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Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

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Ryan’s Federal Reporter

Storm’s SIU

Gestwick’s Garden State Gazette

Lexi’s Legislative Lowdown

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

04/16/25 NGM Insurance Company v. MGC Design & Construction Corp.
Appellate Division, Second Department
New Trend Continues. Employer’s Liability Carrier Establishes, in Declaratory Judgment Action, That Underlying Plaintiff Did Not Sustain a “Grave Injury” and Therefore Has No Duty to Defend Underlying Third Party Action

On November 24, 2017, Guichay, an employee of MGC Design & Construction Corp. (“MGC”) allegedly was injured when he tripped and fell while working at a construction site. Guichay sued Barr and IE Construction Management, LLC (“construction manager”), Thereafter, Barr commenced a third-party action against MGC, and the construction manager commenced a second third-party action against MGC (hereinafter together the underlying third-party actions), each seeking, among other things, indemnification in the underlying action.

MGC's insurer, the plaintiff, NGM Insurance Company, initially provided MGC with a defense in the underlying third-party actions. The plaintiff, however, reserved its right to seek a judgment declaring that it is not obligated to defend or indemnify MGC if the plaintiff determined that Guichay did not suffer a "grave injury" within the meaning of Workers' Compensation Law § 11(1).

On July 17, 2020, MGM commenced this action against, among others, MGC and the construction manager for a judgment declaring that the plaintiff is not obligated to defend or indemnify MGC or any other entity in the underlying action and the underlying third-party actions. MGM convinced the court that the underlying plaintiff did not sustain a grave injury and won its motion.

The construction manager argued that discovery may lead to relevant evidence on the issue of the defendants' liability, or that facts essential to opposing the motion were exclusively within the knowledge and control of the plaintiff. The Second Department rejected that argument -- the mere hope or speculation that sufficient evidence to defeat a motion for summary judgment may be uncovered during the discovery process is insufficient to deny the motion.

The construction manager did not meet its burden of establishing that further discovery might lead to relevant evidence or that facts essential to justify opposition to the motion were exclusively within the knowledge and control of the plaintiff.

An insurance carrier can be relieved of its duty to defend if it establishes, as a matter of law, that there is no possible factual or legal basis on which it might eventually be obligated to indemnify its insured under any policy provision. Workers' Compensation Law § 11 unambiguously shields employers from liability to third parties for contribution and indemnity except in limited circumstances," one of which is where the employee has sustained a "'grave injury'". In the absence of such proof, contribution and indemnification claims become extinguished by statute.

A "grave injury," as defined by Workers' Compensation Law § 11(1) includes, inter alia, "an acquired injury to the brain caused by an external physical force resulting in permanent total disability." "A 'permanent total disability' requires a showing that the injured employee is no longer employable 'in any capacity'" . Here, the NGM demonstrated its prima facie entitlement to judgment as a matter of law declaring that it is not obligated to defend or indemnify MGC or any other entity in the underlying action and the underlying third-party actions.

Editor Note: Normally, the issue of the existence of a “grave injury” is left for the underlying personal injury action. There have now been a couple of cases where the employer’s liability carrier, charged with defending the employer in claims seeking common law contribution or indemnity based on “grave injury,” attach the question in a separate declaratory judgment action.

04/15/25 Zurich American Ins. Co. v. Alterra America Ins. Co.
Appellate Division, First Department
Additional Insured Coverage to Contractor Is Only Available if There Is a Written Subcontract. Court Defines Subcontractor and Discusses Horizontal Exhaustion Rules. Court Embraces Horizontal Exhaustion

Alterra does not owe coverage to Baroco on the basis that Baroco did not enter a written contract with its subcontractor (Alterra’s insured_ Fine Line Carpentry & Renovations Inc. (“Fine Line”) as required for coverage under Alterra's Insurance Requirement endorsement. Zurich's argued that Fine Line was not Baroco's subcontractor.

The Court adopted the definition of "subcontractor" "as one who assumes performance of some part of the contract, so that labor or other service, and not merely the furnishing of materials, is involved" .

Alterra's obligation to provide additional insured coverage to RC Dolner is on an excess basis upon exhaustion of Zurich's policy because of the horizontal exhaustion rule). Zurich's argument that this issue is not ripe until a determination as to whether RC Dolner is entitled to contractual indemnification is unpersuasive.

Even if there is a subsequent finding that RC Dolner is entitled to indemnification from Baroco, the court still properly declared that Alterra's obligation is to provide additional insured coverage to RC Dolner on an excess basis upon exhaustion of Zurich's. The horizontal exhaustion is inapplicable where contractual indemnification entitlement has already been determined.

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

04/24/25 Catskill Barbeque, LLC v. Mid-Hudson Coop Ins. Co.
Appellate Division, Third Department
Thousands Flee - Third Department Finds Apparent Question of Fact on Enforceability of an Endorsement Because it is Hard to Find in the Policy

Plaintiff’s property sustained a covered fire loss, and coverage was accepted without incident by Mid-Hudson. Along with the damages to the property, Catskill also submitted a business interruption claim in excess of $2,000,000. Although the claim was covered under the policy, and coverage accepted, Mid-Hudson indicated that per the terms of the policy coverage was limited to only $175,000. Catskill sued, and this opinion resulted

On motion, Mid-Hudson submitted the policy which contained, as relevant, a Supplemental Declarations Page that provided business interruption coverage for up to 12 months. No sublimit was contained on the Declarations Page. Nevertheless, Mid-Hudson also produced an Endorsement to the business interruption coverage which provided that any previous coverage was deleted, and coverage was otherwise limited to 3 months and $175,000. There is no dispute, apparently, that the policy submitted by Mid-Hudson was true and accurate, and otherwise in admissible form. Nevertheless, for reasons we haven’t been able to discern, the trial court denied Mid-Hudson’s motion to dismiss.

On appeal, the Third Department noted that the operative Endorsement was found 73 pages after the Supplemental Declarations Page. In addressing this issue, the Appellate Division provided “[o]n the whole, it cannot be said that the policy -- insofar as it pertains to lost business income – is clear and unambiguous on its face, particularly when considering the fact that that some of the coverage language is buried deep within the lengthy contract, far removed from where such coverage is originally identified.” The Court went on to note that Mid-Hudson did not explain why it could not have simply noted the limitation on business interruption on the Supplemental Declarations Page.

In perhaps a final saving sentence, the Court also noted that Mid-Hudson apparently conceded that the Supplemental Declarations Page controlled the term of coverage (i.e., 12 months, as opposed the 3 months provided in the Endorsement). As such, the Court appeared to be noting the inconsistency in Mid-Hudson’s position, then, that the temporal limitation in the Endorsement did not apply but the monetary limit did.

If this is the basis for the holding, we can understand refusing to grant the motion but it’s still a reason It is not clear, however, that this is the reason for the decision.

Peiper’s Point - Let us start this discussion by assuming a rational basis for this decision. If there is an inconsistency in how the Endorsement was applied to the Supplemental Declarations Page, we can see how there might be a question of fact on ambiguity. Indeed, one could understand the Court’s point that picking and choosing which provision of an Endorsement is triggered leads to confusion. Ok. We get that point. We do not understand the argument that the contract (THE CONTRACT!!!!) is too confusing because it is too long. What 73 pages has to do with the enforceability of accepted terms and conditions is not clear from the Court, but it appears to be suggesting that if the Endorsement was included closer to the Supplemental Declarations Page maybe Mid-Hudson would have prevailed. Respectfully, this is difficult logic to accept.

And, further, the fact that Mid-Hudson could have simply altered the coverage in the Supplemental Declarations Page does not otherwise void the plain and ordinary meaning of contractual language. Feasibility is not a substitute for enforceability. If the Endorsement is unclear, on its face, the Court should simply have said so. Whether it could have been written differently, or placed in the policy differently, on placed on a different form, should have utterly no consequence on the enforceability of the language.

Editor’s Note: Would 70 pages be too far away? 50? 30? 10? Sheesh.

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

04/09/25 Chromik v. Cmty. Res. Inc.
Superior Court of Connecticut, Waterbury
What Is Failure to Procure Insurance?

Following the death of a foster child, the State of Connecticut tendered its defense and indemnity to Community Resources, Inc. which contracted to provide such services to the State. The contract documents required that CRI obtain CGL and professional liability coverage and that the State be added as an additional insured on the CGL policy. The CGL carried denied coverage to the State and the State brought a cross-claim against CRI for contractual and common law indemnification and for the failure to provide a defense. The State moved for summary judgment and CRI objected.

Initially, the court found that CRI’s acceptance of the State’s defense required the denial of that prong of the State’s motion. It did not matter that it was the insured and not the insurer paying for the defense.

Significantly in our world, the court denied the motion for failure to procure. It was evident that CRI purchased the insurance policies delineated in the contract and named the State as an AI on the CGL policy. The State’s motion focused on the failure of CRI to procure “appropriate” or “proper” insurance, however, no such qualifier was found in the contract documents. [It also hurt the State’s case that it failed to make the policies part of the summary judgment record.] “It is clear that the insurance company refused the State's demand for insurance coverage, however the State has not established that no genuine issues of material fact exist concerning whether or not CRI breached the contract in this regard.” The mere fact that the carrier denied coverage to the State did not mean, ipso facto, that CRI had breached its obligation to procure the insurance set forth in the contract.

While the court further denied the part of the State’s motion for breach of the duty to indemnify, it is unclear from the opinion whether there has been an award of damages against the State for which CRI refused to indemnify. It would seem to us that this claim was premature.

04/01/25 Smith v. Am. Strategic Ins. Corp.
Superior Court of Connecticut, Fairfield
Another Court Grapples With the CUTPA Pleading Standard

Here we go again. Another motion to dismiss (or strike in Connecticut parlance) statutory bad faith claims under CUTPA. This time the plaintiff claims that the insurer failed to pay a first-party water damage claim and, of course, tacked on causes of action for common law and statutory bad faith.

The court spilled a lot of ink before it struck the CUTPA claim (but let stand the common law bad faith claim). Noting “the variability in the approach by” Connecticut trial courts as to the level of specificity an insured must have in setting forth a CUTPA cause of action, the court launched into a detailed discussion of the balancing act between requiring a level of pleading specificity that is unfair to an insured against allowing mere conclusory allegations which amount to no standard at all.

Requiring a high level of specificity of prior incidents seemingly imposes an unreasonable burden on a claimant, the court observed. “A strict requirement of specific assertions of other instances of improper engagement in a similar practice would impose a pre-suit obligation on a plaintiff to identify other instances of improper conduct, without benefit of discovery.” But the court cautioned that allowing a plaintiff to merely cite other similar claims invites a level of circularity, especially if none of the cases have been decided in favor or the claimant. “Allowing an assertion of an unfair practice without any burden other than to type the words is tantamount to no burden to allege/assert a factual basis for the claim.”

So, how to balance the two sides in order to reach a fair pleading standard? The court believed that Judge Devine, in Labonne v. Hingham Mutual Fire Insurance Co., 2014 Conn. Super. LEXIS 4573, 2014 WL 2597802 (Super. 2012), got it right.

In this court's view, a plaintiff can satisfy the 'general business practice' requirement in one of two ways: (1) the plaintiff can comply with the strict line of cases by citing multiple specific instances of the insurance company engaging in similar misconduct with other claimants, or (2) the plaintiff can allege facts related only to his or her isolated claim if a reasonable inference can be drawn therefrom that the insurer's conduct "toward the plaintiff was part of its general business practices—in other words, the court must be able to reasonably infer that if the insurance company committed this misconduct against the plaintiff, they likely commit it regularly against other claimants as well. Therefore, even if a plaintiff cannot plead specific instances of similar prior misconduct by the insurer, circumstantial evidence of a general business practice derived from the insurer's handling of the plaintiffs isolated claim is sufficient to withstand a motion to strike." (Footnotes omitted.) Labonne, 2014 Conn. Super. LEXIS 4573 at *14-15.

Applying the test laid out in Labonne, the court struck the CUTPA claim. The court found that the complaint did not assert any prior violations by the carrier and did not provide any factual allegations upon which one could make a reasonable inference of an unfair practice.

The court quite wisely summed it up this way: “The mere fact of a denial is insufficient to allow an inference of an unfair practice, for the somewhat obvious reason that at least some claims rightfully might be denied, outright.”

Read on for the same result on the same basic pleading.

04/07/25 Rodko v. Am. Strategic Ins. Corp.
Superior Court of Connecticut, Ansonia-Milford
Boilerplate Allegations Do Not Satisfy CUTPA Pleading Standard

More or less the same facts as above and, not surprisingly, the same result.

Here, the covered property became uninhabitable due to toxic dust resulting from a flooring project, resulting in direct physical loss of and damage to the covered property, claimed the homeowners. ASIC, the plaintiffs claim, refused to timely adjust and/or pay the plaintiffs for remediation, repairs, and/or replacements of the covered property and its contents and failed and refused to pay the full insurance benefits. [At first blush, this does not even remotely sound like a covered cause of loss, but we digress.]

The plaintiffs sued for breach of contract and common law and statutory bad faith. ASIC moved, like it did in the case above, the strike the bad faith counts. This court allowed what, in our opinion, amounts to nothing more than boilerplate allegations to substitute for the required specificity of pleading.

The predicate factual claims to support the CUTPA cause of action included:

refusing to pay the plaintiffs' claims without conducting a reasonable investigation;
a failure to conduct an investigation based upon all available information;
failing to attempt in good faith to effectuate a prompt, fair and equitable settlement of the plaintiffs' claim in which liability has become reasonably clear;
wrongfully, willfully, and wantonly and with reckless indifferencefailing to pay the required proceeds of said insurance to the plaintiffs; and
a general business practice of deceptive practices.

While these allegations were adequate to establish a common law cause of action, the court found that they were too vague and conclusory to meet the CUTPA pleading standard. “[T]he plaintiffs in the present case do not go further than "merely [establishing] multiple acts of misconduct relating to a single insurance transaction." Therefore, the motion to strike the third count of the complaint is granted.”

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

04/07/25 State Farm Fire and Casualty Company v. Active Care Chiro
Supreme Court, New York County
Insurer’s Motion for Summary Judgment Granted as to Claimants That Failed to Attend an EUO

After the subject motor vehicle accident, involving three occupants, bills from medical providers were submitted to State Farm, which investigated the incident and determined there was a strong possibility that the collision was an intentional act or that the alleged injuries of the Claimants did not arise from the accident. During the investigation, one claimant failed to appear for his EUOs on two or more occasions, another left in the middle of an EUO and did not return for another one or return her subscribed copy of the transcript, and another appeared for his EUO but did not return a subscribed copy of the transcript. In subsequent arbitration hearings on behalf of providers, multiple arbitrators held that State Farm had not established that the Accident was fraudulent.

State Farm brought this action against numerous providers seeking declaratory judgments that it owes no duty to pay the No-Fault benefits and claims of the defendants in relation to the Accident. The insurer argued it is entitled to summary judgment based on its fraud defense and the failure of claimants to cooperate with the investigation. Defenses raised by the medical providers included 1) the fraud defense is collaterally estopped; 2) there was no evidentiary proof of claimants’ failure to return for an EUO; and 3) the failure to return subscribed EUO transcripts is not a valid No-Fault defense.

With regards to the provider’s estoppel argument, based on prior arbitration hearings, State Farm argued there was not an identity of parties or issues between the hearings and this case and, in New York prior arbitration awards may be given preclusive effect in a subsequent judicial action. The court determined the result of those hearings raised an issue of fact that would bar summary judgment but did not preclude State Farm from bringing this motion, as it advanced other theories of why they do not have to provide No-Fault coverage for the Accident not addressed in arbitration. State Farm also asserted one claimant failed to complete her duly scheduled EUOs and another failed to appear for his duly scheduled EUO. Appearance at a duly scheduled EUO is a condition precedent to No-Fault coverage. Contrary to the providers argument, the court held that a failure to appear at an EUO may be established by submitting transcripts of the EUOs.

For the third claimant, State Farm sought summary judgment based on the failure to return subscribed EUO transcripts. A failure by a claimant to return a subscribed transcript is a violation of a condition precedent to coverage, however, the court determined the request for a return of the subscribed transcript was only sent to claimant’s counsel, not the claimant himself. Therefore, the motion for summary judgment was denied as to this claimant. Accordingly, the court held that State Farm had no duty to pay any no-fault benefits with respect to the claims of the two claimants who failed to attend an examination under oath and otherwise denied the motion.

04/16/25 Drive New Jersey Insurance Company v. RT Hospitality
Appellate Division, Second Department
Insurer Permitted to Seek Subrogation Under Dram Shop Act for Payments Made Due to Accident Caused by Intoxicated Driver

Drive New Jersey Insurance Company provided automobile insurance to Ironbound Fitness LLC, which owned the insured BMW. An individual who was visibly intoxicated after being served alcohol at Atlantis Gentleman's Club drove the BMW with two passengers and was involved in an accident in which all occupants were injured, and the vehicle was damaged. Drive Insurance paid out a total of $507,595.48 in medical payments for the occupants and for vehicle damage, then sued Atlantis Gentleman’s Club as subrogee of Ironbound Fitness under the Dram Shop Act to recover these payments.

The Dram Shop Act, General Obligations Law § 11-101(1), provides "[a]ny person who shall be injured in person, property, means of support, or otherwise by any intoxicated person, or by reason of the intoxication of any person, . . . shall have a right of action against any person who shall, by unlawful selling to or unlawfully assisting in procuring liquor for such intoxicated person, have caused or contributed to such intoxication." A Plaintiff may recover for personal injuries if there was a reasonable or practical connection between an illegal sale of alcohol and the plaintiff’s injuries. However, the Dram Shop Act does not create a cause of action for one injured as a result of their own intoxicated condition.

The court explained that the purpose of subrogation is to allocate responsibility for a loss to the party who should bear it, rather than allowing a wrongdoer to escape liability simply because the insured had insurance coverage. This allows an insurer to seek recovery from third parties whose wrongdoing caused a loss the insurer must reimburse. While Atlantis argued the Dram Shop Act did not expressly provider for subrogation, the court held there was no support in the statute for this argument, determining that allowing subrogation under the Dram Shop Act was consistent with public policy and the purpose of equitable subrogation. Therefore, subrogation did not improperly shift liability onto dram shops and was not precluded under the Dram Shop Act.

Here, Drive Insurance alleged that the individual responsible for the accident was visibly intoxicated at the time that Atlantis sold her alcohol. Accordingly, the Supreme Court properly determined that Drive Insurance was entitled to assert, as subrogee, a cause of action pursuant to the Dram Shop Act against Atlantis to recover payments made for medical payments and property damage. Therefore, the Appellate Division affirmed the order of the Supreme Court, which had denied the defendant's motion to dismiss Drive Insurance's cause of action under the Dram Shop Act.

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

04/14/25 Narcisse v. Progressive Cas. Ins. Co.
United States District Court, Southern District of New York
Satisfaction of Lien Through Payment of Insurance Directly to Lienholder Instead of Insured at Less Than Full Value of Loss Is a Redressable Injury

Plaintiffs brought a class action individually, and as representatives of insureds in New York who made claims to Progressive Casualty Insurance Company for the loss of a totaled vehicle. In settling claims, Progressive had allegedly used valuation reports that applied an allegedly deceptive adjustment, a "Projected Sold Adjustment" ("PSA"), to reduce the actual cash value payable to the totaled vehicle's lienholder. It was further alleged that the plaintiffs had outstanding debt on their vehicles and owed more on their auto financing than they received in insurance benefits, such that all compensation paid by Progressive for the plaintiffs' benefits went directly to the totaled vehicles' lienholders.

Finding that it held Article III Standing at the threshold pleading stage, which is required for a district court to have subject matter jurisdiction, the SDNY noted that "the irreducible constitutional minimum of standing consists of three elements. . . . The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Only the first two elements were at issue.

Here, the Amended Complaint alleges that Progressive paid less on Narcisse's claim than the parties had bargained for, and that Progressive thereby breached the insurance contract with [Plaintiffs], which is itself an “injury in fact” because Narcisse allegedly sustained a “deprivation of the full benefit of what that plaintiff bargained for,” regardless of whether “the benefits would accrue to third parties” such as lienholders.

This injury in fact is redressable by way of either compensatory or nominal damages. Plaintiffs injuries could eventually be redressed by awarding contractual benefits to which the participant is entitled, i.e. compensatory damages, or alternatively nominal damages due to Progressive’s purported completed violation of her contractual rights.

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

03/17/25 Kahan v. Hyundai Mar. & Fire Ins. Co., Ltd.
Supreme Court, Kings County
Material Misrepresentations in the Application and the Mere Intention to Reside in the Premises in the Future Is Insufficient to Satisfy the Policy's "Residence Premises" Requirement

The court granted Hyundai’s motion to dismiss the plaintiffs' complaint. Plaintiffs purchased property in Brooklyn and obtained homeowners insurance from Hyundai. In the insurance application the plaintiffs attested that the premises: (a) was owner occupied, (b) was not a "[d]welling that is vacant or unoccupied," (c) was not a "[d]welling that is under renovation, remodeling or major repair," and (d) was not a "[d]welling without an operational smoke alarm". In addition, plaintiffs signed the section titled "Owner Occupancy" in which they confirmed that the "dwelling is owner occupied".

Hyundai's investigation found that the premises was vacant, and not owner occupied, at the time plaintiffs completed the application, the premises was undergoing renovations at the time of the fire, the plaintiffs admitted to its investigators that they never resided in the home prior to and during renovations, and the premises did not have an operational smoke alarm.

The Personal Lines Manager asserted that Defendant does not issue homeowners policies for any property that is not owner occupied, or which is vacant or unoccupied. Along with his affidavit, Hyundai submitted its underwriting guidelines which include as "ineligible exposures," a property that is "under renovation, remodeling or repair where permit is required by law" or "vacant or unoccupied for more than 30 continuous days after policy issuance". Since Plaintiffs made material misrepresentations, the policy was rescinded and all premiums paid were refunded. Even if the policy was not void ab initio, Hyundai contends that coverage is barred as a matter of law because Plaintiffs did not reside at the premises on the date of loss.

The court held that Hyundai was entitled to dismissal of the plaintiffs' complaint because the plaintiffs did not reside at the premises on the date of loss. The plaintiffs' mere intention to reside at the premises in the future was insufficient to satisfy the policy's "residence premises" requirement. The Second Department has consistently found that a disclaimer of coverage is proper where the insureds did not live at the covered property on the date of loss.

The court found the plaintiffs' occasional visits and intent to reside there in the future insufficient to meet the policy's "residence premises" requirement. The court distinguished this case from the Court of Appeals decision in Dean v. Tower Insurance, where the homeowner had a much more substantial presence on the property. The homeowner in Dean alleged that he was at the subject property at least five days a week, he would eat at the house every day, and he slept there on several occasions. Thus, the Court of Appeals found "issues of fact as to whether [the homeowner's] daily presence in the house, coupled with his intent to eventually move in with his family, is sufficient to satisfy the insurance policy's requirement.”

To establish its right to rescind an insurance policy, an insurer must demonstrate that the insured made a material misrepresentation. A misrepresentation is defined as a false statement as to past or present fact, made to the insurer by the applicant for insurance, at or before the making of the insurance contract as an inducement to the making thereof. A misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented. Even innocent misrepresentations, if material, are sufficient to allow an insurer to defeat recovery under the insurance contract.

To establish materiality as a matter of law, the insurer must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, which show that it would not have issued the same policy if the correct information had been disclosed in the application. Conclusory statements by insurance company employees, unsupported by documentary evidence, are insufficient to establish materiality as a matter of law.

03/31/25 Hanna v. Palisades Prop. & Cas. Ins. Co.
United States District Court, Eastern District of Pennsylvania
Issue of Fact Whether the Plaintiffs' Misrepresentations Regarding Their Additional Living Expense Claim Were Material to the Insurer’s Investigation

Plaintiffs' home was damaged by fire, rendering it uninhabitable. Palisades argued that the plaintiffs knowingly made false statements in their initial recorded interviews pertaining to their Additional Living Expense claim, including who was living with them and details about their lease agreement. The plaintiffs voluntarily corrected these misstatements 29 days later, before giving examinations under oath. They later withdrew the ALE claim. Palisades continued to investigate the claim for 4 months after receiving the corrections before ultimately denying coverage.

Pennsylvania courts have long held that a violation of the fraud and concealment provision of an insurance policy serves as a complete bar to the insured's recovery under the policy, effectively voiding it. An insurance company may refuse payment to an insured who violates the Concealment or Fraud provision of their policy where the insured has: (1) made a false representation, (2) knew the representation was false when they made it, and (3) the misrepresentation was material to the risk being assured.

Pennsylvania courts have repeatedly held that when an insurance company denies coverage based on alleged material misrepresentations made in the submission of the claim it need only prove that the insured made material misrepresentations in violation of the fraud and concealment provision by a preponderance of the evidence, proving the elements of falsity, knowledge, and materiality. This is the proper standard in the context of post-loss investigations, whereas the standard for proving material misrepresentation in the context of insurance applications is clear and convincing evidence.

The Court found Palisades has established the elements of falsity and knowledge by a preponderance of the evidence, and no reasonable jury could find for plaintiffs on this issue.

The question of materiality is generally considered one of fact and law, but if the facts are so obviously important that reasonable minds cannot differ on the question of materiality, then the question becomes one that the court can decide at the summary judgment stage. A misrepresentation is material if a reasonable insurance company, in determining its course of action, would attach importance to the facts misrepresented, and specifically in the context of a post-loss investigation, if the fact concerns a subject relevant and germane to the insurer's investigation as it was then proceeding. A misrepresentation is also material if it may be said to have been calculated either to discourage, mislead or deflect the company's investigation in any area that might seem to the company, at that time, a relevant or productive area to investigate.

While the plaintiffs knowingly made false statements, there is a genuine factual dispute about whether these misrepresentations were material to the insurance company's investigation. The misrepresentations did not concern how the loss occurred or relate to policy conditions. The insurance company continued its normal claims adjustment process after receiving the corrections. A reasonable jury could find that the statements were not material to the investigation, so summary judgment is not appropriate on this issue.

04/10/25 Gordon v. State Farm Fire & Cas. Co.
United States District Court, Southern District of New York
Case Transferred from the Southern District of New York to the District of Connecticut as the Locus of Operative Facts for This Fraud Case Is Connecticut, Not New York

The court granted State Farm's motion to transfer the case to the United States District Court for the District of Connecticut from the Southern District of New York under 28 U.S.C.S. § 1404(a). The locus of operative facts for the case is Connecticut, not New York.

The plaintiff purchased a policy from State Farm in Connecticut to cover the jewelry. While traveling in California, his jewelry was allegedly stolen. State Farm denied the claim alleging fraud. The plaintiff filed suit in New York.

28 U.S.C.S. § 1404(a) allows a district court to transfer a case for the convenience of parties and witnesses to any other district or division where it might have been brought if doing so is in the interest of justice. The court evaluates a potential transfer pursuant to § 1404(a) in two steps. First, the court must ask whether the case might have been brought in the proposed transferee district. An action might have been brought in the forum to which the movant seeks to transfer it if subject matter jurisdiction, personal jurisdiction, and venue would have been proper in the transferee court at the time of filing.

If the threshold inquiry is satisfied, the court proceeds to the second step and determines whether a transfer is appropriate. In doing so, the court considers the following factors to determine whether to grant the requested transfer: (1) the convenience of witnesses; (2) the convenience of the parties; (3) the locus of operative facts; (4) the availability of process to compel the attendance of the unwilling witnesses; (5) the location of relevant documents and the relative ease of access to sources of proof; (6) the relative means of the parties; (7) the forum's familiarity with the governing law; (8) the weight accorded to the plaintiff's choice of forum; (9) trial efficiency; and (10) the interest of justice, based on the totality of circumstances. The list of factors is not exhaustive. There is no rigid formula for balancing these factors, and no single one of them is determinative. Weighing the balance is essentially an equitable task left to the court's discretion. District courts have broad discretion in deciding, on a case-by-case basis, whether to transfer the venue of a given litigation based on notions of convenience and fairness.

A plaintiff's choice of forum is presumptively entitled to substantial deference. The plaintiff's choice of forum is entitled to substantially less deference here than usual because he resides in Connecticut, not New York.

In determining the locus of operative facts, a court must look at the site of the events from which the claim arises. For a breach of contract action, the court must consider (1) the location where the contract was negotiated or executed, (2) where the contract was to be performed, and (3) where the alleged breach occurred.

Trial efficiency and the interests of justice favor litigating the case in the jurisdiction with the strongest connection to the facts. The court determined that Venue is proper in Connecticut as the plaintiff resides there and a substantial part of the events took place there. The insurance policy was issued in Connecticut by a Connecticut agent. The policy contains Connecticut-specific language. State Farm's claim denial letter was sent to the plaintiff’s Connecticut address. Although not definitively ruled by the court, Connecticut state law likely governs the underlying insurance contract dispute. The locus of operative facts is Connecticut, as the contract was formed there, and the alleged breach occurred there. No witnesses or evidence are located in New York. Transfer will not significantly inconvenience the parties.

03/31/25 BR 10th St. Partners LLC v. Seneca Specialty Ins. Co.
Supreme Court, New York County
Court Granted Insurer’s Motion to Amend Its Answer to Include an Additional Affirmative Defense Based on Breach of the "Concealment, Misrepresentation or Fraud" Condition of the Policy

10th Street reported a fire loss to Seneca. Seneca inspected the property and found no evidence of a fire. There are conflicting reports about whether the sprinkler activation was due to a fire/smoke condition or a malfunction.

Seneca paid 10th Street the $250,000 sublimit coverage for water damage. 10th Street claims it is entitled to at least an additional $1,481,242.18 for building repairs, water remediation, and lost rent.

The court granted Seneca's motion to amend its verified answer to include the additional affirmative defense. The court found that 10th Street failed to show that Seneca's proposed amendment was palpably insufficient or patently devoid of merit. Both parties presented some evidence supporting their positions, so the court could not conclude that Seneca's defense was without merit.

The court rejected the application of Insurance Law § 3420(d)(2) because this provision only applies to death and bodily injury claims, not property damage claims.

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

04/18/25 Dostart v. Columbia Ins. Grp.
Iowa Supreme Court
Consumer Fraud Not an Occurrence Under CGL Policy

A jury awarded the Dostarts compensatory and exemplary damages on their claims of consumer fraud against their general contractor and its owner. In the underlying action, the Dostarts sued the general contractor and owner for failure to complete construction of their custom-built, single-family residence. Columbia Insurance Group provided a commercial general liability insurance policy to the general contractor, defended under a reservation of rights, and declined to indemnify the judgment under the CGL policy. The Dostarts were unable to collect directly from the general contractor and owner, and the judgment remains unsatisfied.

The Dostarts commenced a direct action against Columbia for payment of the unsatisfied judgment. Columbia moved for summary judgment. In its motion, Columbia argued that consumer fraud was not accidental in nature and thus not a covered “occurrence,” the consumer fraud did not cause property damage, consumer fraud falls within the CGL policy’s intentional acts exclusion, and the CGL policy excluded punitive or exemplary damages. The district court granted the motion for summary judgment with respect to exemplary damages, but it determined that fact questions existed as to whether consumer fraud was an “occurrence” under the CGL policy, the jury’s award was for “property damage,” and the intentional acts exclusion applied.

The Iowa Supreme Court granted Columbia’s interlocutory appeal and transferred the case to the court of appeals. The court of appeals affirmed and noted there was no evidence in the record about the underlying dispute beyond the verdict form and relevant jury instructions.

On Columbia’s application for further review, the Iowa Supreme Court concluded that the record provided the facts needed to establish that the consumer fraud involved in the underlying action was not a covered “occurrence” under the CGL policy and that the alleged harm did not include covered “property damage” a defined in the policy. Reasoning by analogy based on case law involving claims for the repair of defective workmanship, the Court concluded that damages to complete construction of the very property the general contractor was hired to construct was not physical injury to tangible property contemplated by the CGL policy. Since the Court concluded that the consumer fraud was not an “occurrence” and that the underlying judgment was not for “property damage,” it did not consider whether any exclusions applied.

As a result, the Court vacated the court of appeals decision, reversed the district court order, and remanded the case for entry of summary judgment in favor of Columbia.

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

04/21/25 Marc Feder DMD, PC et al. v. N.J. Manufacturers Ins. Co.
New Jersey Superior Court, Appellate Division
New Jersey Appellate Division Adheres to Strict Statutory Requirements in Cancellation of Automobile Policies

On July 20, 2020, Marc Feder was driving an automobile registered to his business when he rear-ended another vehicle. Feder made a claim under his auto policy with the defendant, who denied the claim on the basis that his auto policy had been cancelled seven months prior for non-payment of policy premiums. Feder challenged the adequacy of the defendant’s notice of cancellation of the policy, and this action followed.

As the Court noted, insurers must comply with strict statutory requirements when cancelling auto insurance policies. N.J.S.A. 17:29C-10 governs the cancellation of auto policies issued within the State of New Jersey. That statute has two distinct requirements, providing that no cancellation (or refusal to renew) an auto insurance policy shall be effective unless: (a) it is either (i) sent by certified mail, or (ii) if sent by regular mail, the insurer obtains a date stamped proof of mailing showing the name and address of the insured from the post office at the time of mailing; and (b) the insurer retains a duplicate copy of the mailed notice, certified to be a true copy. N.J.S.A. 17-29C-10(a-b).

As the Court explained, New Jersey case law has expounded upon the types of evidence that is sufficient to establish compliance with each part of the statute. New Jersey courts have noted that subsection (a) can be satisfied either by a certified mailing or by the insurer’s obtaining of a date-stamped certificate of mailing from the post office. Another appellate court found that while a “master list” of cancellation letters that an insurer brought to the post office for mailing was insufficient to comply with subsection (a), but that a certificate of mailing issued by the post office to show that each piece of mail was indeed mailed out would be sufficient.

New Jersey courts that have analyzed compliance with subsection (b) have ruled that this subsection is the “sine qua non” of an effective cancellation, and that non-compliance with that subsection can almost never be forgiven. These courts have explained that the requirement of the insurer to retain a duplicate copy of the mailed notice is meant to ease the carrier’s proof of mailing burden by providing a simple, expedient, and effective alternative to relying on the carrier’s standard business practices in sending cancellation notices.

The defendant (“NJM”) contended that after Feder went into arrears on his policy premium, it sent him a final request for payment on November 30, 2019. According to NJM, this correspondence was sent to Feder’s home address (the one he maintained on file with NJM) with a warning that if payment was not received within seven days from the date of that letter, his policy would be cancelled.

After no payment was received from Feder, NJM issued a notice of cancellation on December 13, 2019, to the same address. The December 13, 2019, correspondence advised that payment of the amount owed ($378.00) would keep the policy current. In support of the present motion, NJM submitted a certification from the employee that accounted for the mail on December 13, 2019. That employee testified that on that day, each piece of mail listed on the register (147 pieces) was accounted for and was then taken to the post office by another NJM employee. As part of its motion, NJM submitted a proof of mailing obtained from the post office on that same day, reflecting payment for mailing of 147 pieces of mail on behalf of NJM.

In opposition to the motion, Feder made three arguments on why NJM’s cancellation of his policy was ineffective: (1) NJM did not establish that Feder actually received the notice of cancellation; (2) NJM did not comply with part (a) of the cancellation statute; and (3) NJM did not comply with part (b) of the cancellation statute.

The Court rejected Feder’s first argument—that NJM did not establish that Feder actually received the notice of cancellation. New Jersey courts have long held that actual receipt of the notice of cancellation is not required in order for the notice to be effective, provided that the statutory proof of mailing has been satisfied.

The Appellate Division also held that NJM complied with subsection (a) of the statute, since the certifications and exhibits submitted in support of NJM’s motion showed that NJM sent the notice via regular mail and obtained a proof of mailing from the post office.

However, the Appellate Division held that NJM failed to comply with subsection (b) of the statute, and that the policy’s cancellation was therefore invalid. Subsection (b) requires the insurer to provide a duplicate copy of the mailed notice, certified to be a true copy. While NJM provided a copy of the notice of cancellation bearing a typewritten certification, that certification was unsigned and undated. Therefore, as the Court reasoned, NJM’s submission fell short of the standard articulated in subsection (b). The Court reasoned further that none of the certifications made by the NJM employees (the mailroom employee and in-house claims counsel) explained either how the certified copy was made or obtained, nor did either of them attest to any routine practices of the company concerning them. New Jersey courts have held that the duplicate copy required by subsection (b) be a true copy contemporaneously certified with the preparation and mailing of the original; not at any later point in time.

The Appellate Division affirmed the holdings of the trial court that NJM was not required to prove that Feder actually received the letter and that NJM complied with subsection (a) of the statute but vacated the ruling of the trial court that NJM also complied with subsection (b) of the statute. The Appellate Division remanded the case back to the trial court for further proceedings on the issue of a true certified copy of the notice of cancellation.

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

04/14/25 Singh, Rx, PLLC v. Selective Ins. Co. of S.C.
United States Court of Appeals, Sixth Circuit
No Coverage for Professional Liability Claim Under CGL Policy Based on Exclusion and No Coverage Under Professional Liability Policy Based Amended Definition of Claim

SRX is a pharmacy that possessed a general liability policy with Selective and a professional liability policy with American Casualty. Janssen, a Johnson & Johnson subsidiary, sued SRX in the Eastern District of New York for the alleged sale of counterfeit Janssen branded HIV medication. Both Selective and American denied the claim.

Selective’s asserted the alleged trademark infringement suit did not involve a bodily injury, property damage, or personal and advertising injury. And also argued the policy’s exclusions for failure to render medical services, along with intellectual property claims applied to terminate coverage. American Casualty denied coverage because its policy covered claims only brought by natural persons.

The appellate court found the Selective policy did not provide coverage for Janssen’s claims. But not because of the scope of coverage, instead the court focused on the professional services exclusion. Michigan law broadly interprets professional liability exclusion to encompass acts reasonably related to the overall provision of professional services. The alleged procurement and sale of counterfeit medication implicated SRX’s professional services because it is a pharmacy. SRX asserted the procurement and sale was merely administrative, but the court disagreed. It reasoned that conduct triggered a pharmacist’s specialized knowledge to select drugs for specific conditions.

SRX’s American Casualty professional liability policy also failed to provide coverage. The policy’s coverage applied to professional liability arising out of any act, error, or omission in providing professional services that results in injury or damages. Included within the policy’s list for covered claims was intellectual property. However, the policy contained an endorsement that amended the definition of “claim” to apply to natural persons only.

Since Janssen is a company and not a natural person, the American Casualty policy did not provide coverage. SRX contested that Michigan law requires the use of the more specific definition in the base policy. Indeed, under Michigan Law where two contractual terms conflict, the more specific term controls. But the endorsement at issue deleted and replaced the base policy’s definition of “claim.” Thus, only a single contractual term defined “claim,” and it applied to natural persons only. The court also rejected an illusory coverage argument since natural persons routinely make professional liability claims.

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

04/03/25 National Football League v. U.S. Specialty Ins. Co.
Supreme Court of the State of New York, New York County
Partial Summary Judgment Granted to Insured Based on Declaration That Claim Was Deemed First Made During 2014-2015 Policy Period, and Not Excluded by Pending and Prior Litigation Exclusion

The National Football League and NFL Enterprises LLC (“NFL Insureds”) brought a declaratory judgment action against U.S Specialty Insurance Company, Freedom Specialty Insurance Company, Starr Indemnity & Liability Company, Ironshore Indemnity Inc., and Everest National Insurance Company (the “Insurers”). The questions posed to the court involve whether the Insurers owe the NFL Insureds coverage under a 2014-2015 D&O insurance policy in connection with a 2015 antitrust litigation suit filed involving their Sunday Ticket product (“Sunday Ticket Litigation”).

The Sunday Ticket Litigation concerned certain agreements between the NFL Insureds and DirecTV executed in 2009, 2013, and 2014. In the agreements, the NFL Insureds granted DirecTV the exclusive right to distribute out-of-market packages of NFL Sunday games, and control over the composition, pricing, and marketing of such subscription packages. In June 2015, the NFL Insureds and DirecTV were named as defendants in a number of antitrust lawsuits alleging that licensing contracts that giving DirecTV exclusive rights to distribute out-of-market NFL games violated antitrust laws. The Sunday Ticket Litigation alleged violations of the Sherman Act, insofar as the agreements allowed the NFL and DirecTV to charge supercompetitive monopoly prices.

In the coverage action, the NFL Insureds made a partial summary judgment motion, seeking (1) a declaration that the Sunday Ticket litigation is a Claim first made during the 2014-2015 policy period; (2) declaring that the Claim is not excluded by Pending and Prior Litigation exclusions; and (3) dismissing various affirmative defenses made by the Insurers defendants.

The NFL Insureds had a claims-made D&O insurance policy with National Liability & Fire Insurance Co. (the “Primary Policy”). In addition, the NFL Insureds had five layers of excess coverage. Each excess policy implicated in the declaratory judgment action followed form to the Primary Policy.

The Insurers’ policies only provided coverage for a Claim, “first made against the Insured Person during the Policy Period for a Wrongful Act and reported to the Insurer as required by this Policy.” A Claim was defined as, “proceeding against an Insured, which shall be deemed first made upon…the service of a complaint or similar pleading upon the Insured.”

The Primary Policy contained a condition related to Related Wrongful Acts, which was defined as “all Wrongful Acts that are logically or causally connected by any fact, circumstance, situation, event, transaction, cause or series of related facts, circumstances, situations, events, transactions, or causes.” The condition identified that if a Claim involved the same or related wrongful acts, the claim is first deemed made at the earliest date on which any claim was first made or reported. The Primary Policy additionally contained a Pending and Prior Litigation clause, which stated that the insurer was not liable to make a payment for claims alleging, arising out of, based upon, or attributable to, pending or prior litigation.

The Insurers allege that the Sunday Ticket Litigation has origins in a 1997 class action lawsuit filed against the NFL on behalf of consumers who purchased the NFL Sunday Ticket. The 1997 class action lawsuit alleged that in 1994, the NFL Defendants offered a package for purchase of all regular season Sunday afternoon games to residential and commercial satellite dish owners, which induced consumers to enter into an agency agreement. According to the allegations, the NFL and DirectTV entered into an agreement, where DirecTV and other satellite distributors acted as authorized agents of the NFL to sell and distribute NFL Sunday Ticket packages, and were compensated based on commission on all sales of the packages. It was alleged that the NFL determined the pricing and composition of the packages, and had control over the advertising, marketing, and promotion. It was alleged that the football clubs contracted and agreed to restrict output of broadcasts of their games, agreed to jointly sell broadcast rights to purchasers of satellite television at supra-competitive pricing, and agreed to allocate amongst themselves the proceeds of the sale in violation of the Sherman Acts. As a result, the 1997 Plaintiffs paid extremely higher prices to view all NFL Sunday afternoon games. The 1997 litigation ultimately settled in October 2021.

However, the NFL Insureds assert that the Pending and Prior Litigation exclusion is not applicable, because the 1997 Litigation and the Sunday Ticket Litigation are not a single claim under the policies at issue.

The Court began their analysis by looking only at the plain language of the policies and comparing the allegations in the 1997 Litigation and Sunday Ticket Litigation.

The Court identified that while Related Wrongful Acts is defined rather broadly in the policies, there must be a relatedness and a sufficient factual nexus. The Court noted that the 1997 Litigation was filed 18 years prior to the Sunday Ticket Litigation, which is sufficient to show that the claims were temporally separate.

Second, the Court made note that the claims do not involve the same transactions. The 1997 Litigation focuses on the NFL Insureds and the NFL teams conspiracy to sell broadcast rights to DirecTV. However, the Sunday Ticket Litigation challenges a separate agency agreement between the NFL Insureds and DirecTV. The Court acknowledges that the Sunday Ticket Litigation references a conspiracy between the NFL and the NFL teams but instead focuses its grounds for relief on the DirecTV agreements.

The Court wrote that even if the wrongdoings complained of in both actions were part of a larger scheme to eliminate competition, this alone is insufficient to combine otherwise distinct claims.

Based on this analysis, the Court granted the NFL Insureds partial motion for summary judgment and declared that the Sunday Ticket Litigation was a “Claim” first made during the 2014-2015 policy period and was not excluded by the Pending and Prior Litigation exclusions within the policies.

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

04/25/25 New York Senate Bill S3776
New York State Senate
Bill to Prohibit Cancellation, Non-renewal, or Conditional Renewal of Automobile Insurance When Dispute as to Pending Claim Exists

Senate Bill S3776, introduced on January 29, 2025, seeks to amend insurance law § 3425 to prohibit an insurer from cancelling or refusing to renew or condition its renewal of automobile insurance policies solely on the bases that there is a pending complaint filed by the insured, or that a claim filed by the insured with the insurer is in dispute.

The justification for the bill provides that currently § 3425(f) allows insurers to non-renew up to two percent of their non-commercial motor vehicle policies per year. Insurers have abused this two percent provision by using it in cases where insureds have disputed claims or filed complaints with DFS. The legislation seeks to prevent such conduct to allow consumers to openly dispute claims.

The Bill provides:

AN ACT to amend the insurance law, in relation to prohibiting an insurer from cancelling or refusing to renew or condition its renewal of auto-mobile insurance policies in certain cases.

THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1. Section 3425 of the insurance law is amended by adding a new subsection (t) to read as follows:

(T) No insurer shall cancel or refuse to renew a policy covering a private passenger automobile, or to condition its renewal upon change of limits or elimination of any coverages solely on the basis that a claim filed by the insured with the insurer is in dispute, or that a complaint by the insured against the insurer resulting from the disputed claim is pending with the department.

DOMENICA’S DIARY on BAD FAITH
Domenica D. Hart
ddh@hurwitzfine.com

04/18/25 Kinsale Ins. Co. v. Pride of St. Lucie Lodge 1189, Inc.
United States Court of Appeals for the Eleventh Circuit
A Bad Faith Lawsuit Looms Over a Carrier a Decade After Its Failure to Tender Policy Limits Despite a Shooting Case That Presented Potentially Clear Adverse Liability and Financial Exposure of a “Ticking Time Bomb” Within Months of the First Notice of Loss

On Sunday, March 1, 2015, the Pride of St. Lucie Lodge 1189, Inc. (the "Lodge") was being used a as a club and bar while hosting a social event. A fight broke out on the dance floor around 1:00 am, March 2^nd, between two groups of female guests at the Lodge. They were removed from the Lodge through separate exits. The groups congregated in the Lodge's back parking lot and the fight continued, resulting in Tanya Oliver being shot in the forehead 10 to 15 minutes later. She died from her injuries the following year. The Estate of Oliver sued the Lodge in August 2016 on a theory of negligent security. Kinsale Insurance Company was the insurer for the Lodge. After the conclusion of the trial in August 2019, a jury found the Lodge liable for Oliver’s injuries and awarded damages exceeding $3.3 million, far exceeding Kinsale’s $50,000 policy Assault and Battery sublimit.

Prior to the Estate’s suit, filed on August 5, 2016, The Estate sent Kinsale a Letter of Representation in November 2015. Kinsale assigned the claim investigation to a Senior Claims Examiner who described the claim as "a shooting in the rear parking lot of insured property arising out of an argument that began inside the club." The examiner read two local news articles about the shooting. The articles both stated that Oliver had been shot in the head in the early hours of Monday, March 2, 2015, after two assailants fired from vehicles. Articles also said that Oliver remained in critical condition in the ICU after being shot. On December 2, 2015, Kinsale received a detailed police report from the night of the shooting with the description that Oliver was found “unconscious but breathing in the front passenger’s seat of the vehicle after having suffered a gunshot wound to her forehead.” Mount Vernon Fire Insurance Company, the Lodge’s liquor liability carrier, retained an independent investigation. Mount Vernon shared the factual results of the investigation as it progressed with Kinsale. The initial report, on December 30, 2015, detailed the events of that night. A month later, Kinsale’s examiner put a January 30, 2016, article in the claims file containing a statement, which the examiner underlined in red, that Oliver remains unable to speak or walk after she was shot in the head earlier that year. On July 5, 2016, Oliver died from her injuries. On August 5, 2016, the Estate filed suit against the Lodge for negligent security. Six days after receiving the complaint, Kinsale tendered its $50,000 Assault and Battery sublimit to the Estate (Kinsale had a general liability limit of $1,000,000). The Estate rejected the tender. After trial, the jury verdict in August 2019 found 70% liability on the Lodge with the final judgment of over $3.3 million.

In February 2021, Kinsale filed an action in the United States District Court for the Southern District of Florida seeking a declaratory judgment that the policy’s $50,000 Assault and Battery sublimit applied. The Lodge and the Estate countersued for common law bad faith pursuant to Florida law. They alleged Kinsale breached its duty of good faith by failing to make a settlement offer within the policy limits before the Estate's suit was filed. The District Court granted summary judgment to Kinsale based upon a finding that Kinsale had no duty to initiate settlement negotiations because, viewed in the light most favorable to the non-moving parties, no reasonable jury could find that this was a case of "clear liability." This Appeal followed.

The Court of Appeals disagreed with the District Court, finding that a jury should decide the bad-faith issue. Pursuant to Florida law, an insurer is held to the standard of a “reasonably prudent person” meaning it should use the same degree of care and diligence as a person of ordinary care and prudence should in its own business. Although the totality of circumstances must be analyzed, reasonable diligence and ordinary care are material in the determination of bad faith. That determination is an objective one, based on what the insurer at the time knew or reasonably should have known. This Court looked at the facts that liability was potentially clear in this case and the injuries were so serious that a judgment in excess of the policy limits was likely. The Court recognized that where substantial injuries and potential liability of the insured is obvious, failure to offer policy limits constitutes bad faith even if there is no assurance that the action can be settled. The financial exposure to Kinsale was a “ticking time bomb” and any delay in making an offer could be viewed by a factfinder as evidence of bad faith.

Although Kinsale argued that there was evidence uncovered during the investigation that made liability unclear as a matter of law, the Court dismissed that argument. The Court focused on facts in the record. The Lodge, a private clubhouse for fraternal organization, operates as a club and bar on weekends between 6:00 p.m. and 2:00 a.m. The Lodge is staffed by a bartender and “a couple of security guys to help manage the crowds." The Lodge has no paid employees, and the security personnel are volunteers, which helps them secure membership at the Lodge. At least one fight had occurred on the Lodge's property since January 2015, less than two months prior to the shooting . The Lodge's rear parking lot was dark and unmonitored. The Lodge's leadership had previously expressed concerns about the volunteer security guards’ practices, as well as the parking lot. The Court also focused on the security guards’ actions in escorting the groups of women outside. At least one of the security guards admitted he was aware that the best practice was not to let the two conflicting groups outside together. It is also unclear if the security guards saw the initial fighting outside and did nothing.

In addition to the above, one of the appellant’s expert witnesses’ reports described Kinsale’s file notes and correspondence from November 23, 2025, to December 3, 2015, to have presented a case where negligent security premises liability is clear. The expert opined that the facts with which Kinsale was presented amounted to a classic case of bar liability and the failure to appreciate the Lodge’s exposure as a seven-figure verdict was “inexplicable.” Another expert opined that based on what Kinsale knew, there was nothing else that would have been necessary to know for a determination that the $50,000 policy sublimit should have been offered.

The Court reversed and remanded the District Court’s grant of summary judgment stating that “All told, a jury could reasonably find Kinsale acted in bad faith in failing to tender its policy limits prior to the Estate” filing suit.

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

04/14/25 McGregor et al. v. Wawanesa Mutual Insurance Company
Alberta Court of King’s Bench
A Criminal Act Exclusion in a Liability Policy That Excludes “Bodily Injury" or "Property Damage" Caused by Any Intentional or Criminal Act or Failure to Act by Any Person Insured by This Policy, Requires the Insurer to Prove That the Injury or Damage in Issue Was Caused by the Criminal Act, Even Though the Insured Did Not Intend the Injury or Damage

The Alberta Court of King’s Bench issued a judgment on a homeowners’ insurance claim arising from an explosion and fire in a detached garage owned and insured by Mr. McGregor, of Calgary, Alberta. On October 6, 2017, Mr. McGregor was an owner of a single-family residence located on Pinemill Road. That evening, Mr. McGregor was using butane to make cannabis oil in his garage, when a lit cigarette ignited the butane fumes, causing an explosion and fire. The fire, directly caused by the illegal production process, resulted in significant damage to the garage and injuries to Mr. McGregor and two visitors. At no point had Mr. McGregor disclosed to his insurer that he would be producing cannabis oil on the property.

Following the incident, Mr. McGregor pled guilty to criminal charges under s. 436(1) of the Criminal Code of Canada for causing bodily harm by fire and under section 4(1) of the Controlled Drugs and Substances Act for the unlawful possession of cannabis.

The central legal issue in this case was whether the homeowners’ insurer was obligated to defend and indemnify Mr. McGregor in a lawsuit brought by one of the injured visitors and provide indemnity to Mr. McGregor for the property damage caused by the explosion and fire.

This scenario, with its dangerous shed, injured guests, and the ever-present Mr. McGregor, brings to mind the classic tale of Peter Rabbit. In Beatrix Potter’s story, Peter, despite his mother’s stern warnings, sneaks into Mr. McGregor’s Garden—a place already notorious for peril, as Peter’s father had previously met a grim fate there. Like the visitors to Mr. McGregor’s garage, Peter finds himself in sudden danger after venturing where he ought not to go. He loses his shoes and jacket in a frantic escape, is chased into a tool shed, and narrowly avoids capture by the ever-watchful Mr. McGregor.

Both stories serve as cautionary tales about the risks of entering forbidden territory—whether it’s a fenced garden or a garage where cannabis oil is being processed—and the unexpected consequences that can follow. If Peter, after being injured in Mr. McGregor’s shed, demonstrates that he had legal personality and was able to bring a claim against Mr. McGregor, the question of whether the homeowner’s insurer of the fictional Mr. McGregor would be required to defend and indemnify is a discussion for another day.

But in this real-world instance, this Mr. McGregor was facing an uphill fight for insurance coverage … the property portion of the policy excluded loss or damage caused by or resulting from the intentional or criminal acts; there was also a marijuana exclusion that read “loss or damage arising directly or indirectly from the growing, cultivating, harvesting, processing, manufacturing, distribution or sale of any drug or narcotic or illegal substance, whether or not "you" have knowledge of such activity”; the liability portion excluded “bodily injury" or "property damage" caused by any intentional or criminal act or failure to act by any person insured by this policy.”

The issue of entitlement to insurance coverage was heard by summary trial. At the outset of the trial, Mr. McGregor withdrew his claim for property damage. The claim of entitlement to liability coverage remained.

The insurer argued that the bodily injury claims were caused by Mr. McGregor's criminal acts and are therefore excluded. They argue that it is irrelevant to inquire if he had any intention of causing the fire and the resulting injuries. Alternatively, the insurer argued that Mr. McGregor’s failure to disclose the illegal and dangerous production of cannabis oil is both a material misrepresentation and a material change in risk which, together or separately, voids the liability coverage.

Counsel for Mr. McGregor argued that the criminal act exclusion is not applicable as the insurer has not established Mr. McGregor subjectively intended to cause the fire or any harm to Mr. Coffin. Further, section 533 of the Alberta Insurance Act states that a contravention of the criminal law itself will not render unenforceable a claim for indemnity except where the contravention was committed by the insured with the intent to bring about the loss or damage. Therefore, it was argued that Mr. McGregor is entitled to a defence and possible indemnity for the Coffin Action.

The issue before the court was whether an unintentional criminal act is excluded under the Policy. Put another way, to apply the exclusion, is the insurer required to prove that the insured committed a criminal act; that the loss or damage for which coverage is being claimed was caused by that criminal act; and that while committing that criminal act, the insured intended that injury or damage?

The Court held that Section 533(2) of the Insurance Act protects an insured's right to indemnity in cases where a criminal act is committed without the intention to cause the loss or damage. But it also permits an insurer to provide otherwise and exclude the claims for indemnity for loss caused by any criminal act, whether the act was intentional or not. That is what the insurer did in this case. The criminal act exclusion excludes claims arising from bodily injury or property damage caused by any criminal acts that are committed by the insured. The language of the exclusion is disjunctive: An act of an insured that causes injury is clearly excluded when it is either an intentional act, or a criminal act. Therefore, it is irrelevant that the insured did not intend the injury or damage that arose from the criminal act. The exclusion will apply if the insurer proves that the criminal act was the cause of the injury.

In this case, Mr. McGregor plead guilty to a charge under the Criminal Code that he caused a fire that resulted in injury to Mr. Coffin and Mr. McIntosh. Therefore, the Court concluded “In light of this admission, the essential facts necessary to trigger the exclusion exist and relieve the ...[insurer]… of its obligations to indemnify…[Mr. McGregor).” As the criminal act exclusion applied, the Court did not find it necessary to consider whether the liability coverage was rendered void as a result of a misrepresentation or a failure to disclose a material change in risk.

Premises Pointers - Special Edition: A Change in Season: Court of Appeals Overrules Bard, Reinstates Traditional Negligence Standard for Dog Bites

Wed, 23 Apr 2025 17:13:45 +0000

SPECIAL EDITION:
A Change in Season: Court of Appeals Overrules Bard, Reinstates Traditional Negligence Standard for Dog Bites
April 22. 2025
A Monthly Electronic Newsletter

NOTE FROM ROCHESTER ATTORNEY BRADON S. CARLSON:

You all know what they say about April showers—brighter skies are on the horizon. Just like the changing weather, the legal landscape in New York is constantly shifting; this time with a significant development in the state’s law regarding injuries caused by domestic animals.

As background, for almost 140 years, the New York Court of Appeals recognized two distinct avenues for recovery when personal injuries were caused by domestic animals: negligence and strict liability. But in 2006, the Court of Appeals broke with other jurisdictions, creating a bright line standard by holding that when such injuries are caused by domestic animals, only strict liability applies—thus barring common-law negligence causes of action. On nearly 19 years to the day since Bard took effect, the Court of Appeals reversed course again.

Below is a closer look at the Court’s pivotal change.

04/17/25 Flanders v. Goodfellow
New York State Court of Appeals
A Change in Season: Court of Appeals Overrules Bard, Reinstates Traditional Negligence Standard for Dog Bites

On December 8, 2018, Rebecca Flanders (the plaintiff), a postal worker, arrived at Stephen and Michelle Goodfellow’s (the defendants) house to deliver mail but found their mailbox missing. As she approached the house to leave a package on the porch, she heard a dog barking. She had not seen a warning that the Goodfellows had a dangerous dog either at the post office or on the scanner given to postal carriers, and she did not see a "beware of dog" sign on the property.

Before exiting her vehicle, she took a moment to confirm that the dog was not outside. Once this was confirmed, she exited her vehicle and approached the defendant’s porch. The defendant Stephen Goodfellow opened the front door to greet the plaintiff. As the plaintiff was handing the defendant the package, the defendant’s dog slipped through the doorway and lunged at the plaintiff’s neck. The plaintiff raised her hand to cover her face and neck and was bitten on the shoulder. The defendant broke the dog’s grip from the plaintiff’s shoulder, and the plaintiff hurried back to her vehicle. The plaintiff later learned that the bite had caused a "snap tear" in her shoulder muscle, which required several surgical procedures and resulted in scarring.

The plaintiff introduced affidavits from two postal workers who had previously delivered mail to the defendants' residence. Both witnesses testified that the dog had displayed aggressive behavior, including baring its teeth, snarling, barking, and biting at the window in what appeared to be an attempt to attack them. Both believed the dog was dangerous, and that the defendants should have been aware of the dog’s aggressive behavior but had failed to report it as required by the work rules of the Postal Service. Contrarily, the defendants testified that the dog was not aggressive, and that they never received prior complaints regarding the dog’s behavior.

Following discovery, the defendants moved for summary judgment, which the Supreme Court granted. As to strict liability, the court concluded that the evidence did not raise a triable issue of fact regarding whether the defendants had actual or constructive knowledge of their dog’s alleged vicious propensities. As to negligence, the court dismissed the claim based on New York precedent, which forecloses negligence liability in dog bite cases.

The plaintiff appealed, arguing (1) that the defendants knew or should have known of the dog’s vicious propensities, and (2) that the negligence claim represented a good faith argument for the modification or reversal of existing law. In support of the latter, the plaintiff contended that landowners have a duty to maintain their property in a reasonably safe condition under the circumstances—including consideration of the likelihood and seriousness of potential injuries, as well as the burden of avoiding the risk. The plaintiff asserted that it was foreseeable that the defendants’ failure to properly secure their dog would result in injury, and that this failure constituted negligence.

In response to the plaintiff’s negligence argument, the defendants relied on longstanding New York precedent, emphasizing that negligence causes of action are precluded in dog bite cases.

The Fourth Department affirmed the Supreme Court’s decision, holding that the defendants neither knew nor had reason to know of the dog’s alleged vicious propensities, and that the negligence claim was properly dismissed. The plaintiff was subsequently granted leave to appeal.

On appeal to the Court of Appeals, the plaintiff urged the Court to overturn Bard v. Jahnke, the 2006 decision in which the Court held that when harm is caused by a domestic animal, its owners’ liability is determined solely by the application of strict liability.[1]

In Bard, the plaintiff, a carpenter, was injured by a free-roaming breeding bull while repairing cow mattresses in a barn. He asserted both negligence and strict liability claims, alleging that the defendant was negligent in failing to restrain the bull and in failing to warn him of its presence. The plaintiff’s expert opined that bulls, particularly breeding bulls, are generally dangerous. The Court, however, rejected the argument for applying a negligence standard based on the general dangerous nature of bulls, holding that liability depends on the defendant’s specific knowledge of the animal’s vicious propensities.

The plaintiff here argued that the Bard rule was unworkable and inconsistent with general modern tort principles, which require individuals to act reasonably to prevent foreseeable injuries to others.

In further support of her argument, the plaintiff emphasized New York’s longstanding pre-Bard history of permitting simultaneous negligence and strict liability claims against domestic animal owners. She argued that the two causes of action are complementary, each serving distinct public policy goals. Strict liability, she asserted, discourages the harboring of dangerous animals, since “even the most elaborate and extensive measures [would] not avoid strict liability.”[2] However, strict liability alone fails to incentivize precautionary measures by the animal’s owner. The prospect of negligence liability, by contrast, encourages owners to exercise reasonable care to protect the public from unnecessary danger posed by domestic animals.

The defendants, represented by Michael F. Perley of our office as appellate counsel, countered that the Bard rule is consistent with prior New York case law and comports with general tort principles by imposing strict liability on owners who have notice of their animal’s dangerous propensities. In other words, even if the owner was not negligent, liability still attaches upon such notice.

Turning to the plaintiff’s negligence claim, the Court first considered whether principles of stare decisis supported continued adherence to Bard. The first factor was whether Bard was well reasoned and consistent with tort jurisprudence. The Court emphasized that tort law seeks to deter harm by imposing a duty of care. It noted that in other areas, such as operating a motor vehicle, riding a bicycle, or manufacturing machinery, individuals are expected to exercise due care. The Bard rule, the Court found, was inconsistent with these principles because it shifted both the burden of care and the costs of injury from animal owners to those harmed by the animals. It also failed to incentivize owners to learn of their animals’ dangerous propensities and take reasonable steps to prevent injury.

The second stare decisis factor considered was whether subsequent legal developments had undermined Bard. The Court observed that later decisions had carved out exceptions to the rule, gradually eroding Bard’s original bright-line approach.

Lastly, the Court emphasized that the Bard rule proved to be unworkable in the lower courts and an obstacle in the “path of justice.”[3]

For these reasons, the Court overruled Bard and adopted a two-pronged approach to liability for injuries caused by domestic animals. First, if an owner knew or should have known of the animal’s vicious propensities, the plaintiff may pursue a strict liability claim. In addition, or in the alternative, the plaintiff may assert a negligence claim, seeking to prove that the owner failed to exercise reasonable care under the circumstances regardless of whether or not their dog acted unreasonably in the past.

Accordingly, the Court reversed the Appellate Division’s decision, which had dismissed the plaintiff’s negligence claim based solely on Bard and denied the defendants’ motion for summary judgment.

[1] 6 NY3d at 599.

[2] Colarusso v Dunne, 286 AD2d 37, 39-40 [2d Dept 2001].

[3] Woods v Lancet, 303 NY 349 [1951].

As a public service, Hurwitz Fine P.C. is pleased to present this monthly newsletter providing summaries of and access to the latest premises liability decisions from the New York State and Federal courts. The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers. In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

Don’t forget to subscribe to our other publications:

Coverage Pointers: This biweekly electronic newsletter summarizes important insurance law decisions from appellate courts in New York State with the occasional snapshot across borders. Coverage Pointers, the electronic newsletter that started it all, continues to offer guaranteed publication every other Friday, and a read-at-a-glance summary of important decisions as they happen. Contact Dan Kohane at ddk@hurwitzfine.com to be added to the mailing list.

Labor Law Pointers: Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at dra@hurwitzfine.com to subscribe.

Medical & Nursing Home Liability Pointers: Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Liz Midgley at emm @hurwitzfine.com to subscribe.

Products Liability Pointers: This monthly newsletter covers all areas of products liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact Chris Potenza at vcp@hurwitzfine.com to subscribe.

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Coverage Pointers - Volume XXVI No. 22

Fri, 11 Apr 2025 13:44:44 +0000

Volume XXVI, No. 22 (No. 695)
Friday, April 11, 2025
A Biweekly Electronic Newsletter

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at ddk@hurwitzfine.com or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations

Happy Easter. Happy Passover. And for those of you who prefer the obscure, Happy National Pet Day. Happy Barbecue Quartet Day and most importantly, Happy International Louie Louie Day (so selected because Richard Berry, its composer, celebrates his birthday on April 11)

It’s been a busy couple of weeks. Steve and I did presentations at the PLRB Claims Conference in Indianapolis (thanks to those who came by to say “hello”). One of the nice surprises was gifts brought to me from my good friends at Island Insurance in Honolulu. In July 2018, I was asked to speak to their claims staff, and my wife and I spent two wonderful days on Waikiki Beach. Claims folks from Island were at the conference in Indy and delivered some delightful treats from the Island paradise. Thanks.

My presentation was on my favorite topic, Risk Transfer – Additional Insured Coverage and Contractual Indemnity. For those who attended, or even those who did not, we can reprise that presentation for your claims team, via Zoom, should there be an interest.

The ups and downs of the stock market have surely presented some challenges over the past week or so. Luckily, I have no plans on soon retiring.

Ryan Maxwell and I also were honored to be part of the New York Insurance Association Insurance Roundtable, where we talked about the recent First Department decision on car rental insurance. If you are unaware of the implications of the Second Child decision out of the First Department, you can read my article in the New York Law Journal on April 14.

Need a Mediator for an Inter-Company Dispute?

