(Article from Insurance Law Alert, May 2026)
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Holding
A New York federal court dismissed with prejudice a public adjuster’s challenge to an anti-public adjuster (“APA”) endorsement, holding that the insurers’ enforcement of the clause constituted a lawful exercise of contractual rights and did not support claims for tortious interference, restraint of trade, or prima facie tort. Barbato v. Interstate Fire & Cas. Co., 2026 U.S. Dist. LEXIS 108285 (S.D.N.Y. May 15, 2026).
Background
The insurers subscribed to a property policy covering a New York City apartment building that included an APA clause providing that the insured would “not hire, engage, retain, contract with, or otherwise utilize the services of a public adjuster.” After a fire loss, the insured retained North Jersey Public Adjusters Inc. (“NJPA”), prompting the insurers to invoke the APA clause and demand termination of the engagement. The insured subsequently canceled its contract with NJPA, depriving NJPA of a contingent fee tied to the insurance recovery. NJPA then sued the insurers asserting various tort and antitrust theories challenging the enforceability of the endorsement.
Decision
The court dismissed all claims with prejudice, holding that the insurers’ enforcement of the APA clause constituted a lawful exercise of contractual rights.
As to the tortious interference with contractual relations claim, the court explained that NJPA failed to allege the type of “wrongful means” required under New York law, such as physical violence, fraud, misrepresentation, or economic pressure. The court emphasized that the insurers’ conduct amounted to nothing more than enforcement of their contractual rights under the policy and therefore could not constitute independently wrongful conduct. The court likewise rejected NJPA’s tortious interference with prospective economic advantage claim because the complaint failed to identify specific prospective business relationships or facts plausibly showing that the insurers acted solely to harm NJPA or employed unlawful means.
The court also dismissed NJPA’s allegations under the Donnelley Act, New York’s antitrust statute, prohibiting “any contract, agreement, or arrangement, that forms a monopoly or restrains competition in trade.” The court found that NJPA failed to adequately plead a relevant geographic or product market and offered no supporting factual allegations regarding competition, substitute products, or cross-elasticity of demand.
In addition, the court rejected NJPA’s prima facie tort claim, holding that the enforcement of the APA clause reflected legitimate business and contractual interests rather than the “disinterested malevolence” required under New York law. The court noted that in New York, “motives other than disinterested malevolence, such as profit, self-interest, or business advantage will defeat a prima facie tort claim.”
Because NJPA failed to plead any viable substantive claim, the court dismissed the related individual and class claims for declaratory judgment as well.
Comments
This decision provides support for insurers seeking to enforce anti-public adjuster endorsements and underscores the difficulty of transforming ordinary contract enforcement into actionable tort or antitrust claims. The court repeatedly emphasized that involving and enforcing contractual rights, without more, does not constitute “wrongful means” under New York tort law.