, MBIA has never tiedits ability to recover claims payments to the availability of arescissory-damagesremedy. Thefocus of the branch of MBIA’s motion concerning the claim for breach of the Insurance Agreements (as informed by Ins. Law. § 3106)was to show, as undisputedfact, that “56% of the loans breached Countrywide’s representations and warranties, thusdemonstrating a material breach of the entire Insurance Agreements.” Pl.’sReply Mem. Of L.InFurther Supp.Of Its Mot.For Summ.J.On Breach Of The Insurance Agreements,Nov. 9, 2012(Mot. Seq. 58), at 5. While MBIA did discuss rescissory damages as
form of relief that (at least before the First Department’s Decision) could be awarded on MBIA’s claim,
at 17-19,MBIA nowhere restrictedthe claim to that remedy. In fact,MBIA argued both tothe FirstDepartment andthis Court thata non-rescissory, compensatory-damages remedy should be grantedif MBIA proves its claimfor breach of the entire Insurance Agreementswith the benefit of theinsurance-law causation ruleof Ins. L. § 3106.
As this Court explained, under that rule,“MBIAmust prove for its breach of warranty claim that Countrywide’s alleged misrepresentations materiallyincreased MBIA’s
risk of loss
” on day one of the policies.
, 936 N.Y.S.2d at 522(citing Ins. L.§ 3106(b))(emphasis added).
, the First Department plainly understood this context, for it explicitly held, in akeysentence that Countrywide ignores, that MBIA may seek “recovery of payments made pursuant to aninsurance policy
without resort to rescission
.” Decision 32 (emphasis added). Moreover, the FirstDepartmentclearlyso held in connection with MBIA’s claim for breach of the InsuranceAgreementsas opposed to MBIA’s claim for breach of the repurchase obligation.
at31-32(discussing claim for breach of the Insurance Agreements) (“Although the Insurance Law provides for ‘avoid[ing]’an insurance policy (or rescission), it also mentions ‘defeating recoverythereunder,’ which, logically means something other than rescission. Neither defendants, nor thefederal cases on which they rely, explain why ‘defeating recovery thereunder’ cannot refer to therecovery of payments made pursuant to an insurance policy without resort to rescission.”) (internalcitations omitted),
at 33-34 (discussing claim for breach of the repurchase obligation).
, Br.For Pl.-Resp./Cross-Appellant,Dec. 7, 2012 (1st Dep’t), at 27 (“MBIA’s theory[is]that it suffered harm on day one of the policies by assuming a risk (to pay claims under the policies)that was materially different from and greater than was represented by Countrywide. ... This is
by the fact that MBIA seeks rescissory damages …”) (emphasis added); Pl.’sMem. Of L.In Opp’nTo Countrywide’s Mot.For Summ.J.,Oct. 19, 2012 (Mot. Seq. 57), at 19n.20(“an insurer who demonstrates that the applicant made material misrepresentations may obtainrescission
or equivalent relief
”) (emphasis added).Countrywide misrepresents (Letter 2 n.2) Plaintiff’s MemorandumOf LawIn SupportOf ItsMotionFor SummaryJudgementOn Breach Of The Insurance Agreements,Sept. 19, 2012 (Mot.Seq. 58), at 45 n.79, as an indication by MBIA that it is predicating its entire summary-judgmentargument on a rescissory-damages theory. In fact, the footnote did nothing more than “reserve[MBIA’s] right to present evidence in further support of its damages calculations based on theCourt’s rulings.”
. The footnote did
abandon the compensatory-damages remedy later endorsed by the First Department—namely, “the recovery of payments made pursuant to aninsurance policy without resort to rescission.” Decision 32.
The First Department hardly broke new ground in endorsing a compensatory-damages remedy of “recovery of payments made” without any requirement of a causal link between the defendant’s(footnote continued)