Coverage mediation is a thing! Subject matter expertise may be useful.

Hey coverage lawyers. Hey professionals. Have you and a friend, adversary, or lawyer for whom have respect reached a stalemate on a coverage dispute? Look, we know each other. We know that. We don’t want to litigate every coverage disagreement. Why? Because the position we oppose today may be the one we advocate tomorrow. Face it. We all understand that.

A growing percentage of my practice has been a mediator (and sometimes as an arbitrator) in insurance coverage, commercial, personal injury, and other disputes. With a robust national client base, I am regularly called on by friends and colleagues from around the country, folks who know me and trust me, to help resolve disputes. Often, particularly in mediated matters, I know the insurers and lawyers on both (or several) sides of the dispute. Since they all trust me as a fair dealer, they feel comfortable having me try to help close the file (and avoid precedent). Just pick up the phone, 716.849.8942 or send an email to ddk@hurwitzfine.com and I’ll try to help.

Let me help mediate your disagreement to see if there is some mutual agreement, we can reach that will not box us into a corner. Reach out to me. I will be pleased to mediate your dispute.

You don’t want adverse precedent that will bite you next time you might have a slightly different view on coverage issues. You don’t want to spend tens of thousands of dollars to litigate a coverage issue before a motion judge or appellate justice that knows as much about insurance coverage as you do about nuclear physics. For those in the Western District of New York, I am certified by the Court and on the WDNY Mediation Panel as are Mike and Ann.

Try mediation.

President TR’s Sons ….

In case you were keeping track, James Simpson-Roosevelt Asiatic Expedition, sponsored by the Field Museum of Natural History and organized by Kermit Roosevelt and his brother, Theodore Roosevelt Jr. (that was the late President’s son who was also first cousin to Eleanor), departed from New York City on 11 April 1925 aboard SS Leviathan for the purpose of collecting wildlife specimens from mountainous regions in Asia, particularly in the Pamir Mountains and the Tian Shan Mountains. It would return with over 2,000 specimens of small mammals, birds and reptiles, and 70 large mammals, including the Ovis Poli, the great wild sheep. They followed in their dad’s footsteps.

LinkedIn:

One Hundred Years Ago:

You may have heard something about tariffs over the last few weeks. So, you know, history has a habit of repeating itself. You’ll see that in some of this year’s 100 years ago stories.

Newsletters:

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at jeb@hurwitzfine.com to be added to the mailing list.
Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at dra@hurwitzfine.com to subscribe.
Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact V. Christopher Potenza at vcp@hurwitzfine.com to subscribe.
Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at emm@hurwitzfine.com to subscribe.

Tariffs? – 100 Years Ago:

The Buffalo News
Buffalo, New York
11 April 1925

SWISS AROUSED AT
U.S. TRADE TACTICS

Diplomats May Take Up Issue
Of Cost Probes by American
Treasury agents

GENEVA, April 11. – A cry of protest against the United States is spreading throughout manufacturing circles in Switzerland ever the system of establishing special treasury agents here who, under the new American tariff law are authorized to insist upon examination of the books of manufacturers to determine the cost of the articles they produce. This information is sought by the Americans, as a help in fixing tariff schedules when goods exported from Switzerland arrives at American ports.

The impression exists here that the affair has gone so far, and both the Swiss and merchants’ authorities have become so aroused, that the question may cause serious diplomatic difficulties between Berne and Washington, unless a way is found for relief.

According to information given out at Berne, the United States has already exercised the embargo prerogative in the case of a shipment of Swiss dyestuffs to New York.

Peiper on Property (and Potpourri):

We bring this first issue of April to you through the swirling snowflakes that are outside my window. For all of you about to depart for a week in Florida, we envy you. Please return to the Northeast with sunshine.

Not too much to report on this week. We do have an interesting decision where the Third Department tries to explain that a vacant building is not vacant under the terms of the policy. Ok, so maybe it’s not quite that simple, but it’s not too far from it. Do take a moment to review in the Property column this week.

Speaking of property, a big thank you to the folks at PLRB who welcomed me to speak at last week’s annual claims conference in Indianapolis. And, perhaps even more importantly, an especially big thank you to those of you brave enough to sit through an hour and a half discussion on construction defect coverage issues. Not even a yawn was seen, by the way. A testament to the quality of professionals attending PLRB events, and their engagement in the discussion.

That’s it for this week. See you again in two more. In the meantime, Happy Easter and/or Passover to those who celebrate.

Steve
Steven E. Peiper
sep@hurwitzfine.com

Tariffs? – 100 Years Ago:

The Grand Rapids Press
Grand Rapids, Michigan
11 April 1925

FORDNEY’S VISIT
TO WHITE HOUSE
OCCASIONS TALK

Michigan Man Sees No
Reason to Revise
Tariff

BACKED BY BUSINESS

Flexible Provisions Are Taking Levy Program out of Politics

Washington, April 11. – Presence of former Congressman Joseph W. Fordney in Washington and his call at the White House shortly after President Coolidge spoke before he convention of the National Cotton Manufacturers’ association have occasioned a lot of tariff talk. The textile manufacturers are avowedly favorable to a revision of the tariff and were greatly disappointed that the president gave them no encouragement along this line.

Mr. Fordney declared while here that he saw no reason for a revision of the tariff by the next congress. Even if there are inequalities in the schedules, he said he did not think this was the time for tariff-tinkering. He said the present law was as good as can be written at this time, and that the next congress would have all it can do to consider tax revision, railroad legislation and other pressing matters.

Move Held Unwise

Business interests of the country are likely to share the opinions of the president and Mr. Fordney that any tariff revision now is unwise. The present law is the realization of the hope of a lifetime for Mr. Fordney, and he can be pardoned in desiring to see it remain in the statute books indefinitely. Wholly aside from that fact, however, many of those who opposed the bill at the time it was enacted, and see many inequalities and crudities in the schedules, are set against changes now.

Lee’s Connecticut Chronicles:

Dear Nutmeggers:

Well, it seems another two weeks have passed by unnoticed. I’m writing this column as our esteemed editor is breathing down my neck to finish. It reminds me of my college newspaper days, typing furiously against deadline pressure as we approached press time. Fun times.

This edition’s case is a doozy. The unfortunate insureds were arrested and held captive by the Iranian Revolutionary Guard for six years and only released after more than $2 million of back-channel payments and State Department maneuvering. Terrible, you say, but how does this impact insurance coverage? Well, the insureds had some unique coverages, but the carriers ran into some basic rules of construction problems. Undefined terms that are key to coverage need to be defined, especially in unique policies and circumstances. Please read on for some interesting facts and arguments.

Until next time, keep keeping safe and bring on Spring!

Lee
Lee S. Siegel
lss@hurwitzfine.com

More Tariffs – 100 Years Ago:

The Austin American
Austin, Texas
11 April 1925

HIGH TARIFF
ADVOCATED BY
TEXAS GINNERS

Traditional Democratic Policy
Is Ditched by State
Association

“OLD GUARD” FIGHTS

Minority in Gathering at Dallas
Vigorously Opposed
Protectionists.

DALLAS, April 10. – A protective tariff on vegetable oils was advocated here today by the Texas Cotton Ginners’ association for the first time since the organization was founded 16 years ago. This action and the election of J.T. Andres of Waxahachie as president featured the closing session of the association’s two-day convention.

W.V. Angell of Hillett was elected vice president and C.B. Hunt of Dallas was re-elected secretary. The tariff question caused the only division in the convention many members resisting the action on the ground that it was undemocratic, that it would lead the organization into politics, and because free trade has been the traditional principle of the democratic party.

Ruffner’s Road Review:

Dear Readers,

March Madness has come to a close, with the Florida Gators taking home a National Championship. Due to my extensive college basketball expertise (I watched no college basketball until this tournament), I had picked them to win in multiple brackets, leading to a first-place finish in the one where I had Houston in the final, and second place in the Hurwitz Fine bracket. In other sports news, less than a week after Alex Ovechkin set a new NHL record for most career goals, the Buffalo Sabres have officially extended an NHL record of their own, missing the playoffs for the 14^thstraight season. Quite a feat considering half of the teams in the league make the playoffs each year…

I have two no-fault cases this week, both addressing the failure of an insured to attend an examination under oath or medical examination, leading the insurer to deny coverage. In the first case, the Appellate Court denied the insurer’s motion for summary judgment, holding an objective justification for the examination under oath was not established. In the next case, the insurer’s motion was granted, as the court held the IME was properly noticed and the failure to attend was a non-precludable defense to coverage.

Kyle
Kyle A. Ruffner
kar@hurwitzfine.com

Good Choice – 100 Years Ago:

The Buffalo Times
Buffalo, New York
11 April 1925

Says Girls Want
Equal Rights Over Cigarettes

CHICAGO, April 11. – Co-eds of Northwestern University in objecting to the rule forbidding them smoking declare it is not because they want to smoke, but because it is discriminatory against woman and creates a distinction.

Such is the gist of an editorial in the Daily Northwestern, written by Miss Ellen Cole Fetter, ’25.

“There is no reason for a double standard of morals so far as smoking is concerned,” Miss Fetter declared.

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

The University at Buffalo Bulls Women’s Basketball team are WNIT Champions! While I was not part of the broadcast this year, it was amazing to see the growth exhibited by the program from losing to Monmouth in the first-round last year, to taking the crown in front of a sold-out home crowd in Alumni Arena. That place was built for events like this. Hopefully, we will see more big games in the years to come.

In this edition of Coverage Pointers, my column contains a Second Circuit decision that touched upon the interplay between priority of coverage and “insured contracts”.

Until next time,

Ryan
Ryan P. Maxwell
rpm@hurwitzfine.com

Advice to the Lovelorn – 100 Years Ago:

The Kansas City Post
Kansas City, Missouri
11 April 1925

Dear Miss Fairfax – I have read the kind advice you have given to so many others so I wish you would answer a few questions for me.

1. What time do you think a girl at the age of 16 should get in at night?

2. Should she be allowed to go to the dances if accompanied by an older sister?

3. Is it better to go with one boy, at that age, or several?

4. I have a friend who is considered tough and is tough around boys but is a real friend to me. Do you think it right for me to run around with her?

5. How many nights should a girl at the age of 16 get to go out with boys? – Mickey

1. It depends entirely upon where you are and what you are doing.

2. If she behaves properly, I should think she might go with her sister.

3. Be friendly with the boys, why single out one and exclude the other? But, of course, you cannot be a sweetheart to all of them.

4. You are judged and influenced by the company you keep, Therefore, the only sane thing you can do is to choose your friends from among nice girls and boys.

5. No certain number. It depends on the entertainments and parties to which you are invited. A girl of 16 should not be out very often.

Storm’s SIU:

Hey Team:

Three cases for this edition of CP:

Court Granted Insurer’s Motion to Compel Appraisal During Litigation on the Amount of Business Income and Extended Business Income Loss.
Insurer’s Use of Software by Xactimate, Known as "New Construction," and its Labor Efficiency Setting to Estimate the Repair Costs for Fire Damage to the Plaintiffs' Home, was Not Bad Faith Manipulation of the Xactimate Estimating Application" or Bad Faith for Use of the Appraisal Process.
A Signature is Whatever the Signatory Says it is, but a Notarial Signature Must be Consistent with the Signature Affixed Upon the Oath of Office Filed with the Licensing County Clerk's Office.

So happy baseball is back in season. Hope for warm weather ahead.

We appreciate the opportunity to team with you!

More case digests in two weeks.

Scott
Scott D. Storm
sds@hurwitzfine.com

Never Mind … – 100 Years Ago:

The Buffalo Times
Buffalo, New York
11 April 1925

AREN’T WOMEN FUNNY.

LONDON. – Miss Olive Fry, who won $2,500 with a letter advocating that women remain single, got married the next week.

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Now that we are in Spring, as I watch snowflakes fall, I can’t help but wonder when the warmer weather will arrive. We have been faked out a few times, but I remain hopeful that this will be the last week of cold weather.

This week’s case from the South Dakota Supreme Court considers whether an “owned but not insured” exclusion to UIM coverage was against public policy when used to deny coverage to an insured under the circumstances. The decision discusses the public policy behind UM/UIM coverage.

Shoutout to the UConn Huskies on the big W. See you in a fortnight.

Kate
Katherine A. Fleming
kaf@hurwitzfine.com

A Kiss is But a Kiss – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
11 April 1925

Cruel Caresses of
Original Caveman
Result in Divorce

Chicago, Ill., April 10 (A.P.). – What he called “cruel caresses” were named by Judge Sabath as grounds for divorce granted by him today to Mrs. Tessie Menza Fritz. The woman said her husband gave her kisses so intense her lips became numb and even bled, and that his hugs were so arduous they bruised her ribs.

Gestwick’s Garden State Gazette:

Dear Readers:

Congratulations to the other Evan who works in our office, Evan Bussiere, for winning our Firm’s March Madness bracket. CP’s own Kyle Ruffner came in second. Alabama’s loss was the fall of my fiancé’s reign, and Duke and Auburn both losing is what took out yours truly.

The case I have for you this week is full of good tidbits. A cause of action for a declaratory judgment can only be sustained if the declaration sought is to define the rights and obligations of the parties in anticipation of some future conduct; not to declare present liabilities. And that cause of action will be dismissed if duplicative of an accompanying breach of contract cause of action. A cause of action for bad faith will also be dismissed as duplicative of a breach of contract cause of action if the former is based on the same conduct as the latter. This does not change even if the breach of contract claim is also dismissed, like it was here.

See you in two weeks.

Evan
Evan D. Gestwick
edg@hurwitzfine.com

Car Insurance? Hey, it’s a Good Idea – 100 Years Ago:

Dunkirk Evening Observer
Dunkirk, New York
11 April 1925

EVERY DAY – The Papers Say –

Another Automobile Accident – Cars Collided – Some One Injured – Perhaps fatally – People Found in Garages Overcome by Fumes – Cars Stolen – Others Found – Some Burned.

IF YOU OWN A CAR –

– You can’t afford to be without protective insurance. A serious accident might result in the loss of your home or other property if you are not insured.

Why not let an insurance company assume the risks that they are willing to carry for a comparatively small annual premium? It pays to be protected – Ask anyone who has had an accident. Those whose names figure in today’s reports, yesterday thought they never would have one.

For Liability, Property Damage, Collision, Fire, Theft or
Automobile Personal Accident Insurance, See
L. F. HUMPREY
310 Washington Avenue
INSURANCE – ALL KINDS

O’Shea Rides the Circuits:

Readers,

This week Spring is hitting and so is the winter coat blowout. No, not at Burlington Coat Factory, rather both of my dogs are shedding their winter coats. So, that’s a few hours of brushing the dogs out this past weekend. As a side note, if my hair starts looking fuller, please do not ask any questions . . .

This week I have a couple of cases involving Texas law from the Fifth Circuit. Both involve first party property claims, both involve appraisal rights, and both involve unlucky insureds.

Until Next Time,

Ryan
Ryan P. O’Shea
rpo@hurwitzfine.com

Tariffs! – 100 Years Ago:

The San Bernardino County Sun
San Bernardino, California
11 April 1925

TARIFF TINKERING NOT
WANTED

TOTAL of $830,000,000 was provided by congress for the fiscal year 1926 to meet the interest on the public debt. Congress also authorized $485,000,000 for the “sinking fund and other public debt retirement funds.” The Republican tariff law is yielding something like $550,000,000 annually. The average rate on all imports is about 15 per cent; on dutiable imports alone, about 35 per cent. The rates per cent were 14.88 and 37.6, respectively, the first year the Democratic tariff law was in force – 1914. Last year 58 per cent of our imports were free of duty. Importations of partly and wholly manufactured foodstuffs and artifacts totaled about $1,930,000,000. Or more than $100,000,000 greater than our entire imports in 1914. Imports from Europe totaled $895,000,000 in 1914, and $1,096,000,000 last year – they totaled $780,000,000 for the eight months ended February last.

Rob Reaches the Threshold:

Hello Friends,

Welcome to The Masters week. For all you golf fans out there, like me, this is one of the best weeks of the year. We get to enjoy all the best golfers as they come together for the first time of the year at one of the best venues in all of sports. Last year, I was fortunate enough to visit Augusta for one of the tournament's practice rounds – and it was an incredible experience. As I now look back and reminisce, I realize that one of the best 'traditions' that contributes to the wonder of The Masters is that no patron is allowed to bring a cell phone in. Just thousands of people in the moment, enjoying golf and the course and the experience. It really is a tradition unlike any other.

The lull in any cases from the Appellate Division on Serious Injury Threshold continues this time around, so no article from me. We will try again in two weeks.

In the meantime, please enjoy the articles from my colleagues.

Rob
Robert J. Caggiano
rjc@hurwitzfine.com

A Penny-Ante Robbery – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
11 April 1925

Two Burglars Bind
Aged Woman to Bed
And Steal 32 Cents

Beacon, April 10 (A.P.). – police today sought two burglars who last night bound an aged woman to her bed before robbing her of all the money in her purse. – 32 cents. Mrs. Mary Husted, 70 years old, who lives alone, reported the robbery after her assailants had made good their escape with the “loot” and she had worked free from her bonds.

LaBarbera’s Lower Court Library:

Dear Readers:

Been a busy bee last few weeks. With the weather getting warmer (hopefully soonish), we are trying to push through some projects inside before we begin to tackle the outside. Based on how the weather is acting here in Buffalo, it seems like we may have more time than expected.

This week I am reporting on a New York County decision. Upon a motion to renew, the court took a second look at a special proceeding brought by a carrier to dismiss an arbitration award procured by corruption, fraud, and misconduct. This case takes a look at what steps can be taken, after a fraud case is fully investigated, for carriers to dispute past, potentially fraudulent claims.

Until next time…

Isabelle
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Daylight Savings Time Controversial Even Then – 100 Years Ago:

Daily Sentinel
Rome, New York
11 April 1925

TOPICS TREATED BY
THE MAN ABOUT TO WIN

Daylight Saving – Liked by the
City Man and Disliked
By the Farmer.

Rome, April 11. – The daylight-saving period approaches, and those interested in saving daylight for various purposes are active in behalf of the movement. Different periods are advocated by different people. Some want five months, some four months and some three months, but I believe that the majority favor five months. They desire to have the clocks set forward an hour on the first Sunday in May, the 3d, and set back again on the last Sunday in September, the 27^th. This is the same period that was observed here last year, and it seemed to meet the requirements very well. The daylight-saving proposition is very popular with the people of Rome, who a year ago last fall at the regular election voted for it by a large majority. The same sentiment prevails in the other cities of the state. Last year I believed only two cities failed to observe daylight saving, and they were Rochester and Syracuse, and it is believed that if the matter were put to a vote of the people of those cities the daylight-saving proposition would be carried out. In Syracuse, a great deal of dissatisfaction was expressed because the Common Council refused to pass a daylight-saving ordinance, and people there are demanding that the matter be put to a popular vote.

Editor’s note: Daylight savings time started during WW I. We may see the end of it this year.

Lexi’s Legislative Lowdown:

Dear Readers,

It was difficult to willingly return to the cold, snowy Rochester, New York, after a beautiful weekend in Charlston, South Carolina. Nonetheless, I am here, back in my winter coat.

This week we discuss changes to Insurance Law § 3420(g) effective March 26, 2025, regarding the issuance of supplemental spousal liability insurance.

Stay warm. Thanks for reading.

Lexi
Lexi R. Horton
lrh@hurwitzfine.com

Was it Worth it? – 100 Years Ago:

Buffalo Post
Buffalo, New York
11 April 1925

Woman Saves Husband’s Life
In Fire; Dies Saving Jewels

Endicott, April 11. – Mrs. Leila M. Teetsal of this city was burned to death today when she returned to her burning apartment to save her valuables after she had carried her crippled husband, Richard M. Teetsal, to safety. Mr. Teetsal was seriously burned.

The couple were trapped by the fire in a bedroom off the kitchen of their second-floor apartment. Teetsal, with both legs severed above the knees, was powerless to save himself. His wife took him in her arms and fighting her way through the flames, she carries him downstairs to safety.

She returned before anyone could restrain her to obtain valuable left in the apartment. She did not reappear and when the fire was extinguished thirty minutes later her charred body was found on the kitchen floor.

Domenica’s Diary on Bad Faith:

Dear Readers,

As I celebrated my “29th” birthday last week, I return to wondering how fast time flies. I am grateful for every year, but it needs to slow down. There are many things on my constantly evolving bucket list!

This week’s Pennsylvania case focuses on how an insurer’s diligent and reasonable handling of a UIM claim, including constant communication with Plaintiffs’ counsel for medical records and making reasonable settlement offers pre-litigation, can defeat a bad faith claim by Plaintiff.

See you in two weeks!

Domenica
Domenica D. Hart
ddh@hurwitzfine.com

Bring Your Easter Bonnet – 100 Years Ago:

The Ithaca Journal
Ithaca, New York
11 April 1925

North of the Border:

The world news makes it difficult to muster the strength to push back the covers and face another day … markets are in turmoil; coupled with the near certainty that prices will continue to rise while our shrinking asset base pushes the dream of retirement further out of reach … but in my three-foot world, the brown fields are starting to green up. The sun is warm. Our puppy still chases his ball in the morning with wild abandon. Our granddaughter reached up her tiny arms and said ‘Grandma’. We are resilient.

My column this week discusses a case where a failure to correct errors in policy drafting resulted in a denial that was overturned on appeal.

Until next week.

Heather
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

Bond Carrier’s Obligation to Indemnify for Third Party Claims Preserved
Question of Fact as to Whether Employer’s Liability Was a Proximate Cause of the Plaintiff’s Injuries BUT Any Culpability on the Part of the Plaintiff Would Be Imputed to the Employer When Making That Determination

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Sporadic Presence at Building Creates Question of Fact on “Occupancy” and “Vacancy” Issues
Trial Transcripts are Recoverable as Taxable Costs After Successful Appeal of Trial Verdict
Lack of Negligence Results in Dismissal of Common Indemnity/Contribution Claims

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

Lack of Defined Terms Sink Coverage Defenses

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

Summary Judgment Denied as Premature as Insurer Did Not Give Provider an Objective Justification for Requesting Examination Under Oath
Failure to Attend IME is Non-Precludable Defense Applicable to All Claims

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

While Policy is Primary for Liability Assumed Under “Insured Contract,” Court Finds it Co-Excess Due to Direct Insurer-Insured Relationship

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

Court Granted Insurer’s Motion to Compel Appraisal During Litigation on the Amount of Business Income and Extended Business Income Loss
Insurer’s Use of Software by Xactimate, Known as "New Construction," and its Labor Efficiency Setting to Estimate the Repair Costs for Fire Damage to the Plaintiffs' Home Was Not Bad Faith Manipulation of the Xactimate Estimating Application or Bad Faith Use of the Appraisal Process
A Signature Is Whatever the Signatory Says it Is, but a Notarial Signature Must Be Consistent with the Signature Affixed Upon the Oath of Office Filed with the Licensing County Clerk's Office

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

Parents Entitled to UIM Benefits After Child’s Death in VMA With Uninsured Motorist. Exclusion Against Public Policy Under the Circumstances

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

Court Dismisses Declaratory Judgment and Bad Faith Claims as Duplicative of Breach of Contract Claim, and in Turn Dismisses Breach of Contract Claim Upon a Finding of No Coverage

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

Texas’ Concurrent Cause Doctrine Bars Coverage Where Insured was Unable to Segregate Covered and Non-Covered Portions of Claim
Payment of Appraisal Award Precludes Bad Faith Claim Absent Independent Tort or Breach

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

Still a lull in any cases on serious injury threshold from the Appellate Division. We will try again in two weeks.

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Court Grants Motion to Renew Petition and Vacates Master Arbitration Award, Based on Recent December 2023 Plea Allocution Finding Fraud, Corruption, and Misconduct

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

Amendments Made by Chapter 356 of the Laws of 2024 to Insurance Law § 3420(g), Effective March 26, 2025

DOMENICA’S DIARY ON BAD FAITH
Domenica D. Hart
ddh@hurwitzfine.com

An Insurer’s Low Offer, Failure to Conduct an IME, Failure to Settle a Claim Within Full Reserve Authority, and Disputed Causation Do Not Support a Finding of Bad Faith Where the Insurer Acted Reasonably

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

The Reference to the Wrong Statute in a Marijuana Exclusion Found in a Homeowners’ Policy Introduced Ambiguity as to Whether That Exclusion Applied to the Cultivation of Marijuana for Medical Purposes Under License; In View of That Ambiguity, This Exclusion Did Not Apply to Exclude a Fire Loss

Enjoy the holiday season.

Dan

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut and New Jersey.

NEWSLETTER EDITOR
Dan D. Kohane
ddk@hurwitzfine.com

ASSOCIATE EDITOR
Agnes A. Wilewicz
aaw@hurwitzfine.com

COPY EDITOR
Evan D. Gestwick
edg@hurwitzfine.com

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
ddk@hurwitzfine.com

Steven E. Peiper, Co-Chair
sep@hurwitzfine.com

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Domenica D. Hart

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

Victoria S. Heist

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
sep@hurwitzfine.com

Michael F. Perley

Scott D. Storm

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
ddk@hurwitzfine.com

Ryan P. O’Shea
rpo@hurwitzfine.com

Kyle A. Ruffner
kar@hurwitzfine.com

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com

Topical Index

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Gestwick’s Garden State Gazette

Lexi’s Legislative Lowdown

Labor Law § 241(6) (TPW)

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

04/09/25 Malan v. QPS 23-10 Development, LLC
Appellate Division, Second Department
Bond Carrier’s Obligation to Indemnify for Third Party Claims Preserved

Under a contract (the “original contract”) QPS 23-10 Developer, LLC (“QPS”) hired New Millennium Structures, LLC (“NMS”) to undertake concrete work for a construction project in Long Island City. Under the original contract, NMS agreed to indemnify QPS for any liability for personal injury sustained as a result of the performance of the concrete work.

In October 2014, as permitted by the terms of the original contract, QPS assigned the original contract to the defendant QPS 23-10 Development, LLC (“QPS Development”). That same month, General Casualty Company of Wisconsin (“General Casualty” |”) issued a performance bond and established itself as the surety with respect to the concrete work.

In June 2015, QPS Development declared that NMS had defaulted on its obligations under the original contract. Thereafter, QPS Development and General Casualty entered into a surety takeover agreement (the “takeover agreement”) whereby General Casualty undertook "to cause the performance of each and every one of the terms, covenants and conditions of the [original contract]." In August 2015, General Casualty, as surety, entered into a completion contract with Alpha/Omega Concrete Corp. (“AO Concrete”) to complete the concrete work.

On October 8, 2015, Malan, an employee of AO Concrete, allegedly sustained injuries when he fell at the construction site. In December 2015, the plaintiff commenced this personal injury action against the defendants, including QPS Development.

In January 2016, QPS Development submitted a claim to General Casualty in the sum of $12,580,506.56 for damages allegedly relating to New Millennium's default under the original contract. QPS Development and General Casualty settled that claim pursuant to a settlement agreement and release (“settlement agreement”) and an associated assignment of General Casualty's rights and obligations under the completion contract to QPS Development.

In March 2019, QPS Development commenced a second third-party action against General Casualty, asserting, inter alia, a cause of action for contractual indemnification. In its answer, General Casualty asserted a counterclaim against QPS Development for contractual indemnification.

QPS Development demonstrated its prima facie entitlement to judgment as a matter of law on the cause of action for contractual indemnification against General Casualty, and General Casualty failed to raise a triable issue of fact in opposition.

QPS Development submitted, the original contract, the takeover agreement, the settlement agreement, and the assignment. The original contract contains a broad indemnification provision obligating New Millennium to "defend, indemnify and hold harmless" QPS Development, as assignee of QPS Developer's rights under the original contract, with respect to "all losses [and] claims . . . arising out of or in connection with," inter alia, any personal injury sustained as a result of the performance of the concrete work. The takeover agreement incorporates the original contract by reference except in the case of conflict or inconsistencies, in which case the terms of the takeover agreement would "supersede and amend" the original contract. Further, the takeover agreement requires General Casualty to ensure that AO Concrete procured insurance, naming QPS Development and affiliated entities as additional insureds.

General Casualty contended that its indemnification obligation to QPS Development with respect to the plaintiff's personal injury claim was extinguished by the settlement agreement and the assignment. This contention is without merit.

Paragraph 8 of the settlement agreement expressly exempts from release "any claims by third parties for personal injury for which [General Casualty] is liable." This exception to the general release provisions is a specific provision that overrides the general release language. A contrary interpretation would nullify the personal injury exception contained in paragraph 8 of the settlement agreement. Under relevant principles of interpretation, the language of the settlement agreement demonstrates the parties' intent to preserve General Casualty's obligation to indemnify QPS Development with respect to the plaintiff's personal injury claim.

04/03/25 Structure Tone, Inc. v. Merchants Preferred Insurance Co
Appellate Division, First Department
Question of Fact as to Whether Employer’s Liability Was a Proximate Cause of the Plaintiff’s Injuries BUT Any Culpability on the Part of the Plaintiff Would Be Imputed to the Employer When Making That Determination

Old Republic's motion for summary judgment was properly denied because there are questions of fact as to whether the negligence of its named insured, Port Morris Tile & Marble Corp. (“Port Morris”), was a proximate cause of the underlying accident, thus triggering indemnification by Old Republic. The Court found, however, that If the injured plaintiff in the underlying action is found to have been a proximate cause of his accident, then respondeat superior would impute that culpability to Port Morris, his employer. Additionally, Port Morris's foreman testified that Port Morris was responsible for ensuring proper lighting and safety for its employees, which also raises a question of fact as to whether Port Morris may be found negligent.

Where two or more insurers bind themselves to the same risk and one pays the whole loss, the paying insurer has a right of action against his coinsurers for a ratable portion of the amount paid". However, even looking past the issue of whether Old Republic and Scottsdale bound themselves to the same risk, the two are not coinsurers because Old Republic's "other insurance" provision makes it primary, sharing pro rata with other primary policies, while Scottsdale's provision makes it excess. Therefore, "the coverage under Scottsdale's policy containing the excess clause does not come into play, and [its] duty to defend is not triggered, until the coverage under Old Republic's policy containing the pro rata clause has been exhausted".

Editor’s Note: The issue of whether the plaintiff’s culpable conduct – then the plaintiff is an employee – can be imputed to his or her employer is one that has been the subject of debate. If you can impute that liability, can a court ever find that the employer’s liability did not cause the accident, in whole or in part? I don’t like that decision.

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Property

04/03/25 Lok-N-Logs v. Leatherstocking Coop. Ins. Co.
Appellate Division, Third Department
Sporadic Presence at Building Creates Question of Fact on “Occupancy” and “Vacancy” Issues

Plaintiff is the owner of a commercial warehouse facility in Sherburne, New York. The premises were damaged when individuals broke into the premises and stripped out the copper and brass within the building. Plaintiff then presented a claim for coverage under his commercial property policy with Leatherstocking. During the investigation, Leatherstocking confirmed that the second and third floors of the building were classified as vacant, and the last tenants to occupy the first floor of the premises left in December of 2019. As a result, Leatherstocking denied the claim on the basis of the vandalism exclusion which applies where the premises are vacant for more than 30 days prior to the loss and a second exclusion which removes coverage where the premises are vacant or unoccupied for more than 60 days.

In addressing Leatherstocking’s arguments, the Court noted that although unoccupied is undefined “it is the regular presence of inhabitants that makes occupancy.”

With respect to the vacancy exclusion, the Court noted that the policy is classified as “Cold Storage, Warehouse.” Here, plaintiff testified that although there were no active tenants in the building, he did store building materials in the premises as part of his construction business. On balance, the Court noted that a jury could find that the building was used for storage by the owners’ business and, therefore, was not “vacant.”

In addressing whether the building was “unoccupied,” the Court noted that plaintiff’s employees performed maintenance checks two times per week, occasionally stored items in the building and, perhaps even more occasionally, held garage sales at the building. However, the electric was disconnected, and no one was assigned to the premises, by plaintiff, on a regular basis. Thus, as with “vacancy,” the Court concluded a question of fact existed as to whether the building was “unoccupied.”

Potpourri

04/02/25 Thandi v. Otsego Mut. Fire Ins. Co.
Appellate Division, Second Department
Trial Transcripts Are Recoverable as Taxable Costs After Successful Appeal of Trial Verdict

After a successful appeal, defendant sought to tax all appropriate costs under CPLR 8301. This included, inter alia, the costs of trial transcripts. On application to the Queens County Clerk, the Clerk’s Office struck the costs for trial transcripts but entered the judgment on the remaining taxable costs and disbursements.

Defendant appealed, and the Second Department modified the judgment accordingly. Simply, under CPLR 8301, a party is entitled to the cost of trial transcripts because they were necessary for the preparation of the Record on Appeal.

04/01/25 Lora v. Manhattan Interiors, Inc.
Appellate Division, First Department
Lack of Negligence Results in Dismissal of Common Indemnity/Contribution Claims

Co-Defendant Owner attempted to maintain its crossclaim for common law indemnification and/or contribution against Remigio. However, the trial court already determined that Remigio bore no share of the negligence leading to plaintiff’s injuries. Where, as here, there is no active negligence attached to Remigio, it follows that he cannot be responsible for indemnity or contribution claims brought against him. There must be some finding of negligence before risk can be transferred via contribution principles.

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

03/28/25 Tahbaz v. Vigilant Ins. Co.
United States District Court, District of Connecticut
Lack of Defined Terms Sink Coverage Defenses

The Tahbazs purchased a Masterpiece Homeowners Insurance policy from Vigilant and umbrella coverage from Chubb. He sued the insurers for breach of contract and bad faith for failing to provide various coverages when he was captured by the Islamic Revolutionary Guard Corp of Iran for espionage.

In January 2018, the plaintiffs were traveling in Iran as part of wildlife conservation efforts in support of the Persian Wildlife Heritage Foundation, an organization co-founded by Mr. Tahbaz, dedicated to protecting endangered species in Iran. On January 10, 2018, Mr. Tahbaz was wrongfully arrested and detained by the IRGC on falsified espionage charges. The IRGC asserted that Mr. Tahbaz's "efforts to photograph endangered species were a guise to illegally access and collect information within numerous sensitive sites in Iranian territory," and accused Mr. Tahbaz of coordinating and funding the efforts of others engaged in similar activities. That same day, IRGC agents ransacked the plaintiffs' temporary residence in Iran and subjected Mrs. Tahbaz—who was present at the residence—to threats of violence.

A show trial was conducted in the IRGC's Revolutionary Courts at which Mr. Tahbaz was not permitted to present evidence or witnesses. Despite his demonstrable innocence, Mr. Tahbaz was convicted and sentenced to prison for ten years and a $600,000 monetary judgment. On September 18, 2023, following nearly six years of wrongful detention by the IRGC, Mr. Tahbaz was released as part of a diplomatic agreement, and both Plaintiffs were permitted to leave Iran and return to Connecticut.

Before, during, and after the IRGC Show Trial, Mr. Tahbaz was held at the notorious Evin prison, where he was "subjected to torture, prolonged solitary confinement, death threats, and other extreme techniques for interrogation and punishment." As a result, Mr. Tahbaz suffered numerous physical and psychological injuries. While Mr. Tahbaz was detained, Mrs. Tahbaz was contacted by anonymous individuals—believed to be IRGC agents—who offered to ransom Mr. Tahbaz's freedom in exchange for money. Mrs. Tahbaz was also wrongfully prohibited from leaving Iran for the duration of Mr. Tahbaz's detention and was further "subjected to other mistreatment by the IRGC."

Mr. Tahbaz incurred more than $100,000 in legal fees. Moreover, Mr. Tahbaz's extensive post-conviction relief efforts resulted in additional defense costs in excess of $2.2 million. Additionally, "[d]ue to their wrongful detention, Mr. and Mrs. Tahbaz lost income exceeding [$4 million] and incurred substantial medical and psychiatric expenses."

Plaintiffs sought coverage for these costs under the Policies. Despite timely notice, the carriers denied coverage, asserting, inter alia, "that trade and economic sanctions imposed by the Office of Foreign Assets Control ('OFAC') against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States barred all coverage for [Plaintiffs] because their wrongful detention occurred in Iran." Defendants were advised that their position was inconsistent with OFAC guidance. Defendants’ refusal to provide coverage resulted in additional injuries to Plaintiffs, such as delayed compensation, psychological distress, and litigation costs.

The insured sued, claiming (1) breach of contract (Personal Liability coverage); (2) breach of contract (Kidnap Expenses coverage); (3) breach of contract (Family Protection coverage); (4) breach of contract (Uninsured/Underinsured liability coverage); (5) breach of the duty of good faith and fair dealing; and (6) unfair and deceptive practices in violation of the Connecticut Unfair Insurance Practice Act ("CUIPA") and the Connecticut Unfair Trade Practices Act ("CUTPA"). The carriers moved to dismiss.

The Court analyzed the motions as a multi-layered coverage dispute arising from the plaintiffs’ wrongful detention. First, the Court addressed whether the insured was entitled a defense for the Iranian Guard trial. The carriers argued that the espionage trial was not a “suit,” and it did not seek damages for personal injuries. Ultimately, the Court found the term “suit” ambiguous, as these covers did not define “suit.” The Court found the plaintiffs’ argument that the undefined term suit encompasses foreign criminal trials was reasonable; the carriers could cite to no contrary caselaw.

Next, the Court found that the policies’ term “damages” included the $600,000 Iranian monetary penalty. "Damages" was defined as a "sum that is paid or is payable to satisfy a claim . . . resolved by judicial procedure." The Court found that the judgment fit squarely within the definition, especially as the policies failed to include any exclusion for fines, penalties, and non-injurious damages.

Finally, the Court agreed with the insureds that the claims against them involved allegations of “wrongful entry” under the personal injury coverage. Though "wrongful entry" itself is not defined, the Court acknowledged that "it is a basic principle of insurance law that policy language will be construed as laymen would understand it . . ." R.T. Vanderbilt Co., 273 Conn. at 462-63. The insureds allege that the Revolutionary Guard’s allegations against Mr. Tahbaz—in particular, that he "engaged in acts of espionage, including illegally accessing and collecting information within numerous sensitive sites in Iran"—constitute "wrongful entry" within its ordinary meaning. In seeking dismissal, the insurers emphasized that "the gravamen of the charge is espionage—not wrongful entry," and argue that "under no reasonable interpretation can this charge be 'accurately characterized' as a suit for 'wrongful entry.'" In response, Plaintiffs contended that it is the facts alleged by the IRGC, not the title of the charge, that dictate Defendants' obligations under their duty to defend, and that here, the crux of the IRGC's allegations were that Mr. Tahbaz entered property where he was not permitted and engaged in misconduct on that property.

The Court agreed with the plaintiffs and refused to dismiss this claim of breach of contract. [It seems that the insureds should have cross-moved, as the Court has found that there was a duty to defend and indemnify the espionage trial.]

The Court then evaluated the KNR coverage claims. Here, the coverage afforded (a) "expenses incurred as the result of the actual or alleged wrongful taking of a covered person that includes a demand for ransom payment and occurs 'anywhere in the world except those places listed on the United States State Department Bureau of Consular Affairs Travel Warnings list at the time of the occurrence'"; and (b) "expenses incurred as a result of an unlawful act of violence or threat of violence to a covered person by a person who unlawfully entered the covered person's temporary residence while a covered person was present.” The plaintiffs argued that they were kidnapped and held for ransom and were entitled to insurance coverage.

The carriers argued that the “civil authority” and the Travel Warnings exclusions bar coverage. The crux of the coverage is whether the Iranian Revolutionary Guard is a “civil authority” within Iran. Since the term was undefined, the Court held that under these circumstances it is ambiguous. Factual disputes, however, precluded the Court from ruling on the Travel Warning exclusion. The Court noted that every country in the world appears, at some level, on the Travel Advisory system. “But even accepting that Iran was on the Travel Warnings list before it was phased out, Defendants seemingly ignore that under the updated Travel Advisory system, every country in the world is listed and assigned a "Level" between 1 and 4, with "Level 4" meaning "Do Not Travel." In this regard, assuming the Travel Advisory system was in place when Mr. Tahbaz was kidnapped, coverage could arguably be excluded altogether under the Policies, regardless of whether the events occurred in Iran or some comparatively safer country for travel, e.g., Canada.”

Because the policies listed an antecedent travel warning system, the Court would not allow the carriers to “summarily re-write the policies.” This prong of the motion to dismiss was also denied.

The Court, however, granted the motion to dismiss the UM/UIM claim under the umbrella policy. The umbrella coverage, apparently, had no ties to auto liability but rather paid those amounts that a covered person is “legally entitled to receive from an uninsured or underinsured negligent person.” The insureds claimed that there were legally entitled to damages for their mistreatment by the Iranian agents. The carriers argued that the pleading did not establish a right to damages and that the Court lacked jurisdiction over the Iranian Revolutionary Guard agents. The Court held that the Complaint did not allege the particular "applicable statutes and regulations" which entitle the insureds to recovery from the IRGC agents. Because of the pleading deficiency, that count was dismissed. [Presumably, the insureds will be able to replead with specificity.]

The Court dismissed the bad faith counts, holding that the allegations were purely conclusory, failing to plausibly allege bad faith. The unique nature of these claims doomed the CUTPA/CUIPA claim, because the insureds relied entirely on the claims in this matter to try to plead an unfair business practice. This is insufficient under the pleading requirements.

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

04/03/25 State Farm Mut. Auto. Ins. Co. v. Lifeline Med. Imaging, P.C.
Appellate Division, First Department
Summary Judgment Denied as Premature as Insurer Did Not Give Provider an Objective Justification for Requesting Examination Under Oath

State Farm sought a declaration that it was not obligated to provide no-fault coverage for claims submitted by Lifeline, a medical provider. State Farm argued that the provider failed to meet a condition precedent to coverage by failing to appear for duly scheduled examinations under oath (EUOs) and by refusing to produce an individual who could provide the information needed to verify Lifeline's claims. The Supreme Court granted State Farm’s motion for summary judgment declaring that State Farm had no obligation to pay bills submitted by the provider. However, the Appellate Division reversed, denied the summary judgment motion, and vacated the Supreme Court’s declaration.

The Appellate Court held the motion should have been denied as premature, because State Farm failed to offer Lifeline an objective justification for requesting the EUOs, as required by the governing no-fault regulations (see Country-Wide Ins. Co. v. Alicea, 214 AD3d 530, 531 [1st Dept 2023]; Country-Wide Ins. Co. v. Delacruz, 205 AD3d 473, 473 [1st Dept 2022]). The Court explained that the criteria by which State Farm decided that an EUO was required is essential for Lifeline to oppose State Farm's summary judgment motion, and those criteria are exclusively within the State Farm's knowledge and control (11 NYCRR 65-3.5[e]). In addition, despite State Farm's assertion, it did not fully respond to Lifeline's discovery request for a copy of the objective standards relied upon when the EUO was scheduled.

Accordingly, because State Farm's rationale for requesting the EUOs had not been determined, the issue of whether State Farm's no-coverage defense is subject to preclusion could not yet be determined.

04/01/25 Nationwide Gen. Ins. Company v. Raheem Gaines, et al
Appellate Division, First Department
Failure to Attend IME is Non-Precludable Defense Applicable to All Claims

The Supreme Court denied the insurer’s motion for summary judgment declaring that they have no obligation to pay no-fault benefits to defendant medical providers in connection with the underlying motor vehicle collision. The Appellate Division reversed, holding the insurer was entitled to summary judgment because they established that the injured claimant failed to attend properly noticed independent medical examinations (IMEs), which precluded coverage under the policy.

In support of its motion, the insurer submitted the affidavit of an employee from the company that scheduled the IMEs, who stated that he sent two IME notices to the claimant and that the claimant failed to appear on either date. Nationwide also submitted the affirmations of the IME doctor, which were consistent with the scheduling employee's affidavit in that claimant failed to appear for the examinations.

The Court held that the medical providers' argument that the IMEs were untimely was unpersuasive. Where an insurer sends notices scheduling IMEs prior to the receipt of claims, the notification requirements for verification requests under 11 NYCRR 65-3.5 and 65-3.6 do not apply (citing Hereford Ins. Co. v. Lida's Med. Supply, Inc., 161 AD3d 442, 443 [1st Dept 2018]). Further, the Court held that the failure to attend a properly noticed examination is a non-precludable coverage defense, which applies to all claims and is not determined on a bill-by-bill basis. As such, the Court rejected the defendant’s argument that the insurer was required to establish timely disclaimer of coverage in light of claimant's failure to attend the medical examinations.

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

04/07/25 Cnty. of Ulster v. All. of Nonprofits for Ins. Risk Retention Grp.
United States Court of Appeals, Second Circuit
While Policy Is Primary for Liability Assumed Under “Insured Contract,” Court Finds It Co-Excess Due to Direct Insurer-Insured Relationship

While Barbara Hyde, a Jewish Family Services of Ulster County ("JFS") volunteer, was driving Joyce Northacker to a medical appointment through the County of Ulster’s Senior Transportation Program, Hyde lost control of the car and collided head on with a County-owned bus. Hyde died and Northacker was injured. Northacker sued the County, JFS, and the bus driver to recover for her injuries.

The County separately sued Alliance of Nonprofits for Insurance Risk Retention Group (“ANI”), insurer for JFS, seeking a declaratory judgment that ANI Policy covers the County's liability in the Northacker action. Following cross-motions, the district court granted summary judgment for the County.

The Second Circuit agreed with the County that at the time of the accident, Hyde was an insured JFS volunteer for purposes of the ANI Policy and that, accordingly, the ANI Policy treats the County as an insured to the extent of its liability resulting from Hyde's conduct. Specifically, the ANI Policy provided that the definition of "insured" includes "[a]nyone volunteering services to [JFS] . . . while using a covered 'auto' [JFS doesn't] own, hire or borrow to transport [JFS] clients or other persons in activities necessary to [JFS's] business." The Court found that an Agreement for Professional Services (the "Agreement") between the County and JFS was in effect and that the Agreement unambiguously establishes that drivers like Hyder were JFS volunteers, regardless of whether they also acted as volunteers for the County.

Since Hyde qualified as an insured, the Second Circuit also found that, under the ANI Policy, the County was too. This was because the policy includes as an omnibus insured “[a]nyone liable for the conduct of an insured described above but only to the extent of that liability.” While ANI argued that Hyde was an insured by way of an endorsement, rather than those categories of insureds literally “described above” on the form, the Second Circuit noted that Hyde was an insured by way of an endorsement expressly adding JFS volunteers to the definition of “Who is an insured,” placing it “on the same footing with the other categories of insureds” that were “described above.”

Now for the good stuff.

It was undisputed that Hyde’s personal auto insurance provided the first layer of coverage. However, the County was insured by New York Municipal Insurance Reciprocal (“NYMIR”) and the question became “whether the ANI Policy provides the next layer of coverage, or whether it is co-excess with the NYMIR Policy.” The district court found the former. The Second Circuit disagreed.

Finding the policies co-excess, the Second Circuit noted that while “[t]he ANI Policy and the NYMIR Policy contain nearly identical ‘other Insurance’ clauses, except that the ANI Policy ‘is primary for any liability assumed under an “insured contract,”’” ANI’s coverage was not applicable due to liability assumed under such a contract. While the Second Circuit

“agree[d] that if the ANI coverage applied by virtue of the indemnification provision in the Agreement, the ANI coverage would be primary [,] . . . [here,] the County is an ‘insured’ under the terms of the ANI Policy itself; its status as an ‘insured’ under the ANI Policy is independent of any potential right of indemnification from JFS pursuant to the Agreement. Because the liability at issue doesn't involve ‘liability assumed under an “insured contract”’ that is part of an agreement ‘other’ than the ANI Policy, the ANI Policy and the NYMIR Policy are co-excess.”

Maxwell’s Minute: Note the importance of this last issue. The ANI Policy expressly provides that its coverage will pay before NYMIR does, so long as ANI’s named insured, JFS, is found liable under an “insured contract.” This in turn means that NYMIR will need to insist upon the continued pursuit of claims by the County against JFS under the Agreement, so that contractual liability remains on the table. That said, the underlying action was discontinued in January 2024, and it is unclear to me whether that issue was preserved by NYMIR or the County leading up to the discontinuance.

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

03/31/25 Erenrich v. Cincinnati Ins. Co.
United States District Court, W.D. Pennsylvania
Court Granted Insurer’s Motion to Compel Appraisal During Litigation on the Amount of Business Income and Extended Business Income Loss

Cincinnati Ins. invoked an appraisal provision in the policy with its insured Weatherizer, Inc., on the amount of business income and extended business income loss. Weatherizer refused to participate in the appraisal process. Weatherizer insists that Cincinnati's motion is procedurally defective, untimely, and prejudicial and that the meaning of business income under the Policy is beyond the scope of appraisal.

Cincinnati's Motion to Compel Appraisal was granted. Weatherizer was ordered to appoint a competent and impartial appraiser and proceed with the appraisal process.

The case initially involved additional claims and parties, but only Weatherizer's loss of business income and related bad faith claims remain after a partial settlement. Cincinnati has issued payments exceeding the amount it subsequently determined to be the actual loss.

The Court found that all conditions precedent for appraisal had been met, and that Cincinnati's appraisal demand complied with the policy's procedure. The timing of the appraisal demand was reasonable, coming shortly after a court-mandated mediation session and within a reasonable time after discovery. Cincinnati demanded appraisal only eight days after the parties' court-mandated mediation session, a session during which the parties settled part of the litigation. Prior to this settlement, the case involved both additional claims and parties. Post-settlement, only Weatherizer's loss of business income and related bad faith claims remain. The appraisal demand also came within a reasonable time after discovery that included analysis of the loss of business claim and deposition testimony.

The Court relied on precedent from Pennsylvania courts and other jurisdictions to determine that disagreements over valuation methodology fall within the scope of business loss and is appropriate for appraisal. The appraisal provision does not restrict the appraiser's methodology or prohibit calculating business loss based on forensic accounting principles. As Cincinnati explains, methodology determinations pertain to the value of the business loss, not whether the loss was covered, and, thus, are appropriate topics for appraisal.

The well-established public policy of Pennsylvania encourages the settlement of disputes about the amount of loss by appraisal. A condition precedent to appraisal is that the insurer admits coverage and disputes only the dollar value of the loss. A coverage dispute, improper for appraisal, occurs when an insurance company claims an exclusion of a loss under the terms of the insurance policy. A mere disagreement over the extent of damage or whether a covered peril is the cause of certain damage is a dispute regarding the amount of loss and is proper for appraisal.

The Court emphasized the public policy favoring appraisal in Pennsylvania, even after the commencement of insurance coverage litigation.

03/25/25 Belotti v. State Farm Fire & Cas. Co.
United States District Court, M.D. Pennsylvania
Insurer’s Use of Software by Xactimate, Known as "New Construction," and Its Labor Efficiency Setting to Estimate the Repair Costs for Fire Damage to the Plaintiffs' Home Was Not Bad Faith Manipulation of the Xactimate Estimating Application or Bad Faith Use of the Appraisal Process

The Court granted State Farm's motion for summary judgment on all claims. The plaintiffs' motion for class certification and State Farm's motion to exclude expert testimony were denied as moot.

The plaintiffs' home was damaged by fire. The plaintiffs had a homeowners insurance policy with State Farm. State Farm estimated repair costs using Xactimate software with a "new construction" labor efficiency setting. The action challenges State Farm's use of software by Xactimate, known as "new construction," and its labor efficiency setting to estimate the repair costs for fire damage. The plaintiffs argue that the defendant was contractually obligated under the Policy to use a specific estimate setting when estimating the value of their losses. The plaintiffs further contend that when the defendant used a "new construction" setting, rather than its "repair/reconstruction" model, the defendant breached its contract. The defendant has moved for summary judgment on this claim, arguing that it had no contractual duty to use a particular setting when estimating losses and it did not breach its loss settlement obligations.

The adjuster selected the "new construction" labor efficiency because the plaintiffs' home would not be occupied during the repair work, and because once demolition was completed and the wall finishes removed, the repair work would essentially be new construction. The public adjuster’s estimate was substantially higher and prepared using Xactimate estimating software, but with the application of the "Restoration/Service/Remodel" labor efficiency setting. The parties disagreed on the amount of the loss and went through an appraisal process. The final appraisal award was higher than State Farm's initial estimate but closer to its estimate than the public adjuster’s. The appraisal award was not prepared using Xactimate and did not use either Xactimate's "new construction" or "Restoration/Service/Remodel" labor efficiency settings.

The Court held that the insurance policy did not contractually obligate State Farm to use a particular estimation method when calculating repair costs. The Policy unambiguously imposes no contractual duty to use a particular estimate when estimating losses under the provisions, and thus, concludes the defendant did not breach any contractual obligation in creating its estimate.

State Farm did not act in bad faith under the Pennsylvania bad faith statute (42 Pa. C.S.A. § 8371) by initiating the appraisal process or in its handling of the claim and the plaintiffs failed to prove the elements required for a claim under the Pennsylvania Unfair Trade Practices and Consumer Protection Law. An insurer, however, does not need to show correct estimations, but rather a reasonable basis for its decision to deny benefits.

The plain language of the insurance policy did not require State Farm to use any particular estimation method, so there was no breach of contract. State Farm promptly paid the initial estimate and the additional amount after appraisal, showing no bad faith in claim handling. The appraisal process was valid under the policy terms and not evidence of bad faith.

In asserting a bad faith claim, the plaintiffs make allegations of State Farm's bad faith throughout the appraisal process. The Court finds, however, that the plaintiffs have failed to identify any evidence of any frivolous or unfounded refusal to pay proceeds of a policy as required by a bad faith claim. The record shows that State Farm provided a check to the plaintiffs for its estimated damages the same day it provided the plaintiffs with an estimated cost of repairs. Moreover, it is undisputed that State Farm paid an additional $66,690.45, the difference between State Farm's estimate and the ultimate appraisal award, promptly after the conclusion of the appraisal process. The Court agrees that the fact the parties' appraisers ultimately assigned a higher value to the claim than State Farm's estimate does not mean State Farm acted in bad faith. That is, after all, what the appraisal process is for—settling disputes about the value of a claim.

04/01/25 Med. Supply of NY Corp. v. State Farm Mut. Auto. Ins. Co.
New York State Supreme Court, County of Kings
A Signature Is Whatever the Signatory Says it Is, but a Notarial Signature Must Be Consistent With the Signature Affixed Upon the Oath of Office Filed With the Licensing County Clerk's Office

The task of signing with a uniquely scripted flourish of an individualized signature, whether for informal correspondence or legally binding documents, is generally taken for granted until consequences of its unlawful reproduction arise. A signature is whatever the signatory says it is, but a notarial signature must be consistent with the signature affixed upon the oath of office filed with the licensing county clerk's office.

Plaintiff submitted the Kuperman Affidavit in opposition to Defendant's Motion for Summary Judgment in a No-Fault case. The notarial acknowledgment on the Kuperman Affidavit contained the proper statutory stamp and language, but the signature line above "Notary Public" was written as "February" instead of the notary's name. Plaintiff's counsel, who was also the notary public, claimed at oral argument that "February" was his signature. Defendant did not object to the admissibility of the Kuperman Affidavit in its reply but raised the issue at oral argument.

The purpose of notary public laws is to provide certitude of authentication by a licensed governmental official. N.Y. Exec. Law 135-C deems a notary public's electronic signature reliable if it meets standards approved by the secretary of state, including being unique to the notary public, capable of independent verification, retained under the notary public's sole control, attached to the electronic record, and linked to the data in a manner that detects and may invalidate subsequent alterations. N.Y. Exec. Law 135-C and 137 imply that a notary's signature should be unique, capable of independent verification, not easily alterable or reproducible, and consistent with the signature affixed upon the oath of office provided to the licensing County Clerk.

While the intent of the principal signatory to the substance of the document may be an element in determining whether an adopted marking is indeed their signature, this is not the case for a notary public. The defect in the notarial signature on the Kuperman Affidavit is considered a technical defect that can be disregarded in the absence of substantial prejudice to the defendant. The defendant waived its right to object to the defect by not raising the issue in its reply.

The Court found that while a signature can be whatever the signatory claims it to be for a lay person, a notary public's signature must be consistent and verifiable. The use of "February" as a signature was inconsistent with the notary's oath of office and therefore defective. However, the Court determined that this defect was technical in nature and could be disregarded, citing precedents where similar defects were not considered fatal to the admissibility of documents. The Court reasoned that the defendant was not unduly prejudiced by the consideration of the Kuperman Affidavit, as it had a full opportunity to challenge its contents in its reply.

Courts have held that a notary's failure to sign a document is considered a technical defect that may be disregarded or cured by subsequent affidavit if the defect is not jurisdictional and does not cause undue or substantial prejudice to a substantial right. N.Y. C.P.L.R. Law 2001 allows courts to disregard such defects in the absence of substantial prejudice to the defendants.

The Court also held that the defendant waived its right to object to the form of the affidavit by not raising the issue in its reply, pursuant to CPLR § 2001.

The Court granted the Defendant's Motion for Summary Judgment to the extent that Defendant was found to have timely issued its Denials. However, the Court also found that Plaintiff had established a triable issue of fact regarding Outstanding Verification Requests, thus partially denying summary judgment on that issue.

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

03/26/25 Earll v. Farmers Mut. Ins. Co.
South Dakota Supreme Court
Parents Entitled to UIM Benefits After Child’s Death in VMA With Uninsured Motorist. Exclusion Against Public Policy Under the Circumstances

The Earlls’ daughter was killed in a motor vehicle accident when an underinsured motorist (Pigg) ran a stop sign and crashed into her vehicle. The daughter had a policy with Farmers Mutual covering her vehicle that included $100,000 in UIM coverage. Pigg had a policy with Progressive Insurance with limits of $25,000. The Earlls were appointed as co-personal representatives of their daughter’s estate. Progressive tendered the $25,000 to the Earlls and to the Estate. Farmers Mutual gave permission to settle the claim without jeopardizing the UIM claim and paid $75,000 in UIM benefits under the daughter’s policy, offsetting the amount received from Progressive.

The Earlls sought a further $250,000 in UIM benefits under a separate motor vehicle policy they purchased from Farmers Mutual, which provided coverage for two vehicles owned by the Earlls that were not involved in the accident. The policy included UIM coverage for “insureds.” The policy defined an “insured” to include a “relative.” A “relative” was further defined as “a person related to you or your spouse by blood . . . who lives with you.” At the time of the accident, Rebecca lived with her parents and qualified as an insured for the purpose of UIM coverage under the policy.

Farmers Mutual denied UIM coverage to the Earlls based on an “owned by not insured” exclusion in the policy because the daughter was driving a vehicle that was not listed in the declarations of her parents’ policy at the time of the accident. The Earlls commenced a declaratory judgment action, seeking a declaration that they were entitled to UIM benefits for all claims and liability arising from the accident up to the policy limits and that the exclusion violated public policy and was unenforceable. Farmers Mutual argued there were reasonable exclusions from UIM coverage. By contrast, the Earlls argued that the South Dakota Supreme Court has held that similar exclusions violate public policy in the context of uninsured motorist coverage (UM). Due to the shared statutory purpose of UM and UIM coverage and the mandatory requirement both types of coverage, the Earlls argued that the exclusion violated public policy by abrogating the statutorily mandated coverage that is personal to each insured.

The circuit court agreed with Farmers Mutual and granted its motion for summary judgment, acknowledging the purpose of UM/UIM coverage is to protect the injured parties due to the negligence of an uninsured/underinsured motorist. Nevertheless, the circuit court included the exclusion was enforceable based on the South Dakota Supreme Court’s decision in De Smet Insurance Company of South Dakota v. Pourier.

On appeal, the South Dakota Supreme Court noted the public policy of the Legislature for UM and UIM coverage was clear. When read together, the statutes for UM and UIM mandate coverage in every motor vehicle liability insurance policy and require an insurer to pay UM and UIM benefits to any insured who has not fully recovered against an uninsured or underinsured driver. UIM coverage follows the insured and not the insured vehicle. Because the South Dakota Supreme Court’s decision in Pourier had overlooked the public policy underlying UIM coverage and improperly tied the mandatory UIM coverage to the insured vehicle rather than the insured person, the Court found the decision had led to a fragmented application of the law, had created uncertainty in subsequent cases, and was inconsistent with the reasoning in prior and subsequent decisions.

Accordingly, the Court reversed its decision in Pourier and the circuit court’s grant of summary judgment, holding that the “owned but not insured” exclusion to UIM coverage in motor vehicle policies violated South Dakota public policy when used to deny coverage to an insured individual under similar circumstances.

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

03/29/25 Vincent Cusumano Architect P.C. v. Berkshire Hathaway Direct Ins. Co.
United States District Court, District of New Jersey
Court Dismisses Declaratory Judgment and Bad Faith Claims as Duplicative of Breach of Contract Claim, and in Turn Dismisses Breach of Contract Claim Upon a Finding of No Coverage

The plaintiff, a licensed architect, purchased a professional liability insurance policy to replace one from another carrier that was expiring. Plaintiff alleged that, prior to purchasing the policy, Berkshire Hathaway assured that the policy would provide coverage on a claims made basis for potential claims arising out of the plaintiff’s prior operations.

The policy plaintiff purchased included a provision providing that the policy would cover claims of negligence, errors, or omissions in providing professional services, as well as claims against directors or officers of the named insured arising from their actions taken on behalf of the insured. For those kinds of claims, the policy continued, if the named insured first learns about the claim during the policy period, and previously had continuous insurance coverage that would have covered the claim, Berkshire agreed to cover that claim even though it is not the result of an occurrence during the stated policy period. (Emphasis Supplied).

The policy was issued approximately three months after the plaintiff’s prior professional liability policy terminated.

Later, once the Berkshire policy was in effect, plaintiff was sued over a renovation job gone wrong. Berkshire denied coverage under the above-referenced provision, which the District Court calls the “continuous gap provision.” Berkshire then moved to dismiss a handful of the plaintiff’s several causes of action. This decision followed.

The District Court dismissed the plaintiff’s first cause of action, seeking a declaratory judgment that they were owed coverage. The District Court began by noting that declaratory judgment actions commenced (or in this case, removed to) federal court are governed by the federal declaratory judgment act. That act requires there to be an actual controversy allowing the federal court to declare the rights and other legal relations of the parties. The District Court noted that a declaratory judgment is appropriate where the declaration itself would terminate the controversy giving rise to the proceeding. On the other hand, a declaratory judgment is inappropriate under the federal declaratory judgment act where it calls upon the Court to decide present liabilities of one party to another, or where the cause of action is duplicative of any others asserted in the same case.

In this case, the Court dismissed the plaintiff’s cause of action seeking a declaratory judgment, on the basis that it was duplicative of the plaintiff’s breach of contract claim, since both claims arose out of the very same conduct and sought the same relief. The Court also noted that rather than asking the Court to decide upon legal rights and obligations of the parties in anticipation of some future conduct (which the federal declaratory judgment act requires), the plaintiff was using this cause of action to ask the Court to declare Berkshire’s present obligations. Since the underlying action in which the plaintiff was sued was already ongoing, the Court ruled that a declaratory judgment would be inappropriate as the claim was no longer prospective.

Next, the Court examined the above continuous gap provision in assessing the plaintiff’s breach of contract claim. The Court held that the provision on its face barred coverage for the plaintiff’s claim, since there was a three-month gap in coverage between plaintiff’s prior policy and the Berkshire policy. The Court was unpersuaded by the plaintiff’s argument that Berkshire’s representation that the policy would cover the plaintiff for prior work performed, on a claims made basis, since that was a pre-contractual communication, while a breach of contract claim looks only to what is provided by the contract itself.

Lastly, the Court dismissed the plaintiff’s bad faith claim. Under New Jersey law, to sustain a claim against an insurance carrier for bad faith, the plaintiff must show that the carrier had no “fairly debatable” reason for failing to pay the claim, and that the carrier knew and/or disregarded its lack of reasonable basis in denying the claim. The test to determine whether a carrier has a “fairly debatable” reason for not paying a claim is to ask whether the insured could have established a right to summary judgment as a matter of law on its claim at the time of the alleged bad faith conduct. Because the language of the policy on its face barred coverage for the plaintiff’s claim, plaintiff was unable to meet this standard. Also, the Court noted that if a bad faith claim is based on the same conduct as the breach of contract claim, the bad faith claim must be dismissed as supplicative of the breach of contract claim as a matter of law.

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

03/24/25 Mitchell v. Praetorian Ins. Co.
United States Court of Appeals, Fifth Circuit
Texas’ Concurrent Cause Doctrine Bars Coverage Where Insured Was Unable to Segregate Covered and Non-Covered Portions of Claim

In September 2020, Mitchell filed a claim with Praetorian, her homeowner’s insurance company. Mitchell’s claim involved damage to her roof, ceilings, walls, and floors. Praetorian initially concluded that her covered loss fell below her deductible and closed the claim. Through further inspection, Praetorian issued a payment on Mitchell’s claim. Additional payments followed. Mitchell claimed the losses were caused by wind, while Praetorian determined the losses were caused by improper tarping and bathtub water spillover, which fell within exclusions.

Eventually, Mitchell invoked her appraisal rights in October 2021. The appraisal process fell apart as Mitchell contested the proposed scope of settlement. Mitchell then filed suit. After prior motion practice Mitchell’s only remaining claims were her breach of contact claim and statutory bad faith under Texas Code § 541.060(a)(3). Praetorian then moved for summary judgment on the concurrent-causation doctrine. In opposition Mitchell relied upon a report that contained her estimated repair costs.

On appeal, the Fifth Circuit explained Texas’s concurrent-causation doctrine. The doctrine applies when covered and excluded events combine to cause a loss and are inseparable, then the policy’s exclusions apply, and no coverage is afforded. It is the insured’s burden to segregate the damage and an inability to do so is fatal to an insured’s claim.

Under this standard, Mitchell failed to segregate the damages. The report she submitted in opposition contained an estimate of repair costs only. What the report did not do was opine on the causes of loss for any damage claimed. So, Mitchell was left with Praetorian’s expert reports that concluded the loss was either excluded or a combination of both covered and non-covered losses that could not be separated.

Editor’s Note: For those wondering, New York does not follow the concurrent cause doctrine. Instead, New York looks to the dominant proximate cause of a loss to determine coverage. (Greenberg v Privilege Underwriters Reciprocal Exch., 169 AD3d 878 [2d Dept 2019]). Meaning if the dominant proximate cause of a loss is an excluded peril, then the exclusion applies. The inverse is also true.

