A federal appeals court has reopened Madelaine Chocolate’s $49-million case against Great Northern Insurance Co. after a U.S. District Court ruled in favor of the insurance company late last year.
The Second Circuit Court of Appeals vacated a Sept. 20, 2017 ruling from the Eastern District of New York siding with Great Northern, which contended a flood exclusion in its policy kept it from covering all $53 million in damages, lost income and operational expenses resulting from storm surges brought on by Hurricane Sandy in 2012. 
While the company paid Madelaine Chocolate $3.9 million for damage to roofs, rooftop HVAC units, inventory, data processing equipment and associated business income losses, claims for remaining damage and income losses are in dispute. Madelaine Chocolate argues Great Northern is liable to provide total coverage under a windstorm endorsement in its policy.
Rejecting past cases the District Court cited in previous proceedings, the appeals also court ruled more review of the flood exclusion and the windstorm endorsement are needed. Further hearings have not yet been set.
Madelaine Chocolate, based in Rockaway Beach, Long Island, N.Y., is located three blocks north of the Atlantic Ocean and one block south of Jamaica Bay on Long Island’s west side. Strong winds pushed water from both sources into Madeline’s three facilities, rising four feet above slab.
The storm left most of Madelaine’s chocolate moulding lines inoperable and damaged packaging equipment. The company was also unable to rehire many of its employees. However, in 2015 New York City granted Madelaine $13.2 million in recovery aid, helping Madelaine stay and rebuild in the city.
“It’s not just about rebuilding or buying machines, but it’s about regaining our customer base, regaining our market share that we had before,” Jorge Farber, Madelaine president and ceo, told Candy Industry in 2015. “When Sandy hit, we were unable to get our products to our customers; they couldn’t replace those items that late in the game, so they also suffered significant losses.
“We did, however, promise that we would be back next season and that we would be able to supply them with most of their needs. It was with great difficulty that we were able to do so, but that solidified the idea that we really were back and provided us with additional credibility.”