suit.
Because waiver was not established, the court concluded that the unjust enrichment claim should not have been dismissed. The decision notes that Federal alleges it funded the bulk of the settlement and that Seneca did not show it would not be “against equity and good conscience” to allow Seneca to retain what Federal now seeks to recover. The documentary evidence Seneca relied on did not demonstrate that Federal had explicitly waived or assigned its subrogation rights, and it did not conclusively refute Federal’s assertion that it was unaware, until several years later, that Seneca was attempting to recover the money Federal had paid toward the settlement.
On the constructive trust claim, however, the First Department agreed with the lower court that dismissal was appropriate. The court found there was no confidential or fiduciary relationship between Federal and Seneca, which is required to support a constructive trust under New York law. Without such a relationship, that claim could not stand.
For insurance professionals, the decision highlights that an insurer like Seneca faces a significant hurdle when trying to defeat a recovery claim at the motion stage on waiver grounds alone, especially where another insurer, such as Federal, alleges it funded most of a settlement. Clear, explicit documentation of waiver or assignment is crucial if an insurer wants to rely on waiver to shut down a subrogation-based claim early. The case also reinforces that unjust enrichment remains a viable avenue for insurers seeking to recoup funds in complex, multi-carrier settlements when equity is in question, while constructive trust is unlikely to succeed between insurers absent a special, fiduciary-type relationship.