03/24/25 First Baptist Church Daisetta Tex. v. Church Mut. Ins. Co.
United States Court of Appeals, Fifth Circuit
Payment of Appraisal Award Precludes Bad Faith Claim Absent Independent Tort or Breach

First Baptist submitted claim for to Church Mutual for wind and hail damage. Church Mutual found the claimed damage was below the policy’ deductible. First Baptist then enforced its appraisal rights. Church Mutual then paid the appraisal award. Not happy, First Baptist filed a bad faith suit under Texas Code § 541 and violations of § 542 of Texas’s Insurance Code. Section 542 is Texas’s Prompt Payment of Claims Act.

Texas law holds that when an insured seeks only actual damages are policy benefits already paid via appraisal, then an insured cannot recover for bad faith. First Baptist’s acceptance of the appraisal award was fatal because it failed to present any evidence supporting an independent tort or breach of any duty. For this reason, the Court of Appeals affirmed the grant of Church Mutual’s motion for summary judgment.

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

Still a lull in any cases on serious injury threshold from the Appellate Division. We will try again in two weeks.

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

03/20/25 American Tr. Ins. Co. v. Rutland Med., PC
Supreme Court of the State of New York, New York County
Court Grants Motion to Renew Petition and Vacates Master Arbitration Award, Based on Recent December 2023 Plea Allocution Finding Fraud, Corruption, and Misconduct

In 2018, Denisha Walls allegedly sustained injuries in an auto accident, and filed a first party no-fault claim with American Transit Insurance Company (“American Transit”). In relation to the claim, Rutland Medical PC (“Rutland”) sought reimbursement for treatment to Wells, which American Transit denied.

The claims were submitted to arbitration in 2022, and Rutland was issued an award in its favor. American Transit filed a petition to vacate the award, arguing it was procured by corruption, fraud, and misconduct. American Transit submitted a Federal indictment in support of the petition, alleging that the owners of Rutland participated in a criminal scheme to exploit insurance programs designed to protect victims from 2008 through 2021. The indictment alleges that Respondent’s owners used medical professional corporations they owned to bill insurance companies for unnecessary and excessive medical treatments and falsifying clinical findings of injuries.

The original petition was denied on the grounds that the indictment itself was no proof of fraud.

American Transit subsequently moved to renew the petition, submitting a December 18, 2023, allocution in the Federal action against Rutland’s owners. The plea allocution submitted confirmed that the owner pled guilty and agreed “not to dispute” that from 2008 – 2021 the “defendant…unlawfully own[ed] and r[a]n clinics…including…Rutland Medical.” The plea additionally detailed the scheme perpetrated by Rutland’s owners to fraudulently bill insurance companies in relation to No-Fault benefits, and for coaching medical practitioners to lie under oath during Examinations under Oath.

To succeed on a motion to renew, a party must show that there is (1) new facts not offered on the prior motion or (2) there has been a change in the law that would change the prior determination and offer a reasonable justification for the failure to present such facts in the initial motion.

The Court found that American Transit satisfied the requirements of making a motion to renew. The guilty plea and allocution occurred after the underlying arbitration awards were issued and the original petition was filed. As such, American Transit could not have previously relied on the information to make an argument previously.

Based on the recent evidence submitted, American Transit’s motion to renew was granted. Upon renewal, the Court vacated the prior decision, and vacated the arbitration award dated July 22, 2022, and the master arbitration award dated October 25, 2022.

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

04/11/25 N.Y. Insurance Law § 3420(g) and 11 NYCRR 60-1
New York State Department of Financial Services
Amendments Made by Chapter 356 of the Laws of 2024 to Insurance Law § 3420(g), Effective March 26, 2025

Previously, motor vehicle liability insurers were required to provide supplemental spousal insurance unless the named insured elected in writing to decline or refuse the insurance in the policy.

Chapter 356 of the Laws of 2024 (“Chapter 356”) amended Insurance Law § 3420(g) to require that motor vehicle liability insurers automatically provide supplemental spousal liability insurance only where the first named insured has indicated that they have a spouse on the insurance application.

Insurers are not required to automatically add or remove supplemental spousal liability (“SSL”) insurance from a policy when the named insured’s marital status changes after policy issuance. The named insured must request the addition or removal of SSL insurance in writing.

If a motor vehicle liability policy does not include SSL insurance, the insurer must notify the first named insured at least once a year that SSL coverage is available. The notifications must be contained on the front of the premium notice in boldface type and include an explanation of the SSL insurance and the premium of SSL insurance. The notification must notify the insured that SSL insurance is included in the policy or available.

DOMENICA’S DIARY on BAD FAITH
Domenica D. Hart
ddh@hurwitzfine.com

04/04/25 Ockford, et al v. Encompass Ins. Company
United States District Court for the Eastern District of Pennsylvania
An Insurer’s Low Offer, Failure to Conduct an IME, Failure to Settle a Claim Within Full Reserve Authority, and Disputed Causation Do Not Support a Finding of Bad Faith Where the Insurer Acted Reasonably

On December 16, 2022, Plaintiffs, Ockford and Herbst, were struck by a car, while walking across the street in Newtown, PA. The tortfeasor had liability limits of $25,000. Plaintiffs had an auto policy with Encompass Insurance, providing $100,000 per person in UIM coverage, stacked by two vehicles, for a total of $200,000 per person in UIM benefits. Plaintiffs reported the accident to Encompass on December 22, 2022, and Encompass opened a UIM claim on January 3, 2023. Beginning on January 9, 2023, Encompass periodically contacted Plaintiffs' counsel for information concerning Plaintiffs' injuries, treatment, treatment plans, wage loss, and photographs. Plaintiffs were still treating through September 2023. Upon consent by Encompass, Plaintiffs settled with the tortfeasor for its limits in November 2023. On December 7, 2023, Encompass received emergency room medical records from Plaintiff and was advised further medical records were forthcoming. Based on the medical evidence provided, Encompass made an offer, subtracting the tortfeasor’s payment, to Plaintiffs on December 11, 2023. Further medical records were sent to Encompass in January and March 2024. Encompass made 2 more offers to settle in January and March.

In April 2024, Plaintiffs filed suit in state court claiming breach of contract and bad faith, pursuant to 42 Pa. C.S.A. § 8371. The case was removed to Federal Court. In January 2025, while litigation was pending, Mr. Herbst's UIM claim was resolved. Encompass filed a motion for partial summary judgment, seeking dismissal of the Plaintiffs’ bad faith claims.

Recovery for bad faith under PA statutory law requires a plaintiff must show (1) that the defendant did not have a reasonable basis for denying benefits under the policy; and (2) that the defendant knew or recklessly disregarded its lack of reasonable basis in denying the claim. Absent a definition in the statute, PA has defined bad faith to be any frivolous or unfounded refusal to pay proceeds of a policy. Bad faith is a high burden to meet. It must be proven by clear and convincing evidence and not merely insinuated. The Court, citing to Bostick v. ITT Hartford Grp., 56 F. Supp.2d 580, 587 (E.D. Pa. 1999), noted “[T]his heightened standard requires the insured to provide evidence ‘so clear, direct, weighty and convincing as to enable a clear conviction, without hesitation’ about whether or not the defendants acted in bad faith”. Ockford v. Encompass Ins. Co. at 9.

To defeat bad faith, a reasonable basis for an insurer’s actions or omissions is needed. The Court found Encompass’ reasonable basis for its actions and omissions and addressed each of Plaintiffs’ allegations. Plaintiffs first alleged Encompass’ initial offer of $3,000 and $10,000 respectively to each Plaintiff was highly unreasonable. The Court disagreed. A low offer is not treated as bad faith if there is a reasonable relationship to the insured’s loss. The Court found the initial offer reasonable considering the medical records received as of the offer date. Plaintiffs also argued that Encompass’ increase in the offers to $32,000 and $91,000 respectively, despite no significant changes with Plaintiffs' medical conditions, were arbitrary. Distinguishing two cases Plaintiffs cited wherein allegations of bad faith were sufficient to deny summary judgment, the Court found that there was a precipitating event to explain the increased offers. Encompass increased the offers when it received additional information involving Plaintiffs' medical treatment and wage losses. The Court also dismissed Plaintiffs’ arguments that the offers were lower than the reserves. Failure to settle a claim within the full authority of the reserves is not bad faith. The court indicated its reluctance to set a rule requiring an insurer to make an offer reflecting the reserves when set.

Plaintiffs next argued Encompass failed to require Plaintiffs to submit IMEs prior to litigation to better understand Plaintiffs' injuries and the value thereof. Under Federal and PA law, failure to timely obtain an IME is not bad faith. Given the limited medical records Encompass received initially, it had little, if any, time to schedule an IME or EUO. An Encompass representative set forth, when asked about the failure to schedule an IME, that an IME based on ER records and lien information, without treatment records, would not have been fruitful. Encompass was diligent about making offers and following up on medical records. After the latest offer, Encompass asked for further medical records, wage loss information and all radiological reports and films. Encompass advised Plaintiff that it may request EUOs and IMEs in the future to assist in an evaluation. Plaintiff filed suit in April 2024 without providing any additional information.

Finally, Plaintiffs argued that Encompass acknowledged conflicting testimony as to whether Ms. Ockford suffered a herniated disc in response to Plaintiff’s’ expert report indicating that Ms. Ockford suffered lumbar herniations because of the accident. Addressing well-settled law, the Court held a disagreement on causation or value is not sufficient to establish bad faith.

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

03/14/25 Busato v. Gore Mutual Insurance Company
British Columbia Court of Appeal
The Reference to the Wrong Statute in a Marijuana Exclusion Found in a Homeowners’ Policy Introduced Ambiguity as to Whether That Exclusion Applied to the Cultivation of Marijuana for Medical Purposes Under License; In View of That Ambiguity, This Exclusion Did Not Apply to Exclude a Fire Loss

Anthony Edward (“Tony”) Busato suffers from chronic, debilitating, spinal and shoulder pain – the result of five surgeries that he underwent between 2006 and 2013. In June 2013 Health Canada gave him a license to cultivate marijuana for personal/medical use. He could cultivate up to 73 plants and possess up to 450 gms. The initial license was extended in March 2014 “until the Court otherwise orders”.

Until 2018, marijuana was listed as a controlled substance in Schedule (Section 2) of the Narcotic Control Regulations, C.R.C., c. 1041 (2017), enacted under the Controlled Drugs and Substances Act, S.C. 1996, c. 19 [CDSA].

In 2017, Mr. Busato lived on Vernon Avenue in Peachland, British Columbia. His home was a single storey, well-kept bungalow, situated on a terrace overlooking Lake Okanagan, about a half hour by car south of Kelowna, and about 20 minutes north of Summerland.

On Sunday, April 23, 2017, a fire started accidentally in Mr. Busato’s kitchen that rapidly engulfed his home. He lost everything.

Mr. Busato insured his home with Gore Mutual Insurance Company. The policy was originally issued in 2014 and renewed annually through the fire. Gore investigated and determined that the fire did indeed start in the kitchen. But that investigation also revealed his licensed marijuana grow operation, consisting of about 25 plants. On May 16, 2017, Gore denied coverages for all losses arising from the fire on the basis of the following exclusion:

We do not insure direct or indirect loss or damage, in whole or in part: [. . .]

to dwellings or detached private structures or unscheduled personal property contained in them, used in whole or in part for the cultivation, harvesting, processing, manufacture, distribution or sale of marijuana or any product derived from or containing marijuana or any other substance falling within Schedule (Section 2) of the Controlled Drugs and Substances Act Narcotic Control Regulations; regardless of any other cause or event that contributes concurrently or in any sequence to the loss or damage

The exclusion refers to substances listed in the “Controlled Drugs and Substances Act Narcotic Control Regulations”. There is not now, nor was there at the time of the fire, a statute or regulation with this title. The Regulations are enacted under the CDSA.

Following the discovery of the legal grow op, Gore did not void the policy and refund the premium.

Mr. Busato retained counsel who filed an action against Gore. Gore defended on the basis that the exclusion covered a class of property that it did not agree to insure; that is, property used for the cultivation, harvesting, or processing of marijuana.

The action was heard under summary trial procedure on November 15, 2021.

The Trial Judgment

The parties and the Court relied on a 2010 Ontario trial judgment, Pietrangelo v. Gore Mutual Insurance Company, that was upheld on appeal, where the Court in that case interpreted an identically worded exclusion issued by the same insurer. In that case, the insured owned a rental property. The trial judge described the tenant as “… a person of questionable character and of even more dubious entrepreneurial ability.” The tenant decided to use part of his stash to make marijuana resin. He used several canisters of butane gas and tubing to heat the marijuana and turn it into a liquid. Instead of producing resin, he caused an explosion, and “… in the ensuing fire [the tenant] and his friend … were badly burned, and the house destroyed.” The tenant pleaded guilty to two criminal offences: intentionally or recklessly causing damage by fire or explosion to a dwelling house and unlawfully producing cannabis resin. The insured was unaware of the tenant’s activities. The insured were described by the trial judge as a diligent and innocent landlord. Citing the marijuana exclusion set out above, Gore denied coverage. That court held:

On a plain and simple reading, the Marijuana Exclusion can be seen to consist of three separate and distinct elements: the first relating to marijuana; the second relating to any product containing or derived from marijuana; and the third relating to any other scheduled substance. These distinct elements are not conjunctive; each is set off by the disjunctive “or.” Thus, the excluded property includes: (a) property used for the processing, manufacture, or sale of marijuana, or (b) any product derived from or containing marijuana, or (c) “any other substance falling within Schedule (Section 2) of the Controlled Drugs and Substances Act Narcotic Control Regulations.” Mr. Arquette’s activity is caught by the second of these disjunctive elements. Any ambiguity arising from the unclear, inaccurate wording in the third element does not and cannot reasonably be seen to derogate from the clear meaning of the first or second element. Because the elements are disjunctive, the meaning of one is not modified or altered by another.

Mr. Busato argued in this case that the marijuana exclusion is lengthy, poorly drafted, inherently confusing, and ambiguous. The trial judge disagreed, holding that the exclusion is not ambiguous: citing Pietrangelo, the poorly worded third category does not implicate the other two clear instances where the exclusion applies.

Mr. Busato then argued that the exclusion is ‘clearly’ directed at illegal marijuana cultivation. The trial judge disagreed, stating that on a plain reading, it excludes all marijuana-related uses of insured property, whether the uses are legal or illegal. To restrict it to illegal marijuana uses would be an unduly narrow and inconsistent interpretation of the plain wording of the Exclusion.

Mr. Busato then argued that for the exclusion to apply, the fire must have arisen from marijuana cultivation. The trial judge again disagreed, holding that it was not persuaded that the Exclusion requires the insured’s marijuana-related activities to have caused the fire. Rather, citing Pietrangelo, the exclusion removes from coverage all dwellings, used in whole or in part, for any marijuana-related activities, regardless of the cause of the loss.

Mr. Busato then argued that he was entitled to relief from the forfeiture of his insurance, citing s. 32 of the British Columbia Insurance Act that it is unjust and unreasonable for the Court to apply an exclusion that is not causally related to the loss:

The trial judge held that the Supreme Court of Canada stated in a decision known as Marche that is not necessary for a breach of condition to be casually related to the loss and therefore Mr. Busato’s argument failed.

For these reasons, the trial judge held that Gore was entitled to rely upon the exclusion to deny coverage for the loss.

The Appeal

Mr. Busato appealed the trial judgment to the British Columbia Court of Appeal. The Court of Appeal found that the exclusion is ambiguous and cannot be relied upon to deny the fire loss.

With reference to Pietrangelo, the Court of Appeal stated that Gore is relying upon the first and third categories excluded by the marijuana exclusion. The third category was found to be “unclear, inaccurate” in Pietrangelo. This creates an ambiguity that cannot be resolved using general rules of construction: “It surely cannot be said that the average person would instinctively read the exclusion as containing “… three distinct subcategories of excluded coverage; each … separated by the disjunctive ‘or.’ Nor can it be said that the average person would be capable of correctly parsing a reference to incorrectly cited legislation and its accompanying regulations and schedules.”

Mr. Busato’s argument that the marijuana exclusion is aimed at limiting the risks associated with the cultivation of illegal drugs demonstrates this ambiguity as that is an alternative, reasonable interpretation of the exclusion. The Court of Appeal then stated: “I accept that …[Mr. Busato]… did not give evidence about his expectations but it is reasonable for an insured party to expect that an exclusion, which is drafted in a way that targets illegal activity, would not apply to their legal use of property.”

The ambiguity must be resolved against Gore who had the opportunity since 2010 when the Pietrangelo decision was issued to modify the marijuana exclusion to remedy the confusion generated by the inaccurate statutory references. When reading contra proferentum in this fashion, the exclusion does not apply to exclude Mr. Busato’s fire loss.

The Court of Appeal elected to provide comment on the relief from forfeiture argument, even though it was not required to do so, given the findings on ambiguity. In that regard, that Court stated that Marche stands for the proposition that the relief from forfeiture provisions apply where the terms or conditions produce unjust or unreasonable results: Marche at paras. 10–11. Unjust or unreasonable results may flow from the operation of an exclusion clause as well as a breach of condition, and, therefore, these ameliorating provisions that exist in all common law provinces apply to both exclusions and conditions. However, this is an equitable remedy. It is contrary to the principles of utmost good faith to apply relief from forfeiture principles where there has been deliberate concealment by the insured of material changes to risk.

In this case, the trial judge erred as she considered the exclusion in the abstract and did not consider whether the operation of the exclusion, in these circumstances, resulted in an unjust or unreasonable result for Mr. Busato. Gore did not offer evidence of the underwriting intent as to why the marijuana exclusion should apply to licensed and therefore legal marijuana grow operations. The trial judge improperly relied on the Pietrangelo decision to justify her decision not to extend relief from forfeiture. Here “… [Mr. Busato] … was using medicinal marijuana to relieve chronic and debilitating pain experienced following back surgery. He sought and obtained a license that permitted him to grow up to 73 marijuana plants. He had 25 plants at the time of the fire. While not determinative, the cause of the fire had nothing to do with his marijuana plants, and, as the trial judge found, and there was no suggestion that the appellant misled or misrepresented the insurer in any way… In my view, these circumstances support a finding that it would be unjust or unreasonable to give effect to the exclusion.” (emphasis added). The Court of Appeal concluded by stating that “, if it were necessary to do so, I would grant relief from forfeiture under s. 32 of the Act.”

Comment

There was no discussion at trial or on appeal as to whether Mr. Busato had told his broker that he grew licensed medical marijuana. The Court of Appeal stated that there was no suggestion that Mr. Busato misled or misrepresented that fact to his insurer – however, there does not seem to be an evidentiary reference to that conclusion.

The Court of Appeal seemed to be particularly frustrated by Gore Mutual's failure to correct the statutory reference in the marijuana exclusion clause, despite the nearly seven years that had elapsed following the issuance of the Pietrangelo judgment which highlighted the error and the confusion it caused. This appeared to motivate the Court of Appeal to identify ambiguity in the clause, ultimately leading to a reversal of the trial court's decision. A secondary issue was the fact that Gore failed to distinguish between licensed, legal, marijuana grow operations and those that are illegal and failed to provide any evidence as to why, from an underwriting perspective, they should have the same level of exclusion.

Labor Law Pointers - Volume XIV, No. 5

Thu, 03 Apr 2025 13:46:08 +0000

Volume XIV, No. 5
Wednesday, April 2, 2025

Note from David R. Adams:

Do you have a situation? We love situations. Give us a call, send an email, drop by; we truly enjoy solving complex Labor Law and risk transfer issues.

Let me start this edition by congratulating Sarah Schulz on the birth of her daughter Caroline Jane. She now has to care for two babies, Caroline and Marc, as well as a 3-year-old. Marc Schulz will be out for a while on daddy duty but will be back soon.

This month, we have three cases which are the direct offspring of the Wilinski decision, and I have a soft place in my heart for that case. It was that case that started Labor Law Pointers in our First Edition. I had always read and analyzed every Labor Law case for myself, but that decision caused me to write up my thoughts and send them to clients and carriers. It was very well received and thus, on November 2, 2011, 13 ½ years ago and only eight days after the decision, the first edition of Labor Law Pointers came out to a vast audience of about 30 people who had requested to be included.

We now have a lot more readers, and I have a lot more help. However, in the end, it is still all of us on the Labor Law team here at Hurwitz Fine reading and discussing every single New York Labor Law and risk-transfer associated case to stay ready to address any and all issues, or at least be as prepared as anyone can be, in this ever-changing world of New York Labor Law.

Interestingly, the second case I analyzed was the Court of Appeals decision in Grove v Cornell which would wind up on my desk just about a week later after the court reinstated the § 240(1) clam against Cornell.

In our video offering this month, we have an office building being demolished to allow for the building of a new store. The driver of the front loader, hereinafter the plaintiff, worked for a company which was hired to knock down the building. He intended to tie a chain around the central pillar and back away to take down the building. When he went to get the chain, he discovered that the chain was all the way on the other side of the building where he had accidentally left it that morning on the low boy. Not wanting to waste time going to get it he thought, incorrectly as it turns out, that he could give the pillar a quick bang with the bucket and back out quickly. The result is visible below. Plaintiff sustains a nasty back injury, § 240(1) case?

Well, if we start with the prima facie requirements, the injured worker was a person so employed and thus a valid plaintiff, the building owner is a valid defendant, he was engaged in demolition so the overall job is a covered activity, and the plaintiff was injured by a falling object even though it did not hit him. The defendant will claim sole proximate cause and the elements there are 1) that an appropriate safety device be supplied and that 2) the device be available to the plaintiff and 3) the plaintiff must know he is expected to use that safety device and 4) the plaintiff must either fail to use the safety device or misuse the device 5) for no good reason. Here the chain would have been the appropriate safety device which was available. The plaintiff knew he was to use the chain, but he did not want to waste time getting it, so he also failed to use it. Should be summary judgment for the defendant on this one.

Remember that we are always here to answer any questions or to just talk an issue through. Please feel free to ask if you and/or your team want a refresher on Labor Law or Risk Transfer opportunities, we are happy to help.

That’s it for this month. As always, please feel free to reach out to us with any questions Labor Law or risk-transfer related. Hope you learned something.

-David

Hurwitz Fine P.C.
The Liberty Building
424 Main Street, Suite 1300
Buffalo, New York 14202
Phone: 716.849.8900
Fax: 716.855.0874

Email: dra@hurwitzfine.com

Labor Law Pointers is published the first Wednesday of each month. If you know of others who may wish to subscribe to this free publication, please feel free to forward it. If you wish to subscribe or unsubscribe, please send an e-mail to dra@hurwitzfine.com or call the Editor/Labor Law Team Leader David R. Adams directly at (716) 849-8916.

Don’t forget to subscribe to our other publications:

Coverage Pointers: This twice-monthly electronic newsletter summarizes important insurance law decisions from appellate courts in New York State with the occasional snapshot across borders. Coverage Pointers, the electronic newsletter that started it all, continues to offer guaranteed publication every other Friday, and a read-at-a-glance summary of important decisions as they happen. Contact Dan Kohane at ddk@hurwitzfine.com to subscribe.

Medical & Nursing Home Liability Pointers: Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Liz Midgley at emm@hurwitzfine.com to subscribe.

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Cruz v PMG Constr. Group LLC
March 4, 2025
Appellate Division, First Department

Plaintiff, a metal and glass worker, was injured when a 225 to 250 pound, 4' x 10' glass window tipped over and struck the back of his legs. Prior to the accident, the window had been leaning against a stack of approximately four other windows, all similar in size and all of which were propped up against the wall. Plaintiff had just removed a suction cup carrier from the window and had taken only three to four steps towards a nearby A-frame dolly when the window fell on him. Plaintiff commenced an action against defendants, alleging violations of Labor Law §§ 240(1), 241(6), and 200. The Trial Court denied defendants’ motion for summary judgment dismissing the complaint.

Labor Law § 240(1) (DRA)

The Appellate Division unanimously affirmed the Supreme Court holding that it properly denied defendants' motion for summary judgment because the parties submitted conflicting expert opinions raising triable issues of fact. Defendants' expert engineer opined there was a de minimis elevation risk because the window could not generate sufficient force as it toppled over and fell a short distance to the floor. Therefore, the window did not require additional securing devices. In opposition plaintiff's expert opined, based on empirical data, industry standard, and witness testimony, that the weight, length, and height of the glass window, when toppled, created a significant, harmful force, even over the course of a relatively short descent, that warranted securing for the purpose of the undertaking (see Wilinski v 334 E. 92nd Hous. Dev. Fund Corp., 18 NY3d 1, 10 [2011]; Lopez v 106 LPA LLC, 222 AD3d 526, 527 [1st Dept 2023]; Grigoryan v 108 Chambers St. Owner, LLC, 204 AD3d 534, 534 [1st Dept 2022]).

PRACTICE POINT: Conflicting expert opinions preclude the court from rendering a decision as to the § 240(1) claim as the defendant expert opines that the glass does not need securing as the window could not generate sufficient force to injure, and the plaintiff’s expert opines the opposite. Sounds like a true question of fact but a bit of a head scratcher as the plaintiff is claiming injury, and thus, it would seem to me that it did generate sufficient force to injure unless the plaintiff was not actually injured in the accident.

The First Department held that the lower court should have dismissed plaintiff's Labor Law § 241(6) claim predicated upon Industrial Code (12 NYCRR) § 23-2.1(a)(1). The Industrial Code regulation requires that materials not obstruct a passageway, walkway, stairway, or other thoroughfare. Plaintiff failed to raise an issue of fact as to whether there was a violation because the evidence shows that "the materials were not . . . obstructing a passageway".

Labor Law § 200 and Common-Law Negligence (EDA)

The Appellate Division unanimously reversed the Supreme Court finding that Plaintiff testified at his deposition that he received his work instructions only from his employer, a glass subcontractor. There was no evidence that defendants supervised and controlled the means and methods of plaintiff's injury-producing work. The Court reiterated that the general authority of certain defendants to stop the work for safety reasons is insufficient to raise a factual issue (see Villanueva v 114 Fifth Ave. Assoc. LLC, 162 AD3d 404, 406-407 [1st Dept 2018]).

Rivera v 454 W. 57th St. Holding LLC
March 11, 2025
Appellate Division, First Department

Plaintiff and his coworkers were replacing a drainpipe at a building owned by defendants when a section of the drainpipe allegedly fell and struck plaintiff in the face, injuring him. The Trial Court granted plaintiff’s motion for partial summary judgment on his Labor Law § 240(1) claim.

The Appellate Division unanimously affirmed the Supreme Court holding that Plaintiff established that the pipe "required securing for the purposes of the undertaking" (Rivas v Seward Park Hous. Corp., 219 AD3d 59, 64 [1st Dept 2023]). It further rejected the argument that the pipe could not be considered a permanent part of the building, given that it was installed by plaintiff and his coworkers just moments before it fell on him.

PRACTICE POINT: A falling object which was in need of being secured but which is not properly secured such that it falls and causes injury, will be a § 240(1) case with summary judgment for the plaintiff in most cases.

Harnisch v City of New York
March 18, 2025
Appellate Division, First Department

On the day of the accident, Plaintiff was employed by non-party, Outfront Media as a working foreman, billboard erector and/or installer assigned to a project located at or near the Major Deegan Expressway, South of Van Cortlandt Park, near West 234th Street, Bronx County. He was instructed by his supervisor to assess the integrity and safe access to an outdoor advertising billboard at the site and tasked to hang an advertisement.

Plaintiff testified that he previously completed a refurbishment of the subject billboard structure, which included permanently affixing a safety cable to the structure and removing steel that deteriorated or was damaged. On the date of the accident, the plaintiff was tasked to assess and inspect the damage to the steel and tag for future structural repairs.

Upon arrival at the job site, plaintiff and a coworker set up a 24-foot-long fiberglass and aluminum Werner extension ladder owned by plaintiff's employer. The ladder was then secured to the billboard's "catwalk" (about 19-feet high) with hooks and a strap. He inspected the ladder before using it and believed it was in good working order and in "usable condition”. He also testified that he knew how to check the ladder for cracks in the fiberglass rails; that the rungs were securely attached; and that the safety locks were in working order. Plaintiff and his fellow coworkers climbed the subject ladder to the structure one at a time to perform their assigned tasks. At the time of the accident, the plaintiff unclipped his lanyards from the billboard structure to permit him to descend from said structure. When the plaintiff got onto the extension ladder to descend, the ladder suddenly and without warning retracted and caused him to fall to the ground and sustain injury.

CSX Transportation, Inc. (“C-CSX”) and EIB Riverdale Crossing LLC (“EIB”) moved for summary judgement dismissing plaintiff’s § 200, 240(1), and 241(6) Labor Law claims against then. Plaintiff moved for summary judgment pursuant to Labor Law § 240(1) and 241(6).

The Trial Court denied C-CSX and EIB’s motion for summary judgment as to plaintiff’s 240(1), 241(6) and § 200 claims, and denied plaintiff’s motion for summary judgment.

Labor Law § 241(6) (TPW)

The Appellate Division unanimously affirmed the Supreme Court finding that Plaintiff's work replacing a billboard advertisement without changing the structure of the billboard was "more akin to cosmetic maintenance or decorative modification than to altering for the purposes of Labor Law § 240(1). Further he was not "effect[ing] a significant physical change to the configuration or composition" of the billboard. (Castaneda v Amsterco 67, LLC, 220 AD3d 406, 406 [1st Dept 2023]

PRACTICE POINT: The changing of the face of a billboard is not a change to an actual structure and thus does not qualify under § 240(1). In an aside, where an addition is added to the actual billboard then the structure was altered, and a § 240(1) case is valid.

The First Department held that because "no construction, excavation, or demolition was ongoing at the time of plaintiff's accident," plaintiff's Labor Law § 241(6) claim was not viable.

Labor Law § 200 and Common-Law Negligence (EDA)

The Appellate Division unanimously reversed the Supreme Court finding that it should have granted the dismissal of the Negligence and Labor Law § 200 claims. Plaintiff's claim arose “from the method of work, involving an inadequate ladder," but CSX and EIB neither supplied the ladder nor exercised supervisory control over the work, therefore, no liability attaches under Labor Law § 200 or common law negligence. Yousuf, 219 AD3d at 1186; see also Breslin v Macy's, Inc., 211 AD3d 569, 569-570 [1st Dept 2022]).

Lucas v City of New York
March 18, 2025
Appellate Division, First Department

Plaintiff was working as a journeyman electrician installing wall thermostats for a renovation project at Columbia's Mudd Hall when a stack of 8 to 10 pieces of plexiglass tipped over and struck his feet, injuring him. Each plexiglass panel was approximately 9 feet tall, 46 inches wide, ½-inch thick, and weighed between 200 to 300 pounds. Plaintiff testified that the stacked panels were resting lengthwise on the ground against a wall, reaching the approximate height of his waist.

Columbia owned the premises and ACC Construction was the general contractor on the project. Nonparty DirectAire subcontracted the Schneider defendants to supply the thermostat components and related software. The Schneider defendants subcontracted plaintiff's employer to install the thermostats. ACC Construction subcontracted Workwell to install demountable partitions and Workwell in turn hired third-party defendant American Storage & Transportation, Inc. to deliver Workwell's materials to the site, including the glass panels at issue.

The Trial Court denied Columbia and ACC Construction’s motion for summary judgment dismissing plaintiff’s Labor Law §200 and common-law negligence claims, and their motion for partial summary judgment on contribution and common-law indemnification against Workwell. The Trial Court also granted plaintiff’s cross-motion for summary judgment on Labor Law § 240(1), and granted Schneider defendants motion for summary judgment dismissing the third party complaint against then,

The Appellate Division unanimously affirmed the Supreme Court. Initially the court found that defendants’ argument the cross motion was untimely unavailing because plaintiff's cross-motion sought nearly identical relief as Columbia's and ACC Construction's motion for summary judgment on the same claim. Further, it found that plaintiff established prima facie entitlement to summary judgment through deposition testimony and photographs. The unrebutted opinion of plaintiff's expert established that even though the load was positioned on the same level as plaintiff and only fell a short distance, the weight of the plexiglass panels was capable of generating extraordinary force such that securing devices of the kind enumerated in Labor Law § 240(1) were needed to stabilize the load and make the worksite safe (see Wilinski v 334 E. 92nd Hous. Dev. Fund Corp., 18 NY3d 1, 10 [2011]. Columbia and ACC Construction failed to raise a triable issue of fact, and also as a result fail to prove their sole proximate cause argument.

PRACTICE POINT: We have been preaching for years that experts help. In this case, unlike the Cruz case above, only the plaintiff retained an expert to opine that even though the load was positioned on the same level as plaintiff and only fell a short distance, the weight of the plexiglass panels was capable of generating extraordinary force such that securing devices of the kind enumerated in Labor Law § 240(1) were needed to stabilize the load and make the worksite safe”. (Language from the Wilinski decision from the Court of Appeals.)

Labor Law § 200 and Common-Law Negligence (EDA)

The Appellate Division unanimously affirmed the Supreme Court’s denial of the motion to dismiss these claims against ACC and Columbia because there was evidence that ACC Construction instructed Workwell where to stage the glass panels at the worksite. Moreover, there was evidence that ACC Construction's staging instructions differed from the regular practice of Workwell's delivery subcontractor, raising triable issues of fact as to whether ACC Construction supervised the means and methods of the injury producing work or had a part in creating a hazardous staging condition.

Indemnity Issues in Labor Law (PCSM)

The Appellate Division found that the lower court properly denied Columbia’s and ACC’s motion for partial summary judgment on their causes of action for contribution and common-law indemnification against Workwell. The Appellate Division found triable issues of fact as to whether Workwell was non-negligent in the cause of plaintiff's accident and held that ACC, as the indemnitee, must show that it was non-negligent and neither caused the accident nor supervised and controlled the injury-producing work. The Appellate Division also found triable issues of fact as to whether ACC was negligent and contributed to the happening of plaintiff's accident by directing the placement of the glass panels and by directing that the staging take place while other trades were working in the area.

The Appellate Division also found that the lower court properly denied Columbia's and ACC's motion for summary judgment against Workwell for breach of contract for failure to procure insurance. The Appellate Division noted that Columbia and ACC were required to show via testimonial or documentary evidence from Workwell's insurer that they were not named as insureds on any policies issued and held that Columbia's and ACC's unsubstantiated statements that Workwell lacked the requisite insurance did not meet their prima facie burden.

Argueta v 39 W 23rd St. LLC
March 25, 2025
Appellate Division, First Department

Plaintiff was injured when a metal post which was 9 to 11 feet long and weighed approximately 150 pounds and was leaning against a truck, fell on him as he was kneeling to adjust other posts. The Supreme Court granted plaintiff's motion for summary judgment on the Labor Law § 240(1) claim as against defendants 39 W 23rd Street LLC and Pizzarotti LLC.

The Appellate Division unanimously affirmed the Supreme Court finding that Given the weight and length of the post and the distance it fell, Plaintiff’s testimony established that plaintiff was exposed to an elevation-related risk. In opposition, defendants failed to submit evidence to raise a triable issue of fact. Defendant proffered unsworn statements that the posts weighed 30-50 pounds, which were hearsay and were offered for their truth, did not raise an issue of fact.

Plaintiff also established that the failure to secure the post with an adequate safety device was a proximate cause of his injuries. In opposition, defendants failed to establish that the posts were purposely not tied off because they were in the process of being loaded onto the truck, as they did not submit any evidence to support this assertion

PRACTICE POINT: Wilinski again, heavy post falls from ground level onto plaintiff, causes injury, plaintiff wins. We knew that Wilinski was going to be an important case, and bad for us, from the day it came out.

Velez v LSG 105 W. 28th, LLC
March 27, 2025
Appellate Division, First Department

Plaintiff fell from an elevation of five feet. He was not provided with an adequate safety device and was instructed by his foreman to climb a concrete form to complete his assigned task. The Supreme Court granted plaintiff's motion for summary judgment on his Labor Law § 240(1) claim against defendants/third-party plaintiffs LSG 105 West 28th, LLC and Flintlock Construction Services LLC, denied LSG and Flintlock's motion for summary judgment dismissing the Labor Law § 240(1) claim and for summary judgment on their third-party claims for contractual indemnification, common-law indemnification, and contribution as against third-party defendant Construction & Realty Safety Group, Inc. (CRSG), and granted CRSG's motion for summary judgment dismissing the third-party complaint,

Labor Law § 240(1) (DRA)

The Appellate Division unanimously affirmed the Supreme Court. Plaintiff established his prima facie case by submitting proof that he fell from an elevation of five feet, that he was not provided with an adequate safety device — namely, a ladder or harness — and that he was instructed by his foreman to climb a concrete form to complete his work. Plaintiff testified that his employer's general practice was to climb the concrete forms, rather than using a ladder, and that his foreman followed this practice. Plaintiff's testimony also established that even though ladders were generally available, he was not instructed to use one, nor did he know if any ladders were in the location he was working on the day of the accident.

In opposition, defendants failed to raise a triable issue of fact as to whether plaintiff was the sole proximate cause of his injuries or a recalcitrant worker because he did not use a harness or ladder. Although ladders and harnesses were generally available on site, defendants failed to show that plaintiff knew that he was expected to use them or that he decided not to use the safety equipment for no good reason.

PRACTICE POINT: This case points out the not-so-subtle point that even if you tell your employees that they must always use a safety device, here a ladder, but allow then to do the task without the safety device, here climbing the form instead of using the ladder, you have provided tacit approval for not using the safety device. In the instant case it is even worse, the employer is alleged to have actually directed the employee not to use the safety device, and therefore never had a chance in opposing the summary judgment motion.

Indemnity Issues in Labor Law (PCSM)

The Appellate Division found that the lower court properly denied summary judgment in favor of LSG and Flintlock as to their third-party claims for contractual indemnification, common law indemnification and contribution against CRSG. The Appellate Division noted that the contractual indemnification provision in the parties' agreement had a requirement that CRSG be negligent for the indemnification provision to be triggered and there was no evidence of negligence in the record. Likewise, the Appellate Division also found that the common-law indemnification and contribution claims were also properly dismissed as they also require a finding of negligence.

Ramirez-Gomez v Empire Today, LLC
March 5, 2025
Appellate Division, Second Department

Plaintiff was performing construction work at a property in New Jersey owned or controlled by the defendants when he was injured by a falling radiator. Plaintiff brought an action alleging violations of Labor Law § 200, 240(1), and 241(6). The Trial Court granted defendants Empire Today, LLC (“Empire”) and Kennedy All Flooring, LLC’s (“Kennedy”) motions to dismiss plaintiff’s common-law negligence claims against them.

Labor Law § 200 and Common-Law Negligence (EDA)

The Appellate Division unanimously reversed the Supreme Court’s dismissal of these claims against Empire and Kennedy for failure to state a claim holding that while "the protection afforded to New York employees by the Labor Law, including Labor Law §§ 200, 240(1) and 241(6), has no application to an accident that occurs outside New York State, even where all parties are New York domiciliaries" (Osborn v 56 Leonard LLC, 138 AD3d 624, 624, the inapplicability of the Labor Law to the case at bar is not a proper ground, standing alone, to dismiss the cause of action sounding in common-law negligence.

Ramos v Kent & Wythe Owners, LLC
March 5, 2025
Appellate Division, Second Department

In September 2016, the plaintiff allegedly was injured while working as a laborer for the third-party defendant R & M Repairs and Maintenance, Inc. (hereinafter R & M), a subcontractor hired by the defendant L & M Builders Group, LLC (hereinafter L & M Builders), to perform cleaning services at a building under construction. On the date of the accident, the plaintiff was using an A-frame cart to move sheetrock across an unfinished concrete floor at the construction site. The plaintiff allegedly was injured when the A-frame cart turned over and fell, along with the sheetrock, trapping the plaintiff's legs and waist.

The plaintiff commenced this action against the defendants, Kent & Wythe Owners, LLC, L & M Kent & Wythe Managers, LLC, Congress Builders, LLC, and L & M Builders (hereinafter collectively the L & M defendants) to recover damages for personal injuries. The L & M defendants thereafter commenced a third-party action against R & M, inter alia, for indemnification.

The Trial Court denied plaintiff’s cross-motion for summary judgment on his Labor Law § 240(1) claims, denied plaintiff’s motion for leave to amend the bill of particulars, and granted third-party plaintiffs and third-party defendant’s motions for summary judgment dismissing the complaint.

Labor Law § 241(6) (TPW)

The Appellate Division unanimously affirmed the Supreme Court holding that L & M defendants and R & M established, prima facie, that the plaintiff's injuries were not caused by an elevation-related or gravity-related risk within the scope of Labor Law § 240(1). In opposition, the plaintiff failed to raise a triable issue of fact.

PRACTICE POINT: Welcome to the Second Department. Unlike the First Department decisions above citing Wilenski, the second held that a cart full of sheet rock which tips over and lands on the plaintiff. Now there are two possibilities that I can see for the decision, as none are specifically provided by the court. The easy one would be that the cart was mobile and thus could not be secured against tipping over. The other is that this is the Second Department, and they put more responsibility on the plaintiff for his or her actions. I get it, it is likely the first reason, but a man can hope, can’t he?

Labor Law § 241(6) (TPW)

In affirming the grant of that portion of defendants’ motions for summary judgment, the Second Department reiterated that "Labor Law § 241(6) imposes a nondelegable duty upon owners and contractors to provide reasonable and adequate protection and safety to construction workers" … "to establish liability under Labor Law § 241(6), a plaintiff must demonstrate that his or her injuries were proximately caused by a violation of an Industrial Code provision that is applicable under the circumstances of the case."

Defendants established that the Industrial Code provisions relied upon by plaintiff were inapplicable to the facts of this case. In particular, the evidence showed that the accident did not occur in a "passageway" as contemplated by 12 NYCRR 23-1.7(e)(1). Moreover, the alleged grooves in an unfinished concrete floor at the construction site, which were described as having a depth of approximately one inch, were not the type of hazard regulated by 12 NYCRR 23-1.7(e)(2). In opposition, plaintiff failed to raise a triable issue of fact as to the applicability of the Industrial Code provisions upon which he relied.

Labor Law § 200 and Common-Law Negligence (EDA)

The Appellate Division reversed the Supreme Court finding it erred in dismissing the Labor Law § 200 claim. L & M defendants and R & M failed to establish, prima facie, that the plaintiff had the means necessary to safely move the sheetrock on the day of the accident, that the L & M defendants did not have the authority to exercise supervision and control over the subject work, or that the accident did not arise out of a dangerous condition at the premises, that the condition involving grooves in the unfinished concrete floor was trivial as a matter of law. As such, the sufficiency of Plaintiff’s papers was irrelevant.

Bayron Chay Mo v Ultra Dimension Place, LLC
March 12, 2025
Appellate Division, Second Department

The plaintiff alleged that in 2019, he fell through a hole in a roof while employed by an unnamed subcontractor as a day laborer. The plaintiff asserted causes of action alleging common-law negligence and violations of Labor Law §§ 200, 240(1), and 241(6). The defendants moved to dismiss the complaint, plaintiff did not submit opposition to the motion, and the Trial Court granted defendant’s Motion dismissing the complaint. Thereafter, plaintiff moved to vacate the order and deny defendants motion to dismiss. The Trial Court denied plaintiff’s motion and did not vacate the prior order.

Labor Law § 240(1) (DRA)

The appellate Division reversed the Supreme Court and found that the plaintiff provided a reasonable excuse for his failure to submit timely opposition to the defendants' motion pursuant to CPLR 3211(a)(7) to dismiss the complaint. Moreover, on appeal, the defendants did not contest that the plaintiff established a reasonable excuse for his default in opposing their motion. Additionally, it found that the plaintiff demonstrated that the defendants' motion should be denied. Because this was a motion to dismiss for failure to state a claim, the Court found that plaintiff alleged that his fall through the roof was the result of an elevation-related hazard caused by the failure to keep necessary safety devices in place and identified the defendants as the owners of the premises. Therefore, the plaintiff sufficiently pleaded a cause of action alleging a violation of Labor Law § 240(1).

PRACTICE POINT: Where, as here, the plaintiff falls through a hole in the roof, while working on the roof and has no safety devices, it is a tough defense, and none was available here. This is where risk transfer options, early liability assessment, and communication leading to early resolution are the key. The only thing defending liability will do is drive up legal expenses.

As with Labor Law § 240(1) above, The Second Department concluded that plaintiff sufficiently pleaded a cause of action alleging a violation of Labor Law § 241(6) in that plaintiff alleged that he was employed in an area where construction was being performed and that his injuries were proximately caused by the failure to comply with applicable statutes, ordinances, rules, and regulations.

Labor Law § 200 and Common-Law Negligence (EDA)

The appellate Division reversed the Supreme Court. As noted above, the plaintiff alleged that the defendants failed to provide a safe place to work and that the defendants controlled and supervised the work at issue. Therefore, the plaintiff sufficiently pleaded causes of action alleging a violation of Labor Law § 200 and common-law negligence.

Lopes v County of Suffolk
March 19, 2025
Appellate Division, Second Department

The defendant County of Suffolk contracted with the defendant Gibson & Cushmane Contracting, LLC (hereinafter Gibson), to complete a bridge reconstruction project, and Gibson subcontracted with the plaintiff's employer to perform certain painting work, among other things. The plaintiff allegedly was injured during the course of performing this work on the project. According to the plaintiff, at the time of his accident, he was using a scaffold, which he had not set up and which was not equipped with any railings, when his vision became obscured by dust. The plaintiff stepped backwards and fell off of the scaffold, sustaining injuries.

Plaintiff moved for summary judgment based on a violation of Labor Law § 240(1), and the Trial Court granted plaintiff’s motion.

The Appellate Division unanimously affirmed the Supreme Court finding that the plaintiff met his prima facie burden of demonstrating a violation of Labor Law § 240(1) and that this violation was a proximate cause of his injuries, through his deposition testimony that the scaffold that was set up for him did not have any safety railings, thus allowing him to fall backwards off the scaffold. In opposition, Gibson failed to raise a triable issue of fact. Additionally, Gibson's evidence failed to raise a triable issue of fact as to whether the plaintiff was recalcitrant in the sense that he knew that he was expected to use a safety harness, a man lift, or a scaffold different from the one already set up and deliberately chose, for no good reason, not to do so as the affidavit proffered was vague as to the instructions given to the plaintiff and the affiant lacked personal knowledge of the instructions.

PRACTICE POINT: Remember that the defense is sole proximate cause, and the word “sole” has meaning. Pointing out additional reasons for the accident, when at least one of them is not the plaintiff’s own actions, does not ever make the actions of the plaintiff the sole proximate cause of the accident. Here the failure to install a railing will always be a proximate cause, and thus, nothing else can ever be the sole proximate cause.

Marmolejo-Cuellar v Spar Knitwear Corp.
March 19, 2025
Appellate Division, Second Department

The plaintiff Ana Marmolejo-Cuellar (hereinafter the injured plaintiff) allegedly was injured when, while walking inside an office, she tripped and fell on loose, two-by-four pieces of wood, which had been temporarily placed on the floor. The office was located in a building owned by the defendant Spar Knitwear Corp. (hereinafter Spar) and was leased to the third-party defendant, Melcon General Contractors, LLC (hereinafter Melcon). On the date of the accident, the injured plaintiff was employed by Melcon as a secretary to perform clerical work within the office. The injured plaintiff also occasionally performed clerical work within the office for the defendant Southern Contractors, LLC (hereinafter Southern). Melcon and Southern are owned by the same principal.

Southern, Tamkat Building Corp., Spar, and Orkat Realty, Ltd. moved for summary judgment dismissing plaintiff’s complaint against them. The Trial Court dismissed plaintiff’s Labor Law § 200, 240(1), and 241(6) claims against all moving defendants, and dismissed the common-law negligence claim asserted against Spar.

The Appellate Division unanimously affirmed the Supreme Court’s dismissal of the claim finding that Southern and the building defendants each established, prima facie, that the injured plaintiff was not within the class of persons subject to the protections of the Labor Law. In support of their respective motions, Southern and the building defendants submitted, among other things, a transcript of the deposition testimony of the injured plaintiff and of Eric Mendoza, the principal of both Melcon and Southern, which demonstrated that the injured plaintiff had not been retained to perform any repairs or construction work at the premises and was not engaged in the performance of any such work at the premises. In opposition, the plaintiffs failed to raise a triable issue of fact.

PRACTICE POINT: “A person so employed” is the definition in § 240(1). That person so employed must, however, be engaged in the work being done and not simply employed is some other capacity. The example I always used was the coffee truck that arrives on every construction site every day. If a beam fell from above and struck the driver of the truck and a welder on the site, the welder would have a case; however the driver would not have a § 240(1) case. To be clear, the negligence case for the driver would be very strong if the identity of who dropped the beam could be ascertained.

Labor Law § 200 and Common-Law Negligence (EDA)

The Appellate Division unanimously affirmed the Supreme Court’s dismissal of the Labor Law § 200 and common-law negligence claims. The building defendants established, prima facie, through the submission of the lease agreement and transcripts of the deposition testimony of certain parties, that Spar was an out-of-possession landlord that was not bound by contract or a course of conduct to maintain the interior of the premises where the injured plaintiff allegedly was injured. In opposition, the plaintiffs failed to raise a triable issue of fact.

Rahmonov v Purves Dev., LLC
March 19, 2025
Appellate Division, Second Department

In January 2017, the plaintiff allegedly was injured while working at a construction project at certain property owned by the defendant Purves Development, LLC (hereinafter the owner). At the time of the accident, the plaintiff was employed as a window installer by the third-party defendant V & P Altitude Corp. (hereinafter V & P). V & P was a sub-subcontractor on the project pursuant to a subcontract (hereinafter the V & P subcontract) it entered into with nonparty Pioneer Window Manufacturing Corp. (hereinafter Pioneer). Pioneer had been retained by the defendant S2 Construction, LLC (hereinafter the general contractor), to install windows at the property.

Plaintiff commenced an action for violations of Labor Law § 200, 240(1), and 241(6), against the owner, general contractor, and Silvercup Properties, LLC. Defendants commenced a third-party action against V & P asserting a cause of action for contribution, common-law indemnification, contractual indemnification, and breach of contract for failure to procure insurance. V & P moved for summary judgment dismissing the third-party complaint against it, which the Trial Court granted.

Indemnity Issues in Labor Law (PCSM)

The Appellate Division also found that V & P failed to establish its prima facie entitlement to the dismissal of the third-party claims for breach of contract for failure to procure insurance. The Appellate Division reasoned that by failing to submit the "Contract Documents," which included the subcontract between Pioneer and the general contractor, incorporated by reference into the insurance procurement provisions of the V & P subcontract, V & P failed to eliminate a triable issue of fact as to whether those contract documents contained provisions requiring it to obtain additional insured coverage for the benefit of the defendants.

Freas v John W. Danforth Co.
March 14, 2025
Appellate Division, Fourth Department

Plaintiff slipped and fell at a construction site on September 2, 2016. Defendant-third-party plaintiff, John W. Danforth Company (Danforth), was the general contractor on the construction project and hired Rochester Davis-Fetch Corp. (Davis-Fetch) as a subcontractor third-party defendant who was also plaintiff's employer. Danforth commenced a third-party action against Davis-Fetch, stating causes of action for contractual indemnification and failure to procure insurance.

Danforth moved for partial summary judgment against Davis-Fetch, seeking an order of contractual indemnification. Davis-Fetch cross-moved for summary judgment dismissing the third-party complaint. The Trial Court granted Danforth’s motion and denied the cross motion.

Indemnity Issues in Labor Law (PCSM)

The Appellate Division found that the lower court erred in granting Danforth’s motion and properly denied Davis-Fetch’s cross-motion seeking dismissal of the third-party claims as there was no agreement prior to plaintiff’s accident for Davis-Fetch to indemnify Danforth or to procure insurance for Danforth’s benefit. The Appellate Division noted that an indemnification agreement that is executed after a plaintiff's accident may be applied retroactively, but only where it is established that (1) the agreement was made prior to the accident and (2) the parties intended the agreement to apply as of that prior date. In the case at bar, two of Davis-Fetch's executives claimed that there was no discussion between Danforth’s representatives and Davis-Fetch’s representatives about the terms of the subcontract, including any indemnification provision, prior to signing the subcontract. On the other hand, there was evidence that the parties had worked together on a prior project that included a similar subcontract that was also signed after its effective date. As such, the Court found that neither party was entitled to summary judgment on the contractual indemnification claim and that Davis-Fetch was not entitled to summary judgment dismissal of the breach of contract for failure to procure insurance claim.

New York Industrial Code Regulations (EDA)

Regulation § 23–1.26 Lead fumes and dust from structural steel.
(c) Cleaning coated surfaces.
(1) Removal of paint from rivet holes shall be performed by means of reaming or other suitable method.

While there are no cases directly dealing with this subsection, its language is likely specific enough to form the basis of a Labor Law § 241(6) claim, however, while “reaming is specified, “suitable method would be too vague to sustain a § 241(6) claim.

Hurwitz Fine P.C.

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Phone: 716-849-8900, Fax: 716-855-0874

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Hurwitz Fine P.C. is a full-service law firm providing legal services
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www.hurwitzfine.com
© 2025, Hurwitz Fine P.C. All Rights Reserved

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

Premises Pointers - Volume VIII, No. 10

Fri, 11 Apr 2025 19:56:31 +0000

Volume VIII, No. 10
March 31, 2025
A Monthly Electronic Newsletter

NOTE FROM THE EDITOR:

This month we are thrilled to welcome three new attorneys to Hurwitz Fine’s Buffalo office:

Jason A. Goodman has joined Hurwitz Fine P.C. as a Member in the firm’s Litigation Department. Jason handles complex toxic tort, asbestos defense, motor vehicle accident, medical transportation and products liability matters. He has experience defending litigated matters from inception through trial, including post-trial motions and appeals, for corporate and insurance clients. Jason earned his Bachelor of Science from SUNY College of Environmental Science and Forestry and his Master of Studies in Environmental Law as well as Juris Doctor from Vermont Law School.

Carly D. Brown has joined Hurwitz Fine P.C. as Special Counsel in the firm’s Economic Development and Business Services practice areas. Carly represents a diverse range of clients, including industrial development agencies, local development corporations, and businesses. She earned her Juris Doctor from Brooklyn Law School and holds a master’s degree in social work as well as a bachelor’s degree from the University at Buffalo.

Michael L. Lieberman has joined Hurwitz Fine P.C. as an Associate in the firm’s Litigation Department. His practice encompasses a wide range of litigation matters, including premises liability, school district representation, motor vehicle accidents, medical malpractice, and nursing home litigation. Mike earned his Juris Doctor from the University at Buffalo School of Law, where he graduated magna cum laude. He received his undergraduate degree from SUNY Binghamton, graduating summa cum laude with a Bachelor of Arts.

Welcome, Jason, Carly and Mike!

We are also excited to announce the continued growth of our Long Island office, marking a significant milestone in our firm’s expansion. Due to increasing demand and our commitment to providing exceptional legal services, we have relocated to a larger, more modern office space to accommodate our growing team of attorneys and staff. This move reflects our dedication to serving clients throughout Long Island and the greater New York area. As we settle into our new space, we look forward to strengthening our presence in the region and continuing to provide high-quality legal representation. For more information or to connect with our Long Island team, visit our website here.

Lastly, in Premises Pointers news, columnist Marc A. Schulz, who covers Homeowner Liability, Recreational Accidents and Discovery Angles, recently welcomed a baby girl with his wife. Congratulations to Marc and his growing family!

-Jody

Retail, Restaurant and Hospitality Happenings Around New York State and Beyond
By: Jody E. Briandi jeb@hurwitzfine.com

This month, a Los Angeles jury awarded Michael Garcia 50 million dollars in damages after he suffered severe burns when a scalding hot tea spilled onto his lap at a Starbucks drive-through in 2020. According to court papers, the plaintiff entered the drive-through, ordered hot drinks, and proceeded to the pickup window. The allegation is Starbucks failed to prevent the hot beverages from spilling onto the customer and had a duty to properly secure the drinks in the tray before handing them to the customer. Specifically, it is claimed that when the barista handed the plaintiff the order, a venti-sized “medicine ball” hot tea fell out and onto the plaintiff, who sustained third-degree burns that required extensive treatment. After failed settlement negotiations and a denied motion for summary judgment, the case proceeded to trial, and the jury deliberated for 40 minutes. The surveillance video was a key piece of evidence presented during the trial. An appeal will undoubtedly be filed based on the amount awarded. Click here for more details about the case.

3/06/2025 Wang v. Omni Hotels Mgmt .Cort
United States District Court, District of Connecticut
Defendant’s motion to compel medical records is granted.

Plaintiff Hui Wang slipped and fell in the lobby of Omni's hotel in New Haven on September 25, 2018 around 7:40 pm. It had been raining that day since at least 2:30 pm. Omni had placed a "Caution Wet Floor" sign in the lobby around 2:30 pm as a precaution. There is dispute over whether the floor was actually wet where plaintiff fell and whether Omni's safety measures were adequate. Since this case was removed based on diversity, Connecticut premises liability law applied but, federal summary judgment standards under Federal Rule of Civil Procedure 56 controlled. The court stressed that while the moving part must show that there are no genuine issues of fact, the non-movant must also set forth specific facts and affirmative evidence in order to defeat a properly support summary judgment motion. Under that standard, the court found that Plaintiff provided sufficient evidence that included her testimony and video evidence of others slipping to create a factual dispute over whether a dangerous wet condition existed on the floor. The court further found there is conflicting evidence on whether Omni had actual or constructive notice of the alleged wet condition, making summary judgment inappropriate on this issue. The effectiveness of Omni's warning sign and whether the condition was "open and obvious" were also factual issues that a jury should decide based on the disputed evidence. There were also questions noted regarding whether Omni regularly and continuously inspected the lobby.

3/04/2025 Duczinski v. Kohl’s, Inc.
United States Court of Appeals for the Second Circuit

On appeal, the Second Circuit reversed the District Court’s grant of summary judgment to defendant Kohl’s finding that whether a condition is not open and obvious is not dispositive of the entire claim.

The plaintiff, who is 5 feet tall, visited a Kohl's store and tried unsuccessfully to reach a spatula hanging 7 feet and 4 inches above the floor. After briefly looking for assistance, Dudzinski jumped to try to reach the spatula, fell, and suffered a severe leg injury. The Court agreed with plaintiff that the open and obvious nature of the spatula display's dangers is not dispositive of her premises liability claim against Kohl's in its entirety. The Court specifically noted that at oral argument defendant Kohl's conceded the existence of a duty of care distinct from a duty to warn and the existence of a fact question with respect to whether it breached the former duty to maintain the premises in a reasonably safe condition.

Labor & Employment for Retailers, Hospitality, and School District Litigation
By: Anastasia M. McCarthy amm@hurwitzfine.com

Dear Readers,

We continue to track changes affecting the workplace in New York State as well as at the federal level. If you require assistance navigating these various developments, please contact us.

Recently, in response to the Governor’s budget, the NY State Senate introduced its own one-house budget bills. Interestingly, the Senate’s legislation and budget includes extensive childcare funding intended to return parents to the workforce. Highlights include:

$500 million for a Child Care Workforce Stabilization fund—The fund is intended to expand the childcare workforce in order to make childcare more widely available.

$25 million for expanding non-traditional-hour childcare.

At the federal level, the EEOC has issued guidance and a press release related to corporate Diversity, Equity, Inclusion, and Belonging policies and programs. I am happy to help guide you should you require it.

Are You Fall Real? Slip and Fall/Snow and Ice/Storm in Progress/Espinal
By: Patrice C.S. Melville pcsm@hurwitzfine.com

Hi Readers,

Happy spring! As the weather begins (albeit slowly) to warm up and we emerge from hibernation, let’s all be mindful to not get “tripped up” along the way. This month’s offering highlights two cases; one case commenced against a property owner for a condition within the sidewalk and the other against a tenant commenced by an Airbnb guest tripped on an exterior staircase. Enjoy the warmer days ahead and be sure to keep a proper lookout!

3/19/2025 Brown v. 1133 E., LLC
Appellate Division, Second Department
An Abutting Owner Must Establish that It Did Not Create A Dangerous Condition, Did Not Perform Negligent Repairs, and Did Not Cause a Condition to Exist Due to Special Use of the Area In Order to Establish Entitlement to Summary Judgment Dismissal of a Plaintiff’s Complaint for Conditions Not Considered to Be A Part of the Sidewalk.

The plaintiff tripped and fell on a round, metal circle on the sidewalk in front of a commercial property in Brooklyn, New York. The round, metal circle was the remnant of a metal bicycle rack that had been removed from the sidewalk. The plaintiff commenced this action to recover damages for personal injuries against the abutting property owner. The abutting property owner moved for summary judgment dismissing the complaint and all crossclaims against it. The Supreme Court denied the motion, and the abutting property owner appealed.

On appeal, the Second Department reasoned that while Administrative Code of the City of New York § 7-210 shifts tort liability for injuries arising from a defective sidewalk from the city to the abutting property owner and imposes a duty upon the property owner to maintain the sidewalk in a reasonably safe condition, it does not impose civil liability on property owners for conditions such as city-owned tree wells and sign posts on the sidewalk. The Court further reasoned that liability may only be imposed on the abutting property owner in such instances only where the property owner has affirmatively created the dangerous condition, negligently made repairs to the area, or caused the dangerous condition to occur through a special use of that area.

Here, the Court held that the abutting property owner established that a bicycle rack was not part of the sidewalk for the purposes of section 7-210. However, the Court determined that the property owner failed to establish that it was not the entity that removed the bicycle rack that had been in the area of the subject accident, leaving the round, metal circle on which the plaintiff allegedly tripped. Therefore, the Court held that the property owner failed to establish that it did not cause or create the allegedly dangerous condition that caused the plaintiff's fall, affirming the lower Court decision.

03/24/2025 Vasquez v. Tapbrobane, LLC
Supreme Court, New York County
A Tenant May Not Be Responsible for Maintaining Common and/or Public Areas Unless the Lease Agreement States Otherwise.

The plaintiff claimed that she tripped and fell while descending an exterior stairwell from the first floor to a garden-level apartment of a premises. Plaintiff claimed that the step-risers were unevenly spaced, the stairwell lacked a proper handrail, and that the stairwell was dimly lit. Plaintiff commenced suit against the property owner and tenants, arguing that they had a collective duty to ensure the premises were maintained, operated and controlled in a reasonably safe manner, and thus breached that duty.

The tenants moved for summary judgment, arguing they owed plaintiff no duty and therefore could not be held liable for her injuries. The tenants further argued that plaintiff was unaware of the location of the accident and that any negligence claim is speculative. Additionally, tenants argued that because they owed no duty to plaintiff, the owner’s claims for indemnification or breach of contract must be dismissed. Plaintiff opposed the tenants’ motion arguing that the tenants owed her a duty to maintain the premises safely because they were leaseholders of the apartment and operated the Airbnb that plaintiff was visiting on the night of the incident. Plaintiff further contends that tenants’ motion is premature due to incomplete discovery. In reply, tenants maintained they owed plaintiff no duty because the incident occurred on an exterior staircase, not within the leased apartment. They also argued that plaintiff failed to demonstrate how further discovery would yield relevant information.

Here, the Court determined that the lease agreement between tenants and property owner gave tenants possession of the apartment and did not delegate any responsibility to maintain any public space or area outside of the leased unit. The Court held that because tenants were not contractually obligated to maintain the exterior staircase where plaintiff fell, and the lease specifically restricted their use of public space, they were not liable for any alleged structural deficiency to the exterior of the premises or any injury resulting therefrom. The Court held that tenants failed to meet their summary judgment burden in seeking the dismissal of the owner’s claims for indemnification as the lease agreement was ambiguous as to whether the tenants would be liable to the owners for any accident and related injury to tenants’ subtenants or guests, which would include the plaintiff.

Slips, Trips, and Legal Shifts: The Latest Retail Slip and Fall New York State Case Updates

By: Elizabeth K. Ognenovski eko@hurwitzfine.com

Hello Readers,

The end of March is here, and with it comes one of the most exciting and nerve-wracking times of the year – March Madness! Whether you are in it for the upsets, the buzzer-beaters, or just the pure madness of it all, March has a way of creating moments that are both exhilarating and anxiety-inducing. This year, I am putting my faith in Duke to take it all the way and cut down the nets!

The below cases discuss the Second Department's decisions on a trivial defect issue and an abutting property owner's liability under New York City Administrative Code § 7-210.

3/19/2025 Brown v. Heron Flatbush, LLC
Appellate Division, Second Department
In determining whether a defect is trivial, the court must examine all of the facts presented, including the width, depth, elevation, irregularity, and appearance of the defect along with the time, place, and circumstance of the injury.

The plaintiff commenced an action after she allegedly tripped and fell in a 7-Eleven parking lot due to a "hole" from a fuel cap in the ground. The defendant Heron Flatbush, LLC ("owner"), owned the premises, and the defendant 7-Eleven, Inc. ("tenant"), was the tenant pursuant to a written lease. The plaintiff claimed, in part, that the defendants were negligent in their ownership and maintenance of the premises. The defendant owner and defendant tenant moved for summary judgment on the basis that the alleged condition was either trivial in nature or was open and obvious and not inherently dangerous. The defendant owner also argued it was an out-of-possession landlord. The Kings County Supreme Court granted the defendant owner and defendant tenant's motions.

On appeal, the Second Department reversed the lower court's decision and explained that injuries as a result of trivial defects, not constituting a trap or nuisance, are not actionable. "In determining whether a defect is trivial, the court must examine all of the facts presented, including the width, depth, elevation, irregularity and appearance of the defect along with the time, place and circumstance of the injury. There is no 'minimal dimension test' or per se rule that a defect must be of a certain minimum height or depth in order to be actionable." The Second Department held that the evidence submitted by the defendant owner and defendant tenant which included photographs of the allege condition was "inconclusive as to whether the condition alleged was trivial." Below are some of the photographs that were submitted which depicted the alleged condition:

The Court further determined that the defendant owner and defendant tenant failed to establish that the alleged condition was open and obvious and not inherently dangerous. They also failed to "show that the defendant owner was an out-of-possession landlord who relinquished control over the parking lot area and was not contractually obligated under the lease to repair the parking lot."

3/19/2025 Brown v. 1133 E., LLC, et al.
Appellate Division, Second Department
When an alleged dangerous condition is found to not be part of the "sidewalk" for purposes of New York City Administrative Code § 7-210, liability may be imposed on the abutting landowner only where she/he has affirmatively created the dangerous condition, negligently made repairs to the area, or caused the dangerous condition to occur through a special use of that area.

This personal injury action arises from an alleged trip and fall that occurred on a round, metal circle that was on the sidewalk in front of 1133 Eastern Parkway in Brooklyn, New York. This round piece of metal was believed to have been hardware that was used to secure a bicycle rack to the sidewalk. The plaintiff commenced an action against various defendants including 1133 Eastern, LLC d/b/a McDonalds ("McDonalds"). The plaintiff alleged, amongst other things, that McDonalds created the alleged condition and violated Section 7-210 of the New York City Administrative Code. This section, "shifts tort liability for injuries arising from a defective sidewalk from the city to the abutting property owner and imposes a duty upon the property owner to maintain the sidewalk in a reasonably safe condition." The defendant McDonalds moved for summary judgment to dismiss the complaint and argued: (1) McDonalds did not own, control, repair, or maintain the bike rack over which the plaintiff tripped; and (2) the bike racks were not part of the sidewalk pursuant to Administrative Code § 7-210. The Kings County Supreme Court denied McDonalds' motion for summary judgment.

On appeal, the Second Department affirmed the lower court's decision. The Court explained that Administrative Code § 7-210 "does not impose civil liability on property owners for, inter alia, City-owned tree wells and sign posts on the sidewalk. 'Thus, liability may be imposed on the abutting landowner in such instances only where she or he has affirmatively created the dangerous condition, negligently made repairs to the area, [or] caused the dangerous condition to occur through a special use of that area.'" (quoting Marcano v. City of New York, 224 AD3d 829, 830 (2d Dep't 2024)). The Second Department held that although McDonalds established that the subject bike rack was not part of the sidewalk under Administrative Code § 7-210, McDonalds failed to prove that it was not the entity that removed the bike rack and left the round, metal circle which allegedly caused the plaintiff to trip over. The Court further determined that McDonalds failed to establish, prima facie, that it did not cause or create the allegedly dangerous condition that caused the plaintiff to fall.

NEWSLETTER EDITOR
Jody E. Briandi
jeb@hurwitzfine.com

ASSISTANT EDITORS
Marc A. Schulz
mas@hurwitzfine.com

Anastasia M. McCarthy
amm@hurwitzfine.com

Patrice C.S. Melville
pcsm@hurwitzfine.com

Ashley M. Cuneo
amc@hurwitzfine.com

Elizabeth K. Ognenovski
eko @hurwitzfine.com

Protecting Lives through the Rule of Law

Hurwitz Fine P.C.

Buffalo
1300 Liberty Building, Buffalo, NY 14202
Phone: 716-849-8900, Fax: 716-855-0874

Long Island
25 Melville Park Road, Suite 260, Melville, NY 11747
Phone: 631-465-0700, Fax: 631-465-0313

Rochester
100 Office Park Way, Pittsford, NY 14534
Phone: 585-454-6850, Fax: 585-270-4572

Albany
Phone: 518-641-0398

Additional Offices
Albion | Amherst | Hartford, CT | Englewood, NJ | Niagara Falls

Hurwitz Fine P.C. is a full-service law firm providing legal services
throughout the State of New York

www.hurwitzfine.com
© 2025, Hurwitz Fine P.C. All Rights Reserved

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

Coverage Pointers - Volume XXVI No. 21

Fri, 28 Mar 2025 15:05:16 +0000

Volume XXVI, No. 21 (No. 694)
Friday, March 28, 2025
A Biweekly Electronic Newsletter

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at ddk@hurwitzfine.com or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.

My cover note will be a little different than most. Let me reflect on a situation more important than an insurance coverage..

For the past 26+ years, I have written a column in this newsletter, where I speak of insurance coverage, family matters, promotions, CE and CLE programs, etc. In all that time, I have steadfastly avoided political commentary and surely, partisan opinion. However, I hope you will indulge or forgive me for my comments here.

I am a lawyer. I am proud of what I do. I am humbled to be part of a legal system that is designed to protect our citizens. I am committed, as a lawyer, to honor our Constitution and to protect the rule of law. I am very concerned about the broadside attacks on our judges, our constitution, and our legal system. This is not a Democrat or Republican question. It is surely not a partisan issue; it is an American issue.
The ongoing assault on the judiciary—an undeniable and deeply concerning reality—has now reached a level so severe that it has compelled the Chief Justice to issue a public statement. This is not a development we can afford to overlook or dismiss lightly. Judicial independence is the bedrock of a functioning democracy, and any attempt to undermine it is, in effect, an attack on the fundamental principles that sustain the rule of law.

As lawyers, regardless of our political beliefs or partisan affiliations, we have a solemn duty to remind our fellow citizens that the judiciary is not a political instrument but a guardian of justice. To erode its independence is to erode the very framework that ensures fairness, accountability, and the protection of rights for all.

In 2020, I had the privilege of addressing 140 state appellate judges at the National Foundation for Judicial Excellence's annual symposium, where I spoke about the profound impact that the rule of law has had on my own family's journey from Nazi Germany. The lessons of history serve as stark reminders of what can happen when the rule of law is compromised or manipulated for political ends. I was honored to reprise this message at the ADTA annual meeting the following year, emphasizing the crucial role that judges and lawyers play in upholding and defending our legal system.

If you have any interest in reading my remarks, entitled Protecting Lives through the Rule of Law they are available. I urge you to remember, Democrat or Republican or Independent, we are Americans first.

Today, I offer these reflections, once again, as a sobering reminder: the responsibility to protect judicial independence does not rest solely with the judiciary—it belongs to all of us who believe in justice, fairness, and democracy. Now more than ever, we must stand vigilant in defense of the rule of law.

New York Rental Car Companies Celebrate "BYOI": Bring Your Own Insurance!

On March 13^th, the First Department, in Second Child v. Edge Auto, Inc, 2025 NY Slip Opn 01432, has turned car rental insurance on its head, upending a quarter century of precedent. I reported on that decision in the most recent issue of this newsletter. However, I wanted to expand my thoughts on it.

Imagine you're a customer at the Happy Car Rental counter at JFK Airport, and the clerk asks, "Would you like liability insurance for $6.00 per day?" Knowing the law, you confidently decline, citing to the bewildered counter clerk, the 2001 Court of Appeals decision in ELRAC v. Ward, which mandates rental companies to provide at least the minimum liability coverage required under Vehicle & Traffic Law Section 370:

The language of section 370 [of the Vehicle & Traffic Law] is plain and precise. Common carriers, including rental car companies, are required to obtain insurance for their vehicles. For passenger cars, such as the ones rented here, the insurance must provide minimum liability coverage of $ 25,000 for bodily injury and $ 50,000 for death. Furthermore, the policy must "inure to the benefit" of any permissive user of the vehicle … A renter is, of course, a permissive user. Thus, section 370 clearly requires the rental company to provide the renter with this minimum level of coverage.

ELRAC, Inc. v. Ward, 96 N.Y.2d 58, 73 (2001).

How much clearer can that be? The rental company is required to provide the renter with the minimum level of coverage.

The 2005 Graves Amendment changed the tort liability landscape by exempting rental and leasing companies from vicarious liability unless the accident resulted from vehicle defects or owner negligence. The federal statute was enacted in response to state statutes around the country – like New York Vehicle & Traffic Law Section 388 – that imposed vicarious liability on vehicle owner for the negligent acts of permissive users. Those states – including Section 388 – applied not only to personal autos, but also to rental and leased vehicles. Congress determined that those companies in the business of renting and leasing vehicles should not be subject to vicarious liability and would only be responsible for accidents if the vehicle proved defective and the defect, or some act of owner negligence, caused on contributed to the accident. The statute provided:

49 U.S. Code § 30106 - Rented or leased motor vehicle safety and responsibility

(a) In General.—An owner of a motor vehicle that rents or leases the vehicle to a person (or an affiliate of the owner) shall not be liable under the law of any State … by reason of being the owner of the vehicle .. harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease, if—

(1) the owner …is engaged in the trade or business of renting or leasing motor vehicles; and

(2) there is no negligence or criminal wrongdoing on the part of the owner …

Since that statute was adopted, judicial decisions throughout the country have dismissed car rental and leasing companies from lawsuits, in the absence of negligence on the part of the vehicle owner.

That answered the question about tort liability.

What about insurance obligations? The Graves Amendment contained. what has been known as the “savings clause”:

(b) Financial Responsibility Laws.—Nothing in this section supersedes the law of any State or political subdivision thereof—

(1) imposing financial responsibility or insurance standards on the owner of a motor vehicle for the privilege of registering and operating a motor vehicle; or

(2) imposing liability on business entities engaged in the trade or business of renting or leasing motor vehicles for failure to meet the financial responsibility or liability insurance requirements under State law.

Simply stated, state statutes that imposed insurance requirements on vehicle owners would remain untouched by the Graves Amendment. So, if a statute-imposed insurance requirements on the owner of a motor vehicle – a consideration separate and distinct from tort responsibility – those insurance obligations would remain.

As the Court of Appeals said in ELRAC v Ward, Section 370 does just that – it is a state statute that imposes insurance obligations on motor vehicle owners, including car rental agencies. It should be noted that ELRAC preceded the Graves Amendment.

Nevertheless, the First Department's recent decision in Second Child introduces a drastic shift. The court found that while Vehicle & Traffic Law § 370, requiring rental companies to carry minimum insurance coverage, remains valid, the law is preempted by the Graves Amendment when it attempts to make rental companies provide primary insurance coverage for renters. The court reasoned that any requirement forcing rental companies to provide primary insurance essentially reinstates vicarious liability, which the Graves Amendment expressly prohibits.

“[R]equiring rental car companies to primarily insure and indemnify plaintiffs' damages is the precise result barred by the Graves Amendment.”
The renters argued that the Graves Amendment only supersedes statutes imposing vicarious liability, not statutes mandating primary coverage. The court holds this to be "a distinction without a difference". Rental car companies "shall not be liable" under New York State law for damages incurred by renters. The form in which state law attempts to impose vicarious liability, whether under vicarious liability statutes or under primacy of insurance coverage statutes, does not matter. The First Department opined that to “hold otherwise would rescue every vicarious liability claim up to statutory minimum insurance amounts and render the Graves Amendment's preemption clause a nullity”.

This decision has introduced significant uncertainty. Historically, rental companies provided primary coverage, with personal auto policies offering excess coverage. Now, personal insurers like Risky Business Insurance Company may become primary, releasing rental agencies from initial (actually, any) responsibility.

So. imagine that customer at the JFK rental car counter has his personal auto policy with Risky Business Insurance Company and rents a car. It had been the rule, practice, and understanding, under the 2001 ELRAC decision, that if she or he had an accident, the Happy Car Rental Company would through its insurer or by itself, if self-insured, provide the defense and first layer of liability insurance coverage. Now, according to the First Department, that responsibility has been punted to Risky Business, the customer’s personal auto carrier.

This ruling raises serious concerns, especially for renters without personal auto insurance. Previously, rental agencies would cover minimum liability, but under this new interpretation, such coverage may vanish. Crash victims could be forced to rely on their own uninsured motorist (UM) coverage, or if uninsured, turn to the Motor Vehicle Accident Indemnification Corporation (MVAIC) for compensation.

The author believes the First Department misinterpreted the Graves Amendment's savings clause. Until further clarification from the Court of Appeals, confusion is likely to persist as rental companies and personal auto insurers navigate these uncharted and shark-infested waters.

This author suggests that the First Department’s decision misreads the “savings clause” in the Graves Amendment. But, in the meantime, stay tuned for confusion, as rental car agencies and personal auto companies duel this one out.

Law Firm Sanctioned $1,000,000 for Failing to Disclose all Available Coverage – Lawyers, Pay Attention.

A Washington State judge sanctioned a well-respected law firm $1 million for its failure to timely disclose two excess policies. A reminder to all who read this – the duty to inquire and disclose other primary, excess, umbrella, additional insured, or contingent coverage rests with the party and the law firm and the lawyer understand coverage well enough to know where to look and what questions to ask and be persistent enough to secure the information from the carrier that retained the firm and from their client (the insured). Not all coverage for an accident is necessarily provided by the same carrier that has primary responsibilities.

For lawyers who are reading this, ask yourself: are we adequately training our trial lawyers to understand insurance coverage and effectively inquire about it? Any lawyer reviewing this decision who does not promptly meet with their trial attorneys to discuss the obligation to disclose coverage, the necessity to inquire thoroughly, and the correct methods for identifying coverage, is risking potential sanctions.

Litigators, particularly those with less experience, often assume that the insurance carrier assigning a file will provide comprehensive information regarding primary and excess coverage. This assumption is frequently incorrect. Sometimes carriers fail to inform firms even about their own excess policies. Additionally, carriers might be unaware of other existing excess, umbrella, primary, or co-primary policies.

Consider a basic scenario: an ambulance accident involving another vehicle. The attorney representing the ambulance service might be dealing with multiple policies, including professional liability, owned auto, non-owned auto, additional insured, personal auto coverage for the driver, as well as excess and umbrella coverages.

Read what the court held the firm did and did not do and then read it to your lawyers.

Newsletters:

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at jeb@hurwitzfine.com to be added to the mailing list.
Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at dra@hurwitzfine.com to subscribe.
Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact V. Christopher Potenza at vcp@hurwitzfine.com to subscribe.
Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at emm@hurwitzfine.com to subscribe.

Aging Waterfall – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
28 Mar 1925

Figures Age Of Niagara Falls As 40,000 Years

Chicago Professor Claims Falls originally were at Lewiston and Queenston, Retreating 7 ½ miles.

Chicago, Ill., Marcj 27.- Niagara Falls came into being in the year 26935 B.C., at Lewiston, according to professor J. Harlen Bertz, University of Chicago geologist, who has been probing into the birth record of the famous falls.

Based on careful study of the falls, the gorge and the Great lakes, it is estimated that the falls began 30,000 to 40,000 years ago and have been working steadily ever since.

“Nature left a record – if we can read it right -,” said professor Bretz “showing how long ago in years the Northern States were covered by a glacier. Niagara falls are wearing away the rock over which they tumble. They are undercutting this rock at the rate of about 4 ½ feet a year. The falls are maintained by undercutting, but they are moving upstream. And as they move they lengthen the gorge below the great cataract. That is how the gorge was formed – by the retreat of the falls. The gorge is about 7 ½ miles long. The falls were originally at Lewiston and Queenston. They took origin when the ice sheets retreated from the northern part of the Great Lakes country.

“For a long time only the waters of Lake Erie spilled over the falls, lakes superior, Michigan and Huron basins were discharging down the Ottawa river to Lake Ontario directly.”

Peiper on Property (and Potpourri):

Greetings, and welcome to baseball season. If the games are really counting, Spring must be right around the corner. Doesn’t it?

The road show loads up again this weekend, as we’re headed to Indianapolis for PLRB’s annual meeting and claims conference. Indianapolis is close to everyone, it seems, yet not an easy trip for us from Buffalo. We hope to see you there, where your author will be presenting on how to read the CGL policy in the context of a construction defect/products liability claim. Our editor, by popular demand, will be presenting on risk transfer and tenders.

Before we go this week, we’d be remiss if we didn’t point out the Appellate Division’s decision in Dersam as reported in the Property Column. In our humble opinion, the Court appears to be conflating first and third-party bad faith standards. This is part of a consistent trend which, intentionally or unintentionally, is eroding the long-established rules set forth by the Court of Appeals in NYU v. Continental Cas. Co.

Be warned and be ready to explain why Pavia doesn’t mix with Romanova in your next motion.

That’s it for now. See you in two weeks. And go O’s.

Steve
Steven E. Peiper
sep@hurwitzfine.com

Don’t Spead It All In The Same Place – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
28 Mar 1925

Chicago Orchestra Members to Receive World’s Highest Pay

Chicago, Ill, March 27 (A.P.) – The 82 members of the Chicago Civic Opera company’s orchestra have become the highest paid musicians in the country, if not in the world, James Petrillo, president of the musicians’ union, said today with the signing of a new wage agreement.

The players were given a wage increase of $8 a week, bringing the minimum wage to $119 a week. In addition, the agreement provided for $5 for each practice, adding $35 or $40 a week. The average salary will be close to $155 a week during the 22 weeks of the opera season, Petrillo said.

Lee’s Connecticut Chronicles:

Dear Nutmeggers,

Busy couple of weeks, with three out of the four kids having overlapping spring breaks and, believe it or not, wanting to spend some time with dear old mom and dad. Moving to the beach was the best decision we ever made!

More Nutmeggers’ news for you next edition. Oh, and check out our cases this week – a $5,000 issue that’s gonna add up to a lot of money for the industry if carriers don’t change their UM/UIM set-off language.

Until next time, keep keeping safe.

Lee
Lee S. Siegel
lss@hurwitzfine.com

Wife Just Ain’t Worth That Much – 100 Years Ago:

The Buffalo News
Buffalo, New York
28 Mar 1925

JUDGE SETS ASIDE $1000 AWARD MADE BY JURY

The verdict of a Supreme court jury in favor of Merle Austin, 333 Potomac avenue, was set aside Thursday by Justice Brown. The judge ruled that the $1000 compensation awarded Austin for loss of his wife’s services was excessive and declared that unless Austin accepted $500 he would give the D.J. Perry corporation and Gladys Ferrin, secretary to President Edward B. Germain of the Dunlop Tire & Rubber Co., co-defendants, a new trial.

The jury also awarded Austin’s wife, Hazel 20, $750 damages for injuries, suffered when the car in which she and Miss Ferrin were riding, was struck by a Perry corporation truck last April.

Ruffner’s Road Review:

Dear Readers,

Happy Spring, although it certainly doesn’t feel like it yet with 30-degree weather and snow falling. In sports news, March Madness is finally here, and for once my brackets are actually off to a pretty good start. We will check back in a few days to see if that is still the case!

I have a case of first impression from the Second Department this week, regarding whether distinct arbitration awards can be treated as a single arbitral award under Insurance Law and the No-Fault law for the purposes of determining whether the requisite $5,000 threshold has been met to allow for a de novo review of claims for no-fault insurance benefits. The court held that the plain language and intent of the statutes did not contemplate such interpretation (even though the insurance company, medical provider, and injured person were the same in each arbitration) and reversed the Supreme Court’s ruling. In the second case, the court determined that the insurer was not required to pay no-fault claims, as it properly established a founded belief that the claimed injuries were not caused by the subject accident.

Until next time,

Kyle
Kyle A. Ruffner
kar@hurwitzfine.com

Nobody Invited Me! – 100 Years Ago:

The Kingston Whig-Standard
Kingston, Ontario, Canada
28 Mar 1925

Petting Parties

I am twenty and a member of a girl’s quartet. Last summer we played in small towns, and the girls treated me coolly because I refused to go to petting parties and bathing parties at night. Did I do right? – C.R.

You made no mistake in the stand you took. Petting parties alone with a man are always objectionable. Swimming at night with a comparative stranger is also objectionable.

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers!

It’s a GIRL! My wife and I welcomed our beautiful baby daughter into the world on March 1 (six-weeks early), and she is the perfect complement to our two boys, who are now five and almost eight. While she does not yet crawl, talk, or play, she can certainly eat, sleep, and poop with the best of them. Our family is now five and it’s an amazing feeling.

This issue, I tackle a Second Circuit decision concerning coverage for Strikes, Riots, and Civil Commotion. The takeaway is a practical tip for your next grapple with off-beat language.

Until next time,

Ryan
Ryan P. Maxwell
rpm@hurwitzfine.com

He Wheeled His Wheelbarrow, Through Streets Broad And Narrow – 100 Years Ago:

Lebanon Daily News
Lebanon, Pennsylvania
28 Mar 1925

WHEELBARROW WAS RETURNED

Through the article in Thursday’s letter concerning the wheelbarrow that disappeared from the tool house on the Union cemetery, the return of the missing article was brought about. It turned out that it was not stolen but only borrowed by someone in need of it, who, knowing it would be inconvenient to ask Morris Batdorff, the caretaker of the cemetery about it, took the wheelbarrow without that formality, and had forgotten to return it until his attention was called to the matter by the article.

Storm’s SIU:

Hi Team:

Just getting back from some vacation time in sunny Florida. Mickey says, “Hi Folks”!

Five cases this week:

Coverage Denial for Untimely Sworn Statement in Proof of Loss Upheld on Presumption of Receipt of Mailing.
Denial of Assignee Medical Provider’s Claim Upheld Due to Insured’s Failure to Attend EUO.
Case Survives Motion to Dismiss Whether Insurer Must Pay Sales Tax for Total Loss Leased Vehicles.
In Staged Accident case, Evidence from Third-Party Sources like Accurint Reports, CarFax Reports and Information from the Other Vehicle's Event Data Recorder Deemed Inadmissible Hearsay.
Anti-Concurrent Causation Clause Applies if Any Excluded Cause Contributes to the Loss, Even if Other Covered Causes are also Involved.

Have a great two weeks until we talk again!

Scott
Scott D. Storm
sds@hurwitzfine.com

What Is A “Baby Party,” Anyway? – 100 Years Ago:

The Kansas City Post
Kansas City, Missouri
28 Mar 1925

LID ON STUDENTS

Texas University Faculty Ready to Clamp ON Drastic Rules.

AUSTIN, TEX., Marcj 28. – While the socially elect of Texas university thronged to another formal dance at the Country club last night, the faculty administrative counsel met to consider stringent restrictions on students’ social affairs.

Prohibition of all dances off the campus, enactment of an 11 o’clock curfew for social nights and a curtailed social calendar, were among measures discussed, according to L. H. Hubbard, dean of students.

“The investigation of the alleged ‘baby’ party is progressing as fast as could be expected,” Hubbard declared. Taking of testimony has been slow and no disciplinary action will be announced for several days.

The dean denied reports that six students had been told privately to withdraw from the school to avert scandal.

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

This week’s case from the Rhode Island Supreme Court considered whether or not to vacate an appraisal award based on the interest of the defendant’s appraiser. The court vacated the award because the defendant’s appraiser had been assigned the insured’s interest in the claim and was also the contractor performing the restoration work.

Happy Spring!

Kate
Katherine A. Fleming
kaf@hurwitzfine.com

Stop The Flow Of Immigrants Into The US – Then, It Was The Irish – 100 Years Ago:

The Tablet
Brooklyn, New York
28 Mar 1925

IRISH “HEART” CASE CAUSES INQUIRY

Letters Continue to Back Up N.C.W.C Bureau’s Charge of Injustice

Washinton, March 20. – Results in the N.C.W.C. Bureau of Immigration’s check-up on the flood of debarments of Irish immigrants, continue to bear out the Bureau’s contention that serious injustice is being done these immigrants, the Bureau declared this week.

Letters containing doctors’ certificates of stalwart health, and testifying to their employment at good wages, with full ability to work, are still coming in from Irishmen who were admitted only after providing bond that they would not become public charges, says the Bureau. The preponderance of debarments and ultimate deportations or demands for bond came after diagnoses of heart disease.

Gestwick’s Garden State Gazette:

Dear Readers:

Well, MLB opening day is upon us, and so is the Sweet Sixteen of March Madness. One of my favorite times of the year. With the Blue Jays’ off-season acquisitions (Anthony Santander and Max Scherzer, to name a few), I am excited to see if we can turn the corner. Kudos to my fiancé and CP’s own Kyle Ruffner, who are currently neck-and-neck for first place in the Hurwitz Fine March Madness bracket. I am a bit below those two.

I have a Coverage B case for you this week. For those who don’t know, Coverage B is part of many liability insurance policies. Unlike Coverage A, which covers for bodily injury and property damage liabilities, Coverage B protects against “personal and advertising injury,” a defined term that includes many things, including claims of disparagement, slander, and libel. However, a common Coverage B exclusion is one for personal and advertising injury that is caused intentionally (in my view, it is somewhat akin to the typical Coverage A exclusion for expected or intended injury). This week’s case focuses on whether the carrier has a duty to defend against a claim for tortious interference arising out of defamation-esque allegations, and all the allegations such a claim entails. Enjoy!

Until next time,

Evan
Evan D. Gestwick
edg@hurwitzfine.com

Twins Born 24 Hours Apart – 100 Years Ago:

The Brooklyn Daily Times
Brooklyn, New York
28 Mar 1925

Twins in 4 Generations Makes Family Record. Born 24 Hours Apart

James Cain, a salesman, of 604 Humboldt street, is today acting as nurse to his wife, Frances, who presented him with twins Thursday. The babies were born twenty-four hours apart. According to Cain, mother and babies are doing nicely.

The most interesting feature of the case is that Mrs. Cain is one of twins, her mother, Mrs. Theresa Bruetsch, was also one of twins and her grandmother, who is dead, was also one of twins. Thus, the birth of a pair this week completes a series of twins for four generations.

Both of the present babies are girls. One was born at 9:30 P.M. Tuesday, and the other at 10 P.M. Wednesday. This length of interval between the arrival of twins is in itself very rare.

O’Shea Rides the Circuits:

Hey Readers,

This week I was ready to attend the Sabres – Senators game. However, a colleague determined my presence was unneeded. Perhaps it was my fanaticism for Jake Sanderson or not agreeing with his theoretical trades for Brady Tkachuk. One will never know. I jest, my ticket was usurped for an admirable reason, a game with his father.

In other news, I am bracing for the landscaping season. I am not the green thumb of the house, just the manual laborer. Once the ground is thawed, the spade will be ushered into my hand. I can’t wait.

For this issue I have a matter that involved some creative lawyering. Essentially, a party tried to extend the insuring agreement found within a base auto policy to the policy’s supplemental uninsured/underinsured endorsement.

See You in Two,

Ryan
Ryan P. O’Shea
rpo@hurwitzfine.com

Drill Baby Drill (Or Not) – 100 Years Ago:

Buffalo Courier
Buffalo, New York
28 Mar 1925

ATTORNEY GENERAL STARTS DRIVE ON QUACK DENTISTS

New York, March 27. – The state attorney general’s office here is conducting a drive against quack dentists, it became known today when William Gerny of Manhattan pleaded guilty to illegal practice and was fined $200 in general sessions.

Deputy Attorney General Ullman said he would hereafter seek severe sentences in all such cases.

Rob Reaches the Threshold:

Dear Readers,

This edition of Coverage Pointers happens to come out on a beloved national holiday - Opening Day. Cheers to all you baseball fans out there who, like me, look forward to their team taking the diamond with aspirations of a brand-new season. Although I'm sure our diverse readers are fans of various different teams, we can all unify under one purpose - stopping the Dodgers. Happy Holiday to you all.

Unfortunately, there has been a lull in decisions from the Appellate Division on Serious Injury Threshold, so no case analysis from me this time. We will try again in two weeks.

In the meantime, please enjoy the articles from my colleagues.

Rob
Robert J. Caggiano
rjc@hurwitzfine.com

So Forward! – 100 Years Ago:

The Kingston Whig-Standard
Kingston, Ontario, Canada
28 Mar 1925

DEAR MISS FAIRFAX:

I have been going about with a young man for the past year. About four months ago he asked me whether he could see me twice a week, Wednesdays and Sundays. I consented because I love him dearly. He is always telling me how much he cares for me.

I would like to know whether it would be proper for me to ask his intentions. A.S.

Let him take the initiative. You will gain nothing by asking him the question you suggest, and you may lose his friendship. But don’t let him take up so much of your time and thoughts.

If I were you I would encourage other young men friends to call now and then, even on the nights you’ve formerly set aside for him. A little competition will do no harm.

Besides, you can’t in any way count on his proposing marriage to you and it’s therefore unwise to allow him to monopolize you.

LaBarbera’s Lower Court Library:

Dear Readers:

It was maple weekend recently in Western New York. I discovered, despite years of denial, that I do indeed love maple candies. Excited for some more weekend adventures as the weather continues to warm up.

Another New York County decision to report on this week. The Court held that Southwest Marine & General Insurance Company had a duty to defend an additional insured, based on the allegations in a Third-Party Complaint, which the Court acknowledged was “self-serving.”

Until next time…

Isabelle
Isabelle H. LaBarbera
ihl@hurwitzfine.com

What Kind Of Degree? – 100 Years Ago:

The Buffalo News
Buffalo, New York
28 Mar 1925

BURGLARY SCHOOL COMES TO GRIEF

PARIS, March 28. – Running a burglary school in the best style of Fagin brought disaster yesterday to Pere Mousset, because he allowed his pupils to begin practical application of their studies before they had mastered the course. The instructor and three young women and three young men students were jailed after a series of 40 burglaries with which they are charged.

Mousset gave careful lessons and distributed skeletons keys and jimmies, urging his pupils to do a little homework. This resulted in the turning over to the school of various objects valued at 30,000 francs.

The police tracked the pupils and their instructor. Since they have not mastered the jail-breaking lesson, all are behind the bars.

Lexi’s Legislative Lowdown:

Dear Readers,

Next weekend I am heading to Charleston, South Carolina, to run a 10k and visit a friend from college. It looks like it will be around 80 degrees the entire weekend, and I cannot wait for the warm weather!

This week we discuss a proposed bill that seeks to regulate the increases in policy premiums for homeowners’ policies.

Thanks for reading,

Lexi
Lexi R. Horton
lrh@hurwitzfine.com

Now There’s Something We Don’t See Every Day – 100 Years Ago:

The Buffalo News
Buffalo, New York
28 Mar 1925

GOVERNOR SIGNS BILL TO CUT INCOME TAX

ALBANY, March 28. – Governor Smith today signed the bill providing for a 25 per cent. Reduction in the state income tax. The governor was filmed in the act of affixing his signature.

Assemblyman Phelps of New York, introducer of the measure, was present and received the pen used by the governor.

Domenica’s Diary on Bad Faith:

Dear Readers,

This week’s column diverges from the typical Bad Faith to address Attorney-Client Privilege and the Work-Product Doctrine. As lawyers in the insurance arena, we rely heavily on these privileges and this case highlights the chance for unintended waiver of these privileges, guiding us to be prudent with sensitive documents and information. Until next time!

Domenica
Domenica D. Hart
ddh@hurwitzfine.com

Monthly Floggings – 100 Years Ago:

Brooklyn Eagle
Brooklyn, New York
28 Mar 1925

MONTHLY FLOGGINGS FOR ALL CRIMINALS IN 2D TERM URGED

Revise Criminal Insanity Laws
Also, Dr. E. E. Hicks Tells
Flatbush Exchange Club.

Criminal and Criminal insanity and the most effective methods of dealing with these problems was the subject which Dr. Edward E. Hicks, Brooklyn alienist, discussed last night at the dinner of the Flatbush Exchange Club. The dinner was held at the Union League Club of Brooklyn, 122 Kenmore pl.

Dr. Hicks advocated three methods of handling criminal cases in which the question of sanity enters. He said that, in the first place, the laws should be changed so that every person charged with a capital crime will be tried for the particular crime without the question of sanity entering into the trial. After being tried, the mental condition of the prisoner should be considered.

“If found sane, the guilty person would be sent to jail,” he said, “and if insane, sent to a criminal asylum.”

He said that in this manner much of the usual scandal and injustice connected with the trial of wealthy criminals will be done away with.

Secondly, he advocated that all “repeaters” in penal institutions, or persons who have served a previous term, be given the lash once a month.

North of the Border:

In the early morning before sitting down at my desk, I take my 10-year-old arthritic golden retriever and our 10-month-old golden retriever puppy to the dog park for a romp. Lately, I have been bringing along our Chuckit! Ball Launcher and an orange ball.

Our puppy erupts with unbridled excitement the moment the Chuckit! ball launcher appears; his entire body quivering with anticipation. His dark amber eyes lock onto the bright orange rubber ball; nothing else matters. With each launch, he bounds across the field of emerging grass and melting snow, ears flying and paws barely touching the ground, tracking the ball with laser-focused intensity. He retrieves it with a triumphant leap and a proud trot back, eyes sparkling with the simple, profound pleasure of the game. Every throw is a celebration; every catch a moment of canine ecstasy that radiates from his very being—this is a puppy experiencing the most elemental and wonderful kind of happiness.

I marvel at his wholehearted commitment. When playing his entire being is dedicated to the moment, there are no half-measures, no distractions. Every muscle, every sense is focused on the ball, on the game. In our often-fragmented human experience, where our attention is constantly divided by screens, worries, and multiple responsibilities, he reminds me of the profound satisfaction that comes from being fully present, from engaging completely with the task or joy at hand.

A great way to start the day.

My column this week is on the important issue of whether counsel appointed to prosecute a subrogated claim has a traditional solicitor client relationship with the insured.

Until next time.

Heather
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

Fall in Parking Lot Triggers Tenant’s Carrier’s Duty to Defend, Even Though Lease was Only for the “Dentist Office”. Late Notice Excused because of Lack of Prejudice. Late Disclaimer Doom Disclaimer, in Any Event
An Indemnity Agreement in a Construction Contract, Signed After an Accident Can be Effective if the Parties Intended it to be Effective Retroactively. In this Case, a Question of Fact on that Issue
Southern District Holds that an Insurer is Not Estopped from Withdrawing a Defense to an Additional Insured Where the Insurer Did Not Control Defense; Court also Rules that a Finding in a Trial Court of No Proof of a Written Contract for Contractual Indemnification Purposes Collaterally Estops Additional insured from Re-litigating the Existence of a Written Contract in Insurance Dispute [Guest Editor: Sherri Pavloff]

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Two Year Suit Limitation Clause Enforceable Where Clearly Attaches Two Years After the Occurrence Giving Rise to the Claim
Court Denies Motion of Late Proof of Loss Where there No Proof the Form was Attached to Email; Applies Pavia Standard to Companion First Party Bad Faith Claim
Entry of Final Order Terminates Appellate Rights Attached to Intermediated Orders

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

Failure to Cooperate Nullifies Homeowner’s Coverage
Medical Payments Coverage is Not a Set-off to UM

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

In a Case of First Impression, Court Holds that Health Care Providers who Treat No Fault Patients, May Charge at Rates Great Than Workers Compensation Schedule Once $50,000 Basic Economic Loss Ceiling has Been Reached
Separate Arbitration Awards May Not Be Combined to Meet the Jurisdictional Threshold for De Novo Review of No-Fault Claims
Insurer Had No Duty to Pay No-Fault Claims Due to Founded Belief the Claimant’s Injuries Did Not Arise Out of the Accident

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

Remand Ordered to Permit Consideration of Extrinsic Evidence Submitted by Insurer in Support of its Interpretation of Policy Wording

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

Coverage Denial for Untimely Sworn Statement in Proof of Loss Upheld on Presumption of Receipt of Mailing
Denial of Assignee Medical Provider’s Claim Upheld Due to Insured’s Failure to Attend EUO
Case Survives Motion to Dismiss Whether Insurer Must Pay Sales Tax for Total Loss Leased Vehicles
In Staged Accident case, Evidence from Third-Party Sources like Accurint Reports, CarFax Reports and Information from the Other Vehicle's Event Data Recorder Deemed Inadmissible Hearsay
Anti-Concurrent Causation Clause Applies if Any Excluded Cause Contributes to the Loss, Even if Other Covered Causes are also Involved

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

Appraisal Process Could be Equated With Arbitration. Appraisal Award Vacated Due to Evident Partiality of Defendant’s Appraiser

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

Appellate Division Rules Tortious Interference Claim Intrinsically Includes Allegations of Intent, Barring Coverage Under Policy’s Personal and Advertising Injury Exclusion

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

Insured Cannot Extend Auto Policy’s Insuring Agreement in Liability Part Regarding an Insurer’s Right to Investigate a Claim to the Policy’s Uninsured/Underinsured Motorist Endorsement

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

Nothing notable recently from the Appellate Division on Serious Injury Threshold. Check back in two weeks.

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Court Finds Third-Party Complaint Triggers Duty to Defend Additional Insured

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

Act to Amend Insurance Law to Prohibit Increases in Rates of Homeowners’ Insurance in Excess of Twenty-Five Percent Per Year

DOMENICA’S DIARY ON BAD FAITH
Domenica D. Hart
ddh@hurwitzfine.com

Attorney-Client Privilege and Work-Product Doctrine Can be Waived by Failure to Use Reasonable Steps to Rectify an Inadvertent Disclosure

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

A Lawyer Prosecuting a Subrogated Claim for an Insurer Does Not have a Retainer with the Insured and Therefore is Not in Conflict Should that Same Lawyer Act Against the Insured in a Coverage Action on the Same Policy that Generated the Subrogated Claim.

That’s all there is and there is no more.

Stay safe and stay focused on what is important.

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut and New Jersey.

NEWSLETTER EDITOR
Dan D. Kohane
ddk@hurwitzfine.com

ASSOCIATE EDITOR
Agnes A. Wilewicz
aaw@hurwitzfine.com

COPY EDITOR
Evan D. Gestwick
edg@hurwitzfine.com

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
ddk@hurwitzfine.com

Steven E. Peiper, Co-Chair
sep@hurwitzfine.com

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Domenica D. Hart

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

Victoria S. Heist

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
sep@hurwitzfine.com

Michael F. Perley

Scott D. Storm

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
ddk@hurwitzfine.com

Ryan P. O’Shea
rpo@hurwitzfine.com

Kyle A. Ruffner
kar@hurwitzfine.com

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com

Topical Index

Peiper on Property and Potpourri

Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Gestwick’s Garden State Gazette

Lexi’s Legislative Lowdown

Read Our Additional Newsletters

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

03/19/25 523 BWAY, LLC v. Erie and Niagara Insurance Association
Appellate Division, Second Department
Fall in Parking Lot Triggers Tenant’s Carrier’s Duty to Defend, Even Though Lease was Only for the “Dentist Office”. Late Notice Excused because of Lack of Prejudice. Late Disclaimer Doom Disclaimer, in Any Event

Berson leased dental office space (“premises”) from the plaintiff, 523 BWAY. Erie and Niagara Insurance Association (“ENIA”), issued a policy of insurance to Berson for premises for the period from June 15, 2016, to June 15, 2017. The policy listed 523 BWAY as an additional insured.

In November 2016, Pacheco, who was employed by Berson, slipped and fell in a parking lot at the subject property while walking to her car. Pacheco sought to recover damages in an underlying personal injury action entitled Pacheco v Kasey Realty, LLC (the “underlying action”).

523 BWAY's insurance carrier, Merchants Mutual, sought additional insured coverage from ENIA under Berson's policy. ENIA disclaimed coverage to 523 BWAY on the grounds, among others, that the parking lot at the subject property was not included in Berson's lease and, therefore, was not covered by ENIA's policy, that 523 BWAY failed to timely provide notice of the occurrence as soon as practicable, and that the additional insured endorsement of the policy excluded coverage for 523 BWAY's direct liability.

523 BWAY commenced this action for a judgment declaring that ENIA is obligated to defend and indemnify 523 BWAY as an additional insured in the underlying action.

An insurer's duty to defend its insured is 'exceedingly broad’ and additional insured is a recognized term in insurance contracts . . . and the well-understood meaning of the term is an entity enjoying the same protection as the named insured. If any of the claims against an insured arguably arise from covered events, the insurer is required to defend the entire action.

"The phrase 'arising out of' . . . requires 'only that there be some causal relationship between the injury and the risk for which coverage is provided'" with . . . premises for which the insurer has not evaluated the risk and received a premium'".

Here, ENIA failed to establish its prima facie entitlement to judgment as a matter of law. ENIA's policy unambiguously provided that 523 BWAY, as an additional insured, was entitled to coverage for "liability arising out of the ownership, maintenance or use of that part of the premises designated below leased, rented or loaned to the named insured," which premises were defined as "dentist office."

Although the lease only described the subject property as "approximately 2,350 square feet . . . comprising approximately one-half (½) of the building" located on the subject premises, it is undisputed that the subject property was utilized pursuant to the lease as a dental office for a dental practice. Therefore, even though the parking lot was not expressly included as part of the subject property, it appears that the subject property had at least a license to use the parking lot, since Pacheco testified in the underlying action that she parked in the parking lot when she came to work. Moreover, the photographs from the investigation report prepared for ENIA by VanKleeck-Winne Adjusters, Inc., established that the premises was designed in such a way that anyone seeking access to the subject property must pass through the parking lot). Under these unique circumstances, Pacheco's injury arose out of the use of the subject property.

Here, the only way to access the subject property was to cross over the parking lot, whereas in Atlantic Ave., there appeared to have been multiple ways to access the leased premises. Moreover, in a different case, the leased premises were expressly identified in the additional insured endorsement as the unit of the building leased by the lessee. Here, however, the additional insured endorsement defined the designated premises as the less-precise "[d]entist office."

The Late Notice/Late Disclaimer Issue

Pursuant to Insurance Law § 3420(c)(2)(A), "[i]n any action in which an insurer alleges that it was prejudiced as a result of a failure to provide timely notice, the burden of proof shall be on: (i) the insurer to prove that it has been prejudiced, if the notice was provided within two years of the time required under the policy; or (ii) the insured, injured person or other claimant to prove that the insurer has not been prejudiced, if the notice was provided more than two years after the time required under the policy."

Here, the insurance policy stated that "[i]n case of an occurrence or if you become aware of anything that indicates there might be a claim under this policy, you must give us or our agent notice (in writing if requested) as soon as practicable." It is undisputed that the injury occurred in November 2016, and the underlying action was commenced in January 2018. 523 BWAY first informed ENIA of the claim on April 16, 2020, more than 3½ years after the accident date and more than 2 years after the underlying action was commenced. Under these circumstances, it was 523 BWAY's burden to establish, prima facie, that ENIA was not prejudiced by the late notice of the claim.

Insurance Law § 3420(c)(2)(C) provides that "[t]he insurer's rights shall not be deemed prejudiced unless the failure to timely provide notice materially impairs the ability of the insurer to investigate or defend the claim." Here, 523 BWAY established, prima facie, that shortly after receiving notice of the claim, ENIA opened an investigation and performed a full review of the claim. Accordingly, 523 BWAY established, prima facie, that ENIA's rights were not prejudiced, and that 523 BWAY's failure to timely provide notice did not materially impair ENIA's ability to investigate or defend the claim.

Here, 523 BWAY established that in a letter dated April 16, 2020 (hereinafter the April 2020 letter), addressed to ENIA, Merchants Mutual Insurance Company, on behalf of 523 BWAY, "tender[ed] their defense and indemnification and additional insured coverage to Gary Berson, DDS," ENIA's insured. The April 2020 letter also provided the caption and parties to the underlying action, the facts underlying that action, and a copy of the lease agreement and the complaint in the underlying action, which contained the date and location of the accident.

Therefore, as of April 2020, ENIA "was on notice of the underlying accident several months before it disclaimed coverage."

Moreover, the record discloses that by letter dated April 17, 2020, ENIA informed Berson of the additional insured claim, indicating that ENIA had immediately opened an investigation into the underlying claim discussed in the April 2020 letter. ENIA did not disclaim coverage until September 22, 2020, several months later. Such a delay is unreasonable as a matter of law.

03/14/25 Freas v. John W, Danforth Company
Appellate Division, Fourth Department
An Indemnity Agreement in a Construction Contract, Signed After an Accident Can be Effective if the Parties Intended it to be Effective Retroactively. In this Case, a Question of Fact on that Issue

Freas commenced a Labor Law claim after when he slipped and fell at a construction site on September 2, 2016. John W. Danforth Company (Danforth), was the general contractor and hired as a subcontractor Davis-Fetch who was plaintiff's employer, eventually a third-party defendant. stating causes of action for contractual indemnification and failure to procure insurance.

Davis-Fetch contended that there was no agreement prior to plaintiff's accident for Davis-Fetch to indemnify Danforth or to procure insurance for Danforth's benefit. The Fourth Department agreed.

The subcontract included both an indemnification provision and a provision requiring Davis-Fetch to procure insurance coverage and add Danforth as an additional insured. The subcontract was dated July 19, 2016, but it was not signed by Davis-Fetch and Danforth until September 13, 2016, and September 21, 2016, respectively.

"An indemnification agreement that is executed after a plaintiff's accident . . . may only be applied retroactively where it is established that (1) the agreement was made as of a date prior to the accident and (2) the parties intended the agreement to apply as of that prior date". Here, the subcontract was made as of a date prior to the accident, but there is a triable issue of fact whether the parties intended the indemnification provision of the subcontract to apply retroactively.

Two of Davis-Fetch's executives testified that prior to signing the subcontract, there was no discussion between Danforth's representatives and Davis-Fetch's representatives concerning the terms of the subcontract, including any indemnification provision. There was evidence, however, that the parties had worked together before on a project that included a subcontract with an indemnification provision, and that subcontract, like the one at issue here, was also signed after its effective date.

Accordingly, there was a question of fact which must be resolved by a fact finder.

03/10/25 Utica National Assurance Company v. Amazon.com Services et. al.
Southern District of New York
Southern District Holds that an Insurer is Not Estopped from Withdrawing a Defense to an Additional Insured Where the Insurer Did Not Control Defense; Court also Rules that a Finding in a Trial Court of No Proof of a Written Contract for Contractual Indemnification Purposes Collaterally Estops Additional insured from Re-litigating the Existence of a Written Contract in Insurance Dispute

Guest Editor (and successful lawyer on the case): Sherri Pavloff – note contact information at the bottom of this summary.

Amazon hired Bond, a subcontractor, to perform work in connection with a construction project. Deljanin, an employee of Bond, fell from a scaffold while performing Bond’s work, and sued Amazon alleging violations of Labor Law §§240, 241(6), and 200. Amazon filed a third-party action against Bond seeking contractual indemnification based upon a Purchase Order between Amazon and Bond, and Terms and Conditions to the Purchase Order.

Amazon also tendered its defense and indemnification in the underlying suit to Utica National, Bond’s insurer, based upon the same documents, contending that the Terms and Conditions required Bond to procure insurance naming Amazon as an additional insured. Utica National agreed to defend, indemnify and provide additional insured coverage to Amazon, without reservation, based upon an additional insured endorsement which triggered coverage where required by a written contract between Bond and the additional insured, for injuries “caused in whole or in part” by Bond. Amazon refused to allow Utica National to appoint its own counsel. Utica National agreed to allow Amazon its choice of counsel and to pay 50% of Amazon’s defense costs. Amazon controlled its own defense but reported it to Utica National regularly.

During the discovery and depositions in the underlying suit, Amazon could not establish that the Purchase Order or the Terms and Conditions applied to the work being performed at the time of the accident. As a result, the court in the underlying action granted Bond’s motion for summary judgment, dismissing Amazon’s contractual indemnification claim against Bond.

When Utica National learned that Amazon could not prove that the Purchase Order or the Terms and Conditions applied to the work being performed (but before the summary judgment motions were decided in the underlying suit), Utica National withdrew from Amazon’s defense and filed a declaratory suit seeking a declaration that it owed no coverage to Amazon for the underlying suit. Amazon counterclaimed and the parties’ filed motions for judgment on the pleadings based upon the documents and testimony exchanged in the underlying suit.

Amazon argued in its motion that Bond knew that the Purchase Order and Terms and Conditions controlled the work based upon a prior course of dealing between the two. The Southern District rejected this argument, ruling that Amazon was collaterally estopped from re-litigating the issue of whether there was a written contract requiring additional insured coverage even though the decision issued by the court in the underlying action was an interlocutory decision, based upon well-established Second Circuit and New York state law.

The Southern District also rejected Amazon’s argument that Utica National was estopped from denying coverage, explaining that Amazon and not Utica National, controlled Amazon’s defense in the underlying action, and that Amazon had not shown any other prejudice as a result of Utica National’s conduct. Amazon argued that because it provided reports to Utica National and because Utica National also defended Bond in the underlying suit, albeit with different counsel, Amazon was “presumptively” prejudiced by Utica National’s withdrawal of a defense that Utica National provided for over four years. The Southern District disagreed, explaining that Amazon failed to provide any evidence that Utica National influenced Amazon’s defense in any way. The Southern District therefore upheld Utica National’s denial of coverage.

Editor’s Note: Thanks, and congratulations to my friend and superb coverage lawyer, Sherri Pavloff of Stonberg, Hickman & Pavloff, LLP, for her victory in this one and for authoring this summary. If you want a copy of the decision, you can contact Sherri or me. Her email address is Sherri.Pavloff@shplawyers.com.

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Potpourri

03/18/25 Tamm Consulting v. Cincinnati Ins. Co.
Appellate Division, First Department
Two Year Suit Limitation Clause Enforceable Where Clearly Attaches Two Years After the Occurrence Giving Rise to the Claim

Plaintiff commenced this action seeking recovery for damages under a Commercial Property policy issued by Cincinnati. Cincinnati moved to dismiss based upon the two-year suit limitation clause found within the insuring agreement. Here, the insurer was able to demonstrate that claims for advanced under the First and Third Causes of Action, respectively, were commenced more than two years from the occurrence date of the fire. Because the language of the policy was clear and unambiguous, and tied directly to the occurrence of the loss, the Appellate Division found that Cincinnati had met its burden.

However, with respect to certain coverage for fine arts and valuable papers, the Court noted that the applicable two-year suit limitation clause was slightly different. Essentially, the clause applicable to this discrete coverage was measured as two years from the date of discovery of the loss. On the Record submitted to the Appellate Division, it was unclear when plaintiff discovered damage which fell within the fine arts/valuable papers coverage. Accordingly, that portion of the claim was remanded back to the trial court for further proceedings.

03/14/25 Dersam v. Ontario Ins. Co.
Appellate Division, Fourth Department
Court Denies Motion of Late Proof of Loss Where there No Proof the Form was Attached to Email; Applies Pavia Standard to Companion First Party Bad Faith Claim

Plaintiffs submitted a claim for fire loss to Ontario Insurance Company. During the course of the investigation/adjustment of the loss, the claims professional handling the file for Ontario sent an email to Ms. Dersam. Attached to that email, apparently, was a blank Proof of Loss form. When the form was not returned within sixty days, as per the requirement of the policy and statute, Ontario denied the claim. And, upon the filing of the instant lawsuit, Ontario immediately moved to dismiss.

The trial court granted dismissal for Ontario on the basis of long-established principles that failure to timely proffer a Proof of Loss is an absolute defense. The Appellate Division reversed, however, on the narrowest issue of fact. As noted by the opinion, the Proof of Loss form was attached to an email sent to Ms. Dersam. Although the email may have constituted proper notice, Ontario’s motion failed because it was unable to conclusively establish that the Proof of Loss was attached to it upon receipt by Ms. Dersam.

The Appellate Division did affirm dismissal of plaintiffs’ Second Cause of Action which sought a Declaratory Judgment. The Court noted that the relief sought was duplicative of the breach of contract claim asserted in the First Cause of Action.

With regard to the Third Cause of Action, the Appellate Division intervened to modify the trial court’s decision granting dismissal to Ontario. This particular cause of action, asserting a breach of the duty of good faith and fair dealing, was revived where the plaintiff asserted that Ontario acted unreasonably when it refused to extend the time to complete the aforementioned Proof of Loss form and a claim made by plaintiffs’ presumed public adjuster which argued that Ontario “deviated industry practices” when handling the claim.

Based on these assertions, which the Court advised it was compelled to accept as true on a motion to dismiss, the Appellate Division explained here plaintiffs had pleaded a claim which appropriately alleged “the insurer’s conduct constituted a ‘gross disregard’ of the insured interests- that is, a deliberate or reckless failure to place on equal footing the inters of the insured with the insurer’s own interests.” The Court goes on to equate a breach of the duty of good faith and fair dealing with bad faith when it stated “[i]n the context of a cause of action for breach of the duty of good faith and fair dealing, in order to establish a prima facie case that an insurer acted in bad faith…”

Finally, in addressing the dismissal of plaintiffs’ Fourth Cause of Action, the Court opined that there was no independent tort action for bad faith where an insurer allegedly does not perform its obligations.

Peiper’s Point: This matter is the latest in a series of decisions over the past five to seven years which conflate the First Party Bad Faith Standard expressed by the Court of Appeals in NYU v. Continental Casualty Corp. and the long-understood standard governing Third Party Bad Faith claims as set forth in Pavia v. State Farm.

This is a troubling trend from the Appellate Division because decisions like Dersam are eroding, if unintentionally, long established, binding precedent from the Court of Appeals.

Potpourri
03/14/25 Prusik v. Liberty Mutual Insurance Group, Inc.
Appellate Division, Fourth Department
Entry of Final Order Terminates Appellate Rights Attached to Intermediated Orders

Plaintiff filed an appeal from an intermediate order which granted defendant’s Motion to Strike the Note of Issue and reopen discovery. However, thereafter, a final order was granted which effectively superseded the order upon which appellate relief was sought. Accordingly, plaintiff’s appeal was dismissed as not properly before the Court.

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

03/24/25 Billie v. Plymouth Rock Assur. Corp.
United States District Court, D. Connecticut
Failure to Cooperate Nullifies Homeowner’s Coverage

The District Court made a rare finding that the insured’s systematic and unexcused noncompliance with Plymouth Rock's document requests was substantial and material, breaching the "Duties After Loss" provision of the insurance policy.

Plymouth Rock issued a homeowners policy to Caribe D. Billie, for a residence in Waterbury, Connecticut. Within one month of the issuance of the policy, the house was damaged in a fire. In July 2019, Billie bought the property at a tax auction for $16,000. Billie intended to renovate the property but instead installed his cousin and others as tenants. Billie moved to North Carolina, because Connecticut was too cold, so he never actually lived in the premises, although he claimed that he would stay at the property on occasion when traveling to Connecticut for business.

In September and October 2020, Billie obtained building permits. He obtained the Plymouth Rock coverage at the same time, incepting on October 30, 2020, with dwelling limit of $302,000. The structure failed its electrical inspection and service to the home was terminated. Days later, a fire of unknown human origin substantially damaged the home. Billie put in a claim for $226,991.45 for damage to the structure [a substantial return on a $16,000 investment!].

Plymouth Rock issued an ROR and launched an investigation, finding that this was Billie’s fourth fire loss (two homes and one vehicle). The carrier requested documents, including financial records, such as tax and banking information. Despite 18 months of follow-ups, Billie did not provide the documents. Plymouth Rock took Billie’s EUO, even though it did not have the responsive documents. A final 30-day letter was sent seeking the outstanding documents. Billie did not reply, and Plymouth Rock denied the claim for breach of the duty to cooperate. This lawsuit followed (actually preceding the denial letter by one day).

In the action, removed to federal court, Billie never responded to its discovery obligations, nor did he propound discovery. Plymouth Rock moved for summary judgment to which Billie did not oppose. The court found that the carrier was entitled to summary judgment because the insured breached his “Duties After Loss.” The provision states that Plymouth Rock has no duty to provide coverage if the policyholder's failure to comply with certain duties is prejudicial to Plymouth Rock Home. Plaintiff failed to comply with: (1) his duty to cooperate in the investigation of the claim; and (2) his duty to provide requested records and documents.

The court found that the breach of the duty prejudiced Plymouth Rock’s ability to investigate the claim. “Plymouth Rock Home needed Plaintiff's financial and tax records in order to investigate "whether he and his family were experiencing financial distress that might raise questions regarding an unexplained fire and subsequent insurance claim."” Additionally, the court struck the plaintiff’s CUTPA/CUIPA claims.

03/06/25 Bottass v. United Ohio Ins. Co.
Superior Court of Connecticut, Waterbury District
Medical Payments Coverage is Not a Set-off to UM

Danielle Bottass was severely injured in a motor vehicle accident by an uninsured driver. When United Ohio did not settle her claim, she sued for breach of contract. Following a jury trial, she was awarded $2 million, reduced to $1.7 million for her comparative negligence.

On post-trial motions, United Ohio sough remittitur of the jury’s award to the policy limits of $500,000 and sought a $5,000 credit for medical payments previously paid by United Ohio. The court found that, pursuant to CGS § 38a-336, the plaintiff’s recovery was statutorily capped at the amount of uninsured motorist coverage. “[T]he plaintiff contracted with the defendant for $500,000 of uninsured-underinsured motorist coverage. Accordingly, pursuant to § 38a-336(b), the plaintiff was not entitled, under any circumstance, to recover more than $500,000 in policy benefits.”

The court, upon construing the United Ohio policy, refused to reduce the award by the amount of medical payments, finding that it did not follow Connecticut regulations. The policy provided that, “No one will, be entitled to receive duplicate payments for the same elements of loss under this coverage and Part A [liability coverage] or Part B [medical payments coverage] of this policy." The uninsured motorist policy also provides, "We will not make duplicate payment under this coverage for any element of loss for which payment has been made by or on behalf of persons or organizations who may be legally responsible."

However, the court found the duplicate payment provisions did not limit the additional coverage because the terms of the policy did not correspond with the regulations in all material respects. Because the UM/UIM coverage does not provide for any additional reduction in the limit of liability paid or payable to the insured person under the medical payments coverage part of the policy, the carrier cannot seek a reduction in limits on this basis.

[Ed. Note: United Ohio has appealed the decision. I guess $5,000 aggregated over many claims makes the cost worth the effort.]

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

03/25/25 Morrobel v. Alicea
Appellate Division, First Department
In a Case of First Impression, Court Holds that Health Care Providers who Treat No Fault Patients, May Charge at Rates Great Than Workers Compensation Schedule Once $50,000 Basic Economic Loss Ceiling has Been Reached

This appeal sought to reduce a verdict rendered in an auto accident lawsuit and modify an interest award, a verdict of $625,000 for past pain and suffering and $1.53 million for future. The court found that the verdicts did not deviate materially from what would be reasonable compensation and upheld the verdict.

The interesting question from a No-Fault coverage perspective was whether a doctor charged for services was limited to the WC/NF rate once the $50,000 limit for Basic Economic Loss was exhausted.

The defense argued that according to Insurance Law § 5108, charges for health services provided as a result of motor vehicle accident injuries, both as a part of and in excess of basic economic loss, may not exceed the charges permissible under Workers' Compensation Board schedules (see Insurance Law § 5102[a][1]).

Thus, defendants concluded, Insurance Law § 5108 limits the damages that plaintiff may recover for future medical expenses.

In a case of first impression, apparently, the First Department disagreed holding that Insurance Law § 5108, as part of New York's No-Fault Law, applies only to claims for first-party benefits. Specifically, health service providers who accept an assignment of first party (no-fault) benefits but continue treating the covered person beyond the exhaustion of those benefits do not limit the right of recovery for economic loss in excess of basic economic loss in actions by covered persons for personal injuries arising out of negligence in the use or operation of a motor vehicle.

Furthermore, the jury's award for future medical expenses was not excessive. Plaintiff's treating physicians testified to each of the treatments that plaintiff would require, explained why she would require them, and approximated their cost. This testimony, which was within the jury's province to credit, established plaintiff's future medical expenses with the requisite degree of reasonable certainty.

The court did modify the interest award from 9% to 3% because the defendant was the NYC Transit Authority, and it is subject to a lower interest rate.

03/12/25 American Transit Insurance Company v. Comfort Choice Chiropractic, P.C.
Appellate Division, Second Department
Separate Arbitration Awards May Not Be Combined to Meet the Jurisdictional Threshold for De Novo Review of No-Fault Claims

The issue on appeal, an issue of first impression before the Court, was whether, under certain circumstances, separate and distinct arbitral awards can be treated by a court as a single arbitral award under Insurance Law § 5106(c) and pursuant to 11 NYCRR 65-4.10(h)(1)(ii) for the purposes of determining whether the requisite $5,000 threshold establishing subject matter jurisdiction has been met, in order to allow for a de novo review of claims for no-fault insurance benefits.

American Transit Insurance Company commenced this action pursuant to the above statutes to seek de novo review of four separate arbitral awards issued by a master arbitrator. The four awards were issued by the same master arbitrator, following separate arbitration proceedings upon the plaintiff's denial of payment for medical services performed by the defendant for the claimant who was injured while she was a passenger in a taxi insured by the plaintiff. The arbitration proceedings arose upon the denial of the four claims submitted by the same provider for a repeated course of chiropractic treatment. After each of the four arbitration proceedings, the master arbitrator issued an arbitral award in favor of the defendant. American transit sought de novo review. The supreme court held that the four arbitral awards, in effect, constituted a single arbitral award and also denied the defendant's request pursuant to 11 NYCRR 65.4.10(j)(4) for an award of attorney's fees. The defendant appeals.

Upon a review of the applicable statutes, the court stated that Insurance Law § 5106(c) provides, in relevant part that “The award of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator's award is five thousand dollars or greater, exclusive of interest and attorney's fees, the insurer or the claimant may institute a court action to adjudicate the dispute de novo.” Similarly, pursuant to subdivision (h)(1) of 11 NYCRR 65-4.10, a decision of a master arbitrator is final and binding except … where a master arbitrator's award is $5,000 or greater, exclusive of interest and attorney's fees, a court may conduct a de novo adjudication of a no-fault insurance claim.

The court determined that the use of the singular in the statute and the regulation, "arbitrator's award" in Insurance Law § 5106(c) and "the award" in 11 NYCRR 65-4.10(h)(1)(ii), means one, single award, not a combination or collective group. The Legislature did not opt to use the plural, and there is no other language in either the statute or the regulation that would allow for the singular to be interpreted as encompassing the plural. Therefore, the court found that the plain language contained in both statutes did not allow a court to treat separate arbitral awards as, in effect, a single, combined arbitral award for the purposes of meeting the subject matter jurisdictional threshold for de novo review. This is the case even where, as here, the service provider was the same in each circumstance, the insurance company was the same, the service recipient was the same, and the services that were provided were the same.

Since the language of the statute and the regulation is plain and unambiguous, it is unnecessary to consider the legislative history. Nonetheless, as set forth herein, the history underpinning the legislation at issue, which was implemented to relieve the burden of these types of cases on the courts, lends further support to our conclusion that the singular language in the legislation referring to "award" was deliberate and that the Legislature did not contemplate that courts would invoke their authority to exercise discretion to treat multiple arbitral awards as, in effect, a singular arbitral award to meet the $5,000 statutory threshold.

Accordingly, given the plain language of Insurance Law § 5106(c) and 11 NYCRR 65-4.10(h)(1)(ii), the legislative intent of the statute, and related persuasive authority, it was not proper for the Supreme Court to expand the scope of the legislation by construing it to allow for multiple arbitral awards to be treated as, in effect, one, or as a single, combined arbitral award in order to meet the requisite threshold.

03/20/25 Unitrin Safeguard Insurance Company v. Jermail Manuel et al.
Appellate Division, First Department
Insurer Had No Duty to Pay No-Fault Claims Due to Founded Belief the Claimant’s Injuries Did Not Arise Out of the Accident

In this case, the Supreme Court granted the insurer’s motion for summary judgment declaring that it had no duty to pay no-fault insurance claims to defendant medical providers arising out of the underlying accident, unanimously affirmed, without costs. The defendant claimants claimed they were passengers in a covered vehicle when they sustained injuries and notified the insurance company that they intended to submit claims for no-fault benefits. However, claimants never answered the insurers declaratory judgment complaint or appeared in this action, and plaintiff obtained a default judgment against them. The remaining defendants are medical providers that submitted no-fault claims as assignees of the claimants.

The Appellate Court determined the Supreme Court properly granted the insurer’s summary judgment declaring that it had no duty to pay no-fault claims to defendant providers, as it demonstrated a founded belief that claimants' injuries did not arise out of the accident as required by Central Gen. Hosp. v. Chubb Group of Ins. Cos., 90 NY2d 195, 199 (1997). The insurer submitted an affidavit from a claims investigator detailing the circumstances of the accident that led to the investigation, including the absence of any claims for damage to the vehicle and the lack of a police report, as well as affidavits from occupants of the other vehicle, who characterized the accident as a bumper "tap" resulting in no visible damage to the covered vehicle or injury to the driver, and asserted they saw no passengers in the vehicle. There were also several red flags in the claimants' examinations under oath which undermined the credibility of their claims.

In opposition, defendant providers failed to raise an issue of fact, as they did not submit an affidavit of someone with personal knowledge of the legitimacy and circumstances of the accident or any other admissible evidence to rebut plaintiff's showing. Therefore, insofar as claimants asserted in their EUOs that they were passengers in the vehicle at the time of the accident, the court properly construed claimants' default as an admission that their EUO statements were false, and their injuries were not the result of the accident.

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

03/17/25 Navigators Insurance Company v. Goyard, Inc.
United States Court of Appeals, Second Circuit
Remand Ordered to Permit Consideration of Extrinsic Evidence Submitted by Insurer in Support of its Interpretation of Policy Wording

On appeal, Navigators Insurance Company argued that the district court erred in finding coverage for the lost goods of its insured, Goyard, Inc., due to Strikes, Riots, and Civil Commotion (“SS&RC”), as well as its application of a ten percent add-on to the claimed loss amount by failing to construe the lost goods as raw materials, supplies in storage, and/or used goods within the meaning of the Policy. Specifically, Navigators argued that:

the district court erred by (1) interpreting the Policy, and its attached endorsements, to unambiguously include SS&RC coverage for the lost retail goods; (2) considering some but not all of the extrinsic evidence available when interpreting the Policy, including evidence relating to the Policy negotiations, customs and practices in the insurance industry, and Navigators’ expert’s testimony; and (3) applying the rule of contra proferentem in reading ambiguities in the Policy against Navigators, the insurer.

The Second Circuit avoided addressing (2) and (3) above, by finding instead that the district court had erred in finding that the Policy unambiguously provided SS&RC coverage for the lost retail goods.

The parties agreed that “pursuant to Endorsement No. 1, goods in transit were insured for losses attributable to SR&CC,” but the question was “whether the goods at Goyard’s store . . . were similarly insured.” Goyard identified three potential sources of coverage for these goods, including “(1) the Policy Binder; (2) the Declarations Page of the Policy; and (3) Endorsement No. 4.

Quickly dispelling number (1) above, the court noted that in accordance with New York Court of Appeals precedent, “the Policy Binder ‘terminate[d] when [the] [P]olicy [] issued’ and could not provide any coverage, much less SR&CC coverage, at the time of Goyard’s loss.”

Moving to (2), the Second Circuit noted that “[w]hile portions of the Declarations Page reference SR&CC coverage . . . , the Policy later explains that ‘[r]isks of [] strikes, riots and civil commotions are included in the rates detailed on the attached Policy Declarations . . . so long as the separate . . . strikes, riots, and civil commotions endorsement remain[s] in force.’”

Given the above, and turning to (3), the Second Circuit advised that “the SR&CC coverage contemplated in the terms of the Declarations Page hinges on the existence of the SR&CC endorsement i.e., Endorsement No. 1.” But after discussing the parties competing interpretations of whether any coverage extended included losses attributable to SR&CC under Subsection 9(E) of Endorsement No. 4, the court found that “it is impossible to say that one interpretation is unambiguously correct. Both are reasonable.” And that is a problem.

Specifically, “because the Policy terms are ambiguous, the district court should have admitted and considered relevant extrinsic evidence to resolve the ambiguity.” And “while the district court found that ‘[e]xtrinsic evidence provides further support for summary judgment in Goyard’s favor,’ its assessment took place against the backdrop of its prior independent finding that the text of the Policy unambiguously extended SR&CC coverage to the retail goods.” Accordingly, the Second Circuit remanded the matter to the district court in order for it “to conduct a more thorough examination of the extrinsic evidence to resolve the ambiguity.”

Maxwell’s Minute: This case raises an important issue that is often missed in practice. While it is true that a court may apply the doctrine of contra preferentum in favor of coverage, it should only do so absent relevant extrinsic evidence submitted in support of one interpretation of ambiguous language versus another Many choose to simply ignore potentially supportive extrinsic evidence altogether in favor of an all or nothing argument that a policy provision is unambiguous in their favor. While that may be true, courts are not to consider extrinsic evidence until an ambiguity is found. Submitting extrinsic evidence should not be viewed as a sign of weakness. While we tend to favor our arguments over the other guys, try to avoid wearing blinders or you may very well and rather avoidably paint yourself into a contra preferentum corner the next time around.

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

03/19/25 Pager v. Greater N. Ins. Co.
United States Court of Appeals, Second Circuit.
Coverage Denial for Untimely Sworn Statement in Proof of Loss Upheld on Presumption of Receipt of Mailing

Plaintiffs had an insurance policy with Greater Northern covering their residential property in Brooklyn. On 4/29/21 the plaintiffs discovered that their floating dock and gangway had allegedly disappeared. The plaintiffs maintained approximately fifteen surveillance cameras at their home, but none were operational at the time of the incident, having been shut off several days earlier for upgrades. Plaintiffs did not alert the police of the missing dock and gangway. Greater Northern sent the plaintiffs a letter on 6/24/21 requesting that they submit sworn proof of loss statement within 60 days and enclosed blank proof of loss forms. The plaintiffs did not submit the proof of loss. Greater Northern denied the claim.

An insured's failure to file a proof of loss statement within the required period after receiving written notice and a suitable form from the insurer is an absolute defense to an action on the policy, absent waiver or estoppel. Greater Northern established a presumption of receipt by providing evidence of its regular office procedures for mailing the notice and forms, and the plaintiffs failed to rebut this presumption. The mere denial of receipt does not rebut the presumption that notice was received when proof of proper mailing has been provided.

Although plaintiffs claimed to have not received the proof of loss forms, their statements did not amount to a categorical denial of receipt of the mailings, let alone provide some proof that the regular office practice—which was to include the proof of loss forms in the mailing—was not followed or was carelessly executed so the presumption that notice was mailed becomes unreasonable. On the contrary, the exhibits depicting the letters as they were mailed clearly demonstrate that the proof of loss forms were included.

Other record evidence further bolsters this presumption of receipt. Plaintiffs do not point to any evidence which disputes that the 6/24/21 letter constituted Greater Northern's attorney’s first correspondence with plaintiffs, and there is no evidence that the attorney sent any further correspondence to plaintiffs before they responded to him on 7/29/21. Plaintiffs offer no alternative explanation for how they would have known to contact the attorney but for that letter of 6/24/21. It is beyond genuine dispute that plaintiffs received written notice of Greater Northern's request for proof of loss and a suitable form to provide such proof.

03/13/25 State Farm Fire & Cas. Co. v. Aviles
Supreme Court, New York County
Denial of Assignee Medical Provider’s Claim Upheld Due to Insured’s Failure to Attend EUO

State Farm issued an auto policy to Carrion. Aviles was allegedly driving the vehicle on 6/24/22 when involved in an accident. Aviles failed to appear for two EUOs on 9/9/22 and 10/4/22. State Farm disclaimed coverage. State Farm sought summary judgment against medical providers who were assignees of Aviles.

The court held that the failure to appear for two timely requested EUOs is a breach of a condition precedent to coverage and voids the insurance policy ab initio, which applies to assignees of an insured. An EUO request mailed three days after receiving a bill for treatment is timely.

The arguments that the EUO requests were untimely are contrary to First Department precedent and insufficient to defeat Plaintiff's motion. Nor do the arguments about the need for discovery preclude summary judgment as they fail to provide an affidavit from any individual with personal knowledge of the facts underlying the claim regarding what discovery, if any, is necessary to oppose the motion. The opposing defendants rely solely on an attorney affirmation to oppose the motion.

03/12/25 Shiloah v. GEICO
United States District Court, W.D. New York.
Case Survives Motion to Dismiss Whether Insurer Must Pay Sales Tax for Total Loss Leased Vehicles

Plaintiff brings this putative class action against GEICO, asserting breach of contract based on GEICO's failure to pay sales tax for total loss vehicles that are leased. GEICO has moved to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6).

The Court finds that Plaintiff's proffered interpretation of the policy is not unreasonable—to require actual cash value to include the payment of sales tax on a leased vehicle. As a result, the motion to dismiss must be denied. Even if New York law is correctly interpreted as argued by GEICO to not require the payment of sales tax on leased total loss vehicles, this does not mean that GEICO was prohibited from contractually agreeing to pay sales tax. Plaintiff's proffered interpretation of the policy as requiring the payment of sales tax is not unreasonable -- contending that the policy's definition of "actual cash value" as "the replacement cost of the auto or property less depreciation or betterment" is reasonably interpreted to include sales tax.

03/07/25 State Farm v. Quinones
Supreme Court, New York County
In Staged Accident case, Evidence from Third-Party Sources like Accurint Reports, CarFax Reports and Information from the Other Vehicle's Event Data Recorder Deemed Inadmissible Hearsay

Quinones, Burgos and Gonzalez were allegedly involved in an automobile collision. State Farm sought to disclaim coverage for medical treatment provided. Quinones failed to appear for EUOs on multiple dates. State Farm alleged the collision was staged based on various inconsistencies and suspicious circumstances.

The court granted State Farm’s motion in part, declaring no obligation to pay claims submitted by a certain medical provider based on Quinones's failure to appear for his EUOs. However, its motion for summary judgment on the basis that the collision was staged is denied.

State Farm has established its compliance with 11 NYCRR 65-3.5 through an affidavit attesting to plaintiff's mailing of the EUO scheduling letters prior to receiving the subject bills in conformity with standard office procedure, copies of the EUO scheduling letters with affidavits of service attesting to their mailing, contemporaneous statements by plaintiff's counsel on the record at those EUOs recording Quinones's failure to appear, and the denial of claim sent to plaintiff.

State Farm failed to meet the "heavy burden" of proving the collision was staged, as inconsistencies in EUO testimony did not pertain directly to the nature of the collision itself. Furthermore, evidence from third-party sources like Accurint reports, CarFax reports and information from the other vehicle's Event Data Recorder, was deemed inadmissible hearsay.

03/11/25 Eloise Holdings, LLC v. Mt. Hawley Ins. Co.
United States District Court, S.D. New York.
Anti-Concurrent Causation Clause Applies if Any Excluded Cause Contributes to the Loss, Even if Other Covered Causes are also Involved

Eloise Holdings owns a commercial building in Tampa, Florida that was insured by Mt. Hawley. A storm on 3/15/22 allegedly damaged the building's roof, causing interior water damage. The roof had been improperly constructed, with a modified bitumen membrane installed over the original gravel roof. Experts agreed this improper installation made the roof more susceptible to damage. Mt. Hawley denied the claim based on the policy's anti-concurrent causation clause. The court granted Mt. Hawley's motion for partial summary judgment regarding the claims for interior water damage and post-storm roof tarping.

The policy's anti-concurrent causation clause unambiguously excludes coverage for the claimed interior water damage, as the damage was contributed to or made worse by faulty workmanship and inadequate repairs to the roof. The anti-concurrent causation clause applies if any excluded cause contributes to the loss, even if other covered causes are also involved. The undisputed evidence shows the roof's improper construction and inadequate repairs constituted "faulty, inadequate or defective workmanship" that contributed to or worsened the claimed damage. Even if wind also contributed to the damage, the policy excludes coverage because faulty workmanship was a contributing factor.

The policy also excludes coverage for the post-storm roof tarping, as it was a consequence of the excluded interior water damage.

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

03/20/25 Vermont Mut. Ins. Co. v. New England Prop. Servs. Grp, LLC
Rhode Island Supreme Court
Appraisal Process Could be Equated With Arbitration. Appraisal Award Vacated Due to Evident Partiality of Defendant’s Appraiser

The plaintiff, Vermont Mutual Insurance Company appealed from a Superior Court order denying its petition to vacate an appraisal award and granting the defendant’s, New England Property Services Group, LLC, cross-petition to confirm the appraisal award. Vermont Mutual argued that the Superior Court justice erred in failing to vacate the award because there was evident partiality by the defendant’s appraiser.

Vermont Mutual issued a homeowners policy for Rhode Island property that sustained windstorm damage. After retaining an independent adjuster and roofing expert to inspect the property, Vermont Mutual paid the claim. Vermont Mutual was later informed that the insured had engaged NEPSG to complete the restoration work. The contractor was the sole owner and operator of NEPSG. Vermont Mutual learned of additional damages claimed and reinspected the property. The contractor disagreed with the scope of the assessment of the additional damage. Vermont Mutual issued an additional clam payment. The insured assigned her insurance claim to NESPG in exchange for its work on the property. NESPG demanded appraisal, and the contractor was named as an appraiser on behalf of NESPG. Vermont Mutual objected to the contractor acting as an appraiser because he was not disinterested, and it reserved its right to dispute the award.

Vermont Mutual filed a petition to vacate the appraisal award, noting that under the Arbitration Act, the Superior Court had jurisdiction to vacate, modify, or correct an award. NESPG filed a response and cross-petition to confirm the award, in which it requested the court grant the cross-petition for the award to be confirmed pursuant to the Arbitration Act. Vermont Mutual argued that the Arbitration Act requires an award be vacated if there is evident partiality or corruption on the part of the arbitrators. The insurer asserted that the contractor had a direct financial interest in the appraisal award because his company was assigned the claim from the policy holder and was contracted to perform the claimed repairs to the home. NESPG argued that the policy only required a competent appraiser, and that the contractor’s interest did not have a causal nexus to the award that was issued. The Superior Cour denied the petition to vacate and granted the cross-petition to confirm the award.

On appeal, Vermont Mutual contended that the hearing justice erred by failing to apply the relevant standard in determining whether the appraisal award should have been vacated due to the presence of evident partiality. Specifically, Vermont Mutual disagreed with NEPSG’s argument that the appraisal did not constitute arbitration, so the Superior Court did not have “subject matter jurisdiction.” The Rhode Island Supreme Court noted that the Superior Court acted properly, and NEPSG did not object to Vermont Mutual filing its petition to vacate pursuant to the Arbitration Act; moreover, it admitted to the Superior Court’s jurisdiction under the Arbitration Act in its response and cross-petition to confirm the appraisal award. The Court also determined that the appraisal process could be equated with arbitration, and NEPSG did not object to the applicability of the Arbitration Act.

Next, the Court considered whether the defendant’s appraiser was evidently partial. First, the appraiser had a direct financial interest in the award. The defendant’s appraiser was the sole owner and operator of NESPG and the assignee of the insured’s insurance claim. NESPG acted as its own appraiser with the entire award being payable to the appraiser. Second, there was a causal nexus between the appraiser’s conduct and the final appraisal award. The Court did not believe it was irrational to suggest that the appraiser’s inflated amount was potentially motivated by his direct financial interest in the award. As a result, the Court vacated the order and remanded for further proceedings.

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

03/21/25 State Farm Fire & Cas. Co. v. Hole
New Jersey Superior Court, Appellate Division
Appellate Division Rules Tortious Interference Claim Intrinsically Includes Allegations of Intent, Barring Coverage Under Policy’s Personal and Advertising Injury Exclusion

State Farm’s insured, Dr. Hole, was accused by a colleague, Dr. Russonella, of making false statements regarding Dr. Russonella’s alleged misconduct at their shared place of employment, a hospital. After amendment of pleadings and preliminary motion practice, Dr. Russonella’s tortious interference claim was the only one left standing. State Farm brought this declaratory judgment action, seeking a declaration that it had no duty to indemnify Dr. Hole against this claim. The trial court granted State Farm’s motion for summary judgment, finding that the policy’s personal and advertising injury exclusion applied, and that State Farm therefore had no duty to defend or indemnify Dr. Hole against the tortious interference claim. This appeal followed.

In New Jersey, a tortious interference claim must allege that the interference was done intentionally, and with malice. New Jersey courts have ruled that “malice,” as used here, means that the harm must have been inflicted intentionally, and without justification or excuse. Indeed, in Dr. Russonella’s amended pleadings, he alleged that Dr. Hole fabricated allegations, made misrepresentations, and intentionally interfered with Dr. Russonella’s business relationships.

Meanwhile, the State Farm policy contained a “personal and advertising injury” exclusion for “personal and advertising injury” caused by or at the direction of the insured, with knowledge that the act would violate the rights of another and would inflict “personal and advertising injury.” The same exclusion also barred coverage for “personal and advertising injury” arising out of oral or written publication of material when done by or at the direction of the insured with knowledge of its falsity.

Once the tortious inference claim was the only one left standing, State Farm brought this declaratory judgment action, seeking to withdraw from Dr. Hole’s defense in and deny indemnity for the Russonella action. State Farm pointed out that the Russonella pleadings alleged that Dr. Hole “intentionally” interfered with his business relationships, in making “untrue” and “malicious” statements “targeted to injure” Dr. Russonella.

The trial court granted State Farm’s motion for summary judgment, holding that the remaining allegations in the Russonella action fell wholly into State Farm’s “personal and advertising injury” exclusion. The trial court also ruled that the exclusion was unambiguous and did not violate public policy.

On appeal, Dr. Hole argued that the exclusion did not exclude the entirety of Dr. Russonella’s allegations and was ambiguous and void against public policy in any event. Dr. Hole further argued that summary judgment was improperly granted, as there was a material issue of fact regarding his subjective intent to cause injury.

The Appellate Division disagreed. The Court noted that, under New Jersey law, the duty to defend is governed by the pleadings as compared to the language of the insurance contract. Turning to whether the tortious interference claim fell within the policy’s “personal and advertising injury” exclusion, the Court mentioned that, under New Jersey law, a tortious interference claim, when properly pled, includes a claim that the interference was done intentionally and maliciously.

Because Dr. Russonella’s tortious interference claim “require[s] an intentional inference,” the Court continued, such a claim “intrinsically includes an intent to harm.” Meanwhile, Dr. Russonella alleged that Dr. Hole made the false statements with knowledge that his acts would indeed cause such harm.

Holding that the policy’s “personal and advertising injury” exclusion barred coverage for the Russonella action, the Court reasoned that Dr. Hole’s subjective intent was irrelevant. The Court explained that an inquiry into subjective intent is only required when the damages are not the probable outcome of the alleged tort. Here, because Dr. Hole’s intent to harm was an essential element of the tortious interference claim, and by definition required malice or intent, the Appellate Division held that the trial court did not err in not considering Dr. Hole’s subjective intent in making the statements.

The Court then addressed Dr. Hole’s argument that the policy’s “personal and advertising injury” exclusion violated public policy. Dr. Hole argued that coverage should be extended to claims arising from the same conduct that otherwise would have been covered (likely referring to other causes of action that were pled previously and subsequently no longer part of the case). Dr. Hole went on to assert that because State Farm initially agreed to provide coverage for the Russonella action (under reservation of rights), he should be entitled to coverage against the amended pleadings.

The Court was unpersuaded by Dr. Hole’s public policy argument. It reasoned that just because State Farm initially provided a defense for the Russonella action (again, that was done under a reservation of rights), does not compel it to defend Dr. Hole against any subsequently amended pleadings.

The Court also briefly addressed Dr. Hole’s argument that the exclusion was ambiguous. However, the Court deemed that argument waived on the ground that Dr. Hole’s brief did not flesh out the issue, other than citing a few cases discussing ambiguity generally.

Editor’s Note: Would the result have been different if Dr. Russonella’s pleadings were broader?

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

03/21/25 Wolf v. Riverport Ins. Co.
United States Court of Appeals, Seventh Circuit
Insured Cannot Extend Auto Policy’s Insuring Agreement in Liability Part Regarding an Insurer’s Right to Investigate a Claim to the Policy’s Uninsured/Underinsured Motorist Endorsement

Riverport issued Wolf’s employer a commercial general liability policy. Wolf was insured in a motor vehicle accident which resulted in her suffering several pelvic fractures. She collected the other driver’s auto policy limit of $100,000. After this, she filed claims with her personal auto carrier and Riverport. Wolf’s personal auto insurer settled her claim for $150,000, which left Riverport as the last insurer standing.

Four years later, Riverport and Wolf settled the claim in arbitration. At arbitration, Wolf received an award of $905,000 against the Riverport policy limit of $1,000,000. After deducting the $250,000 Wolf received from the other carriers, Riverport paid the outstanding balance. Unhappy with Riverport’s conduct, Wolf filed an action shortly after Riverport’s payout. Riverport promptly moved to dismiss the complaint after it removed the state court action.

Wolf sought relief under Sec. 155 of the Illinois Insurance Code only. That statute permits recovery of attorney’s fees, costs, and statutory damages for an insurer’s unreasonable delay in settling a claim or paying a claim. However, the statute does not create a cause of action, rather it supplements the remedies available for a breach of contract or other tort.

So, Wolf needed to allege more than a vexatious or unreasonable delay under in settling her claim. The Court of Appeals noted Wolf needed to allege facts containing a possible breach of another right, thus enabling her to the relief of Sec. 155. Wolf asserted that contract law creates rights under a breach of contract theory. Thus, the appeal looked at whether Riverport breached the policy at issue.

Wolf’s theory centered on the policy’s business auto coverage form, which obligated Riverport to indemnify an insured for third-party liability. She looked at the standard liability insuring agreement that conferred Riverport with the right to investigate and settle claims regarding actions brought a third-party. Which she felt extended to the policy’s uninsured motorist endorsement.

This theory was rejected. Because that language applies only to defending an insured from other parties, not in a suit brought by an insured. Indeed, Wolf herself was a qualified insured under the Riverport policy. While Riverport possessed discretion over the investigation of Wolf’s claim, that discretion was beyond the policy’s liability insuring agreement. The proper relief for Wolf would have been to sue Riverport for the policy’s proceeds prior to settling her claim. By settling her claim, she mooted that potential form or relief. And for those reasons, the Court of Appeals affirmed Riverport’s motion to dismiss.

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

Nothing notable recently from the Appellate Division on Serious Injury Threshold. Check back in two weeks.

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

03/04/25 Certain Underwriters at Lloyd’s, London v. Southwest Mar. & Gen. Ins. Co.
New York Supreme Court, New York County
Court Finds Third-Party Complaint Triggers Duty to Defend Additional Insured

This declaratory judgment action stems from an underlying Labor Law complaint, alleging injuries to two individuals at a construction site.

Certain Underwriters at Lloyd’s, London (“Certain Underwriters”) insured Arsenal Scaffold Inc. (“Arsenal”), who was hired to build a sidewalk shed at the construction site. Arsenal subsequently subcontracted all work at the site to JGR Services, Inc (“JGR”). The Certain Underwriters policy issued to Arsenal contained a clause identifying the policy was excess to any coverage available to Arsenal as an additional insured.

Certain Underwriters commenced an action against Southwest Marine & General Insurance Company (“Southwest”), the primary liability carrier for JGR. Certain Underwriters filed a partial motion for summary judgment, seeking a declaration that Southwest owes an obligation to provide Arsenal with a defense in relation to the underlying action.

Southwest cross-moved, seeking an order to stay the declaratory judgment action pending a completion of discovery in the underlying action, insisting that Certain Underwriter’s motion is premature. Southwest contended that JGR did not perform any work which contributed to the injuries alleged in the underlying action. In addition, Southwest argues that there is no contract between JGR and Arsenal requiring additional insured status, and thus the additional insured endorsement within the policy was not triggered.

In the discussion, the Court began its analysis by looking at the contract between Arsenal and JGR, which specifically requires JGR to acquire insurance and name Arsenal as an additional insured. The Court then turns to the additional insured endorsement in the Southwest policy, which provides additional insured coverage to, “all entities required by written contract to be included as additional insureds but only with respect to operations performed by the Named Insured or on their behalf.”

The Court identified that in its view, the additional insured endorsement was clearly triggered based on the language of the contract between JGR and Arsenal.

Next, the Court turned to the pleadings in the underlying Labor Law action. In the Labor Law action, the injured parties did not bring a suit against JGR directly. Instead, Arsenal commenced a third-party action against JGR. The Court acknowledged that the third-party complaint was “self-serving.”

However, the Court pointed to the fact that Southwest did not cite any case law for the proposition that a third-party complaint can be ignored, for the purposes of determining whether a defense obligation arises. The Court instead cites to case law, in the First Department, identified by Certain Underwriters, which held allegations in a third-party complaint can be sufficient to trigger a duty to defend.

The Court further wrote that, “[t]his Court’s role is not to perform its own evaluation of the evidence and make a factual determination about liability for the underlying plaintiffs’ injuries.” Further, the Court found it was not dispositive that no direct suit against JGR was commenced for defense obligations to exist under the Southwest policy.

Accordingly, the Court granted Certain Underwriters’ motion for summary judgment and denied Southwest’s motion in its entirety. The Court declared that Southwest must defend Arsenal in connection with the underlying action on a primary and noncontributory basis.

Interestingly, there is no discussion in the decision regarding the decision that coverage would apply on a primary and noncontributory basis under the Southwest policy. A review of the online docket shows that Southwest did not address this point in the papers. Instead, Southwest argues that the contract is not legally enforceable, as it does not specify the work JGR was required to perform at the construction site in question.

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

03/28/25 New York Senate Bill S8481
Act to Amend Insurance Law to Prohibit Increases in Rates of Homeowners’ Insurance in Excess of Twenty-Five Percent Per Year

Senate Bill S8481 seeks to add a new section, section 2351-a, to insurance law which provides that no insurer shall increase the rate of homeowners’ insurance more than twenty-five percent of the same policy from one year prior unless agreed to by the policyholder prior to being issued, renewed, modified, altered, or amended.

The bill justification provides that the escalating rates of homeowners’ insurance have posed a severe financial burden on individuals. This legislation is part of the important goal of ensuring that insurance premiums remain stable and accessible to those who rely on it. Further, by establishing a reasonable limit, homeowners will be able to plan their budgets more effectively.

Section 1 of Bill S8481 reads:

The insurance law is amended by adding a new section 2351-a to read as follows:

§ 2351-a. Homeowners' insurance policies; rate increases. (A) for the purposes of this section, "homeowners' insurance" means a contract of insurance insuring against the contingencies described in subparagraphs (A), (B) and (C), or (B) and (C) of paragraph two of subsection (A) of section three thousand four hundred twenty-five of this chapter and which is a "covered policy" of personal lines insurance as defined in such paragraph; provided, however, that the coverages provided under such subparagraphs (B) and (C) shall not apply where the natural person does not have an insurable interest in the real property, or a portion thereof, or the residential unit in which such person resides.

(B) No insurer shall increase the rate of homeowners' insurance such that the rate is more than one hundred twenty-five percent of the rate of the same policy from one year prior unless agreed to by the policyholder prior to the policy being issued, renewed, modified, altered or amended.

DOMENICA’S DIARY on BAD FAITH
Domenica D. Hart
ddh@hurwitzfine.com

03/21/25 Gross v. Scottsdale Insurance Company, et al.
United States District Court for the Northern District of California, San Jose Division
Attorney-Client Privilege and Work-Product Doctrine Can be Waived by Failure to Use Reasonable Steps to Rectify an Inadvertent Disclosure

Plaintiff, Terry Gross, asserts claims for breach of contract, breach of the implied covenant of good faith and fair dealing and bad faith against Scottsdale Insurance Company based on Scottsdale’s alleged breach of obligation to defend and indemnify two former directors of the now defunct company, Flora Biosciences, Inc. in connection with a state court lawsuit. In the coverage action, a common discovery dispute arose dealing with attorney-client privilege and work-protect doctrine.

In December 2018, counsel for Mr. Gross (a Flora Shareholder) sent a letter to Flora’s Board of Directors demanding the company pursue legal action against Flora’s former CEO. Flora tendered the demand letter to Scottsdale, its insurer. Scottsdale retained an attorney, Joseph Breen, to represent the company for the purpose of investigating the allegations in the demand letter. Breen conducted an investigation and provided a report (“Breen Report”) to Scottsdale and Flora’s Board of Directors on May 21^st, 2019. Mr. Gross became a member of Flora’s Board of Directors on May 22, 2019, but resigned three weeks later in June 2019. Subsequently after resigning, another member of the Board of Directors, Mr. Vergas, shared the Breen Report with Mr. Gross., At Breen’s deposition in February 2025, Scottsdale objected to the Breen Report being used as an exhibit at the deposition, asserting both Attorney-Client Privilege and Attorney Work Product Production.

The Attorney-Client Privilege is governed by state law. Under Cal Evidence Code § 952, if a confidential communication between lawyer and client exists, the client has the privilege against disclosure, and the attorney has an obligation to refuse disclosure until otherwise instructed by the client. CA recognizes the “tripartite relationship” among the insured, the insurer, and defense counsel retained by the insurer for the insured. Absent any conflict, an attorney retained by the insurer to defend its insured under the insurer’s contractual obligation owes a fiduciary duty to both the insurer and the insured. The Work Product Doctrine is governed by federal law here. Rule 26(b)(3), shields from discovery materials that are prepared by or for parties in anticipation of litigation and protects discovery of legal strategies and mental impressions of the party’s counsel.

Scottsdale had the burden of proving that both the privilege and doctrine applied. At the time of the Breen Report preparation and delivery to the Board of Directors, the Court found Breen, Flora and Scottsdale had a “tripartite relationship”, finding the report was subject to the Attorney-Client Privilege. However, both the privilege and doctrine may be waived. Waiver is governed by Fed R. Evid 502(f). Fed R. Evid 502(b), provides in part: The disclosure of the communication or information covered by the attorney-client privilege or the work product protection does not operate as a waiver in a federal or state case if:(1) the disclosure is inadvertent;(2) the holder of the privilege or protection took reasonable steps to prevent disclosure; and (3) the holder probably took reasonable steps to rectify the error.

The court found that Scottsdale waived both the Attorney-Client Privilege and the Work Product Protection. The Breen Report was disclosed to shareholders that were not entitled to it and Scottsdale failed to take prompt action to retrieve the report, or asset privilege, after knowledge of the disclosure. Also, Gross publicly disclosed portions of the Breen Report in the underlying Complaint, filed in 2013. Scottsdale took no action to protect the privileges for over a year after the public disclosure. Simply objecting to disclosure of the report “now” was not sufficient.

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

02/11/25 Sniper Pressure Services Ltd v Northbridge General Ins. Co.
Alberta Court of King’s Bench
A Lawyer Prosecuting a Subrogated Claim for an Insurer Does Not have a Retainer with the Insured and Therefore is Not in Conflict Should that Same Lawyer Act Against the Insured in a Coverage Action on the Same Policy that Generated the Subrogated Claim.

The Alberta Court of King’s Bench has issued a decision as to whether counsel appointed by a subrogating insurer is in a conflict if that counsel also defends a coverage action on the same policy that generated the subrogation.

Background

Sniper Pressure Services Ltd. is a privately owned oilfield service company that operates in north central Alberta. Sniper owns a fleet of 100 oilfield service trucks, and, as well, stores and sells oilfield chemicals out of Whitecourt, Grande Prairie, Hinton, Edson, Fox Creek and Swan Hills, Alberta.

Sniper’s facility in Whitecourt, Alberta was visited by a streak of bad luck. The roof collapsed on March 4, 2020. Sniper was insured by Northbridge Financial who replaced the roof. The roof collapsed again on January 17, 2022.

The Legal Actions

Sniper on its own account sued the alleged tortfeasors for about $5 million. Northbridge paid Sniper about $2 million. Northbridge then sued (apparently naming the same parties as defendants) to recover its subrogated interest. Sniper then sued Northbridge saying that it is owed about $650,000 of additional funds under its policies.

Northbridge retained Ken Haluschak of Bryan & Company in Edmonton on all files involving Sniper’s roof collapse(s). That meant that Haluschak was defending Northbridge against Sniper on the coverage claim and, concurrently acting as plaintiff counsel in Sniper’s name to prosecute the subrogated claim.

The Issue

Sniper objected to Haluschuk’s retainer asserting in this application to the Alberta Court of King’s Bench that Haluschak has a conflict of interest and, as a consequence, should be disqualified from acting for Northbridge in the coverage case and the subrogated claim.

Sniper argued that because Ken Haluschak is Counsel on the subrogated claim that Sniper is properly characterized as its client and, therefore, he cannot act as Counsel in defence of this claim against Northbridge. Haluschak who argued this application, took the opposite view stating that when counsel is retained by an insurer on a subrogated claim that it is incorrect to characterize that retainer as creating a solicitor client relationship between that counsel and the insured.

The Decision

The application Judge clearly wanted to address the duplication of actions arising from the collapse of the roofs. However, the parties were clear that the issue before the court was whether Ken Haluschak had a conflict of interest - the duplication of actions is an issue for another day.

The application to remove Haluschak as counsel was supported by an affidavit sworn on behalf of Sniper. There was a cross examination on that affidavit. The wording of the affidavit is not disclosed by the court in this decision but apparently Sniper objected to Haluschak acting as Plaintiff Counsel in the subrogation as he would be ‘privy’ to Sniper’s confidential information which creates a conflict given that Haluschak was also defence counsel in the coverage case.

Haluschak conducted the cross examination and asked for particulars of what information would be confidential or privileged. The deponent of the affidavit refused to answer the question. Haluschak filed an application to the court to compel an answer. The application judge ordered Sniper to answer the question. The answer was, apparently, generic “…without actual production or satisfactory description of specific information of concern.” The Court in this application stated, “I have no basis to conclude that the concern is valid or warranted.”

The Court held that there are three actions in play: Sniper has sued the tortfeasors for the two instances of roof collapse for about $5 million; Sniper is a nominal plaintiff in the subrogated claim against the same parties for about $2 million; Sniper has sued its insurer Northbridge for additional monies under the coverage that applies to the two instances of roof collapse. The Court held that as Sniper is the nominal plaintiff in the subrogated claim, then Sniper is a “nominal client’ of Haluschak. Northbridge is entitled to bring the action and is entitled to select its counsel to do so. Although it will be awkward for the principals of Sniper to work with Haluschuk, he can continue to act as counsel for Northbridge on the subrogated claim and on the defence of the coverage action as there was no retainer between Sniper and Haluschak.

Coverage Pointers - Volume XXVI No. 20

Fri, 14 Mar 2025 14:32:27 +0000

Volume XXVI, No. 20 (No. 693)
Friday, March 14, 2025
A Biweekly Electronic Newsletter

As a public service, Hurwitz Fine P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York and Connecticut appellate courts and Canadian appellate courts. The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at ddk@hurwitzfine.com or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.

DRI Insurance Roundtable

I am back from Chicago where I was fortunate enough to be asked to participate in one of the nation’s most impressive insurance programs, the DRI Insurance Roundtable. Along with my colleague and friend Matt Foy from the Gordon Rees firm, in place of my great pal John Trimble, who was unable to attend, we discussed how the insurance industry and the defense/coverage attorney community, can work together to transition the business and practices into the future. Both the industry and the legal profession face challenges, financial and otherwise, and we each want the other to expand and thrive. These are challenging times and it’s great that we can break bread and have frank and honest discussions on these very compelling topics/

New York Car Rental Coverage – Important First Department Decision

This one is, in my opinion, one of the most significant judicial decisions involving rental car coverage in many years. On Thursday, March 13^th, the First Department handed down a decision which is reported in column, in a matter called Second Child v. Edge Auto. You will find a lengthy discussion of the case and a link to the decision in in the attached issue of Coverage Pointers.

The Court overturned, in part, based on the Graves Amendment, a section of the Vehicle & Traffic Law (Section 370) and distanced itself from an earlier decision from our high court in ELRAC v. Ward, by holding that the federal statute preempts the requirement that rental car companies need to provide at least the minimum New York limits of liability insurance. $25,000/$50,000/$10,000, to those who rent cars in New York.

This is a perfect case for high court review, but it will have to be done on motion for leave to appeal.

Primary carriers beware – you may have believed that when your insureds rented cars and had accidents, your policies would provide excess, non-owned coverage. If this case becomes the law of the land, you will now have primary responsibility to defend and indemnify your insureds. And for those renters who don’t have their own auto coverage, we can expect a rise in uninsured motorists claims and claims under MVAIC.

Wyoming Sanctions Case Settles

For those who have followed the Morgan and Morgan case which included sanctions to lawyers in that firm for submitting hallucinated cases in support of a motion in liminie, that case was sent to the jury for final consideration on Wednesday, March 13. The parties settled the case during deliberations.

I have no additional information.

The case involved an allegedly defective hoverboard which was said, by the plaintiffs, to have started a fire, leading to injuries to children in the home. The defense blamed the fire on cigarettes in a smoking shed. And so, it goes.

LinkedIn

For those who need to keep up to date on insurance coverage between issues of Coverage Pointers, we’re happy to help. Just follow me on LinkedIn and we’ll keep you up-to-date. I’m easy to find – my linked in name is (ready for this unusual and unexpected name): Kohane (now there’s a shock) and you can find me here: https://www.linkedin.com/in/kohane/

Need a Mediator or Arbitrator, Give a Call

First Department Rules on Interrelated Wrongful Acts in Sexual Assault Arena

There’s another interesting case in my column on the question of interrelated wrongful acts in a claims made, Errors and Omissions policy. If you work in that space, it’s surely worth a read.

Maxwell Gets a Pass

Kudo to Lorraine and Ryan Maxwell on the birth and safe arrival at home of their beautiful daughter, Eliza Sofia. She joins big brothers Phillip and Logan, and the dogs, in a wider family menagerie. Eliza showed up a few weeks earlier than expected after TLC at the hospital, has finally made it home. Ryan gets a pass on this week’s CP, as a result. But ONLY this week!

Newsletters:

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant, and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at jeb@hurwitzfine.com to be added to the mailing list.
Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at dra@hurwitzfine.com to subscribe.
Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework, and governmental agencies. Contact V. Christopher Potenza at vcp@hurwitzfine.com to subscribe.
Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at emm@hurwitzfine.com to subscribe.

The Gold Revolver – 100 Years Ago:

Times Union
Brooklyn, New York
14 Mar 1925

One Manhattan Gun-Toter
Pleads Guilty in Court
After Pal Is Convicted

In the County Court today before Judge Reuben L. Haskell two more young Manhattan gunmen learned that, for their kind, Brooklyn is not an attractive place in which to tarry.

The two prisoners from the other side of the Bridge were David Reiner, 20 years old, of 241 East Houston street, and Morris Gold; 20 of 207 Stanton Street. They are old offenders, and they were brought before Judge Haskell on charges of possessing a loaded revolver as a felony, Reiner went to trial before Judge Haskell and a jury, with Assistant District Attorney Bernard Becker in charge of the prosecution. He was found guilty. With the verdict returned against his pal, Gold concluded he had no chance of escape, so he entered a plea of guilty. Judge Haskell remanded the pair to Raymond street jail until Tuesday when he will sentence them.

Reiner and Gold were arrested by Detectives Harry Beck, William Donelly and Henry Reif. On the morning of Jan. 28 last, as they walked along Thatford Avenue, the three detectives saw Gold, Reiner and three pals of their own age come from a Turkish bathhouse on Thatford Avenue, between Belmont and Sutter avenues. Recalling Gold and Reiner as two old offenders and suspicious of their presence in the neighborhood at that hour, the detectives crossed the street, walking toward the men. On the approach of the detectives. Reiner, with a sweeping motion of his arm behind his back, threw away a loaded revolver. On Gold, concealed behind the waistline of his trousers, was found a loaded revolver, The revolver thrown away by Reiner was recovered.

Peiper on Property (and Potpourri):

Returning from Chicago where I attended the DRI Insurance Coverage and Claims Institute. All is well and I’ll see you in a couple of weeks. He offered you this vista:

Steve
Steven E. Peiper
sep@hurwitzfine.com

Full of Bologna – 100 Years Ago:

Times Union
Brooklyn, New York
14 Mar 1925

DETECTIVES GUARD GOBEL HOME; CHILDREN OUT

The beautiful residence of the late Adolph Gobel, Bologna manufacturer, at 279 Highland Boulevard, is being guarded today by private detectives while the widow, who is now Mrs. Sigwar John Reid, the wife of an artist, is living at the Pennsylvania Hotel. The guards at the house, according to reports, are to keep out the eldest daughter Ottillie, Mrs. Claude Earl Moore, who is reported to have had a disagreement with her mother, when she returned from her honeymoon to find that her mother had married again.

According to neighbors, Adolph, Jr., joined in the quarrel, with the result that he is living now at the Gobel country estate at Annabelle, N.J.

Lee’s Connecticut Chronicles:

Dear Nutmeggers:

Spring is in the air. How do I know this, you ask? Well, it’s not from the still bone-chilling cold temperatures and howling winds blowing off Long Island Sound. Nope, instead it’s the annoying itching feeling in my ears telling me that it’s time to start up the allergy meds again. There’s no surer sign of spring than that. So, forget about Punxsutawney Phil and just ask me if my ears are itchy—then you’ll know spring is around the corner.

Also, it seems that policyholders in Connecticut are itching for some CUTPA/CUIPA action but keep under-pleading their claims. This edition we present another couple of cases in which the courts again dismiss CUTPA/CUIPA causes of action for the policyholders’ failure to adequately plead a general business practice (or lack of standing). It’s become clear that mechanically pleading generic allegations, or even specific case-related allegations, are not enough to meet the pleading standards.

Until next time, keep keeping safe.

Lee
Lee S. Siegel
lss@hurwitzfine.com

Sleeping Man Confesses Infidelity – 100 Years Ago:

Times Union
Brooklyn, New York
14 Mar 1925

To Argue Legality
Of Sleep Talk Evidence
In Suit for Divorce

Interesting argument is expected in the Chancery Court in Jersey City next Friday in the action for divorce brought by Dr. Emil Posner, formerly of Butler, N.J., against his wife, Eleanor, of Jersey City, before Vice Chancellor Griffin.

The interest centers on whether or not the court will permit in evidence statements alleged to have been made by Posner during his sleep in which the other girl was mentioned. The papers filed by the wife made this allegation.

Mrs. Posner, opposing the suit, is represented by V, McDonald an attorney of Essex County, and the husband has engaged Julius Lichtenstein, of Hoboken.

Ruffner’s Road Review:

Dear Readers,

I celebrated my (29^th) birthday last week ... hard to believe 30 is less than a year away! Went to another Sabres game earlier in the week, lost any hope of a miraculous playoff run as they got blown out by the worst team in the NHL, enjoyed a good Hibachi birthday dinner and time with family and friends.

In this week’s case, the respondent moved to vacate an arbitration award pursuant to CPLR §7511(b)(1)(iii), as well as a default judgment, arguing that as a foreign corporation not authorized to do business in New York it could not be subject to any arbitration in New York. The court denied the motion, because while personal jurisdiction is required for the exercise of the state's judicial power over a party, arbitration is a form of dispute resolution almost wholly independent of the court systems. Further, the insurer did not produce its policy to examination for a determination of whether it permitted or possibly required arbitration.

Kyle
Kyle A. Ruffner
kar@hurwitzfine.com

Guilty Conscience – 100 Years Ago:

Buffalo Courier
Buffalo, New York
14 Mar 1925

Holds Up Grocery Store.
Refused to Take Loot;
Gives Self Up to Cops

New York, March 13. – Saying that his conscience bothered him because he had held up a grocery store last night, Arther Prohaska of Dedham, Mass., surrendered to the police today, although the holding up yielded him only $1, which he had turned back to the astonished grocer.

He was held in $3,500 bail to await grand jury action on charges of attempted robbery and carrying concealed weapons.

Prohaska said he left a bride of eight months in Dedham when he came to New York last week. Last night he walked into the grocery store of Michael Hackadorian on West Sixty-first street, drew a pistol and ordered the grocer to open the cash register. The grocer complied, said Prohaska, but there was only $1 in the register and this the would-be bandit declined to take.

Ryan’s Federal Reporter:

Nothing from me this time (but next time I'll have some extra hands).

Ryan
Ryan P. Maxwell
rpm@hurwitzfine.com

My Kingdom for a Stamp – 100 Years Ago:

Buffalo Courier
Buffalo, New York
14 Mar 1925

ORDER BILLION OF NEW STAMPS

Washington, March 13. – Requests for 1,400,000,000 of the new one and a half cent postage stamps bearing President Harding’s picture already have been received from postmasters for use on third class mail when the new rates go into effect April 15.

Storm’s SIU:

Hi Team:

Next time we speak, it will be Spring! Can’t come soon enough.

A couple interesting cases this edition:

“For Hire” Exclusion not Effective to UM/SUM Coverage; Not Enough Proof That the TNC Exclusion Applied.
Where Insured’s Expert Identifies Six Possible Causes of Loss, it is Not Enough for Summary Judgment for the Insurer to Argue One Cause is Excluded from Coverage Based on the Anti-Concurrent Causation Language Without Evidence the Excluded Peril Accounted for Some of the Damage.

Have a great two weeks until we talk again!

Scott
Scott D. Storm
sds@hurwitzfine.com

Hope My Wife Doesn’t Turn Me In For Annoying Her – 100 Years Ago:

Buffalo Courier
Buffalo, New York
14 Mar 1925

ANNOYS WOMAN. GETS 4 MONTHS.

Maryan Kaczmarek, No. 1396 Broadway, was sent to the penitentiary for four months by Judge Woltz in city court yesterday for annoying Mrs. Mary Krudziel of the same address.

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

This week’s case from the Iowa Supreme Court considers whether a policy provided coverage for damage from a partial roof collapse but also the restoration of load-bearing walls for the entire building based on the policy’s ordinance or law provision. The Iowa Supreme Court held that the insurer only had to pay for the partial roof collapse due to an exception for pre-existing code violations.

Looking forward to enjoying the warmer weather this weekend!

Catch you later,

Kate
Katherine A. Fleming
kaf@hurwitzfine.com

Sound Like the Right Conference to Attend – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
14 Mar 1925

DRUGGISTS WILL ATTEND NARCOTIC CONFERENCE

At the invitation of Richard H. Templeton, federal district attorney, the Erie County Pharmaceutical association will be represented at the first narcotic conference on Monday afternoon by three delegates. The men named by the druggists’ society are George P. Bigham, T. F, Williams, and Sidney James.

Members of the Erie County Medical society, Health Commissioner Fronczak and Bishop Brent will also attend.

Gestwick’s Garden State Gazette:

Dear Readers:

I tried making corned beef jerky for the first time this past weekend, using my food dehydrator. Apparently, corned beef needs to be sliced thicker than one would slice regular top round for jerky-making purposes (either that, or it takes less time to dehydrate than regular beef). Either way, may I interest you in a corned beef chip? Because that is what I ended up with. Good thing this was only my “test run,” as I signed up to make the same for our firm’s St. Patrick’s Day potluck lunch on Monday. Perhaps this weekend will yield better results.

I have two cases for you this week. The first involves a rescission of a policy where the insured misrepresented its use of subcontractors on construction sites. The insured said it did not use any, and yet, went right ahead and hired (at least) one. The Court, having been duly satisfied that the carrier would not have issued the policy as it did have it known that its insured does, in fact, use subcontractors (at least sometimes), upheld the rescission.

The second case is far more interesting, in my opinion. A man was incarcerated after intentionally burning down his home. While incarcerated, he received a notice of arbitration from the subrogee which had previously compensated the law enforcement officers injured in dealing with the aftermath of his misdeed. Miscues during the arbitration proceeding, and more miscues in the mail room, led to a very interesting decision.

That’s all, folks! See you in two weeks.

Evan
Evan D. Gestwick
edg@hurwitzfine.com

A Kiss is But a Kiss – 100 Years Ago:

Anderson Daily Bulletin
Anderson, Indiana
14 Mar 1925

KISSING BURGLAR.

London, March 14. – A “kissing burglar” has been busy in one section of London recently. After robbing the house, he kisses any girls he finds in bed and makes his escape.

O’Shea Rides the Circuits:

Hey Readers,

I was unprepared for the posting of a dogs photo in this week’s edition. Looks like I will have to follow up in the next edition. Since the last edition, Josh Norris left the pristine rivers and waters of Ottawa for the Metropolis of Buffalo. In exchange, Dylan Cozens and local product, Dennis Gilbert, traveled to Ottawa. Time will tell how this trade plays out. While I wish Norris well, I hope he does not cause resent and regret within the years to come among us Sens fans.

This week I have another circuit case from the Eleventh Circuit. This time the court looks to whether an insured has standing to reform a policy before the submission of a claim and the breadth of a construction exclusion.

On another note, I disagree with the First Department’s decision in Second Child. The Graves Amendment was enacted to prevent limitless liability against automobile manufactures and rental car companies. What the statute also contains is a carve out for a State’s Financial Responsibility Laws imposing minimum insurance limits. New York VTL Sec. 370 imposes a minimum limit for property damage and bodily injury coverage.

The Appellate Term Decision , 37 S. Fifth Ave. Corp. v Dimensional Stone & Tile, 58 Misc 3d 56, 59 (App Term 2017), similarly identified the carve out in Graves. And found VTL Sec. 370 does not operate to impose vicarious liability. So VTL Sec. 370 imposes mandatory minimums of insurance coverage with no vicarious liability. Sure, seems like a financial responsibility law to me that falls within Graves’s carve out.

Until Next Time,

Ryan
Ryan P. O’Shea
rpo@hurwitzfine.com

It Was a Simpler Time – 100 Years Ago:

The Miami Herald
Miami, Florida
14 Mar 1925

KISSING WOMEN COSTS PRISONER SIX MONTHS

TAMPA, Fla., March 13. – Kissing his women passengers, who were being smuggled into the United States, cost Emilio Leara an extra six months in the Federal prison at Atlanta, government officials in Federal Court here intimated. Leara, as far as the court’s sentence of 18 months is concerned, was not informed that his reported amorous attentions toward the women in question had anything to do with the difference between one year and 18 months in prison.

Several of the women, all aliens testified through an interpreter, that Leara brought a boat load of the aliens from the schooner Almendares last year, into shallow water near shore but refused to land the women until they kissed him. One, Maria Lisjak, admitted she paid the extra charge, being anxious to be put ashore.

Rob Reaches the Threshold:

Dear Readers,

We are now in March - one of my favorite months of the year for many reasons. As I write this, the Players Championship is underway down in Florida. Next week, the March Madness tournament begins. Conveniently, that madness will take us right into Opening Day for MLB and my beloved Yankees (who are dropping like flies in Spring Training, and I am NOT OKAY about it). In better news, I just celebrated my birthday earlier in the week, and it will be near 70 degrees in Buffalo this weekend with some golf courses opening. March is great.

For this installment, we review a First Department decision that analyzes pre-trial rulings on motions in limine regarding testimony from respective experts. Since the jury ultimately found that the plaintiff did not sustain a serious injury pursuant to Insurance Law Section 5102(d), the lower Court's rulings on these motions were crucial.

Hope you all enjoy the read.

Rob
Robert J. Caggiano
rjc@hurwitzfine.com

Can’t Talk About it – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
14 Mar 1925

JUROR SAID TO HAVE DISCUSSED VERDICT EXCUSED

Trial of issue in suit will be completed with eleven men in box.

Conrad J. Moschel, whose name is caried on the jury list as a livestock dealer, No. 165 Jewett Parkway, was excused from service as a juror in the suit of David Paul of No. 332 North Ogden street against Harry Lieberman of No. 63 Traymore Street, after all the testimony had been heard and the opposing attorneys were about to sum up yesterday afternoon. County Judge Conable directed that the case be decided by the remaining eleven jurors.

During a recess one of the eleven jurors claimed that he heard Moschel make a remark indicating that he was in favor of awarding a verdict to the plaintiff. The court and the attorneys decided it would be best to excuse Moschel so as to remove any suspicion that he had prejudged the case.

Paul sought to recover $1,900 that he claimed as his portion of the profits of a farm owned by Liberman that Paul agreed to work on a share basis.

LaBarbera’s Lower Court Library:

Dear Readers:

My puppy has a habit of bringing things outside with her into the backyard. Toys, socks, garbage, you name it. If she can carry it, she must take it with her. Unfortunately, she does not have the same desire to bring things back in. After a few days of warmth, the snow at my house melted away. I finally found out where her favorite toys, my favorite socks, and all of her bones went.

This week I found an interesting case discussing an insured’s motion for class certification. The court denied the motion as premature and ordered the parties to conduct limited discovery regarding the class certification requirements.

Until next time…

Isabelle
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Cancelled Taxes – 100 Years Ago:

The Buffalo News
Buffalo, New York
14 Mar 1925

CARGO TAXES CANCELLED BY CANTON GOVERNMENT

CANTON, China, March 14. – The provisional government, officially announcing the death of its head, Dr. Sun Yat-Sen, who died Wednesday in Peking, cancelled the recently imposed taxes on cargo boats, which caused a strike of cargo boat and cartage coolies and threatened to provoke a general strike throughout the city. There is much jubilation among the workers, who are resuming work.

There is, however, much uneasiness here, owing to military activities in the city and throughout the province of Kwang Tung as a result of the reported ambition of General Chen Chiung-Ming, as opponent of the government, to gain control.

As a sign of mourning for Dr. Sun, the government has ordered the closing for a week of all cinemas and theaters and the cessation of fireworks displayed and other amusements. All government officials and employees have been ordered to wear a band of crepe on the left sleeve.

Lexi’s Legislative Lowdown:

Dear Readers,

This week’s column talks about pet insurance. As a person who has two wild pups and is the holder of two pet insurance policies, I am always interested in reading about proposed legislation that would regulate the pet insurance industry.

Here is a picture of my dogs, May, and Knox, who keep me busy every single day!

Have a nice weekend.

Lexi
Lexi R. Horton
lrh@hurwitzfine.com

Fire Safety – 100 Years Ago:

Buffalo Courier
Buffalo, New York
14 Mar 1925

TOSSES CIGARETTE INTO POWDER KEG.

GATHER REMAINS

Jonquieres, Que., March 13. – James McLaughlin of Manchester, N.H., was killed instantly today when he tossed a lighted cigarette into a keg of powder beside a bow of dynamite on which he was seated. The dynamite also exploded.

Domenica’s Diary on Bad Faith:

Dear CP Readers,

Happy almost spring! The weather is getting warmer, which makes me happy. My morning walks with my Dachshund, Charlie, will now be livelier as the abundant neighborhood chipmucks and squirrels tempt Charlie almost as much as Reese’s Peanut Butter Cups tempt me. It’s a challenging time of year for us both!

Short on bad faith in New York this week, I bring you a Pennsylvania case that highlights the high burden on an insured to prove bad faith by an insurer. The high burden is seen in many jurisdictions around the country.

Domenica
Domenica D. Hart
ddh@hurwitzfine.com

Dear Ms. Fairfax – 100 Years Ago:

The Kansas City Post
Kansas City, Missouri
14 Mar 1925

ADVICE TO THE LOVELORN
By Beatrice Fairfax

Miss Fairfax – As you have helped me before with your advice, I come again asking your kind advice. I know I am dreadfully ignorant as to some of the ways of society but know you will help me.

What is the correct etiquette concerning the wearing of an engagement ring? I notice so many college girls wearing the ring on the right hand while other wear it on the left. Is it the custom for the bridegroom to furnish his with a completely new wardrobe after their marriage? Thanking you in advance for your advice. – L.H.

The custom has been for years and years to wear the engagement ring on the third finger of the left hand, but girls are changing the entire order of things now and I imagine one may do as one pleases about wearing engagement rings.

Brides usually have enough clothes to last a year, that is, enough of the principal garments. Of course, little things like hose and accessories must be purchased from time to time even during the first year.

North of the Border:

We just had our two grandsons over for the weekend. They are almost five and three and full of life. They played in the monstrous puddles outside our house; built Duplo creations and knocked them down; raced around the house on push vehicles and didn’t stop eating. When I suggested to the oldest that he needed to finish his main course before having a cookie, he said “that spoils my happiness,” forcing me to lamely say, “that’s the way it is.”

I recommend being a grandparent.

My column this week discusses the cross-border litigation regarding Vale Canada’s claims for coverage for pollution events arising from its worldwide nickel production facilities.

See you next time.

Heather
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Headlines from this week’s issue:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

This One Is Big. First Department Holds That Graves Amendment Supersedes Vehicle & Traffic Law Section 370, insofar as It Requires Rental Car Companies to Provide Minimum Limits of Coverage for Its Drivers. Thousands Flee.
Law Firm Loses Coverage Under Claims Made E&O Policy When It Had Prior Knowledge of Facts That Could Constitute Claims and Failed to Disclose Same in Policy Application. First Department Provide Primer on This Area of Law
Later Acts of Sexual Harassment to a Different Victim Is Sufficiently Connected to Earlier Harassment to Be Considered an Interrelated Wrongful Act

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Settlement Against Potential Joint Tortfeasor in a Foreign Jurisdiction Does Not Support Res Judicata Dismissal of Second, Independent Lawsuit

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

Berkley Knocks Out CUTPA/CUIPA but Falls Short on Dismissing Bad Faith Claim
CUTPA Claim Dismissed For Want of Standing
Negligent Infliction of Emotional Distress Claim Survives Against Carrier
Carrier Cannot Rely on Home Improvement Act as a Defense to Payment, Among Other Issues

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

Motion to Vacate Default Is Denied, as Respondent Did Not Produce Its Policy to Establish Whether It Permitted or Required Arbitration

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

Nothing from me this time (but next time I'll have some extra hands).

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

“For Hire” Exclusion Not Effective to UM/SUM Coverage; Not Enough Proof That the TNC Exclusion Applied
Where Insured’s Expert Identifies Six Possible Causes of Loss, It Is Not Enough for Summary Judgment for the Insurer to Argue One Cause is Excluded From Coverage Based on the Anti-Concurrent Causation Language Without Evidence the Excluded Peril Accounted for Some of the Damage

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

Insurer Must Only Pay to Repair the Damage from the Partial Roof Collapse but Not the Cost to Remedy the Longstanding Deterioration in Other Areas of the Building Unaffected by the Collapse

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

Insurer Entitled to Rescind Policy Where Misrepresentations Were Made as to the Use of Subcontractors on Construction Projects
Appellate Division Affirms Waiver of Incarcerated Individual’s Right to Contest Arbitration Award, and Finds the Thirty-Day Rule to Apply in Any Event

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

Insured Possesses Article III Standing to Bring Reformation Claim on Undamaged Buildings and Broad Course Of Construction Exclusion Applies to Entire Construction Project

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

First Department Unanimously Affirms Order Which Included Trial Rulings on Motion in Limine Where Plaintiff’s Application to Preclude Defendant’s Biomechanical Engineer Expert From Testifying Was Denied and Defendant’s Application to Limit Plaintiff’s Treating Physician’s Testimony Was Granted

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Court Denies Motion for Class Certification as Premature, and Orders the Parties to Conduct Limited Discovery

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

Proposed Act to Provide Guidelines for the Issuance of Pet Insurance in New York State

DOMENICA’S DIARY ON BAD FAITH
Domenica D. Hart
ddh@hurwitzfine.com

Long Periods of Time Between a Demand and a Settlement Does Not on Its Own Constitute Bad Faith; Delays Attributable to Necessary Investigation or Even Simple Negligence Will Not Satisfy the Burden

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Unless There is a Choice of Law Clause Specifying a Jurisdiction Other than Ontario, the Ontario Courts have Jurisdiction to Hear Coverage Disputes under Policies that were Brokered and Issued to Insureds at an Address Outside of Ontario, Where the Issuing Insurers are Registered and Licensed to Transact Business in Ontario; the Insured Does Business in Ontario; and, the Policies Relate Largely, but not Exclusively to the Insured’s Operations in Ontario
The Sudden and Accidental Pollution Exception to the Pollution Exclusion Contains a Temporal Element that is Met by the Discharge, Abruptly or Within a Short Time Span, of a Significant Quantity of the Pollutant Sufficient to Have Some Potentially Damaging Environmental Effect

That all we have for this week. See you in two.

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut and New Jersey.

In addition, Dan D. Kohane is a Foreign Legal Consultant, Permit No. 0119144, issued by the Law Society of Upper Canada, and authorized to provide legal advice in the Province of Ontario on matters of New York State and federal law.

NEWSLETTER EDITOR
Dan D. Kohane
ddk@hurwitzfine.com

ASSOCIATE EDITOR
Agnes A. Wilewicz
aaw@hurwitzfine.com

COPY EDITOR
Evan D. Gestwick
edg@hurwitzfine.com

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
ddk@hurwitzfine.com

Steven E. Peiper, Co-Chair
sep@hurwitzfine.com

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Domenica D. Hart

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

Victoria S. Heist

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
sep@hurwitzfine.com

Michael F. Perley

Scott D. Storm

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
ddk@hurwitzfine.com

Ryan P. O’Shea
rpo@hurwitzfine.com

Kyle A. Ruffner
kar@hurwitzfine.com

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com

Topical Index

Kohane’s Coverage Corner
Peiper on Property and Potpourri
Lee’s Connecticut Chronicles
Ruffner’s Road Review
Ryan’s Federal Reporter
Storm’s SIU
Fleming’s Finest
Gestwick’s Garden State Gazette
O’Shea Rides the Circuits
Rob Reaches the Threshold
LaBarbera’s Lower Court Library
Lexi’s Legislative Lowdown
Domenica’s Diary on Bad Faith
North of the Border

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

03/13/25 Second Child v. Edge Auto, Inc.
Appellate Division, First Department
This One Is Big. First Department Holds That Graves Amendment Supersedes Vehicle & Traffic Law Section 370, insofar as It Requires Rental Car Companies to Provide Minimum Limits of Coverage for Its Drivers. Thousands Flee.

Plaintiffs, a company and its driver, (collectively referred to as “Second Child”) (by the way, Second Child is a corporation, not the second son or daughter of Mr., and Mrs., Child) rented a vehicle from its owner Edge Auto, Inc. A nonparty commenced an action against Second Child seeking damages arising out of a traffic accident involving their operation of the rented vehicle.

Second Child filed a third-party complaint against Edge Auto and its insurer seeking a judgment declaring, among other things, that Edge Auto was statutorily obligated to provide insurance to Second Child on a primary non-contributory basis pursuant to Vehicle and Traffic Law § 370; that Edge Auto or its insurance company were required to undertake the defense and indemnity obligations of plaintiffs in the underlying action; and that Edge Auto was prohibited from seeking indemnification from plaintiffs or their insurer for amounts up to the statutory minimums imposed by Vehicle and Traffic Law § 370.

Vehicle and Traffic Law § 370 provides that rental car companies "shall file with the commissioner of motor vehicles . . . evidence of . . . a corporate surety bond or policy of insurance. Any such bond or insurance policy shall inure to the benefit of any person legally operating the motor vehicle". The Court of Appeals has determined, in previous cases, that this section obliges rental car companies to provide coverage to their drivers, renters up to the minimum liability limits provided by the statute

The U.S. Congress enacted the Graves Amendment (49 USC § 30106) in 2005. The Graves Amendment's operative provision, the preemption clause, states:

"An owner of a motor vehicle that rents or leases the vehicle to a person . . . shall not be liable under the law of any State . . . , by reason of being the owner of the vehicle . . . , for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of rental or lease, if — (1) the owner . . . is engaged in the trade or business of renting or leasing motor vehicles; and (2) there is no negligence or criminal wrongdoing on the part of the owner . . . ." (49 USC § 30106[a]).

The Amendment contains a savings clause, titled "Financial responsibility laws," which provides:

"Nothing in this section supersedes the law of any State . . . — (1) imposing financial responsibility or insurance standards on the owner of a motor vehicle for the privilege of registering and operating a motor vehicle; or (2) imposing liability on business entities engaged in the trade or business of renting or leasing motor vehicles for failure to meet the financial responsibility or liability insurance requirements under State law" (49 USC § 30106[b]).

Second Child argued that the Graves Amendment does not supersede Vehicle and Traffic Law § 370 and concedes that the plain language of the preemption clause bars liability against Edge Auto. Their argument instead rests on the savings clause, contending that Vehicle and Traffic Law § 370, as interpreted by Ward, is a financial responsibility law and thus not superseded (see 49 USC § 30106[b]).

The court holds that the Graves Amendment does not supersede Vehicle and Traffic Law § 370 insofar as it is a state law that requires car rental companies to carry a specified minimum amount of insurance for each of their vehicles.

However, the court finds that Vehicle and Traffic Law § 370 is superseded to the extent it requires a rental car company to "provide primary insurance to their renters up to the minimum liability limits provided by the statute". Requiring rental car companies to primarily insure and indemnify plaintiffs' damages is the precise result barred by the Graves Amendment.

Plaintiffs argue that the Graves Amendment only supersedes statutes imposing vicarious liability (see e.g. Vehicle and Traffic Law § 388; Hernandez v Sanchez, 40 AD3d 446, 447 [1st Dept 2007]), not statutes mandating primary coverage. This is a distinction without a difference. Rental car companies "shall not be liable" under New York State law for damages incurred by renters (49 USC § 30106[a]). The form in which state law attempts to impose vicarious liability, whether under vicarious liability statutes or under primacy of insurance coverage statutes, does not matter (see Brown, 446 F Supp 3d at 553). To hold otherwise would rescue every vicarious liability claim up to statutory minimum insurance amounts and render the Graves Amendment's preemption clause a nullity (see Dimensional, 58 Misc 3d at 59-60; see generally Garcia v Vanguard Car Rental USA, Inc., 540 F 3d 1242, 1248 [11th Cir 2008]).

Editor’s Note: Nah. Just wrong. The carve out in the Graves Amendment allows Section 370 to be operative.

03/13/25 Allied World Assurance Company v. Golenbock Eiseman, et al.
Appellate Division, First Department
Law Firm Loses Coverage Under Claims Made E&O Policy When It Had Prior Knowledge of Facts That Could Constitute Claims and Failed to Disclose Same in Policy Application. First Department Provide Primer on This Area of Law

The Golenbock law firm (“law firm”) represented nonparty Workspace, Inc. regarding certain real estate sales from 2015-2017. One of the properties, a unit in 106 Spring Street in Manhattan, sold in 2015, and by virtue of the sale the purchaser became a shareholder in Workspace.

In November 2017, the purchaser sued Workspace (the “Spring Street action”) alleging that Workspace, by concealing certain documents and facts both during the sale and thereafter, acted to deprive the purchaser of significant monetary benefits in the pending sale of another of Workspace's properties at 93 Mercer Street. The 93 Mercer Street transaction never closed due to, among other things, the pendency of the 106 Spring Street Action, resulting in an alleged loss to Workspace's shareholders of more than $18 million.

In 2018, Workspace and the law firm entered into a tolling agreement, which set forth that Workspace believes that it may hold claims against [defendant] . . . and wishes to preserve the Claims — if any — until the final adjudication of the [106 Spring Street Action]. The tolling agreement also provided that defendant "believes that it may hold claims against Workspace for unpaid legal fees," and that "[t]he parties desire to avoid litigation at this time." Finally, the parties entered into the agreement "to toll the statute of limitation on their claims against one another at this time."

Years later, Allied World (“AWAC”) issued a claims-made policy to the law firm for the period of August 1, 2021, to August 1, 2022. The policy expressly defined a "claim" to include "a request to toll or waive a statute of limitations made to or against any Insured seeking to hold such insured responsible for any Wrongful Act."

The policy defines a Legal Services Wrongful Act as "any actual or alleged act, error or omission committed by any Insured, solely in the performance of or failure to perform Legal Services." Finally, the "No Prior Knowledge" condition precedent to coverage required that "prior to August 1, 2019, no Insured had any basis (1) to believe that any Insured had breached a professional duty; or (2) to foresee that any fact, circumstance, situation, transaction, event, or Wrongful Act [*2]might reasonably be expected to be the basis of a Claim against any Insured." Defendant did not disclose the tolling agreement or the related 106 Spring Street Action to plaintiff prior to the policy's issuance.

On August 3, 2021, Workspace initiated an action against defendants for legal malpractice allegedly committed from 2015 through 2017 in connection with the 106 Spring Street sale and the ultimately aborted 93 Mercer Sale (the Workspace Action). The law firm requested coverage in the Workspace Action from plaintiff, and on August 27, 2021, plaintiff agreed to provide a defense while reserving its rights. During its investigation of the Workspace Action, plaintiff subsequently learned that defendant had entered, and failed to disclose, the tolling agreement in August 2018. On August 16, 2022, AWAC denied coverage to the law firm on the grounds that the claim pre-dated the policy, and that the policy's no prior knowledge condition was not satisfied.

It is undisputed that defendant and Workspace, its former client, entered into the tolling agreement prior to the policy period, and defendant's argument that the tolling agreement is ambiguous or otherwise insufficient to constitute a "claim" is unavailing. The policy specifies that a tolling agreement seeking to hold defendants responsible for "any Wrongful Act" (including acts constituting legal malpractice) establishes a claim.

AWAC also properly denied coverage due to defendant's failure to satisfy the policy's "No Prior Knowledge" requirement. When analyzing "prior knowledge" provisions in professional liability insurance cases, New York courts apply a two-step subjective/objective knowledge. The Court must first determine whether the insured has subjective knowledge of relevant facts or circumstances indicating a potential claim prior to the policy's effective date. Second, the Court must determine whether a reasonable attorney "might expect such facts to be the basis of a claim."

The tolling agreement establishes that defendant had both subjective and objective knowledge of a potential legal malpractice claim sufficient to trigger an obligation to disclose such fact to plaintiff under the policy.

03/11/25 Zurich American Insurance Co. v. Giorgio Armani Corporation
Appellate Division, First Department
Later Acts of Sexual Harassment to a Different Victim Is Sufficiently Connected to Earlier Harassment to Be Considered an Interrelated Wrongful Act

This appeal arises out of three lawsuits and two insurance policies. One of the insurance policies was issued by Hiscox Insurance Company. This is a rare, signed decision out of the First Department, from Justing Singh. The other was issued by plaintiff Zurich American Insurance Company (ZAI). Both were issued to defendant Giorgio Armani Corporation (GAC).

The lawsuits allege that GAC employee Javier Herrera used his position to sexually harass, and assault women and that GAC made no effort to deter or punish his misconduct. There were three lawsuits. Hiscox acknowledged coverage for two of them. Third, the Christin act, Hiscox denied claiming it as outside the policy period and within ZAI’s.

Hiscox acknowledged coverage of the Loreto-Hays and Oberloh actions. It denied coverage of the Christin action, which it asserted was filed outside the policy period. The parties eventually agreed to litigate their dispute in New York. Both ZAI and Hiscox moved for summary judgment, each asserting that the other's policy covered the Chrstin action.

The Hiscox policy covered the period in which the first two lawsuits were filed. The Loreto, Hays, and Oberloh actions were filed. It is not disputed that these actions and the Christin action constitute Claims under the Hiscox policy.

The Hiscox policy provides that once notice of a Claim is given, "any Claim which is subsequently made against the Insureds and reported to the Insurer . . . alleging any . . . Related Wrongful Act to that alleged in the Claim of which such notice has been given, shall be considered made at the time such notice was originally given." Related Wrongful Act(s) is defined as:

"Wrongful Act(s) as defined in the applicable Coverage Part which are the same, repeated or continuous to other Wrongful Act(s) as defined in the same applicable Coverage Part."

"Related Wrongful Act(s) shall also mean Wrongful Act(s) as defined in the applicable Coverage Part which arise from a common causal connection or cause the same or related damages, or a common nexus or nucleus of facts to other Wrongful Act(s) as defined in the same applicable Coverage Part."

"Claims can allege Related Wrongful Act(s) regardless of whether such Claims involve the same or different claimants, Insureds or legal causes of action."

The ZAI policy covered the later period in which the Christin action was filed. Again, it is undisputed that all three actions constitute Claims under this policy. The ZAI policy provides that "[a]ll Claims . . . which arise out of the same Wrongful Act and all Interrelated Wrongful Acts of Insureds shall be deemed one Claim," which "shall be deemed to be first made on the date the earliest of such Claims is first made against any Insured, regardless of whether such date is before or during the Policy Period." Interrelated Wrongful Acts are defined as "all Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause or series of causally connected facts, circumstances, situations, events, transactions or causes."

The Actions

In these first of the two lawsuits, the plaintiff alleges that in 2015, while she was providing janitorial services to a GAC store, Herrera sexually assaulted her. She alleges that she reported the sexual assault to GAC, which took no action to protect her from Herrera. She further alleges that GAC knew or should have known that Herrera posed a danger to others.

In the second action. It is alleged that GAC and its employees, including Herrera, discriminated against her on the basis of her race and sex. As relevant here, she alleges that she learned Herrera had been sexually harassing three women and later learned that he had sexually assaulted a coworker. She alleges that she reported both to GAC, that it knew women felt uncomfortable in the workplace because of Herrera, and that it did nothing. Allegedly, the women eventually quit because of Herrera's behavior, and Oberloh herself was fired on March 27, 2018.

In the Christin action, five women allege a variety of harassment by Herrera from 2013 until 2018. One plaintiff alleges that she was sexually assaulted by Herrera many times over a period of almost two years. The complaint alleges that, in response to complaints against him, Herrera was transferred to another store. He then allegedly subjected the remaining plaintiffs, who worked at that store, to years of unwelcome and degrading sexual contact.

The Christin complaint also alleges that GAC knew of Herrera's wrongdoing against women other than the plaintiffs. Among the misconduct alleged is that against the two women in the first two actions.

The court finds that the Christin action shares "a common nexus or nucleus of facts" with the earlier actions, and whether it "[has] as a common nexus" with them "any fact, circumstance, situation, event, transaction [or] cause." This is a broad test, which should not be "read [] . . . narrowly at the expense of applying its plain language. Applying this test, the court finds that the Christin action should be treated as made no later than the filing date of the Oberloh action.

Nothing in the language of either policy restricts Related or Interrelated Wrongful Acts to those harming the same plaintiff. Rather, Herrera's actions and GAC's response — or lack of response — to them may present the common nexus or nucleus of fact.

The Oberloh and Christin complaints share allegations that Oberloh learned Herrera was sexually harassing three women employed by GAC, that Oberloh reported this harassment to GAC, that all three women eventually quit because of Herrera's misconduct, and that GAC took no action to punish Herrera or prevent repetition. Two of those women were plaintiffs in the Christin action. Furthermore, all three complaints allege that Herrera sexually assaulted the women from the first two lawsuit and GAC did nothing. The allegations "originate from" and have "some causal relationship" with the allegations in the earlier actions (id.).

The court finds that the Christin action is a Related Wrongful Act under the Hiscox policy and an Interrelated Wrongful Act under the ZAI policy. It is thus covered by the Hiscox policy.

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

03/06/25 Kirby v. David Fabricators of NY, Inc.
Appellate Division, First Department
Settlement Against Potential Joint Tortfeasor in a Foreign Jurisdiction Does Not Support Res Judicata Dismissal of Second, Independent Lawsuit

Plaintiff commenced this action in New York seeking damages as a result of exposure to asbestos products while working in pizza kitchens from the 1960s through the 1980s. Plaintiff alleged that his exposure was caused by certain stone boards which were manufactured by defendant David and incorporated into ovens manufactured by Bakers Pride. An action was previously commenced in Illinois against Bakers Pride, and was ultimately discontinued, with prejudice, as part of a settlement agreement.

David moves to dismiss the subsequent action, filed in New York, under res judicata grounds. The Appellate Division rejected David’s argument because David was neither a party to the Illinois lawsuit, the Illinois settlement, nor was David in privity with Bakers Pride. The existence of a potential indemnity obligation running in favor of Bakers Pride also does not create a bar to plaintiff’s new action in New York.

Finally, David’s argument that Bakers Pride was a “necessary party” to the New York action was also dismissed by the Court. It is black letter law in New York that joint tortfeasors are “necessary parties.”

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

02/26/25 Natarajan v. Berkley Ins. Co.
Superior Court of Connecticut, Stamford
Berkley Knocks Out CUTPA/CUIPA but Falls Short on Dismissing Bad Faith Claim

The insured sued Berkley for breach of a homeowner’s policy, claiming that the carrier wrongly denied coverage for a sewer backup loss. The policyholder also alleged that Berkley’s denial was in bad faith, under common law and statutory theories.

Interestingly, the policy covered sewer backup damage, but only for drains “located within the fully enclosed perimeter of the foundation of the building.” The insured alleged that the loss was caused by a drain “located immediately outside the interior of the dwelling. Critically, the drain was located within the fully enclosed perimeter of the foundation of the building.”

Berkley moved to strike the bad faith causes of action but was only one for two. The insured alleged that the denial was in bad faith because Berkley, among other things, failed to properly apply the terms of the Policy; ignoring the terms of the Policy; disregarding the facts surrounding the Loss; disregarding documentation provided by Plaintiffs; disregarding Connecticut law; disregarding the law of policy interpretation; improperly attempting to, in effect, delete, nullify or neutralize terms contained in the Policy; failing to timely and promptly respond to communications from Plaintiffs; misrepresenting its intentions; misrepresenting when it would respond to communications; misrepresenting the terms of the Policy; misrepresenting the facts; and failing to conduct a thorough investigation into the facts, foundation and footing design, application of the Policy and applicable law.

The court, based on these allegations, refused to strike the cause of action. “The facts alleged about the coverage dispute, taken as true on this motion to strike, describe conduct calculated to deprive plaintiffs of the benefits of the insurance contract, which suffices to state a claim of bad faith conduct violative of the implied covenant of good faith and fair dealing.”

Berkley, however, fared better on the CUTPA/CUIPA claim. While the court was sympathetic to a more lenient pleading approach, the allegations did not meet the lessened standard. The court noted that the insured’s allegations did not assert a general business practice in violation of CUIPA. “The preceding paragraphs, however, just alleged acts experienced by plaintiff from which no inference of a general business practice may be derived. No facts are alleged to show that Berkeley's settlement practices experienced by plaintiff were part of its general business practices.”

02/25/25 Cummings v. Alexander
Superior Court of Connecticut, Tolland
CUTPA Claim Dismissed for Want of Standing

The court dismissed the plaintiff’s CUTPA action against GEICO. Because the plaintiff was not a party to the insurance contract or an intended beneficiary of the insurance contract, he lacked standing to bring a CUTPA claim.

Cummings alleges that he got into a motor vehicle accident with Alexander, who was insured by GEICO. Cummings claimed that GEICO had not acted promptly to settle the property damage claim, in violation of CUTPA. The plaintiff, however, did not assert a CUIPA claim. Connecticut precedent establishes that an insured must allege a CUIPA violation in order to sustain a CUTPA claim. The Connecticut Supreme Court has held "that individuals may bring an action under CUTPA for violations of CUIPA. In order to sustain a CUIPA cause of action under CUTPA, a plaintiff must allege conduct that is proscribed by CUIPA.”

Ultimately, the court dismissed the claim because of a lack of standing. Because the plaintiff is not the insured, not a third-party beneficiary, and not a subrogee of the insured, he lacked standing to bring a CUTPA claim against GEICO.

02/26/25 Cummings v. Liberty Mut. Fire Ins.
Superior Court of Connecticut, Tolland
Negligent Infliction of Emotional Distress Claim Survives Against Carrier

Mr. Cumming returns to us (see above), with claims against Liberty Mutual. For the same reasons, the court struck plaintiff’s CUTPA claim against Liberty for lack of standing. This time, however, Cummings fared better on his claim that Liberty negligently inflicted emotional suffering on him. The opinion is sparse in detail; however, the court denied the motion to strike on the carrier’s claim of a lack of standing.

There is no requirement that a plaintiff be in contractual privity to bring a tort claim against a party. “The court rejects the defendant's argument that the plaintiff's claim for negligent infliction of emotional distress is legally insufficient because the plaintiff fails to allege that he has subrogation rights under the insurance policy or that there has been a judicial determination of the insured's liability.”

A copy of this decision is available upon request.

02/27/25 Rising Star Roofing, LLC v. Gen. Ins. Co. of Am
Superior Court of Connecticut, Hartford
Carrier Cannot Rely on Home Improvement Act as a Defense to Payment, Among Other Issues

The Pazdas are homeowners who suffered insurable damage to their roof. They hired Rising Star to complete the repairs and assigned their rights against General for the cost of repairs to Rising Star. General paid the contractor over $28,000 for the damage, but Rising Star claimed it was due additional compensation.

The carrier moved for summary judgment claiming that the assignment was invalid, the contractor was paid in full under the terms of the insurance contract, and the contractor’s Xactimate estimates did not provide adequate support for its claim. General also argued that the repair contract was void for failure to comply with CGS § 38a-313a which requires that a contractor provide a written scope of work, estimated price, and that in at least 12-point type apprising the homeowner of the right to be a joint payee. And, of course, the parties fought over the right to appraisal.

First, the court held that there was a question of fact as to whether the homeowner had apparent authority to sign the assignment to the contractor on behalf of his wife. Second, the court held that the construction contract did not preclude a claim for additional compensation. The contract between Rising Star and the Pazdas provided that, "Final project cost will equal the carrier's final agreed scope and estimate of damages.” The court found that caselaw finding that additional compensation was prescribed by such language was inapplicable because it was in the context of mechanic’s lien. Third, while the court was skeptical that an Xactimate estimate was sufficient proof of the actual and necessary repair costs incurred, the evidence raises a triable issue of fact.

Fourth, and significantly, the court held that the insurer cannot assert the Home Improvement Act as a defense to payment. “The act is for the benefit of the consumer, and compliance with its terms may be waived by the consumer, either explicitly or by nonassertion. Thus, the . . . insurer, cannot interpose noncompliance with the act as a defense to its own insured's claim for replacement cost coverage.”

Lastly, the court indicated that a post-litigation appraisal is not precluded or waived. “although appraisal is an option available to either party, it is not mandatory. For this reason, the court further concludes that it would be inappropriate to determine, as a matter of law, that every failure to request appraisal prior to initiating suit ipso facto results in a waiver of appraisal rights. Instead, the court concludes that whether Rising Star waived its right to appraisal in this case presents a genuine issue of material fact.” However, the court refused to order appraisal because Rising Star did not allege a right to appraisal in its complaint or otherwise seek such relief.

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

03/03/25 In re St. Farm Mut. Auto. Ins. Co. a/s/o Soblevsky v. Prime Prop. & Cas. Ins., Inc.
Civil Court of the City of New York, Queens County
Motion to Vacate Default Is Denied, as Respondent Did Not Produce Its Policy to Establish Whether It Permitted or Required Arbitration

State Farm’s insured was involved in an accident with a vehicle operated by a driver for Prime Property’s insured, JLP Express Corp. State Farm commenced an arbitration proceeding seeking loss transfer reimbursement pursuant to Insurance Law §5105 and upon the default of the respondent was awarded $44,892.39. The petitioner then commenced this action seeking to confirm the arbitration award and another action, as subrogee of its insured seeking reimbursement of $49,800 in No-Fault payments paid by State Farm. The respondent moved to vacate the award pursuant to CPLR §7511(b)(1)(iii), as well as the default judgment, arguing that as a foreign corporation not authorized to do business in New York it could not be subject to any arbitration in New York.

To vacate a default the movant must present a reasonable excuse for the default and a potentially meritorious defense. There were no disputes between New York courts that lack jurisdiction over whether a party does not transact business in New York or is not licensed to transact business in New York (see, CPLR 302) or that a vehicle insured out of state that is involved in an accident within the state is insufficient, standing alone, to confer jurisdiction. However, the lack of jurisdiction that does not mean a party cannot be subject to an arbitration in New York. The court referenced the case of American Independent Insurance Company v. Art of Healing Medicine P.C., 104 AD3d 761, 961 NYS2d 240 [2d Dept., 2013] as instructive to this case, explaining that "while personal jurisdiction is required for the exercise of the state's judicial power over a party, arbitration is a form of dispute resolution almost wholly independent of the court system" and that other than a few basic guarantees "personal jurisdiction is not required for arbitration that is controlled by the parties' agreement". The issue is whether the arbitrator has authority under the insurance contract to award no-fault benefits to the applicant. The court held that the lack of personal jurisdiction over the respondent would not bar any arbitration proceedings over the same respondent. In prior cases, motions of out of state insurers to vacate a default on the grounds that the insurer did not conduct business in the state have been denied where the insurer failed to submit its policy to determine whether an arbitration clause existed.

In addition, the court pointed out that the existence of an out-of-state insurance clause within respondent's policy would subject respondents to the financial liability No-Fault laws of New York, where an insured becomes subject to those laws by driving in that state. Therefore, without the ability to review the insurance policy the respondent failed to present sufficient evidence warranting the vacatur of the arbitration award.

The respondent cited multiple cases to support its contention the court had no jurisdiction over it. For example, in GEICO Indemnity v. Prime Property & Casualty, Index Number 603953/2021 (Supreme Court Nassau County 2023) and New York State Insurance Fund v. Prime Casualty & Realty, Index Number 803471/2023 (Supreme Court Erie County 2024) the courts held that arbitrations could not proceed against the respondent in this action, Prime Property and Casualty Insurance Inc., because the respondent was not licensed to do business in New York and was thus not a covered person pursuant to Insurance Law §5102(j). However, neither decision discussed American Independent Insurance Company v. Art of Healing Medicine P.C. which held that whether a party must submit to arbitration is not in any way connected to the jurisdictional requirements of state courts and failed to consider whether the insurance policy of the respondent contained an `out-of-state insurance clause' which would subject the respondent to arbitration and any subsequent state court action to confirm any eventual award.

Therefore, the only factor in determining whether the respondent could be subject to arbitration is whether its policy contained procedures regarding arbitration. However, this would require an examination of the policy itself. The court determined an affidavit from an employee of respondent, the vice president of the claims department, establishing that the respondent was not authorized to do business in New York and did not conduct business in New York, did not address whether the respondent's policy permitted, and perhaps required, arbitration.

Therefore, the court held the respondent failed to submit its insurance policy for review and thus has failed to present a meritorious defense necessary to vacate the default judgement. As such, the motion seeking to vacate the arbitration award was denied.

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

Nothing from me this time (but next time I'll have some extra hands).

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

02/10/25 Matter of State Farm Mut. Auto. Ins. Co. v. Rympel
Supreme Court, Kings County
“For Hire” Exclusion Not Effective to UM/SUM Coverage; Not Enough Proof That the TNC Exclusion Applied

State Farm commenced a special proceeding to permanently stay arbitration. State Farm's insured, Dalusma, had a policy that excludes coverage for "for hire" and TNC vehicles. Rympel hailed Dalusma's vehicle on the street, recognizing it as a taxicab, without pre-arranging the trip. Dalusma was allegedly working for "Mex Express Car Service" at the time of the accident.

The Court held that the "for hire" exclusion in the policy may be effective regarding the general liability aspects of the policy, but the exclusion does not apply to UM/SUM coverage as a matter of public policy to ensure innocent victims of motor vehicle accidents are compensated for their injuries and losses.

The Transportation Network Company exclusion does not apply in this case as the vehicle was not being used as a TNC vehicle at the time of the accident. The undisputed affidavit of Rympel said, "Prior to the accident, I was walking toward the bus stop when I saw Mr. Dalusma's vehicle. I hailed Mr. Dalusma's vehicle on the street as I recognized it to be a taxicab. Mr. Dalusma stopped and accepted me as a passenger. I did not otherwise contact anyone to pre-arrange this trip." The affidavit of Mr. Dalusma makes general statements that the driver was working for "Mex Express Car Service" at the time of the accident but the court said it does not tell us the circumstances as to Ms. Rympel's pick-up.

02/21/25 SC Austin Holdings LLC v. Mt. Hawley Ins. Co.
United States District Court, S.D. New York
Where Insured’s Expert Identifies Six Possible Causes of Loss, It Is Not Enough for Summary Judgment for the Insurer to Argue One Cause Is Excluded From Coverage Based on the Anti-Concurrent Causation Language Without Evidence the Excluded Peril Accounted for Some of the Damage
Mt. Hawley Ins. Co. insured SC Austin Holdings covering a hotel in Daytona Beach. Hurricane Ian flooded the hotel and damaged almost every room. The hotel was closed for months. Mt. Hawley denied coverage and sought summary judgment on SC Austin's claims as to 1) damage on the hotel's second through seventh floors based on an "anti-concurrent cause" exclusion in the policy, and 2) business-income losses caused by the hotel's closure.

The court held that as an "all-risk" policy, it is Mt. Hawley's burden to prove that the damage is excluded. Once the insured shows that a loss has occurred, the insurer has the burden of demonstrating that the loss claimed is excluded. The court says that Mt. Hawley fails to meet this burden. Mt. Hawley pointed to one of six possible explanations for water damage identified in SC Austin's expert’s report saying it was excluded under the policy and relying on the anti-concurrent causation language but failed to provide evidence that this theory definitively accounted for some or all of the damage.

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

03/07/25 Waterloo Comm. Sch. Dist. v. Vermont Mut. Cas. Co.
Iowa Supreme Court
Insurer Must Only Pay to Repair the Damage From the Partial Roof Collapse but Not the Cost to Remedy the Longstanding Deterioration in Other Areas of the Building Unaffected by the Collapse

After a heavy snowstorm, part of the roof of an aged elementary school building collapsed into a second-floor classroom during a snow day. Several feet of snow had already fallen, and the heavy snow accumulated on the roof of the school. Investigations into the cause of the collapse determined that the roof failed under the weight of the snow and because of pre-existing, hidden deterioration of mortar in the load-bearing walls supporting the roof. The longstanding deterioration was found in the load-bearing walls throughout the school, and local authorities deemed the entire building unsafe for occupancy. The school district was unaware of the deterioration of the mortar within the concealed, load-bearing layer of the walls. Both the school district and the insurer hired experts to investigate the cause of the collapse, and both experts agreed that the deterioration of the load-bearing wall was a contributing factor for the partial collapse due to long-term water infiltration.

The school district demanded that the insurer pay to restore the load-bearing walls for the entire building to comply with the building code because it had purchased additional Ordinance or Law coverage. However, the insurer agreed to pay only for the area of the collapse based on the Ordinance or Law provision’s exception for failure to comply with the code before the collapse. The parties disagreed about whether the exception applied because the school district was unaware of the deteriorated mortar that made the building unsafe before the collapse. The school district sued for the cost to restore the deteriorated mortar throughout the entire building. The district court granted summary judgment for the insurer, concluding that the school district could only recover for the damage physically caused by the collapse. The district court applied the exception for pre-existing code violations and found that the policy’s exclusion for decay and deterioration barred coverage.

The school district applied for interlocutory review. The Iowa Supreme Court agreed with the insurer that the Ordinance or Law coverage’s exception applied to the pre-existing code violations and defeated the school district’s claim for the deteriorated mortar outside the area of the collapse. The court reasoned that the Ordinance or Law coverage was designed to pay for the costs of a code upgrade where the building code excused owners of older buildings from complying with current code requirements until an event necessitated major renovations. By contrast, the provision does not provide coverage for pre-existing code violations that the school district had been obligated to address. Accordingly, the Supreme Court held the district court correctly applied the Ordinance or Law exception, and there was no coverage for the cost to replace deteriorated walls outside the area of the partial roof collapse. A contrary holding would have turned the policy into a general maintenance contract.

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

03/03/25 Midvale Indem. Co. v. Plaster Pro Masonry Contractors et al.
United States District Court, District of New Jersey
Insurer Entitled to Rescind Policy Where Misrepresentations Were Made as to the Use of Subcontractors on Construction Projects

Midvale issued an insurance policy to Plaster Pro. On the application for that policy was a question that asked whether Plaster Pro used any subcontractors on any of its projects, to which Plaster Pro responded “no.” While the policy was in effect, an accident occurred at one of Plaster Pro’s job sites. Through investigation, Midvale learned that Plaster Pro had hired Cumbicos, a subcontractor, in connection with the project. Midvale agreed to defend Plaster Pro in the resulting tort action under a reservation of rights, and brought this declaratory judgment action seeking declarations that it is entitled to rescind the policy based on Plaster Pro’s material misrepresentation, and that it has no duty to defend or indemnify Plaster Pro in the tort action.

The Court noted that, under New Jersey law, an insurance carrier is entitled to rescind an insurance policy based on a material misrepresentation made by the insured. To prove its entitlement to do so, the insurer must establish that the misrepresentation existed at the time of the application for the policy, and that the insurer either would not have issued the policy at all or would have issued the policy on different terms (e.g., at a different premium) had it known of the misrepresentation at the time of the policy’s application.

The Court, having found that Midvale satisfied its burden of showing both the misrepresentation and that it would not have issued the same policy had it been aware of the misrepresentation at the time of Plaster Pro’s policy application, held that Midvale was entitled to rescind the subject insurance policies.

02/28/25 Burlington Cnty. Mun. Joint Ins. Fund a/s/o Ettinger v. Smith
Superior Court of New Jersey, Appellate Division
Appellate Division Affirms Waiver of Incarcerated Individual’s Right to Contest Arbitration Award, and Finds the Thirty-Day Rule to Apply in Any Event

Smith intentionally set fire to his home and was eventually incarcerated. Several members of the Pemberton Police Department entered the burning structure in an attempt to rescue elderly individuals and were injured in the process. The Burlington County Municipal Joint Insurance Fund (the “Fund”), a joint insurance fund established to insure the municipality against various risks, initially compensated the injured municipal workers for their injuries, and became subrogated to the rights of the workers, allowing the Fund to stand in their shoes to collect directly from Smith.

Under the New Jersey rules of court (New Jersey’s civil procedure rules), all actions for personal injury not arising out of the operation, ownership, maintenance, or use of an automobile are to be submitted to arbitration. If a party is unsatisfied with the arbitration award, it may file a notice of rejection of the award and demand a trial within 30 days of the award.

After the conclusion of discovery, the Court scheduled the parties for arbitration on May 4, 2023. Smith, having received his prison sentence almost a year and a half prior to the arbitration date, was incarcerated at the time of the arbitration hearing. Smith attended the arbitration hearing by phone but, according to him, had technical difficulties. The arbitrator entered an award in favor of the Fund and against Smith, providing that Smith “refused” to attend the hearing by phone, and “was advised that the court wanted the arbitration to go forward,” and that Smith “stated he wanted his attorney and hung up.”

On May 8, 2023, four days after the arbitration, the Fund mailed the arbitration award to Smith at the correctional facility (as required by the rules). On June 13, 2023, the Fund filed and served a notice of motion seeking to confirm the arbitration award with the Court. On July 10, 2023, the Court, noting that no opposition was filed in connection with the confirmation of the arbitration award, confirmed the award and entered judgment in favor of the Fund. The July 10, 2023, order was sent to Smith at the correctional facility. On July 24, 2023, Smith signed an acknowledgement of receipt of the judgment.

On August 16, 2023, Smith filed a motion rejecting the arbitration award and seeking a trial of all issues. Smith’s basis was that he never received notice of the arbitration award, and that although he tried to attend the hearing, the video and audio were inadequate.

The trial court denied Smith’s motion, finding that the June 13, 2023, mailing (the notice seeking to confirm the arbitration award) was sent to the same address that was listed as the return address on both items of correspondence received from Smith. As a result, the Court concluded that Smith was beyond the 30 days to reject the award and demand a trial. This appeal followed.

The Appellate Division affirmed the judgment of the trial court, finding that Smith had notice of the arbitration hearing, and indeed was given an opportunity to participate. No evidence suggested that the telephonic hearing was inadequate. The Appellate Division noted that, by voluntarily disconnecting from the proceeding, Smith waived his right to reject the arbitration award and seek a trial, notwithstanding the 30-day rule.

The Appellate Division continued that, even if Smith had not waived his right to reject the award by voluntarily disconnecting from the proceeding, his rejection of the award was untimely. The Court, like the trial court, was satisfied by the proof of service of the award, finding that it demonstrated that the award was sent to the same address as the return address listed on Smith’s various items of correspondence.

Editor’s Note: The opinion also says that Smith requested his lawyer before he disconnected from the arbitration proceeding. Indubitably, Smith is entitled to a lawyer at all criminal proceedings. Does that extend to civil proceedings while incarcerated? What about if the civil proceeding is connected to the crime for which he is incarcerated? Sounds like a question that could appear on a final exam in a constitutional law course.

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

03/05/25 Liberty Surplus Ins. Co. v. Kaufman Lynn Cons. Inc.
United States Court of Appeals, Eleventh Circuit
Insured Possesses Article III Standing to Bring Reformation Claim on Undamaged Buildings and Broad Course of Construction Exclusion Applies to Entire Construction Project

JM Family Enterprises hired Kaufman Lynn Construction to construct JM’s new corporate campus in South Florida. The campus buildings were to include three office buildings, a training and conference center, a sports and recreation building, a dining hall, an amphitheater, an energy plant, a parking garage, and various landscaping features. Kaufman procured a commercial general liability policy from Liberty Surplus.

Kaufman completed the energy plant, parking garage, office buildings, and dining hall by October 2020. At that time JM began to relocate staff to the new campus. On November 8, 2020, Tropical Storm Eta hit the campus and caused a water leak. Which amounted to about $3.3 million in damage. When this occurred, the remaining buildings were yet to be completed. JM claimed Kaufman was responsible for mitigating the damage. Kaufman then sued its various subcontractors and also filed a claim with Liberty.

Liberty denied coverage on the policy’s Course of Construction Exclusion, which barred coverage for “[a]ny ‘property damage’ at or to any project insured under this policy during the course of construction until the project is completed.” Liberty then filed a coverage action to enforce its coverage position. Among other defenses, Kaufman asserted a counterclaim for reformation of the policy.

Kaufman’s reformation claim was based upon a mutual mistake. According to Kaufman, the policy’s description of the project differed from what Kaufman provided Liberty at the time of binding, failed to include several buildings, and failed to identify the project was to proceed in two phases. Liberty eventually received a grant of summary judgment and dismissed Kaufman’s reformation claim for a lack of standing.

On appeal, we look at the reformation claim and the application of the exclusion itself. Standing in the sphere federal practices requires (i) a cognizable injury; (ii) a concrete and particular injury; and (iii) a ripe claim. The Appellate Court broke with the lower court and found Kaufman met each standing requirement.

The district court found a lack of standing for the following reasons (i) there was no cognizable injury because Kaufman was not pursuing claims for omitted buildings under the policy and even if reformed the exclusion would apply; (ii) Kaufman faced no injury from the incorrect premium; and (iii) the reformation claim was unripe because Kaufman might not face hardship if adjudication was withheld.

There is a cognizable injury since, if proven, Kaufman would have received a different policy than bargained for and paid a premium insufficient for the coverage sought. Kaufman’s injury was also concrete and particular because it was affected by the policy itself, and thus, sought reformation. The mere fact Kaufman did not seek damages did not lessen the injury. Finally, the reformation claim was ripe because it is not turn on a future event because a mistake occurred in the past formation of the policy. Thus, Kaufman possessed standing to bring a reformation claim regarding the unfinished portion of the project, as well as the finished building. Because the policy may not reflect the actual bargained for agreement.

As for the exclusion itself, the court looked at the distinction between a general liability policy and a builder’s risk policy. A builder’s risk policy provides protection for buildings in the process of construction. Whereas a general liability policy protects the insured from liability arising from property damage or bodily injury during the construction. Since the Liberty policy is a general liability policy, the court properly analyzed the exclusion within the sphere of a liability policy.

The dispositive language at issue was “until the project is completed.” Neither project nor completed were defined within the policy. But an undefined term itself does not create an ambiguity. In looking to the dictionary definition of both terms, the Eleventh Circuit agreed with the district court on this issue. The exclusion barred coverage until the entire project was completed. Even agreeing with Kaufman’s belief that there were two distinct phases, the entire project was still incomplete. To support its reasoning, the court identified that under Kaufman’s interpretation the entire project’s start and end date remained the same. Thus, while the project may have been split into two phases those two phases were apart from a single, overarching construction project.

Kaufman suggested the policy’s “products-completed operations hazard” could be used to define “complete” within the exclusion. But that argument was rejected. The court noted the “products-completed operations hazard” applied to the “your work” definition also found within the policy. However, “your work” was not included in the exclusion’s language. Since “your work” was not included in the exclusion’s language, the court reasoned the policy simply does not read with Kaufman’s interpretation. The Court cited Liberty’s argument to this point. It noted Kaufman’s interpretation conflicts with the exclusion itself. Because Kaufman would receive coverage for each building completed, when the exclusion broadly applies to the entire project and not single buildings.

An amicus brief was submitted by several contractors and builders who argued such an exclusion would insurance policies themselves unreliable. But the Liberty policy was procured through a contractor-controlled insurance program (“CCIP”). A program used by a general contractor to provide liability insurance to all participants in the project. And while JM procured a builder’s risk policy, it was never entered into the record to determine a potential gap in coverage. So, the exclusion applied to the claimed water damage.

Editor’s Note: There is another portion of the decision concerning attorneys’ fees. But I limited this review to the coverage aspects only.

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

02/27/25 Drapper v. Horan, et al
Appellate Division, First Department
First Department Unanimously Affirms Order Which Included Trial Rulings on Motion in Limine Where Plaintiff’s Application to Preclude Defendant’s Biomechanical Engineer Expert From Testifying Was Denied and Defendant’s Application to Limit Plaintiff’s Treating Physician’s Testimony Was Granted

This case stems from a July 17, 2013, motor vehicle accident where a vehicle owned and operated by Plaintiff, Dwight Drapper, collided with a vehicle owned and operated by Defendant, Andrew John Horan, in Greenburgh, New York. As a result of this accident, Plaintiff alleged significant injuries to his left shoulder, cervical spine, lumbar spine, and a traumatic brain injury. He claimed that these injuries met the Serious Injury Threshold under numerous categories of Insurance Law § 5102(d).

By way of motion practice, liability was determined against Defendant as of August 12, 2014. Notably, unlike certain Appellate Divisions (i.e., Fourth Department), a finding of ‘liability’ in First Department venues does not include the finding that a plaintiff sustained serious injury under § 5102(d). Many years later, the matter moved to jury trial on the issue of damages only in July 2022. Prior to the trial, the Supreme Court, Bronx County, denied Plaintiff’s motion in limine seeking to preclude the Defendant’s biomechanical engineering expert from testifying. It further granted Defendant’s motion in limine which sought to limit Plaintiff’s treatment of physician from testifying about imaging records taken of Plaintiff after a prior motor vehicle accident. Following the trial, the jury found that Plaintiff did not sustain a serious injury under § 5102(d) and thus did not award non-economic damages – but did award economic damages for lost wages and medical expenses incurred. Plaintiff then sought appeal, which included review of the Court’s rulings on pre-trial motions in limine.

On review, the First Department agreed with the lower Court’s pre-trial rulings. Regarding granting of Defendant’s motion in limine, it was found that Plaintiff’s treating physician was properly limited in his testimony. Specifically, the Court permitted the physician to testify about his observations during surgery he performed on the Plaintiff’s shoulder and his treatment reports, but he was precluded from testifying about MRI imaging done of Plaintiff’s shoulder after a prior motor vehicle accident. The First Department found this limitation proper since the physician had not reviewed the prior MRI before the trial nor referenced it in any treatment report – therefore the Defendant had no prior notice that the physician would give such testimony at trial.

Further, the First Department agreed that the lower Court properly denied Plaintiff’s motion in limine and allowed the Defendant’s biomechanical engineering expert to testify. Specifically, expert was presented to offer an opinion as to whether the accident could have created the mechanisms required for Plaintiff’s claimed injuries. The expert had reviewed specifications and crash data from both involved vehicles and cited peer-reviewed documentation in support of his analysis. Plaintiff’s motion for preclusion was based upon the expert not having medical training – but the First Department cited prior case law that states that such lack of training does not render the expert unqualified to offer an opinion that the force of the accident could not have caused the alleged injuries.

Accordingly, the First Department unanimously affirmed the Order of Supreme Court, Bronx County, without costs.

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

03/04/25 Hudson v. Allstate Veh. & Prop. Ins. Co.
New York State Supreme Court, New York County
Court Denies Motion for Class Certification as Premature, and Orders the Parties to Conduct Limited Discovery

Allstate Vehicle & Property Insurance Company (“Allstate”) issued a Condominium or Coop Owners Policy to Stephen Hudson (the “Plaintiff”), for the period from June 10, 2023, to June 10, 2024 (the “Policy”). Plaintiff submitted a claim to Allstate under the Policy, alleging that in June 2023, and January 2024, there were two discrete and sudden instances of smoke wafting from the apartment below. The Plaintiff stated that as a result of the smoke, Plaintiff’s apartment was declared to be temporarily uninhabitable, requiring significant cleaning.

Allstate denied coverage for the loss, stating that the Policy did not provide coverage for the Plaintiff’s claim for tobacco/nicotine smoke damage, because the loss was not a sudden and accidental direct physical loss. After the denial, the Plaintiff commenced a declaratory judgment action against Allstate, seeking coverage for the claim.

After Allstate appeared, the Plaintiff filed a motion for class certification, seeking to expand the class of plaintiffs to cooperative/condominium apartment residents who experienced second-hand smoke intrusion from a neighboring property over the last six years, while insured by Allstate or its subsidiaries under a homeowners’ or renters’ policy.

Pursuant to CPLR 901(a), a court may certify a proposed class only if (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common; (3) the claims or defense of the representative parties are typical of the claims and defenses of the class; (4) the representative parties will fairly and adequately protect the interest of the class; and (5) the class action is superior to other available methods for the fair and efficient adjudication of the controversy. After all requirements are met, the court must then assess the feasibility considerations listed in CPLR 902.

In deciding the motion, the Court found that the motion was premature. Plaintiff provided no evidence to support any of the requirements, outlined above. The only evidence attached to Plaintiff’s motion was (1) a screenshot of the US Census data and estimate of the number of condominium and cooperation housing unit owners in NYS; and (2) a screenshot of a pamphlet from the American Lung Association, titled, “Is Secondhand Smoke Infiltrating Your Apartment or Condominium.”

The Court wrote that the documents and general statistics are insufficient to establish any element of class certification.

However, the Court did exercise its discretion to require limited pre-certification discovery to develop the record of the elements required under CPLR 902(a). In doing so, the Court identified that based on the nature of the Plaintiff’s claims, there is potential for certification following limited pre-certification discovery. The Court reasoned that the Policy was a “form” insurance policy and has potential impact on many other Allstate customers.

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

03/14/25 New York Assembly Bill A1433
New York State Assembly
Proposed Act to Provide Guidelines for the Issuance of Pet Insurance in New York State

Assembly Bill A1433 proposed on January 9, 2025, seeks to amend insurance law by providing guidelines regarding the issuance of pet insurance in New York State.

The Bill seeks to amend Insurance Law to include Section 3463 to provide certain definitions for terms relevant to the pet insurance industry including veterinarian, veterinary expenses, waiting period, and wellness program. If an insurer uses the terms outlined in the proposed Subsection (A) of § 3463, then the insurer must use the definitions provided in that subsection.

The Bill would further require that an insurer transacting pet insurance shall disclose to the consumers among other things, the following:

If the policy excludes coverage due to any of the following:
A preexisting condition.

(ii) A hereditary disorder.

(iii) A congenital anomaly or disorder; or

(iv) A chronic condition

(b) If the policy includes any other exclusions, the following statement: "other exclusions may apply. Please refer to the exclusions section of the policy for more information."

Any policy provision that limits coverage through a waiting or affiliation period, a deductible, coinsurance, or an annual or lifetime policy limit.

(d) Whether the insurer reduces coverage or increases premiums based on the insured's claim history, the age of the covered pet or a change in the geographic location of the insured.

DOMENICA’S DIARY on BAD FAITH
Domenica D. Hart
ddh@hurwitzfine.com

03/04/25 Pipik v. State Farm Mut. Auto. Ins. Co.
United States District Court, Western District of Pennsylvania
Long Periods of Time Between a Demand and a Settlement Does Not on Its Own Constitute Bad Faith; Delays Attributable to Necessary Investigation or Even Simple Negligence Will Not Satisfy the Burden

Pipik alleges that, on November 2, 2020, her vehicle was sideswiped by another motorist, and she sustained injuries. Pipik maintained automobile insurance with State Farm that provided for UIM coverage.

Pipik gave notice of her UIM claim to State Farm “shortly before January 5, 2022.” Between June 2023 and October 2004, investigation took place, including obtaining Pipik’s demand, medical records, Social Security Disability documentation, and State Farm’s request for proof of the offer of $15,000.00 from the tortfeasor. Plaintiff’s EUO and IME were also conducted. Pipik alleged that, since October 2024, State Farm had not yet extended an offer on her UIM claim. Prior to settlement, in December 2024, Pipik filed suit against State Farm for statutory bad faith under 42 Pa.C.S. § 8371 and breach of contract. State Farm moved to dismiss the Bad Faith count.

Pipik alleged State Farm’s motion should be denied because her Complaint’s timeline demonstrated an “inexcusable delay” which violated State Farm’s duty to fairly and promptly investigate the UIM claim. State Farm countered with allegations of Pipik’s delay in furnishing her Social Security Disability file and her attorney’s delay who withheld the proof of the tortfeasor’s settlement offer.

Like neighboring states, the Court recognized the high burden recognizedto prevail on a bad faith action. Pipik had to present clear and convincing evidence that State Farm did not have a reasonable basis for delaying benefits under the policy and State Farm knew of or recklessly disregarded its lack of a reasonable basis. The Court found that Pipik did not meet this burden. The Court highlighted an insurer’s right to investigate and evaluate UIM claims and emphasized that a long period of time between a demand and settlement does not on its own constitute bad faith. If the delay is attributed to the need to investigate further, or even simple negligence, there is no bad faith. The Court’s findings that Pipik delayed filing the UIM demand until several months after the accident and her counsel’s delay in obtaining proof of settlement from the tortfeasor were significant factors in its decision. It also highlighted the delays beyond the parties’ control, i.e., production of the Social Security Disability File. Given the totality of circumstances, the Court found State Farm conducted an ongoing investigation on par with the timing and substance of information it received. The Court granted State Farm’s motion to dismiss the Bad Faith count.

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

For the last 80 years, International Nickel Company of Canada Limited, later re-named Inco Limited, was the world’s leading producer of nickel. Throughout its existence, Inco has been headquartered in Toronto, Ontario, with satellite offices throughout the world. In a deal that took place in 2007, Inco was purchased by the Brazilian company, Vale S.A., resulting in a change of name to Vale Canada Limited.

Over the past 20-30 years, Inco/Vale Canada incurred environmental remediation costs for damage caused by its operations in relation at 26 sites around the world. Of those sites, 22 are in Canada with 19 of them in Ontario. It also incurred remediation costs at sites operated through subsidiaries in Japan, Indonesia, New Jersey, and Wales.

Over several decades, 24 separate primary and excess insurers issued a total of 92 policies to Inco/Vale to cover the worldwide environmental liabilities in issue. Inco/Vale initiated claims for coverage under all 92 policies for the remediation costs incurred at its worldwide sites.

The claims advanced by Inco/Vale and its subsidiaries under the insurance policies relate predominantly, but not exclusively, to environmental expenditures incurred in Ontario that were generated by its Ontario operations. All of Vale Canada’s information and documents about all the insurance claims for environmental expenditures is in Ontario. Witnesses about the expenditure claims are in Ontario (except for four people in Manitoba and one person in New Jersey).

Vale sought to negotiate its claim for insurance coverage. The negotiations broke down, and Travelers Casualty & Surety Company brought an action in the Supreme Court, New York County, New York, against Vale, and the many insurers with respect to whether it was obligated to indemnify Vale.

Vale has an office in New York. One or more policies were brokered and underwritten in New York and issued to Vale Canada at its New York address. Notice of claims on those policies was to be given in New York.^[1]

The Ontario Action
12/09/22 Vale Canada Limited v. Royal & Sun Alliance Ins. Co. of CA
Ontario Court of Appeal

Unless There Is a Choice of Law Clause Specifying a Jurisdiction Other Than Ontario, the Ontario Courts Have Jurisdiction to Hear Coverage Disputes Under Policies That Were Brokered and Issued to Insureds at an Address Outside of Ontario, Where the Issuing Insurers Are Registered and Licensed to Transact Business in Ontario; The Insured Does Business in Ontario; and the Policies Relate Largely, but Not Exclusively to the Insured’s Operations in Ontario

Soon after, Inco/Vale and Royal & Sun Alliance Insurance Company of Canada (RSA), one of Inco/Vale’s primary insurers, issued an identical action in Ontario. Vale and RSA took the position that the action they commenced should continue in Ontario. Travelers and several other insurers took the position that the Ontario action either cannot, or should not, proceed. Each side accused the other of gamesmanship and forum shopping.

Inco/Vale and RSA brought an application within the Ontario action to have Ontario declared the appropriate forum to hear the coverage action. The motions court agreed with Inco/Vale and RSA that Ontario was the appropriate forum. In a decision released December 9, 2022, the Ontario Court of Appeal affirmed the decision of the Motions Court. The Court of Appeal stated:

A comprehensive general liability insurer, underwriting primary or excess insurance coverage for Ontario risks, connects itself to Ontario for jurisdictional purposes and thus commits itself to defending, in Ontario, claims arising out of those risks. No other outcome is commercially reasonable in the operation of the international insurance market and consistent with the principles of comity. There is no place that enjoys universal jurisdiction.

The common law principles of comity underpin the doctrines of jurisdiction simpliciter and forum non conveniens and stand against forum shopping and the notion that the race should go to the swiftest, for good reason, as we will explain. These principles ensure that Vale, an Ontario-based international miner, can sue its primary, comprehensive general liability insurer RSA, an Ontario-based insurer, in respect of environmental liabilities largely incurred by Vale for polluting Ontario properties, in Ontario’s Superior Court of Justice. These principles also entail the conclusion that Vale and RSA can sue the insurers who provided additional or excess insurance, largely follow-form, for the same type of risks, significantly but not exclusively tied to Ontario, in the same court.

The interesting finding in this case is that Ontario is the appropriate jurisdiction for the coverage disputes implicating the follow-form excess insurers. The follow-form policies did not contain a choice of law / jurisdiction clause meaning that the common law determines the issue of what is the appropriate jurisdiction to hear coverage disputes. The motion court and the Court of Appeal pointed out that the insurers were licensed and registered to undertake insurance in Ontario; the policies were issued to an insured doing business in Ontario; that was sufficient connection to Ontario for the Ontario courts to assume jurisdiction. One of the insurers, North River Insurance Company, argued that it was not licensed to undertake insurance in Ontario.

The Court held that the record before it did not contain that evidence but that even if it did, North River would have had a reasonable expectation at the time its excess policy was issued in a tower where RSA was the primary, that its liabilities would be acted upon in Ontario and therefore it was subject to the jurisdiction of the Ontario courts.

North River filed an application for leave to appeal to the Supreme Court of Canada. That application was dismissed December 9, 2022.

As the Ontario Court of Appeal judgment was not appealed, it is final and binding. Vale’s claims for coverage are continuing in Ontario.

The New York Action

02/26/25 Travelers Casualty & Surety Company v. Vale Canada Limited
Supreme Court, New York County

The Sudden and Accidental Pollution Exception of the Pollution Exclusion Contains a Temporal Element That Is Met by the Discharge, Abruptly or Within a Short Time Span, of a Significant Quantity of the Pollutant Sufficient to Have Some Potentially Damaging Environmental Effect

In the meantime, Vale and RSA applied in the New York Courts to have the New York action commenced by Travelers dismissed on the basis that the Ontario courts have jurisdiction to hear the coverage disputes. On May 10, 2022, their application was denied, and the New York action was allowed to continue.

On February 26, 2025, the New York Supreme Court, sitting in New York County, released its judgment on a motion filed by Travelers Casualty and Surety Company, North River Insurance Company, and United States Fire Insurance Company for summary judgment seeking a declaration that a Pollution Exclusion that was common to all policies issued by these insurers unambiguously bars recovery for any of Vale Canada's insurance claims.

Those claims arise from 27 sites. The parties agreed that four of those sites are representative of the 27 for purposes of discovery and for the Court’s review. Vale picked the Pipe Mine in Manitoba and the Chicago Mine site which is in Ontario. The insurers picked The Copper Cliff Smelter in Sudbury and the Thompson Complex in Manitoba.

The operative policies issued by these insurers contained the same pollution exclusion which excluded property damage caused by pollution, except where the damage arises from the "sudden and accidental" discharge (the ‘sudden and accidental exception’) of the pollution or other contamination, including any waste materials.

The insurers argued that the Pollution Exclusion contained in each of the Policies clearly and unambiguously bars recovery for any of Vale Canada's coverage claims for the Test Sites because it is undisputed that the pollutant damage for which Vale Canada claims coverage arise out of the gradual discharge, release, or dispersal of pollutants over the course of many decades such that it cannot be said that the pollution was "sudden" within the meaning of the sudden and accidental exception.

The controlling case in New York on the ‘sudden and accidental’ exception is Northville Industries Corp. v National Union Fire Insurance Co., 89 NY2d 621, According to that case, the sudden and accidental exception is based on the "initial release of the pollutant, not on the length of time the discharge remains undiscovered, nor the length of time that damage to the environment continued as a result of the discharge, nor on the timespan of the eventual dispersal of the discharged pollutant in the environment" As such, the exception "cannot be established merely by showing that the release of the pollutant had its onset at some particular point in time and, in that sense, the discharge could be said to have begun abruptly". "Rather, the temporal aspect of the sudden discharge element would only be met by the discharge, abruptly or within a short time span, of a significant quantity of the pollutant sufficient to have some potentially damaging environmental effect."

Based on this authority, the Insurers argued that they are entitled to summary judgment dismissing Vale Canada’s claims for coverage as there is no dispute as to the gradual nature of the pollution events for which coverage was demanded.

Vale Canada opposed this position stating that the law of Ontario applies to the policies. Under Ontario law, there is no temporal element to the application of the sudden and accidental exception.

The first order of business therefore was for the court to decide whether the policies are subject to the law of Ontario (which was Vale Canada’s position) or the law of New York State (which was the insurer’s position) However, under New York law, if there is no conflict between the applicable law of Ontario and New York on the subject, then there is no need to decide ‘the law of the policies’.

The onus was on Vale Canada to demonstrate the lack of a temporal element regarding this exception under Ontario law creating a conflict with New York law. Vale Canada retained Gordon Hilliker, K.C., a noted policyholder Canadian coverage lawyer and author based in Vancouver as their expert on Ontario law. The insurers retained Chris Paliare, a respected, general commercial litigator out of Toronto.

The New York Court found that Vale Canada’s expert, Mr. Hillicker, did not say that the law on the topic is settled in Ontario and further, he did not say that there is no temporal element to the application of the exception. The New York Court then delved further into Ontario law. The judgment discusses two inconsistent trial level decisions on the exception. Of those, the most recent case (B.P. Canada Inc. v. Comco Service Station Const. & Maintenance Ltd,) was found to be consistent with New York law. Canadian principles of horizontal stare decisis dictate that the New York court is bound to follow BP. However, even if that was not the case, the earlier Ontario case (Zatko v. Patterson Spring Service Ltd.) states that the exception does not apply to pollution damage that occurs after the insured becomes aware of the polluting event. Vale Canada seeks coverage for pollution damage at the Copper Cliff Smelter that is the consequence of a surface pollution event that occurred in 1974 and subsequently spread to the groundwater. Under Zatko, the earlier Ontario decision, this would not be covered.

As no conflict was found between the law of Ontario and the law of New York on this exception to the Pollution Exclusion, there was no need to engage in a conflict of law analysis. Even if it did, under both the law of Ontario and the law of New York, the insurers had established their case for summary judgment and accordingly, Vale Canada’s demands for coverage at the Test Sites were dismissed.

Time will tell if there is an argument as to the application of the decision regarding these test sites to the remaining claims.

[1] This information is mentioned in the Ontario proceedings and specifically referred to in Travelers Cas. & Sur. Co. v. Vale Can. Ltd., unpublished opinion, Borrok, J., May 10, 2022

Medical & Nursing Home Liability Pointers - 03/07/2025

Fri, 07 Mar 2025 20:17:41 +0000

March 7, 2025

A Note from Liz Midgley:

I don’t know about all of you, but 2025 is moving at lightning speed for us in (still) snowy Buffalo! Our Medical Malpractice and Nursing Home Liability team has had some very busy months since our last newsletter. I had the honor of speaking to the Pre-Law students at my alma mater, SUNY Geneseo (I can’t believe how much the campus has changed!), and the team has presented at so many seminars and webinars for various clients, The Harmonie Group, RISE Professionals, the Bar Association of Erie County, and more. We really appreciate the opportunities we get to share insight and connect with others!

We are excited to officially welcome new associate attorney Noah C. Neale, Esq., to the Medical Malpractice and Nursing Home Liability team! Noah was a summer associate at Hurwitz Fine during law school and joined us full time after taking – and passing! – the Bar Exam. He has now been admitted to practice as an attorney in New York State, and we could not be more excited! Noah hit the ground running, already handling appearances, motions, and depositions, and he has authored this month’s case updates, below. Prior to law school, Noah was a licensed EMT and performed pediatric research in association with the PLAN study at the University of Rochester Medical Center, which makes him a perfect addition to our team. Welcome, Noah!

In firmwide news, we have officially opened a brick & mortar Rochester office! We are fortunate to announce our two new litigation attorneys, Elizabeth K. Ognenovski and Bradon S. Carlson. While we have had a Rochester presence for the past five years with NYS Labor Law Attorney Tim Welch, we are excited about our expansion to further serve our clients.

Trusts & Estates Attorney Melissa A. Pezzino recently discussed the role of Irrevocable Trusts in estate planning, and how they can be used to safeguard your wealth. This is the #1 question that Melissa receives from clients, so she took a deeper dive into the benefits, legal considerations and potential drawbacks in “Are you protecting your wealth from rising nursing home costs?”

We are also excited to announce that Andrea Schillaci, Chair of the Business & Commercial Litigation Department, has been elected President of The Harmonie Group, an international network of elite and vetted law firms that holds events for attorneys and industry members across the country. In addition, Chris Potenza has been elected Co-Chair of the Harmonie Group's Litigation Practices Committee. Congratulations to both Andrea and Chris!

NY Governor Vetoes Grieving Families Act for Third Time

In December, New York Governor Kathy Hochul, for the third straight year, vetoed the Grieving Families Act, legislation that would completely overhaul wrongful death claims in New York by permitting recovery for emotional damages and expanding the class of persons who can seek recovery for a fatality.

Notably, the proposed legislation continued to omit a cap on damages, nor did it carve out an exception for medical malpractice claims. The expansion of damages was the same as passed in the prior legislation, and while the legislature limited retroactivity, it did not eliminate it. As predicted, these modest revisions did not address the Governor’s prior concerns in any meaningful way. For more analysis of this issue, click here.

Want to see us address something in a future Pointers? Send us an email!

Medical Malpractice and Nursing Home Negligence Case Updates

October 15, 2024       Gomez v. Mt. Sinai Hospital
Appellate Division, First Department
First Department confirms that statutory savings period deadline prevails over informal judicial deadline.

A plaintiff, following the death of her parent, sought to sue the defendant hospital for medical malpractice and wrongful death. In an effort to commence the action before the expiration of the statute of limitations, plaintiff filed her summons and complaint prior to being appointed as the administrator of decedent’s estate. When the trial court granted defendant’s motion to dismiss for lack of standing on grounds that plaintiff did not yet have her administration papers, it “permitted plaintiffs to ‘restore the action at any time within one year’” after plaintiff was properly appointed. Exactly one year after the dismissal, having been named administrator, plaintiff moved to restore the action. The trial court denied the motion, citing CPLR 205(a), which establishes a savings period of 6 months for a plaintiff to restore an action that was dismissed for lack of administration papers. On appeal, the First Department affirmed, opining that the trial court’s comment that plaintiff could refile within a year did not constitute law of the case and did not trump the savings period established in CPLR 205(a).

December 11, 2024 Butler v. Wyckoff Heights Medical Center
Appellate Division, Second Department
Second Department finds plaintiff’s allegations that he should have been assessed as a higher fall risk sound in medical malpractice rather than ordinary negligence.

A 71-year-old patient suffered a fall while unattended in a bathroom at the defendant medical center and subsequently commenced a suit. Although plaintiff initially characterized his complaints as negligence claims, defendant argued that the claims sounded in medical malpractice, and were consequentially subject to a shorter period of limitations, which had expired. The trial court determined that plaintiff’s allegations consisted of some negligence claims and some medical malpractice claims, dismissing the malpractice claims as untimely. On appeal, the Second Department reiterated that a claim sounds in negligence when jurors can use their everyday experience to assess whether the standard of care was breached, as opposed to those for medical malpractice, which require a consideration of professional skill and judgment. As a result, plaintiff’s claims that he should have been assessed as a higher fall risk constituted medical malpractice claims, because analyzing them required the application of medical judgment, while plaintiff’s other injury claims were ordinary negligence.

January 2, 2025           DeRusso v. Home of the Good Shepard at Highpointe
Appellate Division, Third Department
Third Department finds that Public Health Law § 2801-d, which provides a private right of action by residents of “residential health care facilities,” does not extend to claims against assisted living facilities.

Plaintiff, a resident of defendant’s assisted living facility, commenced a suit alleging issues with his care. Plaintiff asserted, among other things, a cause of action alleging violations of Public Health Law § 2801-d. Defendant moved to dismiss the Public Health Law claim, arguing that § 2801-d granted a cause of action for patients at a “residential health care facility”, and that defendant’s assisted living facility did not qualify. Plaintiff conceded that defendant is an assisted living facility but argued that § 2801-d nevertheless applied because the facility provided health-related services within the meaning of Public Health Law article 28. The trial court sided with defendant, and on appeal, the Third Department did so as well. In so doing, it noted that Public Health Law article 46-B deals with assisted living facilities and specifically delineates that assisted living facilities “shall not include . . . residential health care facilities or general hospitals licensed under [Public Health Law article 28].” The Third Department observed that this issue has also been reviewed by the Second and Fourth Departments; the Third Department’s view is consistent with that of the Second, and can be distinguished from the Fourth Department, which has a line of cases suggesting that § 2801-d might be applied to assisted living facilities.

January 16, 2025        Guthier v. DiPreta
Appellate Division, Third Department
Third Department evaluates battling experts and finds no issue of fact when one expert’s opinion is conclusory and ignores causation.

After two years of conservative treatment for foot and ankle pain, plaintiff saw defendant surgeon for placement of hardware. Plaintiff later suffered an infection, alleging that defendant caused plaintiff’s injuries by failing to diagnose and properly treat the infection. On motion for summary judgment, both parties provided an expert affidavit, and the trial court, finding that the affidavits raised an issue of fact, denied the motion. On appeal, the Third Department reversed. The court concluded that there was no issue of fact because plaintiff’s expert’s assertions that defendant breached the standard of care were either conclusory or failed to respond to the opinion of defendant’s expert that any alleged deviations did not cause plaintiff’s injury.

January 31, 2025        Mylar v. Niagara Falls Memorial Medical Center
Appellate Division, Fourth Department
Fourth Department splits over whether expert who denies any negligence may properly opine as to whether there was causation.

Defendant doctor diagnosed plaintiff’s daughter with pink eye and recommended a next-day follow up with an ophthalmologist. The doctor did not set up the appointment herself, advising plaintiff to do so. Weeks later, plaintiff’s daughter was seen by an ophthalmologist and diagnosed with a very rare eye disease that left her almost entirely blind. Plaintiff claimed defendant breached the standard of care by diagnosing pink eye and by not personally making an appointment with an ophthalmologist.

The lower court denied summary judgment on the grounds that defendants did not meet their burden with respect to either the deviation from the standard of care or causation. On appeal, the Fourth Department affirmed. The court determined that defendants’ expert affirmation did not satisfy the burden on causation because the expert said that “at all times, defendant was not negligent”; in the court’s view, the expert could not have properly testified that there was no causation, because if you do not acknowledge, or at least assume for sake of argument, that some act or omission breaching the standard occurred, then you cannot render an opinion as to causation.

Two judges dissented, opining that defendants did satisfy their burden with respect to causation, since the expert said that even if defendant had tried to make an appointment with an ophthalmologist immediately, the appointment wouldn’t have happened until at least the next day. In the dissent’s view, the expert established that there was no causation because regardless of defendant’s conduct, the fastest that an ophthalmologist’s appointment could have been made would have been the next day, whether it was the defendant who made it or plaintiff.

Hurwitz Fine's Medical Malpractice & Nursing Home Defense Team
is here to answer your questions:

Elizabeth M. Midgley, Esq. (emm@hurwitzfine.com)
V. Christopher Potenza, Esq. (vcp@hurwitzfine.com)
Stephen M. Sorrels, Esq. (sms@hurwitzfine.com)
Patrick B. Curran, Esq. (pbc@hurwitzfine.com)
Ashley M. Cuneo, Esq. (amc@hurwitzfine.com)
Noah C. Neale, Esq. (ncn @hurwitzfine.com)
Gabrielle D. Markle, Esq. (gdm@hurwitzfine.com)

As a public service, we are pleased to present this newsletter providing the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. In some jurisdictions, newsletters such as this may be considered: Attorney Advertising.

If you know of others who may wish to subscribe to these legal alerts, please feel free to forward it. If you wish to subscribe or unsubscribe, please do so at the bottom of this newsletter.

Coverage Pointers: This twice-monthly electronic newsletter summarizes important insurance law decisions from appellate courts in New York State with the occasional snapshot across borders. Contact Dan Kohane at ddk@hurwitzfine.com to subscribe.

Labor Law Pointers: Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law and construction accident case decided during the month by the Appellate Courts. Contact Dave Adams at dra@hurwitzfine.com to subscribe.

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Contact Jody Briandi at jeb@hurwitzfine.com to subscribe.

Products Liability Pointers: This monthly newsletter covers all areas of products liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact Chris Potenza at vcp@hurwitzfine.com to subscribe.

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Labor Law Pointers - Volume XIV, No. 4

Thu, 06 Mar 2025 14:13:11 +0000

Volume XIV, No. 4
Wednesday, March 5, 2025

Note from the Editors:

Do you have a situation? We love situations. Give us a call, send an email, drop by; we truly enjoy solving complex Labor Law and risk transfer issues.

While it is Marc’s month for the cover note, I need to announce the first one to correctly name the band who developed the “Wall of Sound” as displayed in last month’s edition. As luck would have it, Elizabeth Ognenovski was the first to point out that it was the Grateful Dead that developed the distortion free “Wall of Sound”, designed by Owsley “Bear” Stanley in 1973. It was used for less than a year in 1974 due to its size, difficulty transporting it and the time necessary to set it up. It had over 600 speakers and 48 amplifiers producing 28,800 watts of power.

A bit more on Elizabeth--she was not just a random Deadhead who recognized the photo and name, but in addition she just happened to be an attorney who was in the process of joining Hurwitz Fine, as we recently opened a brick and mortar office in Rochester. We are happy to add Elizabeth to Hurwitz Fine along with Bradon Carlson rounding out our Rochester office, joining Labor Law team member Tim Welch. Think of us for your central New York needs.

- David

In the ever-illuminating world of Labor Law § 240(1), we often find ourselves navigating the fine line between "repair" and "routine maintenance." Let’s brighten our understanding with our first photograph that just might light up your day.

Imagine this electrician is tasked with replacing a flickering lightbulb atop a 12-foot unsecured ladder outside a commercial building. Armed with his towel and a new bulb, the worker ascends the ladder, humming “Blinded by the Light.” Alas, as he unscrews the old bulb, the ladder decides it’s time for a break, leading to an impromptu meeting between the worker and the ground. Does this worker have a § 240(1) case?

Labor Law § 240(1), often dubbed the “Scaffold Law,” is designed to protect workers from elevation-related hazards during covered activities such as construction, demolition or repair work. However, courts distinguish between repair, which is covered, and routine maintenance, which is not. While this worker’s fall is unfortunate, his activity of changing a light bulb falls squarely into the routine maintenance category. This hypothetical case serves as a bright reminder that not all elevation-related tasks are created equal in the eyes of the law because changing a light bulb is routine maintenance, which is not a covered activity under Labor Law § 240(1).

In our next photograph, let’s imagine a painter is tasked with adding a fresh coat to a ceiling. Lacking a scaffold, he leans his unsecured ladder against the wall and climbs to the top to begin his work, as shown below.

Now let’s assume this painter falls, claiming that the lack of adequate safety devices (a scaffold) led to his accident. The defense argues that this painter’s decision to use an unsecured ladder was the sole proximate cause of his incident and injuries. Who prevails on the inevitable summary judgment motions?

Labor Law § 240(1) mandates that owners, contractors and their agents provide appropriate safety devices to protect workers from elevation-related risks. In this photograph, the absence of a secured ladder or alternative safety measures, such as a scaffold or harness, indicates a failure to comply with the statute. Courts have consistently held that when inadequate or no safety devices are provided, liability under § 240(1) established, resulting in summary judgment in favor of the injured worker.

That’s it for this month. As always, please feel free to reach out to us with any questions Labor Law or Risk-Transfer related. Hope you learned something.

-David dra@hurwitzfine.com
-Marc   mas@hurwitzfine.com

Hurwitz Fine P.C.
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Buffalo, New York 14202
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Labor Law Pointers is published the first Wednesday of each month. If you know of others who may wish to subscribe to this free publication, please feel free to forward it. If you wish to subscribe or unsubscribe, please send an e-mail to dra@hurwitzfine.com or call the Editor/Labor Law Team Leader David R. Adams directly at (716) 849-8916.

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Jagdeo v Borden House Condominium
February 11, 2025
Appellate Division, First Department

Plaintiff was injured when a coworker, who was on a ladder installing metal “Z clips,” dropped the clips on plaintiff’s head while working on a renovation of a single-family apartment in a condominium building. Plaintiff was not wearing a hard hat. The trial court granted summary judgment dismissing plaintiff’s Labor Law §§ 240(1) and 241(6) claims against all defendants and granted summary judgment dismissing the Labor Law § 200 and common-law negligence claims against certain defendants.

Labor Law § 240(1) (MAS)

The First Department unanimously affirmed the trial court’s decision to dismiss the Labor Law §§ 240 and 241(6) claims against Caceres and Michael Novogratz. As owners, they demonstrated their entitlement to the homeowners’ exception by showing that they did not direct or control plaintiff’s work. Plaintiff’s hearsay evidence that Caceres gave his supervisors instructions, was insufficient to raise a triable issue of fact.

The Court also properly dismissed the claims against the Condo defendants, who established that plaintiff’s accident occurred within the apartment and that plaintiff was not working on common elements of the building. The Condo defendants also established that they did not have authority to supervise or control the job and thus were not liable as an agent of the owner.

PRACTICE POINT: Under the homeowner’s exemption, owners of one and two-family dwellings who contract for but do not direct or control the work are exempt from Labor Law §§ 240(1) and 241(6).

Labor Law § 241(6) (TPW)

The First Department also dismissed the Labor Law § 241(6) claims as against Caceres and Michael Novogratz because of the homeowner's exemption as owners of the apartment who did not control the construction. Further, the remaining defendants did not have authority to supervise or control the job and thus were not liable as agents of the owner.

Labor Law § 200 and Common-Law Negligence (EDA)

The First Department unanimously affirmed the trial court’s decision, finding that there were no issues of fact as to whether Caceres directed or controlled plaintiff's work. It also affirmed the dismissal of the claims against Condo defendants because they did not exercise supervisory control over the activity that brought about plaintiff's injury.

Konstantinovic v Finch Apt. Corp.
February 13, 2025
Appellate Division, First Department

Plaintiff, an employee of Finch, allegedly was injured while working in the boiler room at a building owned by Finch, after he fell from a ladder. Plaintiff alleges that Finch hired Abilene, a boiler installation and repair company, to work on the boiler before the accident and that Abilene was responsible for maintaining the boiler and boiler room in a reasonably safe and suitable condition and in good repair. The trial court denied Abilen’s motion seeking dismissal of the Labor Law §§ 240, 241 and 200 claims.

Labor Law § 240(1) (MAS)

The First Department unanimously affirmed the trial court’s decision, finding that Abilene failed to establish its entitlement to judgment as a matter of law. The affidavit of Abilene’s principal failed to address plaintiff’s central allegation that he fell and emails attached Abilene’s motion established that it had worked in the boiler room where plaintiff fell that day of his incident. Additionally, the motion was premature because plaintiff demonstrated that facts essential to oppose the motion – including invoices, work orders, proposals, and other evidence of Abilene’s work before plaintiff’s incident – were in Abilene’s exclusive control.

PRACTICE POINT: When moving for summary judgment, you must address the central allegations against you and your motion will be denied, like here, without regard to the sufficiency of your opponent’s opposition papers.

Mannino v Waldorf Exteriors, LLC
February 13, 2025
Appellate Division, First Department

Plaintiff was injured while working on a construction project in a building owned by the City and occupied by FIT. TDX was the construction manager for the project. Plaintiff's employer, nonparty general contractor Vanguard, retained Waldorf and Calvin as the demolition subcontractors. On the day of his injury, plaintiff was tasked with chipping cement encasements from two-story, steel vertical columns located in the lobby of the building. Plaintiff was going up in a scissor lift when he was struck by a 200-to-300-pound piece of cement that fell from the middle tier of a column.

The trial court denied plaintiff's motion for summary judgment on liability on his Labor Law §§ 240(1) and 241(6) claims, granted the motion of The Board of Trustees of Fashion Institute of Technology, FIT, the City of New York, and the New York City Department of Education (together, the City), and TDX for summary judgment dismissing the Labor Law §§ 240(1) and 241(6) claims against them, and granted the cross-motion of Waldorf Exteriors and Calvin for summary judgment dismissing the Labor Law §§ 240(1) and 241(6) claims against them.

Labor Law § 240(1) (MAS)

The First Department reversed the trial court’s decision, reinstated plaintiff’s § 240(1) claim and granted summary judgment in plaintiff’s favor as he demonstrated that he was injured by falling cement from an area on a vertical column, and that at the time of the accident he was not otherwise engaged in actual cement removal. Moreover, shoring or bracing of the cement casing on the columns could have been accomplished by wire mesh or other means without making the work impossible to complete. In opposition to plaintiff’s motion, the Court held that FIT and the City failed to show how adequate safety measures would interfere with or preclude plaintiff from completing his assigned demolition task.

However, questions of fact remain as to whether TDX was a statutory agent of FIT because of testimony that TDX could stop the work to enforce safety practices, as well as testimony that TDG was the “eyes and ears” of FIT during the renovation project. Questions of fact are also raised as to whether Walforf and Calvin were statutory agents, as the evidence indicates that their supervision over earlier demolition work on the columns could reasonably have destabilized the cement encasements.

PRACTICE POINT: A party may be vicariously liable as an agent of the owner for injuries where the party had the ability to control the activity which brought about the injury. When the work giving rise to the duty to conform to the requirements of Labor Law § 240(1) has been delegated to a third-party, that third-party then obtains the concomitant authority to supervise and control that work and becomes a statutory agent of the owner or general contractor. Where, as here, the party had such supervisory control and authority, they are an appropriate Labor Law defendant.

Saula v Harlem Urban Dev. Corp.
February 13, 2025
Appellate Division, First Department

Plaintiff slipped on the top, first rung of a wet ladder while descending and suffered injuries. The trial court granted plaintiff’s motion for partial summary judgment on his Labor Law §§ 240(1) and 241(6) claims.

Labor Law § 240(1) (MAS)

The First Department unanimously affirmed the trial court’s decision. Plaintiff established entitlement to partial summary judgment under § 240 based on the uncontested testimony that he slipped on the top, first rung of a wet ladder while descending, and that defendants did not require him to use fall protection gear when using the ladder. The evidence also showed that the wet ladder, the only means of access between the first and second floors, lacked slip protection and a tie-off point, in violation of § 240.

As plaintiff established that his injury was causally related to a violation of Labor Law § 240(1), the court also properly dismissed defendants’ affirmative defense asserting that plaintiff was the sole proximate cause of his accident.

PRACTICE POINT: If a statutory violation of § 240(1) is a proximate cause an injury, then plaintiff cannot be solely to blame for it.

Rossi v Doka USA, Ltd.
February 18, 2025
Appellate Division, First Department

Plaintiff, an employee of the concrete subcontractor Roger & Sons, was injured while using a ratchet to move a reusable concrete formwork system used to construct concrete walls. The concrete formwork system was supplied by Doka, which also trained the Roger & Sons employees on how to use the system and the ratchets. The trial court denied the cross-motion of Doka for summary judgment dismissing the complaint and all crossclaims against it.

Labor Law § 241(6) (TPW)

The First Department unanimously affirmed the trial court’s denial of Doka’s motion for summary judgment. Doka failed to establish that it was not a "statutory agent" under Labor Law § 241(6). Based on Doka's contract with Roger & Sons and testimony that a Doka employee remained on site after training the Roger & Sons employees on the formwork system, issues of fact existed as to whether Doka had the authority to supervise and control plaintiff's work with the formwork system.

Labor Law § 200 and Common-Law Negligence (EDA)

The First Department unanimously found that Doka failed to establish that it is not a "statutory agent" under Labor Law § 200. Based on Doka's contract with Roger & Sons and testimony that a Doka employee remained on site after training the Roger & Sons employees on the formwork system, issues of fact exist as to whether Doka had the authority to supervise and control plaintiff's work with the formwork system. The authority to supervise and control is the key issue.

Indemnity Issues in Labor Law (AMC)

The First Department upheld the trial court’s decision denying Doka’s cross-motion for summary judgment for contractual indemnification against Roger & Sons. The trial Court found, and the First Department agreed that Doka failed to establish it was not negligent.

Suazo v 501 Madison-Sutton LLC
February 18, 2025
Appellate Division, First Department

Plaintiff was engaged in wall plastering work atop an A-frame ladder, that he held plaster material in one hand and his spreading knife in the other as he worked, and that the ladder suddenly toppled, causing him to fall. The trial court granted plaintiff’s motion for partial summary judgment on his Labor Law §§ 240(1) and 241(6) claims.

Labor Law § 240(1) (MAS)

The First Department unanimously affirmed the trial court's decision. Contrary to defendants’ argument, none of the alleged inconsistencies in plaintiff’s testimony as to the ladder’s height, the ceiling height, the stability of the ladder as he stood on it, or even whether the ladder had moved before it toppled, undermine plaintiff’s proof warranting summary judgment. The Court also rejected defendants’ sole proximate cause argument as there was no evidence that plaintiff was reaching or leaning at the time the ladder toppled, and to assume as much would be speculative. In any event, it is “conceptually impossible”

PRACTICE POINT: Another case reminding us that it is “conceptually impossible” for a plaintiff’s negligence to be the sole proximate cause of an accident where, as here, it is shown that a violation of 240(1) was a concurrent cause of the accident.

Traub v Basketball City N.Y. LLC
February 18, 2025
Appellate Division, First Department

Plaintiff was one of a team of 60 stagehands belonging to a union hired to erect a temporary stage for an awards show at Pier 36 in Manhattan. During the day prior to the show, plaintiff performed a number of construction tasks including going up in a "genie" lift to fix a malfunctioning speaker and helping the carpenters install decking and staging. Plaintiff was then tasked with wiring the audio system for a rolling drum riser to be used during the show. While backstage retrieving necessary audio cables for the riser, plaintiff was holding onto the stage's railing to guide himself when the lights were turned off and on during a lighting test, causing him to become disoriented and fall off the stage because part of the railing was missing and was injured.

The trial court granted plaintiff’s motion for partial summary judgment under Labor Law § 240(1), and denied defendant’s cross-motion for summary judgment and the BBC defendants’ common-law indemnification claims against NGPI.

Labor Law § 240(1) (MAS)

The First Department unanimously affirmed the trial court’s decision granting summary judgment to plaintiff under Labor Law § 240(1). BBC’s contention that the activity engaged in at the exact moment of injury is determinative of liability is belied by this Court’s jurisprudence that a full assessment of the work being performed is required. On this record, the Court held it was clear that plaintiff was engaged in construction-related activity covered by the Labor Law as plaintiff participated in the construction of the stage and the riser throughout the project, including on the day of the accident, in service of a union that was performing a contract to carry out construction activities clearly covered under the statute. Moreover, plaintiff’s task of wiring the drum apparatus for use in the show was ultimately part and parcel of the stage’s overall construction. That plaintiff’s discrete task of fetching the cables neither involved the physical construction of the stage itself, nor its attached rigging and electronics fails to compel a different result.

PRACTICE POINT: Courts rejected defendant’s argument that the court should limit its analysis of plaintiff’s activity to the moment of the injury, instead analyzing the totality of work plaintiff performed on the project because it is neither pragmatic nor consistent with the spirit of the statute to isolate the moment of injury and ignore the general context of the work.

Indemnity Issues in Labor Law (AMC)

The First Department upheld the trial court’s decision denying BBC’s cross-motion for summary judgment for common-law indemnification against New Games Productions. The trial Court found, and the First Department agreed, that BBC failed to establish its freedom from negligence regarding the lighting conditions.

Williams v McAlpine Contr. Co.
February 18, 2025
Appellate Division, First Department

Plaintiff was injured when he fell while walking on raised curbing that was in the middle of a pathway leading to his employer's shop at a construction site. Sandy 350 was the owner, McAlpine Contracting was the general contractor, and Bedrock, a subcontractor, was plaintiff's employer. The trial court denied defendants’ motion seeking dismissal of plaintiff’s Labor Law § 241(6) claim based on 12 NYCRR 23-1.7(e), denied plaintiff’s motion for summary judgment under Labor Law § 200, granted defendants’ motion to dismiss the § 200 and common-law negligence claims, and denied defendants’ motion for summary judgment seeking contractual indemnification and breach of contract against Bedrock.

Labor Law § 241(6) (TPW)

Defendants established entitlement to summary judgment dismissing the Labor Law § 241(6) claim predicated on an alleged violation of Industrial Code § 23-1.7(e)(1), which pertains to tripping hazards, because plaintiff admitted he did not trip on the raised curbing or any debris. In opposition, the Court held that plaintiff did not raise a triable issue of fact. The opinion of plaintiff's expert that plaintiff tripped on the raised curbing was not supported by admissible evidence in the record and was contradictory to plaintiff's own testimony.

Labor Law § 200 and Common-Law Negligence (EDA)

The First Department unanimously found issues of fact that precluded summary judgment to either plaintiff or defendants on the Labor Law § 200 and common-law negligence claims as it was based on a dangerous condition on the site, not from the means and methods of plaintiff's work. Defendants' witness acknowledged that workers were not supposed to walk on the pathway with the raised curbing, which was to become part of the final structure. McAlpine Contracting's superintendent testified that it would be against the rules for a worker to use the pathway as a shortcut. However, the record contained conflicting evidence as to whether defendants knew or should have known that workers continued to use the pathway, despite a plywood barrier, which according to testimony could easily be removed. There was also an issue of fact as to whether plaintiff's fall was caused by a dangerous condition of the curbing, or whether he lost his footing as he was stepping off the curbing.

Indemnity Issues in Labor Law (AMC)

The First Department held that because there are questions of fact as to whether the defendants’ (McAlpine Contracting and Sandy 350) negligence, they are not entitled to summary judgment on their contractual indemnification claim against Bedrock.

Castro v Brito
February 20, 2025
Appellate Division, First Department

Defendants hired plaintiff to repair the garage roof of a two-unit home. Plaintiff was injured when the wooden ladder he was using collapsed as he descended from the roof. He alleged that defendants provided a defective, unsecured ladder causes of action for negligence and violations of Labor Law §§ 240(1), 241(6), 200 and common-law negligence. The trial court granted plaintiff’s motion for summary judgment on the § 240(1) claim against Tito and denied Villavicencio’s cross-motion for summary judgement, while denying defendants’ cross-motion for summary judgment dismissing plaintiff’s Labor Law § 200 claims.

Labor Law § 240(1) (MAS)

The First Department unanimously affirmed the trial court’s decision. Villavicencio was not entitled to the homeowners’ exemption. Although he was the spouse of the owner, Brito, Villavicencio was not a legal owner of the property where plaintiff worked and thus lacked any legal interest in the property that would have entitled him to the exemption. Plaintiff also established that Villaviencio is a statutory agent, who acted as the owner’s agent by hiring plaintiff with Brito’s authorization and providing materials and tools for the garage roof repair.

Plaintiff further established entitlement to summary judgment by showing he was provided with an old, unstable wooden ladder that was too short to reach the roof. The court rejected Villaviencio’s sole proximate cause argument because even if a metal ladder shown in a photograph of the garage was available on the date of the accident, defendants’ failed to establish that plaintiff knew that the taller ladder was available for his use; he was expected to use the taller ladder for his work; he chose for no good reason not to do so; and, he refused to follow a specific instruction to use the taller ladder for his work.

PRACTICE POINT: Remember the four essential elements of the sole proximate cause defense under Labor Law § 240(1): (1) plaintiff had adequate safety devices available; (2) plaintiff knew both that the safety devices were available and that he or she was expected to use them; (3) plaintiff chose, for no good reason, not to do so; and (4) would not have been injured had he or she not made that choice. Without all four elements, this defense will not succeed, as in this case.

Labor Law § 200 and Common-Law Negligence (EDA)

The First Department unanimously affirmed the dismissal of the Labor Law § 200 and common-law negligence claims, finding that the evidence established that defendants exercised supervisory control over the means and methods of the work, such as by providing the ladder.

Lopez v 18-20 Park 84 Corp.
February 27, 2025
Appellate Division, First Department

Plaintiff fell from a ladder while in the course of his employment with Dowd as a painter. Plaintiff was performing renovation work in an apartment at premises owned by 18-20 Park, which apartment was leased by Marissa Reese. The trial court granted plaintiff’s motion for partial summary judgement on the Labor Law § 240(1) claim against 18-20 Park, and denied Dowd’s motion for summary judgment claims for common-law indemnification and contribution.

Labor Law § 240(1) (MAS)

The First Department affirmed the trial court’s decision to grant plaintiff summary judgment as plaintiff met his burden that the ladder on which he was standing moved from under him for no apparent reason. To the extent that plaintiff was required to identify a safety device that would have prevented the incident, the Court held that plaintiff established that he was provided with a safety device, i.e., a ladder, but that the ladder proved inadequate.

PRACTICE POINT: A plaintiff is not required to demonstrate that a ladder is defective to be entitled to summary judgment. Even if plaintiff misused the ladder by standing on its fifth rung, this constitutes at most comparative negligence, which is not a defense under Labor Law § 240(1). Moreover, plaintiff is entitled to summary judgment although he was the only witness as nothing in the record controverts his account of the accident or calls his credibility into question.

Indemnity Issues in Labor Law (AMC)

The First Department reversed the trial court’s decision denying Dowd’s motion for summary judgment seeking to dismiss the common law indemnification claims, finding that Dowd established plaintiff did not suffer a “grave injury” within the meaning of Workers Compensation § 11 and defendants and Reese failed to raise a question of fact.

Martinez v Nader Enters., LLC
February 5, 2025
Appellate Division, Second Department

Plaintiff was employed by Sunfar, who was the general contractor at a construction site owned by defendant. Plaintiff was injured while cutting a cement block with a grinder without a blade guard when the grinder kicked back and cut plaintiff's leg. Sunfar owned and provided the subject grinder. Plaintiff commenced an action asserting violations of Labor Law §§ 241(6) and 200. The trial court granted plaintiff’s cross-motion for summary judgment on Labor Law § 241(6) predicated on a violation of 12 NYCRR 23-1.5(c)(3) and denied Sunfar’s motion for summary judgment seeking dismissal of the Labor Law § 200 and common-law negligence claims.

Labor Law § 241(6) (TPW)

The Second Department reversed the trial court’s decision. Industrial Code (12 NYCRR) § 23-1.5(c)(3), provides that “[a]ll safety devices, safeguards and equipment in use shall be kept sound and operable, and shall be immediately repaired or restored or immediately removed from the job site if damaged." Here, the Court held that plaintiff failed to eliminate all triable issues of fact as to whether defendant had notice of any defect or unsafe condition in the subject grinder and the trial court should have denied plaintiff's cross-motion, regardless of the sufficiency of defendant's opposition papers.

Labor Law § 200 and Common-Law Negligence (EDA)

The Second Department unanimously reversed the trial court’s decision and dismissed the Labor Law § 200 claim, finding that it did not have the authority to supervise or control the manner and method of plaintiff's work. Defendant's submissions established that it did not interact with Sunfar's employees during the construction and that it did not provide any equipment or tools to Sunfar's employees. In opposition, the Court held that plaintiff failed to raise a triable issue of fact.

Magistro v New York City Hous. Auth.
February 13, 2025
Appellate Division, Second Department

Plaintiff was injured while working as a plumber on a project involving the replacement of an underground leaking water pipe by plaintiff's employer, Richard's Plumbing., at premises owned by New York City Housing Authority (hereinafter NYCHA). To access the pipe, part of the sidewalk had to be broken up, and a hole four feet deep was created using an excavator. At the time of the incident, plaintiff and a coworker were manually loading pieces of broken concrete from the hole into the excavator bucket, which was on the ground level near the hole. Plaintiff was standing "waist high" in the hole, while his coworker was on the ground level. The slabs varied in size, with the largest measuring two feet by two feet. While plaintiff put a piece of concrete into the bucket, his coworker "slammed" a two-feet-by-one-foot piece of concrete into the bucket directly on top of plaintiff's right hand, causing him to sustain injuries.

The trial court granted the motion of NYCHA for summary judgment dismissing the complaint against it and denied plaintiff’s motion for leave to amend his bill of particulars and for summary judgment on violations of Labor Law §§ 240(1) and 241(6) against NYCHA.

Labor Law § 240(1) (MAS)

The Second Department reversed the trial court and denied NYCHA's motion as premature, with leave to renew after the completion of discovery, because discovery, some of which were exclusively in the knowledge of NYCHA, was necessary to oppose the motion. For the same reason, the trial court should have denied that branch of plaintiff’s motion seeking partial summary judgment on liability under Labor Law 240(1) against NYCHA.

PRACTICE POINT: A party should be afforded a reasonable opportunity to conduct discovery prior to the determination of a motion for summary judgment. A party opposing summary judgment is entitled to obtain further discovery when it appears that facts supporting the opposing party’s position may exist but cannot then be stated. A party contending that a summary judgment motion is premature must demonstrate that discovery might lead to relevant evidence or that the facts essential to justify opposition to the motion were exclusively within the knowledge and control of the movant. In this case, plaintiff was able to this meet this burden.

Labor Law § 241(6) (TPW)

The Second Department affirmed that branch of NYCHA's motion for summary judgment dismissing the Labor Law § 241(6) claim insofar as asserted against it and properly denied that branch of plaintiff's motion for summary judgment on the issue of liability on that claim against NYCHA. "To prevail on a cause of action alleging a violation of Labor Law § 241(6), a plaintiff must establish the violation of an Industrial Code provision that sets forth specific, applicable safety standards, and that his or her injuries were proximately caused by such Industrial Code violation". Here, NYCHA established that the Industrial Code provisions relied upon by plaintiff were either not applicable to the facts of this case or not sufficiently specific to support a Labor Law § 241(6) cause of action. In opposition, plaintiff failed to raise a triable issue of fact.

Labor Law § 200 and Common-Law Negligence (EDA)

The Second Department unanimously reversed the trial court’s decision, finding that NYCHA's summary judgment motion should have been denied as premature, with leave to renew upon the completion of discovery. The motion was made before written discovery was exchanged and before any depositions were taken. Further, plaintiff demonstrated that NYCHA's motion was premature with respect to the Labor Law § 200 and common-law negligence claims, as discovery with respect to several relevant issues, some of which were exclusively within the knowledge of NYCHA, was necessary to oppose those branches of the motion.

Martinez v Shore Oaks, LLC
February 26, 2025
Appellate Division, Second Department

Defendant McNulty Development Corp. (MDC) was retained by Shore Oaks as a construction manager to manage the construction and to arrange for the coordination and scheduling of construction of a single-family residence. Shore Oaks hired and paid the contractors on the project, including Castro. On January 7, 2021, plaintiff was employed as a carpenter by Castro when he fell 18 feet to the ground from the roof of the house while putting up windows and molding using an air gun. The trial court denied MDC’s motion seeking dismissal of plaintiff’s Labor Law §§ 240(1) and 241(6) claims.

Labor Law § 240(1) (MAS)

The trial court reversed the trial court’s decision and dismissed the Labor Law §§ 240(1) and 241(6) claims. MDC established entitlement to judgment as a matter of law through the testimony of plaintiff and the contractual agreement between itself and Shore Oaks, that MDC did not have the authority to control or supervise plaintiff's work. In opposition, the Court rejected plaintiff’s contentions that MDC was contractually responsible for reviewing and coordinating the safety programs of the contractors on the project site, yet failed to ensure compliance, and was required to coordinate the activities of all the contractors and report and deficiencies to Shore Oaks.

PRACTICE POINT: Although a construction manager of a work site is generally not responsible for injuries under Labor Law §§ 240(1), 241(6) or 200, when it functions as an agent of the properly owner or general contractor in circumstances where it has the ability to control the activity which brough about plaintiff’s injury, responsibility will attach. An agent’s liability is limited to those areas and activities within the scope of the work delegated or, in other words, to the particular agency created.

O'Connor v S&S Constr. of W. N.Y., Inc.
February 7, 2025
Appellate Division, Fourth Department

The trial court granted in part S&S’s cross-motion for summary judgment by determining Frey’s insurance carrier had a duty to defend S&S in a Labor Law and third-party case. The trial court also denied the cross-motion of Frey seeking summary judgment dismissing the second amended third-party complaint. While the appeal was pending, the third-party action proceeded to trial and a jury rendered a verdict in Frey’s favor.

Indemnity Issues in Labor Law (AMC)

The Fourth Department unanimously dismissed the appeal. Frey’s contention that the trial court improperly determined that the insurer had a duty to defend S&S against plaintiff’s claims in the first-party action is not properly before the Court. Frey has no direct interest in the controversy between the insurer and S&S, and the trial court’s order to that extent has no binding effect on Frey or its rights. Therefore, Frey is not aggrieved by that part of the order.

Frey also contends that the trial court erred in denying its cross-motion and that the order should be modified to that extent despite the jury verdict. Even if the judgment has not yet been entered in this case, the Fourth Department held that this appeal is moot. Courts are generally precluded from considering questions which, although once live, have become moot by passage of time of change in circumstances. Here, because the third-party complaint has already been dismissed pursuant to the jury’s verdict, the Court’s decision will have no immediate or practical consequences to the parties, rendering any decision moot.

New York Industrial Code Regulations (EDA)

Lead fumes and dust from structural steel.

(b) Hot riveting or welding.

Where such hot riveting or welding is to be performed in confined spaces, the contact surfaces, exterior surfaces and the rivet holes of field joints to be hot riveted shall be free from any compound containing lead or from any other substance which may create toxic fumes when heated.

While there are no cases directly dealing with this subsection, its language is likely specific enough to form the basis of a Labor Law § 241(6) claim.

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Premises Pointers - Volume VIII, No. 9

Mon, 03 Mar 2025 16:40:29 +0000

Volume VIII, No. 9
February 28, 2025
A Monthly Electronic Newsletter

NOTE FROM THE EDITOR:

For those of you who also subscribe to Coverage Pointers, and received Dan’s most recent issue, you heard about the FDCC meeting that we just returned from in Charleston. It was a fabulous week of education with friends and colleagues from across the country. Our FDCC convention chair Jeff Kelsey and program chair Dan McGrath went above and beyond in every way to organize and execute a phenomenal event in beautiful Charleston. The programming ranged from a panel of Federal Court judges who provided an insider’s view of what they expect from lawyers practicing in their courtrooms to a timely and informative discussion on navigating the current Executive Orders on DEI, a topic that Premises Pointers columnist and Hurwitz Fine attorney Anastasia McCarthy has been following and helping clients understand. We also had some fun (as you saw from our picture at the South Carolina Aquarium shared by Dan) and enjoyed amazing restaurants and sites. If anyone is interested in joining the organization or getting more information about FDCC, which stands for the Federation of Defense and Corporate Counsel, I would also be happy to chat with you. We have a mix of both defense attorneys and insurance industry professionals which makes for a wonderful exchange of ideas and information on what’s happening in the practice of law. Our next meeting is this summer in Park City, Utah, which is sure to be another great event.

Now, onto what’s happening in Premises Pointers and HF firm news.

Last month, we announced our expansion into Rochester, and this month, we are thrilled to have one of our new Rochester attorneys, Elizabeth K. Ognenovski as a Premises Pointers columnist! Be sure to read her column called Slips, Trips, and Legal Shifts: The Latest Retail Slip and Fall New York State Case Updates.

In our Trusts & Estates department, Attorney Melissa A. Pezzino recently discussed the role of Irrevocable Trusts in estate planning, and how they can be used to safeguard your wealth. According to Melissa, this is the #1 question she receives from clients, so she took a deeper dive into the benefits, legal considerations and potential drawbacks in “Are you protecting your wealth from rising nursing home costs?”

Lastly, in firm news, I am excited to announce that Andrea Schillaci, Chair of the Business & Commercial Litigation Department, has been elected President of The Harmonie Group, an organization that many of you may have attended events of across the country. Andrea has been an active member of The Harmonie Group for over 20 years. She has served on the board of directors and currently co-chairs the Professional Liability Committee. Congratulations, Andrea, on this terrific accomplishment!

With February winding down here in Buffalo, we are anxiously waiting for Spring’s arrival and hope to be turning the corner soon. Hopefully by the time our next issue comes out, we will have seen the last of the snow!

-Jody

Retail, Restaurant and Hospitality Happenings Around New York State and Beyond
By: Jody E. Briandi jeb@hurwitzfine.com

This month we are covering several summary judgment decisions—all from the 2^nd Circuit. Of the three retail defendants, two prevailed on summary judgement and one did not.

2/20/2025 Gomez v. Target Corporation
United States District Court, Eastern District of New York
Court ruled a period of two minutes and thirty-eight seconds between a spill and a fall is insufficient, as a matter of law, to provide a reasonable opportunity to correct or warn.

On January 10, 2021, plaintiff slipped and fell on a broken jar of pickles in a Target store. Surveillance video verified the jar broke at 4:50:19 p.m. and plaintiff fell at 4:52:57 p.m., a span of 2 minutes and 38 seconds. No Target employee was seen on surveillance footage entering or passing by the aisle during this time. Plaintiff claims a Target employee told her after the fall that they were aware of the spill, which the employee denies. The court reasoned that even if the defendant had actual notice of the spill, the 2 minutes and 38 seconds between the spill and the fall was insufficient time, as a matter of law, to provide a reasonable opportunity to correct or warn about the hazard. The defendant's motion for summary judgment was granted, and the case was closed.

2/13/2025 Russo v. Costco Wholesale Corp.
United States District Court, Southern District of New York

Defendant Costco’s motion for summary judgment was denied even though Costco argued plaintiff was unable to identify the cause of her fall.

Plaintiff, Andrea Russo, slipped and fell at a Costco store in Yonkers, New York on January 16, 2022. Russo testified that she saw a round plastic object on the floor after her fall that she believed caused her to slip. Surveillance video shows Russo's shopping cart potentially coming into contact with a cup lid on the floor just before her fall. The parties dispute whether the video shows Russo's cart contacting the lid and whether this caused her fall. The court ultimately denied the motion reasoning that a plaintiff does not need explicit personal knowledge of the cause of her fall to survive summary judgment, but can rely on circumstantial evidence from which negligence and causation may be reasonably inferred. Russo provided testimony about seeing a plastic object and video evidence that could show her cart contacting a lid, which is sufficient for a jury to potentially infer causation. The surveillance video is subject to conflicting interpretations, creating genuine issues of fact that must be resolved by a jury, not the court on summary judgment. Defendant Costco's motion for summary judgment is denied.

2/12/2025 Mahoney v. Whole Foods.
United States District Court, Eastern District of New York

The court grants summary judgment to the defendant because defendant did not have actual or constructive notice of the hazardous condition that caused plaintiff's fall even with the presence of a "Caution: Wet Floor" sign approximately 16 feet from where plaintiff fell.

Plaintiff slipped and fell in defendant's Whole Foods store in Albany, NY on July 21, 2019. She did not see any water on the floor before falling but noticed clear water after falling. A "Caution: Wet Floor" sign was present in the seafood department about 16 feet from where plaintiff fell. Defendant's maintenance records show the area was inspected and found clear of hazards about 10-11 minutes before plaintiff's fall. In deciding to grant the motion, the court ruled plaintiff failed to provide evidence that defendant had actual notice of water on the floor where she fell. The "Caution: Wet Floor" sign 16 feet away was insufficient to establish notice of the specific hazardous condition. Plaintiff failed to show constructive notice because she provided no evidence that the water was visible and apparent or present for a sufficient length of time prior to her fall. Defendant's general awareness that the floor near seafood displays could get wet is legally insufficient to constitute notice of the particular condition that caused plaintiff's fall. The court granted defendant's motion for summary judgment on plaintiff's negligence claim.

Labor & Employment for Retailers, Hospitality, and School District Litigation
By: Anastasia M. McCarthy amm@hurwitzfine.com

Dear Readers,

We continue to monitor the NY state budget process as well as federal litigation and agency guidance impacting employers. If you need assistance or guidance navigating the rapidly changing employment space, please feel free to give me a call.

THE EEOC VOWS TO INVESTIGATE AND LITIGATE EMPLOYMENT PRACTICES EVINCING AN ANTI-AMERICAN BIAS

On February 19^th, the EEOC’s new Acting Chair, Andrew Lucas issued a Press Release “vow[ing] to protect American workers from anti-American bias.” Specifically, the EEOC announced: “The EEOC is putting employers and other covered entities on notice: if you are part of the pipeline contributing to our immigration crisis or abusing our legal immigration system via illegal preferences against American workers, you must stop. The law applies to you, and you are not above the law. The EEOC is here to protect all workers from unlawful national origin discrimination, including American workers.”

The press release went on to explain that the EEOC will assist the federal government’s efforts to “deter illegal migration and reduce the abuse of legal immigration programs by increasing enforcement of employment antidiscrimination laws against employers that illegally prefer non-American workers, as well as against staffing agencies and other agents that unlawfully comply with client companies’ illegal preferences against American workers.” As noted in the EEOC’s press release, national original nondiscrimination of any kind (including practices evincing employment preferences for or against American workers) is illegal under Title VII. Acting Chair Lucas and the EEOC are now stating their commitment “to ensuring employers and workers better understand the even-handed protections provided to all workers by Title VII’s prohibition against national origin discrimination.”

The press release then explicitly addresses common justifications for preferring non-American workers—explaining that these are NOT legally permissible exceptions to Title VII:

lower cost labor (whether due to payment under the table to illegal aliens, or exploiting rules around certain visa-holder wage requirements, etc.);
a workforce that is perceived as more easily exploited, in terms of the group’s lack of knowledge, access, or use of wage and hour protections, antidiscrimination protections, and other legal protections;
customer or client preference;
biased perceptions that foreign workers are more productive or have a better work ethic than American workers.

Rooting out anti-American bias is but one of Lucas’s priorities for her tenure. Other priorities include:

“[r]estoring evenhanded enforcement of employment civil rights laws for all Americans. In recent years, this agency has remained silent in the face of multiple forms of widespread, overt discrimination. Consistent with the President’s Executive Orders and priorities, my priorities will include rooting out unlawful DEI-motivated race and sex discrimination; protecting American workers from anti-American national origin discrimination; defending the biological and binary reality of sex and related rights, including women’s rights to single‑sex spaces at work; protecting workers from religious bias and harassment, including antisemitism; and remedying other areas of recent under-enforcement.”

Homeowner Liability, Recreational Accidents, and Discovery Angles
By: Marc A. Schulz mas@hurwitzfine.com

Hello Subscribers,

This month’s edition continues with another conditional order of dismissal that was unopposed by plaintiff, under CPLR 3126, to strike the complaint unless plaintiff provided certain discovery responses and authorizations. Recall that pursuant to CPLR 3126(3), “[i]f any party … refuses to obey an order for disclosure or willfully fails to disclose information which the court finds ought to have been disclosed [,] the court may make such orders with regard to the failure or refusal as are just,” including, an order “dismissing the action.” This statute “broadly empowers a trial court to craft a conditional order,” which imposes a sanction “unless within a specified time the resisting party submits to the disclosure.” If a party fails to comply with the order by the specified date, “the conditional order becomes absolute.”

A party seeking to vacate an order entered on his or her default in opposing a motion must demonstrate a reasonable excuse for the default a potentially meritorious opposition to the motion. Although a court has the discretion to accept law office failure as a reasonable excuse (see CPLR 2005), law office failure does not constitute a justifiable excuse where there is a pattern of willful default and neglect, or where allegations of law office failure are conclusory, undetailed, and unsubstantiated.

Until next issue, here’s hoping the temperature continues hovering above 40°

Marc

2/13/2025 Adams v 161 Ct. St., LLC
Appellate Division, Second Department
Plaintiff failed to demonstrate a reasonable excuse for his default, and his vague and unsubstantiated proffered excuse of law office failure was not supported by a detailed and credible explanation of the default.

The trial court denied plaintiff’s motion to vacate an order conditionally granting defendant’s unopposed motion to strike the complaint unless plaintiff provided outstanding discovery. In support of plaintiff’s motion, he submitted, among other things, an affirmation from his counsel, who stated that plaintiff defaulted in opposing defendants’ motions due to calendaring errors.

The Second Department affirmed the trial court’s decision. Plaintiff failed to demonstrate a reasonable excuse for his default, and his vague and unsubstantiated proffered excuse of law office failure was not supported by a detailed and credible explanation of the default. Since plaintiff failed to proffer a reasonable excuse for his default, the Court declined to consider whether he demonstrated a potentially meritorious opposition to defendants’ motions. Accordingly, the trial court properly denied plaintiff’s second motion, pursuant to CPLR 5015(a) as procedurally improper, and plaintiff was precluded from making a second motion to vacate the conditional order on the same grounds raised in the prior motion.

Are You Fall Real? Slip and Fall/Snow and Ice/Storm in Progress/Espinal
By: Ashley M. Cuneo amc@hurwitzfine.com

Hi Readers,

Hope everyone has had a great start to the New Year and are sticking with those resolutions. I love nothing more than checking things off on a list, gives me the motivation to work on that next task.

This has been quite an interesting winter with temperatures ranging from the teens to the 50’s. I certainly am looking forward to those beautiful spring, warm days – playing outside with my puppy and taking long walks without my nose freezing off.

2/7/2025 Otero v Rochester Broadway Theatre League, Inc.
Appellate Division, Fourth Department
Duty of an easement holder is the same as that owed by a landowner.

The Appellate Division, Fourth Department reversed the Trial Court’s decision granting defendant/easement holder summary judgment.

Plaintiff filed suit after slipping and falling on snow and ice in the parking lot at 875 East Main St., City of Rochester, NY. Defendant filed summary judgment arguing that it “had absolutely no involvement with” the parking lot where plaintiff fell. The theatre submitted: (1) an affidavit from its COO stating that it did not own, use, occupy, control or maintain the parking lot; and, (2) evidence that the parking lot is owned by a nonparty. In reply to plaintiff’s opposition, defendant submitted, for the first time, a “Parking Agreement” with the nonparty owner that says the nonparty owner agreed to keep the parking lot "reasonably clear of ice and snow."

In addition to finding that defendant introduced a new argument, upon which the Trial Court relied on to grant defendant’s motion, the Appellate Division held that an easement is more than a personal privilege to use another’s land, it is an actual interest in the land, and the easement holder has the same duty as that of the landowner.

Thus, the owner of the easement (the theatre) had a duty to clear the snow and ice from the subject parking lot where plaintiff fell.

Slips, Trips, and Legal Shifts: The Latest Retail Slip and Fall New York State Case Updates

By: Elizabeth K. Ognenovski eko@hurwitzfine.com

Hello Readers!

I recently joined Hurwitz Fine as part of their expansion into Rochester. This is an exciting chapter in my career, and I am honored to be working with such an incredible and respected team. A little bit about myself - I am from Rochester, New York (Pittsford). I attended undergrad at the University at Buffalo and graduated from Albany Law School.

Prior to joining Hurwitz Fine, I was an avid reader of Premises Pointers and frequently applied the information and cases presented to my practice. I am thrilled to be contributing a column and look forward to sharing my insights on recent retail slip and fall cases around the State of New York.

2/05/2025 Hernandez v. Malchus B’Chesed, LLC
Appellate Division, Second Department
An out-of-possession landlord is not liable for injuries that occur on its premises unless the landlord has retained control over the premises and has a duty imposed by statute or assumed by contract or a course of conduct.

The plaintiff commenced a personal injury action after he tripped over broken and mis-leveled concrete on a loading dock of the supermarket at which he worked. The third-party defendant supermarket Hatzlacha Supermarket, Inc. leased the premises from the defendant landlord Malchus B’Chesed, LLC pursuant to a lease agreement. The defendant landlord moved for summary judgment to dismiss the complaint and argued in part that it was an out-of-possession landlord. The Kings County Supreme Court held there were issues of fact as to: (1) what caused the plaintiff’s incident; (2) whether the supermarket or the defendant landlord had notice of the alleged defect; (3) whether the defendant landlord had a duty to repair the alleged defect as an out-of-possession landlord; and (4) whether the alleged defect constituted a significant structural issue.

On appeal, the Second Department explained that since the complaint “sounds in common-law negligence and the pleadings do not allege a violation of a statute, the defendant landlord could not be held liable unless it owed a duty assumed by contract or a course of conduct.” The Court held the defendant landlord failed to demonstrate that it did not have an obligation by contract or a course of conduct to maintain the loading dock. The language of the lease was ambiguous and the deposition testimony of the supermarket’s general manager contradicted the deposition testimony of the landlord regarding who was responsible for repairing the concrete surface of the loading dock. The Second Department further determined that the landlord failed to establish that it relinquished control over the premises to such a degree as to extinguish any duty it owed to maintain the premises.

2/13/2025 Rubin v. Sivan Merrick, LLC
Appellate Division, Second Department
A defendant seeking dismissal of a complaint on the basis that the alleged defect is trivial must make a prima facie showing that the defect is: (1) under the circumstances, physically insignificant; and (2) that the characteristics of the defect or the surrounding circumstances do not increase the risks it poses.

The plaintiff allegedly sustained injuries when he tripped and fell in a hole in a parking lot owned by the defendant Sivan Merrick, LLC and leased by the defendant Metro Franchising Commissary, LLC, d/b/a Dunkin. The defendants asserted contribution and indemnification cross-claims against each other. Both defendants moved for summary judgment to dismiss the complaint and the cross-claims. The defendants argued in part that the alleged defect was trivial. The Nassau County Supreme Court denied both motions.

On appeal, the Second Department affirmed the lower court’s holding. The Court explained that there is no minimal dimension test or per se rule that the condition must be of a certain height or depth in order to be actionable. “In determining whether a defect is trivial as a matter of law, the court must examine all of the facts presented, including the width, depth, elevation, irregularity, and appearance of the defect along with the time, place, and circumstance of the injury.” Photographs may be used to demonstrate that a defect is trivial if they are acknowledged to fairly and accurately represent the accident site.

The Second Department held that the defendants failed to establish that the alleged defect was trivial and not actionable as a matter of law. The Court explained that the plaintiff testified that the hole was approximately 5 inches deep and 18 inches wide and the defendants failed to submit any measurements of the dimensions of the hole. In addition, it was not possible to determine from the photographs submitted as to whether the alleged defect was trivial. With regard to constructive notice, the defendants failed to produce evidence as to when the parking lot was last inspected prior to the plaintiff’s incident.

With regard to the cross-claims, the defendant landlord failed to demonstrate that it was an out-of-possession landlord that did not have a contractual duty under the lease to maintain the parking lot. Thus, the defendant landlord’s motion with regard to dismissing the cross-claims asserted against it was denied.

Hurwitz Fine P.C.

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Coverage Pointers - Volume XXVI No. 19

Fri, 28 Feb 2025 14:18:43 +0000

Volume XXVI, No. 19 (No. 692)
Friday, February 28, 2025
A Biweekly Electronic Newsletter

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at ddk@hurwitzfine.com or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.

Happy Birthday to my son, Jacob, who turns 40 years old today.

Lots of good stuff in this week’s issue – highlights at the end of this note. Here are some other tidbits of interest.

DRI Insurance Roundtable – March 11-12, 2025, in Chicago, IL

I’m delighted to be a speaker at this year’s DRI Insurance Roundtable. There is still an opportunity to register!

Secure your Golden Ticket to this premier and exclusive opportunity to network and brainstorm with leaders of the insurance industry and defense bar. This program is designed to pair industry representatives with outside counsel on a one-to-one basis, allowing for maximum networking opportunities for all parties involved. Discuss and debate important and significant challenges facing the industry and forge synergistic relationships with your peers.

What to Expect during the Program:

Participate in transparent discussions and debates addressing issues that shape the relationship between insurers and outside counsel.
Explore how artificial intelligence is likely to impact privacy issues, the claims process, and defense lawsuits.
Develop strategies for protecting the human equation and addressing mental health and wellness challenges in the insurance and legal industries.

Managing and growing insurer-outside counsel relationships to build the next generation of coverage professionals and outside counsel.

Expand Your Network By:

Attending a networking reception, dinner dine-arounds, and breakfast with industry and outside counsel leaders.
Sharing your knowledge and learning from others during interactive roundtable and lunchtime sessions.

Registering for the Insurance Claims and Coverage Institute which begins immediately after the Insurance Roundtable in Chicago

FDCC Winter Meeting

This issue comes to you in transit, as I am returning from the Federation of Defense & Corporate Counsel winter meeting in lovely Charleston, South Carolina. Jody Briandi, our president and managing partner, and an FDCC Board Member, led a great panel on succession planning. There were other excellent CLE programs, great restaurants, and wonderful people. It’s a great organization. It was my 70^th consecutive meeting, and I was honored with a pair of beautiful Waterford martini glasses. They will come in good use. For those who want to learn more about the FDCC or who may be interested in being considered for membership (vetting is a critical part of our membership criteria), you can either contact me or visit the website, www.thefederation.org.

Dead Experts and Artificially Created Hallucinated Cases

If you don’t follow me on LinkedIn, you may have missed some robust discussions over the last week. Follow me on LinkedIn if you don’t already.

For those of you who follow me on LinkedIn, we had over 120,000 views and hundreds of postings on two topics over the last week, The first was the Morgan and Morgan hallucinated, fake citations created by Artificial Intelligence and submitted to a Wyoming federal court in a motion in limine which led to sanctions which I considered light. For the lawyer who submitted the seven imaginary cases, $3,000 and loss of pro hac vice status. For the two lawyers who also signed the submission, $1,000 each. My comment, when interviewed by national media, was a simple one: “The court had an opportunity here to send a message to lawyers in a way that would remind my colleagues around the country that artificial intelligence is not a substitute for real intelligence."

The second case involved a Texas federal judge’s motion for sanctions against by an attorney named Dick for allegedly submitting an affidavit from an expert who died about a year before he signed it. Here’s a link to the article that quoted me as delivering a simple message, “Even in Texas, dead men should not be signing affidavits.”

Newsletters:

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant, and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at jeb@hurwitzfine.com to be added to the mailing list.
Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at dra@hurwitzfine.com to subscribe.
Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework, and governmental agencies. Contact V. Christopher Potenza at vcp@hurwitzfine.com to subscribe.
Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at emm@hurwitzfine.com to subscribe.

Judge Decries Non-Religious Marriages – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
28 Feb 1925

Civil Marriages, Cosmetics
Are Scored By Judge Tierney

Ninety per cent of municipal ceremonies end in divorce court, he says: women try to improve God’s work

New York, Feb. 27 (A.P.) – Denunciation of civil marriage ceremonies and advocacy of religious rites as a sanction to marriage were made in court today by Supreme Court Justice Tierney, who declared that from many years’ experience on the bench he had found that 90 per cent of the marriages performed in the municipal building terminate in the divorce court before many weeks.

“I do not have any faith in these civil marriages,” Judge Tierney declared, when Mrs. Ruth Cantor appeared before him to ask divorce from Samuel Cantor, whom she married in the municipal building on August 3, 1923. They separated a year later.

“If you marry again,” Justice Tierney counseled her, “don’t forget to ask the blessing of God on your marriage and have a religious ceremony performed.”

Justice Tierney also lectured Mrs. Cantor for the use of Beautifying devices.

“What silly things women are when they are not satisfied with the beauty they were born with and try to change the harmony of their faces. God gave women beauty and when they try to undo it by giving their hair an unnatural color and penciling their eyebrows, they are trying in vain to improve on the work of the Great Artist.”

Peiper on Property (and Potpourri):

Sorry for my absence last week. Although the column was quiet, I usually have something to say in this space. At the time Our Editor went to print, I was securely locked inside an aluminum tube on my way home from Southern California. I sent a note to be included, but the internet failed me. Rather than getting to its intended destination, my weekly missive was left to flounder in my outbox.

I was in Southern California after attending the IADC Mid-Year meeting where I had the pleasure of attending a number of very insightful programs. In addition to substantive legal topics, I particularly appreciated the discussion on recognizing and addressing “burnout” among our colleagues. We all, I’d posit, suffer from burnout from time to time. For us Rust Belters, the lack of any basic sunshine from December to April only leads to the challenges of keeping a positive outlook and healthy mental hygiene. It’s nothing, though, that a few days of sun out of the office can’t help but remedy. When it is more serious, however, no trip to a beach will return us back to the factory setting. So be aware of your health and take time for yourself. A short-term investment in your well-being is far superior to the much more serious impact of neglecting the day-to-day pressures of our daily lives.

On a much more fun topic, I am currently in the midst of co-coaching a high school mock trial team with my partner, Jody Briandi. Our fact pattern is a civil defamation case, and it has been a lot of fun helping our team learn basic evidence rules, craft openings, directs, crosses and closings.

We’re 1-0 so far, but please if you have any suggestions or pointers, we would certainly welcome some assistance.

That’s it for this week. See you in two more.

Steve
Steven E. Peiper
sep@hurwitzfine.com

Immigration Isn’t So Bad – 100 Years Ago:

The Herald Statesman
Yonkers, New York
28 Feb 1925

AN ASSIMILATION
AT REO WORKS

Factory Employes Are Either
Native Or Naturalized Citizens And Every One Of
Them Speaks In English

Most recent immigration laws produced by the legislative mill of the United States have been condemned by many as acts liable to offend the people of other nations. At least in spirit, however, they are admitted to be worthy measure, for one of their chief aims is not to bar the foreign born from America, but to admit them only in such numbers as can be assimilated into American life.

Among the principal advantages to be gained by the people of foreign lands who come to this country are higher standards of living and greater opportunities for education. It seems though, that these advantages are gained only when the immigrants actually become a part of the American communities.

Where they band together in colonies, speak their native tongues, and continue to live according to the same standards they were accustomed to before setting out to find their new homes, the greatest of the advantages are lost to them.

It is true, however, that many of the immigrants have their greatest opportunity for contact with American customs and standards through their work, the companies they work for, and the men and women they work with. Unless, in places of employment, they learn to like American customs and the American ways of living, they are apt to never take kindly to the social forces that would make them Americans.

Lee’s Connecticut Chronicles:

Dear Nutmeggers:

It’s been a difficult two weeks – I had surgery, took a week off and then had another surgery. Both were minor procedures (no overnights required) and, most importantly, both resulted in clean bills of health. I’m feeling great and am back to work, keeping the world safe for insurance companies everywhere.

Lee
Lee S. Siegel
lss@hurwitzfine.com

Who Can Imagine an Eight Hour Workday? – 100 Years Ago:

The Buffalo News
Buffalo, New York
28 Feb 1925

LAKE ENGINEERS TO HEAR
ABOUT 8-HOUR LAW

The proposed eight-hour work law for marine engineers will be explained to members of the Buffalo Marine Engineers’ Beneficial association by William S. Brown of Washington D.C., international president of the organization, at a special meeting Saturday night.

Marine engineers now work 12 hours a day. They want congress to limit their working time to eight hours. A bill to this end has been drawn for introduction at the next congress, according to William J. Garret, lake business manager of the association.

Ruffner’s Road Review:

Dear Readers,

While it has been just over ten years since I played hockey competitively, and I haven’t followed the Sabres closely in quite some time, the Four Nations tournament and two great USA v. Canada matchups have re-sparked my interest. I attended a nice comeback win this Tuesday, which has me (temporarily) excited to see if the Sabres can make an unlikely playoff push this year and even have the urge to get back on the ice myself.

I have two cases to report this week: In the first, the court granted a defendant’s motion to vacate a default judgment in a no-fault case, accepting law office failure as a reasonable excuse and a default judgment in an underlying declaratory judgment case, declaring the subject incident was the result of an intentional act and the insurer had no coverage obligation. In the next case, the court applied Second Department precedent in holding that the exhaustion of policy benefits did not preclude the insurer from having to render payment on an earlier claim that they denied if such denial was found to be improper or unsubstantiated.

Kyle
Kyle A. Ruffner
kar@hurwitzfine.com

Huge Increase in RR Fares– 100 Years Ago:

The Buffalo News
Buffalo, New York
28 Feb 1925

8-CENT FARE STARTS
SUNDAY AT MIDNIGHT

The new eight-cent fare on lines of the International railway will go into effect at midnight Sunday. This announcement was made by President Tulley of the traction company, following a conference Ralph K. Robertson and Public Service Commissioner William R. Pooley.

At the conclusion of the conference President Tulley said he was sending the new tariff schedule to Albany by special messenger Saturday afternoon and hat it will be filed at the offices of the public Service commission at 7 o’clock.

Under the decision of the public service commission the increased fare rate could be put into effect 24 hours after the filing of application, but the traction company had decided to withhold the change until Sunday midnight, Mr. Tulley said.

In the operation of the new rate, passengers will be carried for one token plus one cent, until all tokens are exhausted, the traction company announced. The tokens then will be replaced by tickets, which will be sold for eight cents each, or two for 15 cents.

Assistant Corporation Counsel Robertson made an effort to confer with Mayor Schwab relative to the advisability of an immediate appeal from the fare increase order, but was informed the mayor was in Syracuse and would not return to this city until Monday.

Ryan’s Federal Reporter:

See you in two weeks.

Ryan
Ryan P. Maxwell
rpm@hurwitzfine.com

Be Careful Who You Date – 100 Years Ago:

Times Union
Brooklyn, New York
28 Feb 1925

BABB AWARD UPHELD
WITHOUT COMMENT

Appellate Division Endorses
$28,000 Verdict in Alienation Suit.

The Judgment of $28,000 recovered by Charles J. Babb, of 353 Linden avenue, against Clyde E. Black, a wealthy elderly manufacturer of knit wear, for the alienation of the affections of young Mrs. Ada Babb, wife of the plaintiff, was sustained yesterday by the Appellate Division.

The case was tried last March before Supreme Court Justic Carswell in Queens County and was one of the most sensational ever tried there. The jury brought in a verdict of $46,000 for Babb, which was reduced to $28,000.

Babb, a chemist, and his wife were married Aug. 17, 1918, and lived together four years. Babb testified that his wife did not leave him until after she met Black, who had taken up his residence around the corner from the Babb apartment at 1289 St. Johns place. Finally, Babb said, his wife left him and became an artist’s model. He said she refused to return to him and said he could not give her the “good times” Black could give her.

Babb contended that he was in moderate circumstances and that Black turned his wife’s head by lavishing money and luxuries on her. Mrs. Babb, a witness for Black, testified she lost her love for her husband before she became friendly with the elderly manuf. The Appellate Division wrote no opinion in upholding the judgment.

Storm’s SIU:

Hi Team:

Three case synopses for you this week:

Homeowners Policy Does Not Cover Replacement Siding for Undamaged Portions of the Home, Even if New Siding on Damaged Portions Does Not Match Existing Siding.
Complaint Demanding $70,000 in Damages for Breach of Contract and Unspecified Amounts for Attorney's Fees, Consequential Damages, Consequential Losses, and Punitive Damages, Does Not Satisfy the Jurisdictional Threshold of $75,000 for Federal Diversity Jurisdiction.
Court Grants Insurer’s CPLR § 3211(a)(1) Motion to Dismiss Due to the Insured’s Breach of the Suit Limitation Condition.

Can’t wait for spring! Busy week, back to work…

Let’s talk again in two weeks.

Scott
Scott D. Storm
sds@hurwitzfine.com

It Only Took Another 23 Years – 100 Years Ago:

Brooklyn Eagle
Brooklyn, New York
28 Feb 1925

TALK ON PALESTINE.

William Mazer, who recently returned from nine months in Palestine, spoke on the significance of that place to the Jews at a meeting of Young Israel of Flatbush on Thursday evening at Coney Island Ave. and Ave. Y. Adolph Flam outlined plans for a new building for the organization.

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Now that it is the end of February, we are so close to Spring! The weather has finally started to warm up, so I am looking forward to running more outdoors.

This week’s case from the Kentucky Supreme Court considered whether a minor child in the sole legal custody of one parent qualifies as a “resident relative” under the custodial parent’s insurance policy if the child is staying elsewhere at the time of an automobile accident. The court found the term ambiguous based on the facts of the case.

Catch you later,

Kate
Katherine A. Fleming
kaf@hurwitzfine.com

Eight Bit Theft Lands Two in Jail – 100 Years Ago:

Daily News
New York, New York
28 Feb 1925

JAIL FOR 2 IN $1 THEFT

Judge William Allen in General Sessions yesterday sentenced Rose Cohen, 27, of 740 Fox St, and Anna Brown, 30, of 640 Cauldwell Ave., Bronx, to the penitentiary for the theft of $1.

Gestwick’s Garden State Gazette:

Dear Readers:

I have returned from a very enjoyable trip to the Big Apple with my fiancé. I have been more times than I care to admit, usually on business. It was my fiancé’s first experience, though. She was mesmerized by the bright lights in Times Square, the allure of the Statue of Liberty, and the hustle and bustle of the city.

The case I have for you this week discusses whether an insurer’s refusal to consent to a settlement was reasonable. At first glance, some may think not. I encourage you to read the policy exclusion at play before reading anything else, and then decide for yourself (or, read it last—up to you).

That’s it for two weeks. Take care in the meantime.

Evan
Evan D. Gestwick
edg@hurwitzfine.com

GW Bridge in the Offing – 100 Years Ago:

Daily News
New York, New York
28 Feb 1925

Senate bill authorizing construction of four new bridges linking New York and New Jersey is passed by house and sent to President Coolidge for O.K. One span would cross Hudson, between Fort Lee, N.J., and point between 170^th and 180^th Sts.

O’Shea Rides the Circuits:

Readers,

I take issue with unprompted theoretical trade talk for Brady Tkachuk move to the Buffalo Sabres. The Sabres simply possess no assets for such a trade. Fingers crossed he is an Ottawa Senator for life.

This week I have a follow-up case from a previous edition. This case again looks to the 11^th Circuit’s interpretation of Florida Law and a policyholder’s attempt to incorporate a Florida state statute into all policies within the state.

Until Next Time …

Ryan
Ryan P. O’Shea
rpo@hurwitzfine.com

Trial Lawyers Chastised for Overcoats – 100 Years Ago:

Times Union
Brooklyn, New York
28 Feb 1925

O’Neill Flays Lawyers
Who Wear Overcoats
Trying Cases in Court

Lawyers who persist in wearing their overcoats while pleading cases in Brooklyn magistrate’s courts were severely criticized by Magistrate James T. O’Neill, in Gates avenue court yesterday, when he ordered two attorneys to remove their wraps.

“In my opinion, it is not in accord with the ethics of the legal profession for you attorneys to wear your overcoats while trying cases,” asserted the magistrate. “You are not showing the proper respect for the court. Some of you act here the same as you would on a street corner or in a club.

“Lawyers should realize that our police courts are in a measure more important than our higher courts, for it is here that people of the rank and file, many of them foreigners get their initial impression of American institutions.”

Magistrate O’Neill expressed the opinion that attorneys possessing reputations as “good lawyers” conduct themselves better in the courtroom than do some of the attorneys who are not so well known.

Rob Reaches the Threshold:

Dear Readers,

Although the last couple of days have been warmer in Western New York, I am sure ready for winter to end. Last week, I was lucky enough to find some sunshine in Florida, as I enjoyed attending a family member's wedding. While I sat in 75 degrees and sunshine hours before my flight back to snow-covered Buffalo, I contemplated life. Here's hoping we warm up in March for good.

In the meantime, the Appellate Divisions have certainly warmed up, as there were multiple decisions on Serious Injury Threshold to comb over this time. I landed on writing about a decision out of the First Department, which contains a nice refresher on many points.

Hope you all enjoy the read.

Rob
Robert J. Caggiano
rjc@hurwitzfine.com

A Kiss is But a Kiss – 100 Years Ago:

The Brooklyn Daily Times
Brooklyn, New York
28 Feb 1925

Your Kisses Are Cheap

Dear Miss Chester:

I love a young man two years my senior. He told me he loved me and asked for a kiss which I gave him. It was because I love him. Now he does not look at nor speak to me. I love him. Kindly give me advice. He is always on the car when I come home.

I have met another young man whom I like very much but not half as much as the first. The last young man asked me to go to a party with him. He said it in a joking way. I asked him whose party. He said I knew her, but he would not say her name. I said I would tell him by Friday, so kindly give me advice as to what to do by then, also as to the one I love most.

BROKEN LOVE

My Dear Broken Love:

You cheapened yourself when you made it easy for the young man to kiss you. Perhaps that is why he passed you by now. You have not yet realized, my dear Broken Love, that the things one treasures are the things for which one has to fight. Hold your kisses priceless and they will be treasured when it is time for you to give them. And I am old-fashioned enough to believer that you should give them only to the young man to whom you are engaged.

By all means if you know the girl who is giving the party and wish to attend it, go with the young man who asked you.

SUSAN CHESTER

LaBarbera’s Lower Court Library:

Dear Readers:

Thankfully, the weather seems to have taken a turn here in Buffalo. What was snow for the past few months has quickly turned to rain. Before we know it, the Spring flowers will be blooming.

This week I will discuss a Bronx County Supreme Court case, dismissing an action based on a suit limitation provision contained in a homeowners insurance policy. The court found that the action was required to be brought within two years of the date of loss, using the statutory requirement to supersede the policy language, which was measured from the date of the property damage.

Until next time…

Isabelle
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Overpaid, Even Then – 100 Years Ago:

Mount Vernon Argus
White Plains, New York
28 Feb 1925

“ALIBI” STATEMENTS

Washington, Feb, 28. – (INS) – While President Coolidge deliberated today over whether to approve congress’ raising its own salary from $7,500 to $10,000 a year, a veritable barrage of “alibi” statements flooded the Congressional Record.

Lexi’s Legislative Lowdown:

Dear Readers,

I am happy to be heading into March and hopefully some warmer weather!

This week we discuss a bill proposed that would allow for electronic delivery of certain notices in property/casualty insurance transactions.

Have a nice weekend!

Lexi
Lexi R. Horton
lrh@hurwitzfine.com

One Across – 100 Years Ago:

The Buffalo News
Buffalo, New York
28 Feb 1925

PUZZLE WIZARD IN JAIL,
PAL, STUCK, ASKS KEY

Fails, However, to Crash Four-letter Word Meaning Barrier.

A well-dressed young man walked into the Pearl street police station early Saturday morning and asked to be locked up in a cel with an acquaintance of his whom he knew only as “John,” so that they could work out a crossword puzzle together.

“I hear you have John locked up here,” he said. “He’s a shark at words and I want to finish the puzzle.”

Police declined to grant his request. They did not get his name. The police blotter showed that the only man named John who was locked up for the night was John Dwyer, 31 years old, who was arrested on a charge of passing a bad check at the Ford hotel, where he has been stopping. There being no crossword enthusiasts at the station, none bothered to inquire of Dwyer, as to his prowess with verticals and horizontals.

Domenica’s Diary on Bad Faith:

Dear Readers,

I spent a wonderful seven days since the last newsletter in beautiful Finland, chasing the Northern lights, visiting Santa’s house, snowmobiling, and sledding with dogs and reindeer in a peaceful, snowy village of log cabins and igloos. Great memories and new friends were made.

I have an interesting case for you this week. Read on to find out more.

Until next time,

Domenica
Domenica D. Hart
ddh@hurwitzfine.com

Big Bang Banks Bitty Bucks – 100 Years Ago:

The Buffalo News
Buffalo, New York
28 Feb 1925

TWO SAFES BLOWN AT
FALLS, ONT., $50 TAKEN

NIAGARA FALLS, Ont., Feb. 27. – The office to Smith Brothers, contractors, this city, was entered today by burglars, who blew the safe and took $50. The office of the Concrete Coal & Stone company, a short distance away, was also entered and the safe blown. It contained only books.

North of the Border:

Over this past weekend, I was briefly in Charleston, S.C. to attend the FDCC Board and Administrative Meetings and had an opportunity to catch up with several FDCC members including Dan. Great to see him in person. Unfortunately, I couldn’t stay for the Winter Meeting but had to return to my desk in Calgary.

This week’s article deals with whether an insured waives solicitor client privilege over legal advice shared with a broker during the placement of complex insurance for a complex project.

‘til next time.

Heather
Heather A. Sanderson
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

Despite Unexcused Three Years Late Notice of Lawsuit, No Material Prejudice Established So Late Notice Defense Fails

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Loss of Product During Third-Party Bankruptcy Covered by Policy
Affidavit of General Counsel Does Not, by Itself, Erode Attorney/Client Privilege
Counsel’s Questioning About Status of Subsequent Lawsuit Was Prejudicial to Plaintiff and Resulted in Mistrial

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

See you in two.

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

Defendant Demonstrated Reasonable Excuse and Meritorious Defense Sufficient to Vacate Default Judgment
Exhaustion of the Policy After Denial of Plaintiff’s Claim Did Not Preclude Later Payment of Claim Under Second Department Precedent

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

Nothing from me this edition. See you next time.

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

Homeowners Policy Does Not Cover Replacement Siding for Undamaged Portions of the Home, Even if New Siding on Damaged Portions Does Not Match Existing Siding
Complaint Demanding $70,000 in Damages for Breach of Contract and Unspecified Amounts for Attorney's Fees, Consequential Damages, Consequential Losses, and Punitive Damages, Does Not Satisfy the Jurisdictional Threshold of $75,000 for Federal Diversity Jurisdiction
Court Grants Insurer’s CPLR § 3211(a)(1) Motion to Dismiss Due to the Insured’s Breach of the Suit Limitation Condition

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

Physical Presence Not Sole Controlling Factor Regarding Whether Minor Child Qualifies as a Resident Relative Under Parent’s Insurance Policy

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

New Jersey’s High Court Agrees to Hear Appeal of Intermediate Appellate Court Decision Holding an Insurer’s Refusal to Settle Was Reasonable in Light of Dual Capacity Exclusion

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

Insureds Try to Incorporate Statutory Interest Provision Into All Florida Policies, Circuit Court Rejects that Argument Because It Would Circumvent the Statute and Policy Terms Themselves

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

First Department Unanimously Affirms Order Which Granted Defendants’ Respective Summary Judgment Motions Dismissing Plaintiff’s Complaint on the Basis He Did Not Sustain Serious Injury Within the Meaning of Insurance Law § 5102(d) Where Plaintiffs Submissions in Opposition Failed to Raise Triable Issues of Fact

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Insured’s Action Dismissed Based on Suit Limitation Provision Superseded by Insurance Law §3404

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

Act to Amend Insurance Law to Allow for Certain Notices to Be Delivered by Electronic Means

DOMENICA’S DIARY on BAD FAITH
Domenica D. Hart
ddh@hurwitzfine.com

Bad Faith Claim Against Insurance Broker Survives Motion to Dismiss

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

An Insured Did Not Waive Solicitor Client Privilege over Legal Advice It Received Regarding the Insurance Requirements for a Complex Project when It Shared that Advice with a Broker Charged with Placing that Unique and Specialized Coverage.

Until next issue, our warmest regards.

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut and New Jersey.

NEWSLETTER EDITOR
Dan D. Kohane
ddk@hurwitzfine.com

ASSOCIATE EDITOR
Agnes A. Wilewicz
aaw@hurwitzfine.com

COPY EDITOR
Evan D. Gestwick
edg@hurwitzfine.com

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
ddk@hurwitzfine.com

Steven E. Peiper, Co-Chair
sep@hurwitzfine.com

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Domenica D. Hart

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

Victoria S. Heist

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
sep@hurwitzfine.com

Michael F. Perley

Scott D. Storm

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
ddk@hurwitzfine.com

Ryan P. O’Shea
rpo@hurwitzfine.com

Kyle A. Ruffner
kar@hurwitzfine.com

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com

Topical Index

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Gestwick’s Garden State Gazette

Lexi’s Legislative Lowdown

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

02/18/25 Wesco Insurance Company, Inc v. Kookmin Best Insurance Co.
Appellate Division, First Department
Despite Unexcused Three Years Late Notice of Lawsuit, No Material Prejudice Established So Late Notice Defense Fails

Wesco's ability to seek reimbursement from KBIC for the costs of defending any given claim turns on whether Wesco provided notice of that claim to KBIC within a reasonable time under all circumstances. Although justifiable ignorance of insurance coverage may excuse a delay in giving notice of an occurrence if it made reasonably diligent efforts were made to ascertain whether coverage existed. Wesco did not give notice to KBIC until more than three years after its insured, the underlying defendant building owner (owner), was served with the summons and furthermore, Wesco failed to establish what it did during that three-year period to uncover whether the owner had other insurance.

Nonetheless, despite the late notice, KBIC was not prejudiced because Wesco promptly began investigating and defending the owner and a codefendant commercial tenant from the onset of the underlying personal injury litigation and was fully prepared to share its information relating to its investigation and defense. Moreover, KBIC failed to point out "how Wesco's defense of the [underlying] matter materially prejudiced it".

However, under its plain policy language, KBIC is only required to provide excess coverage to the named insured and any additional insured only after Wesco's primary coverage has been exhausted but has no duty to defend or reimburse Wesco its defense costs.

Editor’s Note: The only problem I have with this decision is this statement: KBIC failed to point out "how Wesco's defense of the [underlying] matter materially prejudiced it”. If notice is more than two years late, it would have been Wesco’s burden to prove that KBIC was not prejudiced, not KBIC’s proof to demonstrate that it wasn’t prejudiced.

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

02/18/25 Endurance Am. Ins. Co. v. StoneX Commodity Solutions, LLC
Appellate Division, First Department
Loss of Product During Third-Party Bankruptcy Covered by Policy

It appears that defendant, StoneX, lost a certain amount of soybeans it had stored at a premises owned by non-party, Express Grain Terminals (“EGT”). EGT, while in possession of the soybeans, filed for bankruptcy. It is alleged that StoneX only recovered a portion of the beans in EGT’s possession, and a claim for damages was subsequently made under the Endurance policy.

Endurance denied the claim because it maintained that StoneX could not produce evidence of exactly how many/how much soy beans were lost. StoneX maintained that reports from EGT showed that it held enough beans to cover StoneX’s inventory. Importantly, an Endorsement to the Endurance policy provided that coverage would be triggered if the insured could provide receipts that proved the storage facility maintained sufficient quantity to cover the insured’s deposits.

Endurance countered that there were not enough beans at the particular EGT warehouse. The Appellate Division rejected this argument by noting that the Endorsement was not limited to one particular location but rather could be read to mean the quantity of beans in all EGT locations.

Finally, the Court ruled that the date of loss was the date EGT filed for bankruptcy and was, thusly, dispossessed of its soybeans.

Potpourri

02/13/25 Certain Underwriters v. NL Industries, Inc.
Appellate Division, First Department
Affidavit of General Counsel Does Not, by Itself, Erode Attorney/Client Privilege

Underwriters were served with an affidavit of defendant’s general counsel wherein counsel made various statements related to factual issues in the case. In light of such disclosure, Underwriters made an application seeking to compel defendant to produce internal documentation related to statements presented by general counsel. Essentially, Underwriters argued that the preparation of the affidavit constituted a waiver of attorney/client and/or work product privileges.

In affirming the trial court, the First Department noted that many of the statements were not even “legal” in nature but instead amounted to nothing more than factual assertions. Further, if there were indicia of legal theory/work in the affidavit, Underwriters’ application failed to demonstrate that an “invasion of the privilege” was necessary.

02/13/25 Drayton v. Putman Hospital Center
Appellate Division, Second Department
Counsel’s Questioning About Status of Subsequent Lawsuit Was Prejudicial to Plaintiff and Resulted in Mistrial

In a motion to set aside the jury’s verdict dismissing plaintiff’s cause of action, the Appellate Division found reversable error and remanded the matter back to the trial court for further proceedings.

Plaintiff initially challenged that the jury verdict must be set aside as inconsistent with the facts adduced a trial. However, where there was conflict testimony between plaintiff and a nurse who witnessed the accident, the Court ruled that it was within the jury’s province to determine which version of the events it believed to be accurate.

Nevertheless, the trial was still irreparably harmed by the decision to permit defense counsel to question the plaintiff on a pending lawsuit wherein plaintiff was being sued for non-payment of a medical procedure. Because there had been no finding of fault in that suit, only allegations, the court found that the line of questioning was of no probative value to the jury. What is more, counsel’s further statement that plaintiff (or at least the veiled allusion to plaintiff) had accepted $250,000 in insurance proceeds to which he was not entitled was deemed overtly prejudicial. On that basis, where the prejudice was caused by questioning that otherwise had no probative connection to the dispute at trial, the Court found reversible error.

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

On the mend; be back in two weeks.

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

02/14/25 Trinity Med., P.C. a/a/o Lewi v. Nat’l Gen. Ins. Co.
Supreme Court, Appellate Term, Second Department
Defendant Demonstrated Reasonable Excuse and Meritorious Defense Sufficient to Vacate Default Judgment

Plaintiff commenced this action to recover assigned first-party no-fault benefits for services rendered to its assignor as a result of a motor vehicle accident. The summons and complaint were served on December 22, 2020, but defendant did not serve an answer. Therefore, the plaintiff applied for a default judgment, and mailed defendant a copy of the application, on October 28, 2021.

On November 17, 2021, the defendant moved, pursuant to CPLR 3012 (d) and/or 2001, to open its default and to compel plaintiff to accept its late answer on the grounds that defendant had a reasonable excuse for its delay in answering as well as a meritorious defense to the action. Defendant submitted the affidavit of an employee at defendant's attorney's office who was responsible for serving the answer, stating the answer was timely prepared but she failed to serve it, amounting to law office failure. Defendant argued this failure should be excused by the Civil Court, as there was no evidence that it was willful or that plaintiff had been prejudiced by the default. As a meritorious defense, defendant asserted that the subject action was barred by res judicata or collateral estoppel pursuant to a declaratory judgment stating there was no duty to provide coverage for claims as the subject accident was the result of an intentional act.

Plaintiff cross-moved for summary judgment, arguing the defendant only provided vague details leading to the oversight in serving an answer and that mere neglect was not a reasonable excuse. Further, plaintiff argued the declaratory judgment did not have preclusive effect because it involved different parties and causes of action and was not fully litigated due to the default. However, the Civil Court granted the defendant’s motion to open the default. Plaintiff appealed.

On appeal, the court confirmed that in order to open its default and obtain an order compelling plaintiff to accept a late answer, defendant had to provide a reasonable excuse for the delay in answering and demonstrate a potentially meritorious defense to the action. The determination of what constitutes a reasonable excuse lies within the trial court's discretion, and courts may accept law office failure as a reasonable excuse (CPLR 2005) where there is a lack of evidence of willfulness or neglect. Here, the law office failure resulted from an isolated, inadvertent mistake, not from repeated neglect and plaintiff did not demonstrate any prejudice caused by defendant's default.

Defendant also demonstrated a potentially meritorious defense to the action, as the declaratory judgment was a conclusive final determination that defendant was not obligated to provide coverage or reimbursements for any and all no-fault related services submitted by plaintiff and plaintiff's assignor for the subject motor vehicle accident and, thus, the instant action should be barred by res judicata. Accordingly, the order vacating the default and compelling plaintiff to accept a late answer was affirmed.

02/13/25 N. Queens Surgical Ctr. a/a/o Armand v. Lancer Ins. Co.
Supreme Court, Appellate Term, Second Department
Exhaustion of the Policy After Denial of Plaintiff’s Claim Did Not Preclude Later Payment of Claim Under Second Department Precedent

In an action by a provider to recover assigned first-party no-fault benefits, the parties stipulated that: (1) plaintiff had established its prima facie case; (2) defendant had timely denied plaintiff's claim on the ground of lack of medical necessity; and (3) after defendant denied plaintiff's claim, the insurance policy limits were exhausted due to the insurer’s payment of claims it received after denying the claim at issue. The insurer’s sole argument at trial was that the insurance policy limits had been exhausted after denial of the subject claim. The District Court found in favor of plaintiff, holding the denial of claim based on medical necessity was not proper, awarding the principal sum of $7,582.15.

The insurer appealed, asserting, that it need not pay the claim at issue because, after the denial of this claim, subsequent payments exhausted the available coverage. However, the court applied Second Department precedent established in Alleviation Med. Servs., P.C. v. Allstate Ins. Co., 55 Misc 3d 44 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2017]. In that case, the court interpreted the requirement in 11 NYCRR 65-3.8 [b] [3] that fully verified claims are to be paid in the order they are received also applies to claims that were denied, which implicitly declares the claim was fully verified. Therefore, the argument that an insurer need not pay the present claim because the subsequent payment of other claims exhausted the policy lacked merit. Therefore, the District Court’s holding was affirmed.

In contrast, Harmonic Physical Therapy, P.C. v. Praetorian Ins. Co., 47 Misc 3d 137[A], 2015 NY Slip Op 50525[U] [App Term, 1st Dept 2015]) the Appellate Term, First Department, held that claims which are timely denied by an insurer do not hold a place in the priority-of-payment queue ahead of subsequently filed claims that were paid by the insurer, thus exhausting available coverage.

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

Nothing from me this edition. See you next time.

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

01/30/25 Grote v. Am. Economy Ins. Co.
United States District Court, Eastern District of Pennsylvania
Homeowners Policy Does Not Cover Replacement Siding for Undamaged Portions of the Home, Even if New Siding on Damaged Portions Does Not Match Existing Siding

A windstorm caused a tree to fall on the Grotes' home, damaging some siding and possibly the roof. The Grotes filed an insurance claim with AEIC under their homeowners policy. AEIC agreed to cover replacement of damaged siding but not undamaged siding or the shingled roof. The parties dispute whether the entire siding should be replaced and whether the roof was damaged. The Grotes allege the replacement siding AEIC proposes for the damaged siding is not "of like kind and quality," or of "equivalent construction," so AEIC is required to replace all of the siding on the property.

The Court held that the policy does not cover replacement siding for undamaged portions of the home, even if new siding on damaged portions does not match existing siding. The policy language clearly and unambiguously covers only damaged property and includes an exclusion for matching undamaged siding that AEIC "will not pay for the cost to replace and/or match any undamaged siding . . . due to any mismatch between the existing undamaged siding . . . and any new materials used to repair or replace the damaged siding . . . because of . . . obsolescence or unavailability of materials." Therefore, regardless of whether replacement materials are of "like kind and quality" or "equivalent construction," the Policy does not cover replacement siding on undamaged portions of the home.

Other Pennsylvania courts have rejected similar arguments seeking coverage for undamaged portions to achieve matching, “because the language of the contract ‘clearly and unambiguously requires [the insurer] to pay the replacement cost of the part of the building damaged.’" The Court said that “Reading the Policy to mandate the replacement of siding not damaged by the storm would allow the Grotes to ‘exploit their losses and use them as an opportunity to remodel their home at the insurer's expense’”.

However, there was an issue of fact whether the windstorm caused damage to the shingled roof, precluding summary judgment on that issue. There is conflicting evidence from experts regarding whether the storm caused damage to the shingled roof, creating a factual dispute.

A public adjuster who possesses skill or knowledge greater than the average layperson may be qualified to opine on causation.

02/06/25 Deswert v. Travelers Commercial Ins. Co.
United States District Court, Northern District of New York
Complaint Demanding $70,000 in Damages for Breach of Contract and Unspecified Amounts for Attorney's Fees, Consequential Damages, Consequential Losses, and Punitive Damages, Does Not Satisfy the Jurisdictional Threshold of $75,000 for Federal Diversity Jurisdiction

Plaintiff owns property in New York and is a citizen of Pennsylvania. Defendant Travelers is a citizen of Connecticut and issued a policy to Plaintiff. The Plaintiff alleges a plumbing leak caused water damage to his property. Count One of the complaint demands $70,000 in damages for breach of contract. Count Two alleges that Defendant "engaged in bad faith claims handling" and "engaged in bad faith in the investigation and adjustment of the claim and improperly denied the claim." It seeks unspecified attorney fees, and unspecified consequential damages, consequential losses, and punitive damages.

In order to remove a case from state court to federal court based on diversity jurisdiction the removing party must establish that: (1) there is complete diversity of citizenship of the parties; and (2) the amount in controversy exceeds $75,000, exclusive of costs and interest.

Defendant's Notice of Removal describes the Complaint's allegations as follows:

Upon information and belief, Plaintiff seeks an amount in excess of $75,000. In addition to the $70,000 specified by Plaintiff for the first cause of action for breach of contract, Plaintiff seeks additional ["]consequential losses, consequential damages, and punitive damages" in relation to the second cause of action for bad faith. [Defendant] reasonably believes that the amount sought by Plaintiff for the second cause of action exceeds $5,000.

Generally, there is a rebuttable presumption that the face of the complaint is a good faith representation of the actual amount in controversy. However, this presumption may be rebutted when there is a legal certainty that the amount recoverable does not meet the jurisdictional threshold. “In a diversity case, if a court makes a face-of-the-complaint determination that the $75,000 amount in controversy cannot be recovered 'to a legal certainty,' the case is dismissed for lack of subject matter jurisdiction." In addition, conclusory allegations and boilerplate pleadings are insufficient to establish the amount in controversy.

The Court found that Count Two alleging bad faith is duplicative of Count One alleging breach of contract, as it does not allege violation of any duty independent of the insurance contract. “[U]nder New York law, if ‘the basis of a party's claim is a breach of solely contractual obligations, such that the plaintiff is merely seeking to obtain the benefit of the contractual bargain through an action in tort, the claim is precluded as duplicative’”. “Under New York law, because 'every contract contains an implied covenant of good faith and fair dealing,' a 'cause of action alleging a breach of good faith is duplicative of a cause of action alleging breach of contract.'"

As such, the Court held that there is a "legal certainty" that the $70,000 stated on the face of the Complaint does not exceed the $75,000 jurisdictional threshold. The case was remanded to New York State Supreme Court for lack of subject matter jurisdiction.

02/13/25 Aguasvivas v. Mtn. Val. Indem. Co.
Supreme Court, Bronx County
Court Grants Insurer’s CPLR § 3211(a)(1) Motion to Dismiss Due to the Insured’s Breach of the Suit Limitation Condition

Plaintiff purchased a homeowner's policy from defendant that insured his property in the Bronx. On April 28, 2022, the property sustained damage from a fire. The Plaintiff filed a claim, which defendant denied on February 2, 2023. The Plaintiff commenced this law on July 3, 2024, alleging breach of contract and fraud. The policy contained a condition requiring any action to be started within one year after the date of loss.

The court held that while the policy prescribed a one-year statute of limitations, Insurance Law § 3404 supersedes this with a mandatory two-year period for fire insurance claims. The cause of action accrued on the date of the fire, so the plaintiff had until April 28, 2024, to file the lawsuit. Since the lawsuit was filed on July 3, 2024, it was outside the two-year statute of limitations and, therefore, time barred.

The court rejected the plaintiff's argument that the policy language was ambiguous, finding that "date of loss" clearly referred to the date of the fire in the context of the policy. In interpreting the phrase “date of loss”, the Court held that “while the policy does not define date of loss, to the extent that the policy, in relation to both dwelling and personal property coverage, states that it covers ‘direct loss . . . only if that loss is physical loss to property,’ it is clear that the date of loss referenced in section 11 is that prescribed by law, namely the date of the event giving rise to coverage under the policy, i.e., the date [the property] was damaged in a fire, such that plaintiff sustained a physical loss to portions of [the property]”. The suit limitation condition also applied to the fraud cause of action.

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

02/20/25 Hill v. State Farm Mut. Auto. Ins. Co.
Kentucky Supreme Court
Physical Presence Not Sole Controlling Factor Regarding Whether Minor Child Qualifies as a Resident Relative Under Parent’s Insurance Policy

Hill suffered injuries and lost a pregnancy when her vehicle was struck by another car driven by a seventeen-year-old. The teen, pursuant to a family court order, was in the sole legal custody of his father for nine uninterrupted years prior to the collision. The mother had not been exercising custody. The teen’s driver’s license, court documents, and employment records listed his father’s address as his own, and he was listed as a dependent on his father’s income taxes. However, the teen had not been physically staying with his father for three months when the accident occurred. Instead, he had been staying at his aunt’s house or with friends. The accident occurred when the teen was driving his aunt’s vehicle as a permissive user.

Hill sued for damages from the collision. The coverage question was whether the teen qualified as a resident relative under the father’s policy with State Farm. The policy defined “resident relative” as one who “resides primarily” with the named insured. The policy did not define the terms “resident,” “resides” or “primarily.” In Kentucky, an unemancipated minor cannot be without a home or guardian. In order to determine whether there was coverage, the issue was whether residency as used in the insurance policy meant legal domicile or actual physical residence. The trial court granted summary judgment in favor of State Farm’s denial of coverage. The Court of Appeals affirmed, finding the policy’s language clear and unambiguous and reasoning that the teen was not living at his father’s house.

The Kentucky Supreme Court disagreed with the appellate court’s reasoning that physical presence was the controlling factor without considering the teen’s status as a minor or the family custody orders. The Court found the term “resident relative” was ambiguous under these circumstances. For the vast majority of the last nine years, the teen had lived with his father, and the other facts of the case created a strong argument that the teen was “primarily” residing with his father. Accordingly, the Court reversed and remanded.

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

02/20/25 Mist Pharms., LLC v. Berkley Ins. Co.
New Jersey Supreme Court
New Jersey’s High Court Agrees to Hear Appeal of Intermediate Appellate Court Decision Holding an Insurer’s Refusal to Settle Was Reasonable in Light of Dual Capacity Exclusion

Last year, the New Jersey intermediate appellate court overturned a trial court ruling that found that an insurer’s refusal to settle an underlying action was unreasonable. The intermediate appellate court held that because the global settlement package represented the separate interests of several entities that were not insureds under the policy, the insurer’s refusal to settle the claim was reasonable in light of the policy’s dual capacity exclusion.

The underlying facts are these. Several “Mist” entities were sued by a company called CelestialRx, which alleged that Mr. Krivulka, a director of Akrimax Pharmaceuticals, engaged in a scheme of self-dealing which defrauded Celestial. Specifically, Celestial asserted that Krivulka inserted various other entities that he controlled and/or invested in (including Mist) as intermediaries in deals between Akrimax and other pharmaceutical companies. The “middlemen” in these deals would receive a cut of the revenue from the deal.

At the same time as serving as a director of Akrimax, Krivulka chaired Mist’s Board of Directors and held over 90% of Mist’s company. Krivulka also controlled other Mist entities other than Berkley’s named insured (which was only Mist Pharmaceutical).

Mist Pharm. had a directors and officers policy with Berkley, written on a claims made and reported basis. The policy contained a dual capacity exclusion, which provided that Berkley was not liable to make payment for claims based on any wrongful act of any “insured person” serving in their capacity as a director or officer of any entity other than an “insured entity.”

After the underlying action was commenced, Berkley issued a reservation of rights letter, explaining that coverage for Krivulka would be limited to claims against him in his capacity as chairman of Mist Pharmaceutical, and that there would be no coverage for claims arising out of his roles with any other entity. Since, according to Berkley, the vast majority of the claims against Krivulka were brought in his capacity as director of other non-insured organizations, it offered to contribute 10% toward defense costs.

The underlying action was eventually set down for mediation. Leading up to mediation, Berkley wrote to Mist again, highlighting the dual capacity exclusion. In response, Mist brought this declaratory judgment action, seeking coverage from Berkley.

While this DJ was pending, the parties to the underlying case continued their settlement negotiations. Eventually, Mist sought Berkley’s consent to settle and again asked for indemnification. In doing so, Mist expressed its opinion that because the underlying plaintiff sought joint and severally liability against the various defendants, the legal fees and expresses would be generally the same across all defendants. Berkley again refused the request, on the ground that more information was needed.

Months later, Mist reached a $12 million global settlement, agreeing to bear 25% liability (still without having obtained consent from Berkley). After Berkley refused to indemnify Mist for its share of the settlement, summary judgment motions were filed in the DJ.

The trial court ruled that Berkley was required to fund the settlements. In so holding, the trial court relied upon Fireman’s Fund Ins. Co. v. Sec. Ins. Co. of Hartford, 72 N.J. 63 (1976), which held that an insurer has a duty to not unreasonably without consent to settle. The trial court held that Berkley’s refusal to consent to the settlement was unreasonable under Fireman’s Fund because Mist’s allocation of the global settlement was in excess of the Berkley policy limit and was below the potential liability Mist faced. Appeal was taken.

The Appellate Division reserved the order of the trial court, on the ground that it never considered the application of the dual capacity exclusion. While the trial court was correct in that Mist’s allocation of the global settlement went beyond its policy limit and was below its potential liability exposure, and Berkley withheld consent to settle, the intermediate appellate court held that Berkley’s refusal to consent was still reasonable.

Among the factors considered by the intermediate appellate court was the fact that the global settlement represented the interests of multiple entities, most of which were not insured under the Berkley policy. Also, the intermediate appellate court found that Berkley reserved its right to rely upon its dual capacity exclusion from the very inception of the claim to the extent Krivulka was held liable in capacities other than those for which he was insured.

This past week, New Jersey’s high court agreed to review the decision of the intermediate appellate division. We will monitor the developments closely.

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

02/21/25 Riley v. Heritage Prop & Cas. Ins. Co.
United States Court of Appeals, Eleventh Circuit
Insureds Try to Incorporate Statutory Interest Provision Into All Florida Policies, Circuit Court Rejects That Argument Because It Would Circumvent the Statute and Policy Terms Themselves

You may recall I previously discussed Safont v. State Farm Fla. Ins. Co. in the January 31, 2025. Well, this matter is a follow up to that decision that reiterates the core concept of insurance policies, a policy’s plain terms control the insurer’s obligations to an insured.

This matter involved a consolidated appeal of breach of contract actions brought against two insurers for the failure to pay interest on untimely payments. In 2017, Hurricane Irma damaged the insureds’ respective properties and each failed to agree on the damage in value in each case. The insureds each received an appraisal award which the insureds claim was paid in a timely manner, thus requiring Fla. Stat § 627.70131(5)(a)’s interest payment provision to apply.

In Safont and Tyler v. State Farm Fla. Ins. Co. the Appellate Court held that while Fla. Stat § 627.70131(5)(a) did not create a private right of action, a standalone provision to provide interest within an insurance policy does. The trouble for the Riley appellants is that the respective policies at issue contained no such standalone promise to pay interest. So, the Riley appellants attempted to incorporate the statute’s language into the policies themselves. For reference, the statute reads:

“Any payment of an initial or supplemental claim ... made 90 days after the insurer receives notice of the claim, or made more than 15 days after there are no longer factors beyond the control of the insurer which reasonably prevented such payment, which-ever is later, bears interest at the rate set forth in s.55.03. Interest begins to accrue from the date the insurer receives notice of the claim. The provisions of this subsection may not be waived, voided, or nullified by the terms of the insurance policy ... However, failure to comply with this subsection does not form the sole basis for a private cause of action. (emphasis added).

Notably, the statute itself states there is no private cause of action for a failure to comply with its obligations. The Appellants homed in on “this subsection may not be waived, voided, nullified by the terms of the insurance policy” to support their incorporation argument. They paired this language with Fla. Stat. § 627.418(1), which requires policies not in compliance with the State’s Insurance Code to be construed as if in full compliance with the code. While creative, the court found that position lacked legal merit.

In using the pair of statutes, the Court found that reasoning would render 627.70131(5)(a)’s bar on private actions superfluous. Indeed, § 627.418(1)’s compliance obligation applies only to policies in direct conflict with the Florida Insurance Code. Here, the policies in question did not conflict with the Code nor did the policies contain an interest provision at all.

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

02/11/25 Krmic, et al v. Corrie, et al
Appellate Division, First Department
First Department Unanimously Affirms Order Which Granted Defendants’ Respective Summary Judgment Motions Dismissing Plaintiff’s Complaint on the Basis He Did Not Sustain Serious Injury Within the Meaning of Insurance Law § 5102(d) Where Plaintiffs Submissions in Opposition Failed to Raise Triable Issues of Fact

This case stems from a 2016 motor vehicle accident where a vehicle owned and operated by Plaintiff, Nikola Krmic, collided with a vehicle operated by Defendant Andrew J. Corrie, owned by Defendant Charlie Xavier Salamanca Roman. As a result of this accident, Plaintiff Nikola alleged an injury to his cervical spine. He claimed that these injuries met the Serious Injury Threshold under the following categories of Insurance Law § 5102(d): permanent consequential limitation of use, significant limitation of use, and 90/180 day. Plaintiff’s spouse, Ana Krmic, also joined the suit in a derivative nature claim loss of consortium.

Both Defendants made motions for summary judgment seeking to dismiss the complaint, arguing that the injured Plaintiff did not sustain a serious injury as alleged. In support of these motions, Defendants submitted an expert radiologist report and IME neurologist report. The Supreme Court, Bronx County, granted both Defendants’ motions and dismissed the complaint – prompting appeal by Plaintiffs.

On review, the First Department agreed with the lower court’s findings. Specifically, Defendants’ expert radiologist opined that findings in post-accident imaging were degenerative and preexisting, and thus not causally related to the subject accident. The IME neurologist also opined as to similar findings. Further, although the IME neurologist found certain range of motion limitation of plaintiff’s cervical spine during the exam, the physician highlighted that Plaintiff’s own reviewed medical records in months after the accident showed plaintiff to have normal range of motion. The First Department found these submissions sufficient to meet the prima facie burden for Defendants on their motions, subject to Plaintiffs’ ‘significant’ and ‘permanent’ § 5102 claims.

In opposition, Plaintiffs did not raise a triable issue of fact. Notably, Plaintiffs only submitted one piece of evidence which was in admissible form – a report of a consulting orthopedic surgeon the injured Plaintiff only once, six years after the accident. The First Department found such an exam too far removed from the subject accident to raise an inference that any limitations were causally related to the collision. Additionally, that physician did not reconcile why any limitations at that time differed from Plaintiff’s normal range of months closer to the accident or the degenerative findings. Lastly, it was noted that the lack of causation defeats the ‘90/180 day claim’ – but nevertheless Plaintiff testified that he returned to work as a cleaner two weeks after the accident.

Accordingly, the First Department unanimously affirmed the Order of Supreme Court, Bronx County, granting Defendants’ respective motions dismissing the complaint on the grounds that Plaintiff Nikola Krmic’s injuries did not meet the serious injury threshold of Insurance Law § 5102(d).

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

02/13/25 Aguasvivas v. Mountain Val. Indem. Co.
New York State Supreme Court, Bronx County
Insured’s Action Dismissed Based on Suit Limitation Provision Superseded by Insurance Law §3404

Wanny Aguasvivas brought an action against Mountain Valley Indemnity Company (“Mountain Valley”) on July 3, 2024, asserting fraud and breach of contract. The plaintiff had purchased a homeowners insurance policy. The property covered under the policy was damaged by a fire on April 28, 2022. On February 2, 2023, Mountain Valley denied coverage, after plaintiff appeared for an examination under oath.

Mountain Valley made a pre-answer motion to dismiss based upon documentary evidence. The policy contained a Suit Limitation provision, which stated:

Suits Against Us. No action can be brought unless the policy provisions have been complied with and the action is started within one year after the date of loss.

Case law in New York is clear, where the parties set down their agreement in writing, the clear, complete document should be enforced according to its terms. Courts refrain from interpreting agreements in a manner that implies something not included by the parties. If a contract is not reasonably susceptible to multiple meanings, the court is not free to alter it.

It is well-settled in New York that parties to an insurance policy can agree to a shorter limitation of actions than that provided in the general Statute of Limitations. However, it is important to note the requirements under statutory law Insurance Law §3404, which governs policies providing coverage for fire damage. Insurance Law §3404 states:

[n]o suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twenty-four months next after inception of the loss.

The statutory language cited above represents the shortest period parties may contract amongst themselves to limit when lawsuits may be brought. As such, courts in New York interpreting suit limitation provisions will use the statutory limitation cited above, to supersede the language of fire damage policies attempting to shorten the period for a time less than two years. The Mountain Valley policy did not abide by the statutory requirements, and therefore, the court looked to the statute to supersede the plain language of the policy, to comply with New York law.

The court additionally discussed the date where the cause of action begins to accrue based on the language of the policy. Under an insurance policy a claim for breach of contract begins to accrue on the date of the loss. Here, both causes of action in the complaint, regarding fraud and disclaiming coverage for the loss, stem from Mountain Valley’s failure to provide coverage for a fire which occurred on April 28, 2022.

In this case, the plaintiff commenced the lawsuit on July 3, 2024. However, the date of the fire loss was April 28, 2022. Since Mountain Valley’s evidence conclusively established that the action was not commenced for two years and three months after the loss, it was time-barred. As such, the action was dismissed in its entirety.

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

02/28/25 New York Senate Bill S3352
Act to Amend Insurance Law to Allow for Certain Notices to Be Delivered by Electronic Means

Introduced on January 8, 2025, Bill S3352 seeks to amend insurance law and the vehicle and traffic law to allow electronic delivery of certain notices.

The Bill seeks to amend Insurance Law § 3458 (b) to allow for any notice of document required under this chapter to be delivered by paragraph (C) of Section Three Hundred of the Vehicle and Traffic Law in a property/casualty insurance transaction may be delivered by electronic means so long as it meets the requirements of Article three of the state technology law.

Further, Section 313 of the Vehicle and Traffic Law would be amended to include:

(C) An electronic notice that complies with section three thousand four hundred fifty-eight of the insurance law shall be sufficient for the purposes of this section.

DOMENICA’S DIARY on BAD FAITH
Domenica D. Hart
ddh@hurwitzfine.com

02/19/25 Frydman v. Endurance American Insurance Company
Appellate Division, Second Department
Bad Faith Claim Against Insurance Broker Survives Motion to Dismiss

The plaintiff commenced this action to recover amounts due and payable under an insurance policy. The plaintiff alleged that the policy was fully paid for but never delivered to him.

Alliant Insurance Services, Inc. (“Alliant”), is the successor to Crystal & Company, the insurance broker that allegedly was supposed to obtain a policy from the defendant Endurance American Insurance Co. (“Endurance”) The plaintiff asserted causes of action to recover damages for breach of contract and breach of the implied covenant of good faith and fair dealing.

The broker, Alliant, moved to dismiss the cause of action pleading breach of the implied covenant of good faith and fair dealing insofar as asserted against it.

The implied covenant of good faith and fair dealing embraces a pledge that neither party shall do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract and is breached when a party acts in a manner that deprives the other party of the benefits of the contract. For a complaint to state a cause of action alleging breach of an implied covenant of good faith and fair dealing, the plaintiff must allege facts which tend to show that the defendant sought to prevent performance of the contract or to withhold its benefits from the plaintiff. Here, the plaintiff alleged facts tending to show that Alliant's predecessor sought to prevent performance of an agreement with the plaintiff or to withhold the benefits of that agreement from the plaintiff.

Any claim for breach of contract or breach of the covenant of good faith and fair dealing accrued on the date of the breach. Accepting the allegations in the amended complaint as true, the plaintiff requested a copy of the operative policy by email on October 23, 2016. He alleged that he did not receive a response to that email. The statute of limitations for the breach of the covenant of good faith and fair dealing is six years. The plaintiff first asserted its claims against Alliant in September 2022, less than six years after the alleged breach.

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

02/14/25 Irving Shipbuilding Inc. v. Beazley Syndicates AFB 2623
Nova Scotia Supreme Court
An Insured Did Not Waive Solicitor Client Privilege Over Legal Advice It Received Regarding the Insurance Requirements for a Complex Project When It Shared That Advice with a Broker Charged With placing That Unique and Specialized Coverage

In 2014, the Government of Canada committed to the acquisition of six Arctic and Offshore Patrol Ships (AOPS) for the Royal Canadian Navy. Designated the Harry DeWolf - class in honour of Vice-Admiral Harry DeWolf, a Canadian wartime naval hero, the vessels are being delivered through the AOPS project, under the National Shipbuilding Strategy. Five of the ships have been built and delivered and the sixth is on schedule for delivery in August 2025. Irving Shipbuilding Inc. (ISI) was appointed as the prime contractor to build these new vessels.

The negotiations that led to the issuance of this contract to ISI began in 2011. At that time, Beazley issued a ‘made-to-order’ insurance policy for the AOPS project. The policy was put in place with the assistance of ISI’s broker, Integro.

ISI had a dispute with a sub-contractor, Odense Maritime Technology (OMT), and that entity’s design subcontractor that went to arbitration. OMT defended and counterclaimed. Beazley funded OMT’s defence and counterclaim but refused to pay ISI’s claim expense to launch its claim. Beazley also refused to pay the costs incurred by ISI to defend the OMT counterclaim.

As a result of the arbitral proceeding, OMT was ordered to pay about C$170 million in damages to ISI. Both OMT and ISI sought coverage under the Beazley policy. Beazley stated that its liability to pay was limited to $25 million. Both ISI and OMT disputed this position. That dispute gave rise to this coverage action. This decision does not explain the basis of that dispute, rather, it deals with whether ISI rightfully claimed solicitor client privilege over documents and correspondence between itself and its broker during the negotiation and drafting of the policy.

Both ISI and Beazley agreed that those documents and that correspondence was relevant to the coverage dispute. The issue was whether ISI waived any solicitor client privilege and common interest privilege over the documents when it shared them with the broker.

Privilege Was Waived

ISI’s internal counsel and its external counsel, Stewart McKelvey/McCarthy Tétrault, received and reviewed the Government of Canada’s strict and specialized instructions for the insurance to be placed on the AOPS project. ISI shared that legal advice with its broker, Integro. ISI claimed that “it brought Integro into the tent” so that Integro, who had a common interest with ISI in placing the policy, could understand the insurance requirements. Therefore, solicitor client privilege was not waived.

For its part, Beazley argued that ISI's lawyers never provided legal advice to the insurance brokers, nor did the brokers provide any legal advice to ISI. Further, any privilege was waived when it was disclosed to a third party.

The Court’s Decision

Much of this very long and involved judgment is dedicated to a useful discussion of solicitor client privilege and common interest privilege. The court then discussed the role that Integro played in placing this insurance with Beazley.

The court stated that Integro was to broker a very specific type of insurance coverage for the Project, one which met the Canadian Government’s specifications in every aspect. In some instances, it had to negotiate directly with Beazley on ISI’s behalf, as Beazley acknowledges. To do so, Integro needed complete familiarity with the legal advice that ISI had received, so that it could understand whether what was under discussion met the Government’s exacting specifications. In addition, Integro advised ISI’s lawyers in advising ISI throughout the period of time that the Policy was being negotiated and drafted. Specifically, the Court stated:

“The purpose, or role being fulfilled by Integro throughout the time interval relevant to the generation of the documents and communications at issue was essential to the operation of the solicitor-client relationship of ISI and its internal and external counsel. It required that this advice be made available to Integro. Further, the specialized nature of the Policy necessitated the very integrated and cohesive roles shared by ISI, Integro, and all of the legal counsel involved, as the Policy was negotiated and implemented with Beazley. Such cooperation was needed not only to obtain the Policy, but to manage and maintain it in accordance with ISI’s needs.”

In view of this unique relationship, ISI established, on a prima facie basis: first, that the communications between itself and its counsel with respect to its insurance requirements are privileged and second, that this privilege was not waived when the information respecting that advice was provided either by ISI personnel to those of Integro, or when particulars of that advice were discussed by ISI’s counsel directly with Integro personnel, or, thirdly, when personnel of Integro, or those of ISI, discussed that advice amongst themselves.

In the eyes of the Court, Beazley failed to demonstrate that the privilege should be disregarded. However, the door was left open for Beazley to demonstrate that privilege ought to be disregarded if further information is obtained from the discovery process. In the meantime, Beazley must pay ISI’s court costs to respond to its motion for production.

Coverage Pointers - Volume XXVI No. 18

Wed, 26 Feb 2025 15:47:52 +0000

Volume XXVI, No. 18 (No. 691)
Friday, February 14, 2025
A Biweekly Electronic Newsletter

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at ddk@hurwitzfine.com or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.

Happy Valentine’s Day

This publication has been around for a long time. This story is from our February 7, 2008, Valentine’s edition, Volume IX, No. 16, and a tale that Steve Peiper has always appreciated:

Happy Valentine’s Day:

How do you celebrate Valentine's Day? Do you do it the modern way and send cards, candy, flowers, and gifts? I hope not. I thought a little history of the holiday would help you recreate a more traditional approach, steeped in history.

During the third century in Rome, Emperor Claudius II who was only emperor for two short years, by the way (August 268 to January 270) was preparing to fight the Goths. [Editor's note: who wouldn't fight the Goths, given the opportunity?]

Anyway, he decided that single men would be better soldiers than married ones, so he outlawed marriage for young men. However, one young priest, Valentine, believing that the Emperor's decree was unjust, continued to perform weddings. Rumor had it that he had a financial interest in a chapel and later moved to Vegas. Claudius learned of Valentine's defiance and had him imprisoned. While in jail, he fell in love with the jailer's daughter and it is said that before his death, he wrote her a love letter, which he signed "From your Valentine."

Valentine's feast day was set to commemorate his death in February 270, and that was also used to make it into a Christian holiday, the pagan Lupercalia Festival, which also celebrated the beginning of spring. That Festival involved the sacrifice of a goat for fertility and a dog for purification. The goat hide would be sliced into strips, dipped in sacrificial blood, and taken to the streets by young men who would slap women with the strips, apparently making the women more fertile. Pope Gelasius, seeking to end the pagan holiday but continue the tradition, declared February 14 as St. Valentine's Day around 496 A.D. So, there you go. Forget the card, forget the candy, and forget the flowers. Chase your sweetheart around the room and slap him or her with dried goat strips dipped in blood, and you'll be celebrating the holiday the right way.

Just don't tell the PETA people.

Artificial Intelligence v. Human Intelligence – A Word to the Wise

Many of you are familiar with the case of the New York lawyers who were sanctioned because they submitted citations for non-existing cases, which were created by artificial intelligence. One would think that the message would be clear – don’t submit cases to a court, generated by artificial intelligence (or otherwise), without reading them.

But it happened again, this time in Wyoming federal court. The judge was not happy and ordered Morgan & Morgan to show cause why they should not be sanctioned. If you want to read the law firm’s first response to the court order, it’s here. . Both Mr. Morgan and the local attorney who was hired to work on the case, filed declarations indicating that they had nothing to do with the filing, leaving the responsibility to the lawyer who actually filed the legal memorandum. The lawyer who did the actual submission just filed his explanation on Thursday, and you can find that here.

We can expect the court to file its decision on sanctions very shortly.

The message is clear. Do not think, for a moment, that artificial intelligence will always trump real intelligence. It is a compelling lesson, as my partner Larry Ross just said to me, for those who use these tools.

When an Employer Liability Carrier is Sued for Coverage, is the Lack of Grave Injury a Coverage Defense? This one will be of interest only to real coverage nerds.

There’s an interesting case in my column this week, involving, in part, a claim made for coverage under a New York Employer’s Liability policy. In most cases, unless the plaintiff has sustained a “grave injury”, a third-party action for contribution against an employer that provided Workers Compensation cannot be maintains (a small number of exceptions, notwithstanding). In this case, the employers liability carrier was able to get the declaratory judgment action dismissed on the ground that the plaintiff did not sustain a grave injury and therefore the EL coverage would never trigger. Normally, the issue the underlying tort action, not a coverage action.

First 45 Years Completed

Forty-five years ago, on February 12, Ann Evanko and I were sworn in as lawyers at the Appellate Division, Fourth Department. Our classmate and my law partner, Larry Ross, were admitted around the same time, downstate. That’s a long time to do anything. It’s been a fun ride and I’m still up on the horse.

Need a mediator for an insurance dispute? Coverage mediation is a thing! Subject matter expertise may be useful.

I’ve been doing a considerable amount of mediation all over the state (and country). Reach out.

Newsletters:

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant, and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at jeb@hurwitzfine.com to be added to the mailing list.
Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at dra@hurwitzfine.com to subscribe.
Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework, and governmental agencies. Contact V. Christopher Potenza at vcp@hurwitzfine.com to subscribe.
Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at emm@hurwitzfine.com to subscribe.

Valentine’s Cards for those Behind Bars – 100 Years Ago:

The Buffalo News
Buffalo, New York
14 Feb 1925

SEVERAL PRISONERS AT
JAIL RECEIVE VALENTINES

“Two Gun” Cotter Gets Tender
Sentiments – Jailer Expectant.

Valentine’s day was observed at the jail Saturday. George W. Bittle, who is awaiting a second trial on a charge of murder in connection with the killing of Rufus Eller, clerk in a Genesee street jewelry store, was the recipient of a Valentine from his wife and one from an unknown sender. Stella Mackowska, who was also implicated in the Eller murder and who is also awaiting a second trial, was not remembered.

A federal prisoner, who is charged with alien smuggling, received a handsome lace paper token of affection, and one with the forbidding title of “Two Gun” Cotter was sent some tender sentiments.

Up to noon, Jailer Charlie Leib had not received the annual comic that always comes to him. Mr. Leib is of simple proportions and always receives a Valentine which “spoofs” at his size. Somehow, he felt confident that it would arrive before the day was over.

Peiper on Property (and Potpourri):

Just returning from a wonderful IADC conference in California and heading from the sun to the frigid east. See you in two.

Steve
Steven E. Peiper
sep@hurwitzfine.com

Young Love – 100 Years Ago:

The Buffalo News
Buffalo, New York
14 Feb 1925

MISSING SCHOOL GIRL
RETURNS AS BRIDE

SYRACUSE, N.Y., Feb. 13. – Police search for Eileen Page, 14, pretty 7^th grade grammar school student who had been missing from her home two days, ended at noon today when she returned home, the bride of William “Wild Bill” Rook, motorcycle driver, with whom she eloped to Rochester.

The girl had been destined to go to a convent in Ohio, Thursday, sent there by her parents, who were opposed to her romance. She stole away from her home at midnight Wednesday, met Rook for what was to have been their last meeting, and they decided upon the elopement.

Lee’s Connecticut Chronicles:

Dear Nutmeggers:

The final mile is the longest mile—at least when it comes to home renovations. The saga of our kitchenless-life continues. There is, however, progress to report. We now have a sink with running water, countertops, and a backsplash. You have no idea what not having a kitchen sink has been like for the last four months. We’ve been washing our handful of kitchen tools in the powder room sink; a vessel not designed for washing things like a coffee pot. So, now it looks like a kitchen but it’s nothing more than a tease, because we still can’t use it like a kitchen. But the finish line is in sight, with electricians and carpenters set to return next week. Soon we should be in the punch list phase. I don’t dare ask how long that will take.

Not much in the case reporting department this week but read on for details on a broker’s post-procurement responsibility to the insured and what satisfies the obligation to exhaust the tortfeasor’s coverage before bringing a UIM claim. It’s not as simple as it sounds.

By the way, COVID is on the upswing (it got me—again), the norovirus is making the rounds, and there’s a measles outbreak in Texas. So, keep keeping safe.

Lee
Lee S. Siegel
lss@hurwitzfine.com

Not A Lucky Day – 100 Years Ago:

The Buffalo News
Buffalo, New York
14 Feb 1925

13 PRISONERS ON WAY
TO JAIL ON FRIDAY, 13

DETROIT, Feb. 13. – Richard Labelle, federal deputy marshal, left Detroit today in charge of thirteen prisoners destined to Fort Leavenworth. Transportation arrangements were made before authorities noticed the date or Mr. Labelle declared he would not tempt fate to start with thirteen on Friday the thirteenth.

Ten of the prisoners violated the narcotic law, two robbed post offices, and the thirteenth, John Singstook, violated the prohibition enactment, for which the judge sentenced him to thirteen months.

Ruffner’s Road Review:

Dear readers,

Hope everyone enjoyed the Superbowl... while it is sad to see football season come to a close (and to have the Bills fall just short of the big game) it was a small consolation to see Kansas City lose in blowout fashion.

I have two no-fault cases to discuss this week. In the first, the insurer moved for summary judgment asserting it properly denied the subject claims pursuant to material misrepresentation in the insured’s application for insurance. However, while the court determined the misrepresentations were “material” the insurer did not submit documentary proof of its underwriting practices and procedures to meet its burden for summary judgment. In the next case, the court determined the insurer was entitled to summary judgment on the basis that the defendant did not comply with proper post-EUO verification requests.

Until next time,

Kyle
Kyle A. Ruffner
kar@hurwitzfine.com

Could Have Been a Nice Swim – 100 Years Ago:

The Daily News
Lebanon, Pennsylvania
14 Feb 1925

5,000 Gals. Moonshine
Emptied Into River

Wilkes-Barre, Pa., Today – The receding Susquehanna river which reached a flood stage here two days ago, had something more than ice and water in it today. Federal prohibition agents emptied 5,000 gallons of moonshine and 250 barrels of beer in the stream. The stuff had been confiscated in raids. Besides destroying the liquor, the authorities also burned and demolished five truckloads of stills.

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

Tough day at the Maxwell residence. Water in the basement. Nothing like spending money on fixing things.

This edition, I have a Second Circuit decision involving standing as a mortgage lender—or former mortgage lender.

Until next time…

Ryan
Ryan P. Maxwell
rpm@hurwitzfine.com

Axe Murderer Executed – 100 Years Ago:

Buffalo Courier
Buffalo, New York
14 Feb 1925

Slayer Walks to Death
Cheerfully Hands Over
Confession of Crimes

Wheaton, Ill., Feb. 13. – With a cheerfulness, in contrast with the surliness that marked his imprisonment, John Kammerer, walked to his death on the gallows today. With his own life he paid for the lives of five members of the family of Otto Eder, his “only friend.”

Before stepping on the trap, Kammerer handed a detailed confession of how he wiped out the Eder family, one by one, with an axe.

“There is nobody I’d change places with,” Kammerer said, “and I want to get it over with. I’ve made my peace with God.”

Storm’s SIU:

Hi Team:

Happy Valentine’s Day!

Three interesting cases in this edition:

Court Grants Insurer’s Motion to Amend its Answer to Include a Fraud Affirmative Defense Based on Evidence of the Insured Claiming Damage Not Actually Damaged, Concealing Pre-existing Damage Reports, and Instructing Engineers to Alter Reports to Remove References to Uncovered Damage.
Property Policy Void Ab Initio Due to Material Misrepresentations in the Application as the Insured Failed to Disclose the Existence of an Illegal Basement Apartment.
Because the Forged Documents Were Not Financial Instruments, the Insured's Losses Were Not Covered Under the Forgery Provision of the Policy.

“Oh, here’s an idea let’s make pictures of our internal organs and give them to other people we love on Valentine’s Day. That’s not weird at all.” ~ Jimmy Fallon

“Love is being stupid together”. ~ Paul Valery

“Valentine’s Day is a love-note to the rest of the year. Graciously, it comes at a perfect time to be savored – that period of calm between winter holiday commotion and spring enticements” ~ Jo Lighfoot

“To be brave is to love someone unconditionally, without expecting anything in return. To just give.” ~ Madonna

Let’s talk again in two weeks!

Scott
Scott D. Storm
sds@hurwitzfine.com

Warming Up to Marriage – 100 Years Ago:

Buffalo Courier
Buffalo, New York
14 Feb 1925

Weather Affects Love, Damsels
In Sunny Climes, Marry Young

Sacramento, Cal., Feb. 13. – Weather affects love. Sunshine and moonlight evenings make California girls easy prey for romance and takes them to the altar at an earlier age than maidens in other states of the union.

L. E. Ross, director of the state bureau of vital statistics, holds this a reasonable theory based on marriage statistics for three years. They show that the average California daughter marries between the ages if fifteen and twenty, while the American marrying age generally is between twenty and twenty-four years.

The figures show that over thirty-nine per cent of all the 1924 brides in California were under twenty years. Girls under the age of twenty-five made up fifty-four per cent of the marriage total for the last twelve months.

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

This edition’s case comes from the Massachusetts Supreme Judicial Court. The SJC considered whether part 4 of the 2016 edition of the standard Massachusetts automobile insurance policy excludes coverage for “inherent diminished value” (IDV) of a third-party claimant's vehicle after an accident. The SJC also addressed whether the third-party claimants had standing to bring a direct action against the insurer without first obtaining a final judgment against the insured tortfeasors (very important).

Go Birds and Happy Valentine’s Day. Catch you later.

Kate
Katherine A. Fleming
kaf@hurwitzfine.com

Drunken Son – 100 Years Ago:

Buffalo Courier
Buffalo, New York
14 Feb 1925

MOTHER HAS SON JAILED
THIRTY DAYS FOR “SPREE”

“Make it as long as possible,” requested the mother of Michael Sieperski, thirty-two years old, No. 94 Gatchell street, when asked by Judge Hartzell in city court yesterday to name the punishment she wanted imposed upon her son charged with drunkenness.

The court decided that thirty days in the penitentiary would be sufficient to make Siepierski mend his ways. He was arrested on the complaint of his mother.

Gestwick’s Garden State Gazette:

Dear Readers:

Nice to see the Chiefs lose in blow-out fashion. The Bills would have done it better, but hey, a Chiefs loss is the next best thing to a Bills win.

I am preparing to take my fiancé to the Big Apple next week. I have been tens of times, due to our office’s heavy presence in the boroughs. My fiancé, however, has never had the pleasure. We’re going to see the High Line, World Trade Center memorial and observatory, Times Square, and all the other tourist attractions. Maybe we’ll even have the fortune of brushing shoulders with a Coverage Pointers subscriber!

The case I have for you this week is about a follow-form personal auto excess policy. The primary carrier tendered its $500,000 liability limit, which was insufficient to cover the full extent of the damage. The primary carrier’s UIM coverage endorsement excluded coverage for family members of the named insured. Does this exclusion apply to the UIM endorsement in the excess policy? Read on to find out!

See you in two weeks.

Evan
Evan D. Gestwick
edg@hurwitzfine.com

The History of Valentine’s Day – 100 Years Ago:

Elmira Star-Gazette
Elmira, New York
14 Feb 1925

THE WHY OF VALENTINE’S DAY

Two Valentine’s Days are really crowded into one – the lovers’ festival and the religious side. The ancients believed that the birds selected their mates on February 14. Hence this date was observed as lovers’ day among the Romans, some 2000 years ago.

As a lovers’ festival, Valentine’s Day reached its greatest popularity in England five centuries ago. The custom of sending valentines likely started with the ancient practice of putting names of unmarried young men and women in a box.

Then there was a “Love’s Lottery,” in which the names were drawn out in pairs on Valentine’s Day. Thus, affinities were discovered and became each other’s valentines for a year – until the next lottery.

Early in the history of the Christian church, February 14 acquired the religious significance. There were eight saints and martyrs named Valentine, in various parts of the world. The greatest of the Valentine’s were a priest in Rome and a bishop in Umbria, who lived about 1700 years ago.

The first valentine sold in America was patterned after one received from England in 1519 by Easther Howland, daughter of a Worcester (Mass.) stationer.

O’Shea Rides the Circuits:

Hey Readers,

The Ottawa Senators are maintaining a playoff spot as the February break sets in. At this point, the Four Nations Cup is being played, and fingers crossed our players come out unscathed.

This week I have a couple of duty to defend cases. One involves corporate espionage and the other involves the intentional concealment of a murder weapon.

Until next time,

Ryan
Ryan P. O’Shea
rpo@hurwitzfine.com

Retribution – 100 Years Ago:

Press and Sun-Bulletin
Binghamton, New York
14 Feb 1925

MOTHER’A DEATH
CAUSES GIRL TO
LEAD RUM RAID

15-Year-Old Child Informs
Philadelphia Police Her
Parent Obtained Pint of
Liquor from Saloon Before
She Died

VENDOR IS HELD

Philadelphia, Feb. 14 – Finding her mother dead in bed, a 15-year-old girl early today led a police raid on a saloon, where, she said, her mother had obtained a pint of liquor last night.

The bartender was arrested and held pending analysis of the liquor. Police said the proprietor of the saloon is serving a 30-day sentence for illegal sale of liquor.

Coroner Patton, who ordered an inquest, declared that should death be found due to alcoholism, the vendor of the liquor would be held for murder.

Rob Reaches the Threshold:

Dear Readers,

So . . . Watching the Eagles beat down Mahomes and the Chiefs was kind of fun? However, overall, it was a pretty boring Superbowl given the dominate performance from Philly. Once the parade ends and my (insufferable) friends who are Eagles fans simmer down, we begin the long drought of football-less days. Coincidentally, this is the same time my own (probably also insufferable) Yankee fandom kicks into gear as Spring Training is right around the corner. But I just remembered that the DODGERS LITERALLY SIGNED EVERYONE BECAUSE MONEY IS FAKE IN BASEBALL. I am ready to hurt again come October.

For this installment, we have a rare appearance from the Fourth Department, who issued a decision in related accident cases which highlights the importance of defendant IME submissions in support of summary judgment motion practice seeking to dismiss a complaint on the ground that a plaintiff did not sustain a serious injury under Insurance Law § 5102(d).

Hope you all enjoy the read.

Rob
Robert J. Caggiano
rjc@hurwitzfine.com

Woman Business Leader has Little Confident about Women in Business – 100 Years Ago:

Democrat and Chronicle
Rochester, New York
14 Feb 1925

Women Cannot Supplant Men in
Business, Says Society Matron
Qualified as Financial Advisor

New York. Feb. 13. – Women cannot take the places of men in the business world, Mrs. William Laimbeer, society matron who is to become head of a woman’s department of the National City Bank after 12 years’ experience, said to-day.

“Men are all right.” She added. “I worry little about women’s rights, never vote and am not interested in politics. Women get what they are worth in business.”

She was reminded that men have been saying woman’s place was in the home.

“For most women, it probably is,” she answered. “But there are places for those who are compelled to make their own way and for those with an aptitude for special work. Besides, no girl’s future is secure, and every girl should be trained to care for herself if necessary.

“I think it gives women self-respect to earn their own living. It makes better waives, happier mothers.”

Mrs. Laimbeet entered business after her husband’s death. At her desk she still appears more as the hostess than the business executive. She wears a string of pearls, parts her auburn hair in the middle and knots behind it. Her new job will be advising women about their financial problems.

LaBarbera’s Lower Court Library:

Dear Readers:

It’s unhappy to report that after nearly six years of going uninjured, I am limping around in a boot. I was too ambitious at rec-league soccer and now must pay the price. Thankfully, we got a little bit of warm(ish) weather this week, and some of the ice on the road has melted away.

This week I am reporting on a New York County decision, granting the insurer’s motion for summary judgment and default in its entirety. The court discusses the reasonable, ongoing investigation taken by the insurer to investigate the facts and circumstances of the loss, and the applicability of the exclusion. There is also discussion regarding a privity-based additional insured endorsement. Hope you enjoy reading, I certainly did!

Until next time…

Isabelle
Isabelle H. LaBarbera
ihl@hurwitzfine.com

A Little Assault and Battery in School is Ok– 100 Years Ago:

Poughkeepsie Eagle-News
Poughkeepsie, New York
14 Feb 1925

Exonerate Teacher
Of Hurting Pupil

New York, Feb. 13. – The conviction of Miss Genevieve Collier, principal of the Central School at Port Chester, N.Y., of assault in the third degree for striking Frank Fugilisi, a 12-year-old pupil, with a rubber hose was reversed today by the appellate division in Brooklyn. A fine of $20 imposed on Miss Collier was remitted and the complaint against her dismissed.

“The prosecution,” the appellate court read, “failed to establish a reasonable doubt that the force used by the defendant in correcting the pupil was unreasonable in manner and immoderate in degree.”

Lexi’s Legislative Lowdown:

Dear Readers,

I am looking forward to a weekend full of skiing. I haven’t been in a couple of years so hopefully my muscle memory kicks in.

This week we discuss the reintroduction of the wrongful death bill, Senate Bill S4433. We will continue to follow this Bill through the 2025-2026 Legislative Session.

Thanks for reading,

Lexi
Lexi R. Horton
lrh@hurwitzfine.com

Two Wives OK in Singapore – 100 Years Ago:

Press and Sun-Bulletin
Binghamton, New York
14 Feb 1925

CHINESE GIRL WINS
HEART BALM SUIT

Singapore, Feb. 14 – The first Chinese breach of promise action ever known here was brought when Miss Wee Ohkiah sued a wealthy married businessman, Oel Teowbeng, who refused to take her as his secondary wife.

The defense was that breach of marriage was impossible in view of the fact that the man was already married, or, alternatively, that the second wife must be approved by the first.

The chief justice ruled that, although the obedience of the second to the first wife was the custom, the approval of the first was unnecessary for the marriage of the second. In support of the Chinese recognition of polygamy, he quoted the precedent of a Chinese who left six widows. Damages of £650 were awarded to Miss Wee.

Domenica’s Diary on Bad Faith:

I may be scorned for this opinion, but I am happy football season is over. NJ is Giant and Jet country, and my boyfriend is a die-hard Dallas Cowboy fan, so as you can imagine, it can get “loud” on Sundays in my corner on NJ. I will enjoy the next several months of peace and quiet.

This week I report on a Southern District case involving a carrier’s denial of a class action suit involving claims of failing to pay wages on public works contracts. The carrier denied coverage to its insured 3 times and a coverage action by the insured followed. The Court’s findings on the lack of bad faith are not new, but it reminds us that healthy disagreements on coverage should not be avoided based on a fear of Bad Faith.

Domenica
Domenica D. Hart
ddh@hurwitzfine.com

Two Wives, One Too Many, in Michigan– 100 Years Ago:

Press and Sun-Bulletin
Binghamton, New York
14 Feb 1925

WED WHILE DRUNK,
HE GETS TWO YEARS

Paw Paw, Mich., Feb. 14 – Being drunk while getting married is a more serious offense than drunk driving, John Lebeau of Detroit learned in circuit Court here when he was sentenced to serve from one to 14 years in the State Prison at Jackson on a bigamy charge.

Lebeau, a magazine solicitor, of Detroit, pleaded guilty to a charge made by Margaret Mildred Linge DeMonthe of Paw Paw, to whom he was married the day after he met her at an Armistice Day ball here. Later it was learned here that he had a wife and three children in Detroit.

Lebeau explained to the court that he was drunk at the Armistice ball when he proposed to his dancing partner and had not sobered up by the time the ceremony was performed the next day.

North of the Border:

Dear Readers:

It has been cold. Very cold. With some breaks (not lasting long enough) and with windchill, it has been hovering around -35C /-31F when I take the dogs to the dog park in the morning. I have to say though that there is a beauty to the world when it gets that cold. There are sometimes ice crystals in the air that refract the light when the sun shines through them. The sky is a beautiful blue and snow cover dazzles. But its still cold. Very cold. And the groundhog did not see his shadow. There will be more of it. I know.

My column this week discusses a case that held that undefined words in an insurance policy will be given their ordinary meanings. Something like the meaning to be given to “international border,” being the demarcation between two sovereign nations, such as the United States and Canada, the opposite of an imaginary line. An interesting historical factoid about that border: There are six airports, and eleven seaplane bases whose runways straddle the Canada/United States border. Such airports were built before the U.S. entry into World War II to legally transfer American built aircraft, such as the Lockheed Hudson, to Canada under the provisions of the Lend-Lease Act. Before the attack on Pearl Harbour in December 1941 and in the interest of maintaining neutrality, U.S. military pilots were forbidden to deliver combat aircraft to Canada. As a result, the aircraft were flown to the border, where they landed, and then, overnight, they were towed on their wheels over the border by tractors or horses. The next day, the planes were crewed by Royal Canadian Air Force pilots and flown to other locations, typically airbases in Eastern Canada and Newfoundland, from where they were flown to the United Kingdom and deployed in the Battle of Britain. That’s how sovereign nations cooperate.

See you in two weeks.

Heather
Heather A. Sanderson
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

Interesting Decision, This One. Employers Liability Exclusion Applied to Eliminate CGL Coverage. That Was the Easy One. Court Finds That Employers Liability Coverage Not Available Because No Grave Injury. As a Purist, Court Should Have Dismissed Third-Party Action Rather Than Rule on Coverage on EL Policy
Tenant’s Carrier Had No Obligation to Provide Additional Insurance Coverage to Landlord for Fall on Sidewalk, in Area Outside of Tenant’s Maintenance Obligations
Named Insured Is Not Aggrieved by Order Requiring Its Insurer to Defend an Additional Insured. Query: Is That a Surprise?
Lots of Good Stuff in This One. Where Alleged Child Molester Was an Employee of a Religious institution, He Was Not an Insured Because His Acts Were Not in Furtherance of His Employer’s Business, Nor Was His Conduct Accidental. Since the Claims Are Outside of the Grant of Coverage, No Need to Timely Disclaim. However, the Institutional Claims Are Accidental and Timely but Insufficiently Specific Disclaimer Letter Is Worthless and a Follow Up Disclaimer, Even Though Specific Enough, Was Sent 56 Days Later and Thus Untimely and Ineffective

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Nothing from me this time; see you in two weeks

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

Insured’s Broker Owes No Duty Post-Procurement
Disputed Existence of Other Auto Policy Defeats UIM Carrier’s Motion

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

Insurer’s Summary Judgment Motion Denied, as Documentary Evidence of Underwriting Practices Were Not Submitted to Establish Material Misrepresentation
Insurer’s Summary Judgment Motion Is Granted on the Basis That Defendants Failed to Comply with Post-EUO Requests

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

Former Mortgage Lender Lacks Standing Under Insurance Policy

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

Court Grants Insurer’s Motion to Amend Its Answer to Include a Fraud Affirmative Defense Based on Evidence of the Insured Claiming Damage Not Actually Damaged, Concealing Pre-existing Damage Reports, and Instructing Engineers to Alter Reports to Remove References to Uncovered Damage
Property Policy Void Ab Initio Due to Material Misrepresentations in the Application as the Insured Failed to Disclose the Existence of an Illegal Basement Apartment
Because the Forged Documents Were Not Financial Instruments, the Insured's Losses Were Not Covered Under the Forgery Provision of the Policy

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

Third Party Claimants Lacked Standing In Direct Action Against Insurer and Were Not Entitled to IDV Damages to Their Vehicles

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

Exclusions and Definitions in Primary Auto Policy Are Deemed Included in Follow-Form Excess Policy

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

Extrinsic Evidence Establishes Exclusion but Not Duty to Defend
Intentional Infliction of Emotional Distress Is Not an “Occurrence” and Pennsylvania Law Bars Insuring Criminal Acts

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

Fourth Department Modifies Orders in Related Cases Which Granted Defendants’ Summary Judgment Motions Dismissing Plaintiff’s Complaints on the Basis That She Did Not Sustain Serious Injury Within the Meaning of Insurance Law § 5102(d) Where the Evidence Presented by the Defendants Did Not Meet the Initial Prima Facie Burden

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Court Held Insurer Was Not Obligated to Provide Coverage Based on Privity-Based Endorsement and Upheld Disclaimer of Coverage Based on Employee Exclusion Issued 62 Days After Tender

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

The Grieving Families Act has been reintroduced as Bill S4433

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Plain, Undefined Words in an Insurance Policy Will Be Given Their Ordinary Meaning

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut and New Jersey.

NEWSLETTER EDITOR
Dan D. Kohane
ddk@hurwitzfine.com

ASSOCIATE EDITOR
Agnes A. Wilewicz
aaw@hurwitzfine.com

COPY EDITOR
Evan D. Gestwick
edg@hurwitzfine.com

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
ddk@hurwitzfine.com

Steven E. Peiper, Co-Chair
sep@hurwitzfine.com

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Domenica D. Hart

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

Victoria S. Heist

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
sep@hurwitzfine.com

Michael F. Perley

Scott D. Storm

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
ddk@hurwitzfine.com

Ryan P. O’Shea
rpo@hurwitzfine.com

Kyle A. Ruffner
kar@hurwitzfine.com

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com

Topical Index

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Gestwick’s Garden State Gazette

Lexi’s Legislative Lowdown

Labor Law § 240(1) (MAS)

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

02/13/25 TCS Construction Corp. v. AmTrust North America, Inc.,
Appellate Division, First Department
Interesting Decision, This One. Employers Liability Exclusion Applied to Eliminate CGL Coverage. That Was the Easy One. Court Finds That Employers Liability Coverage Not Available Because No Grave Injury. As a Purist, Court Should Have Dismissed Third-Party Action Rather Than Rule on Coverage on EL Policy

Wesco issued a commercial general liability (CGL) policy to TCS and its principal, Matsui, and an employers' liability (EL) policy to TCS. TCS, a contractor, was hired to renovate certain real property owned by nonparty Balila Realty, LLC. Before commencing its work on those premises, TCS bought both of the aforementioned policies from Wesco through Wesco's managing general agent, AmTrust.

The CGL policy contains an employer's liability exclusion that applies to bodily injury to an "'employee' of the 'insured' arising out of and during . . . [e]mployment by the 'insured'," including "any obligation to share damages with or repay someone else who must pay damages because of the injury." The CGL policy also contains an independent contractors exclusion that applies to bodily injury "arising out of operations performed for any insured by independent contractors or acts or omissions of any insured in connection with his supervision of such operations."

The EL policy covers "bodily injury by accident" if the injury "arise[s] out of and in the course of the injured employee's employment by you [TCS]." If those conditions are satisfied, the EL policy obligated Wesco to "pay all sums you [TCS] legally must pay as damages because of bodily injury to your employees," including, "where recovery is permitted by law," damages "for which you are liable to a third party by reason of a claim or suit against you by that third party to recover the damages claimed against such third party as a result of injury to your employee."

In September 2016, Pacheco, an employee of TCS, sued Balila to recover damages for injuries he allegedly sustained while performing construction work at its premises. Balila later filed a third-party complaint against TCS and Matsui; according to the allegations in the third-party complaint,

Pacheco was employed by his brother rather than by TCS. TCS and Matsui commenced this action against AmTrust and Wesco, and, as relevant here, against Morstan, alleging that Morstan, a broker, sold TCS insurance for additional insured protection covering claims for bodily injury arising out of, or in the ]course of, TCS's performance.

Wesco established its entitlement to summary judgment. About the claim under the CGL policy, Wesco made an unrebutted prima facie showing of noncoverage by submitting evidence that Pacheco was injured in the course of his employment with TCS and therefore, that the employer's liability and independent contractor exclusions in the CGL policy apply to bar coverage of the contribution and indemnification claims against TCS and Matsui.

With regard to the claim under the EL policy, Wesco made an unrebutted prima facie showing of noncoverage by submitting Pacheco's bill of particulars, which demonstrated that his injuries did not qualify as "grave injuries" within the meaning of Workers' Compensation Law § 11 . Pacheco's claimed injuries were attributed to a wrist fracture and back and neck injuries, not an "acquired injury to the brain, the only potentially applicable category of grave injury under Workers Compensation Law § 11" Because Pacheco's injures were not "grave injuries" within the meaning of Workers' Compensation Law § 11, "recovery [from TCS] is [not] permitted by law" upon a third party's claim for contribution or indemnification with respect to damages based on those injuries. Accordingly, such third-party claims against TCS are not covered by the EL policy as to either defense or indemnity.

Editor’s Note: Attaboy Max. Technically, what the court should have done is dismiss the third party action on lack of grave injury rather than declare that the coverage is not available under the policy.

02/07/25 Wesco Ins. Company v. Jewelers Mutual Insurance Company
Appellate Division, First Department
Tenant’s Carrier Had No Obligation to Provide Additional Insurance Coverage to Landlord for Fall on Sidewalk, in Area Outside of Tenant’s Maintenance Obligations

Rio De Oro Jewelry Corp. (“tenant”) leased and operated a store on the ground floor of the premises owned by AKJR. The store was situated on the corner of Liberty Avenue and Eldert Lane in Brooklyn. The record shows that the store's sole entrance and storefront was located on the Liberty Avenue side of the building, while the Eldert Lane side of the store was a windowless, doorless wall.

On the sidewalk abutting the Eldert Lane side of the store were cellar doors opening to a staircase leading to the building's basement. It is undisputed that at all relevant times the leased premises did not include, and the tenant otherwise had no access to or an obligation to maintain, the basement or the cellar doors.

While the basement was situated below the store, there was no internal access to the basement through the Rio jewelry store. Further, the record clearly establishes that another AKJR tenant had exclusive use and control over the basement and cellar doors.

Additionally, while the lease obligated Rio to keep the sidewalk "in front of" the store (which the court found to mean the Liberty Avenue storefront) free from obstructions, it was silent as to any similar duty regarding the Eldert Lane sidewalk with the cellar doors, and fails to impose upon Rio any broader duty regarding the sidewalks abutting the store.

The tenant, in accordance with its lease, named AKJR as an additional insured in an insurance policy issued to it by defendant Jewelers Mutual. The policy covered AKJR "only with respect to liability arising out of the ownership, maintenance, or use of that part of the premises leased to [Rio]." The plaintiff in the underlying action alleged that he tripped and fell over a raised concrete panel surrounding and containing the cellar doors.

Jewelers is not obligated to cover AKJR as an additional insured because the injury did not arise out of AKJR's ownership of "that part of the premises leased to Rio". The raised concrete panel which allegedly caused the underlying injury was part and parcel of the cellar doors, which was not part of Rio's demised premises, property which tenant had no obligation to maintain. As such, any liability resulting from the trip and fall did not arise out of AKJR's ownership of that part of the building leased to the tenant.

Editor’s Note: Dennis Wade, of Wade, Clark, Mulcahy, LLP, gets the “atta lawyer” on this one.

02/07/25 O’Connor v. S&S Construction
Appellate Division, Fourth Department
Named Insured Is Not Aggrieved by Order Requiring Its Insurer to Defend an Additional Insured. Query: Is That a Surprise?

This was a Labor Law case. H.K. Frey & Sons, Inc. (Frey) appealed from an order determining that Frey's insurance carrier (insurer) had a duty to defend S & S in the main action. While this appeal was being perfected, the third-party action proceeded to trial, and the jury returned a verdict in Frey's favor, dismissing claim against it.

Whether the insurer had a duty to defend S & S against plaintiffs' claims in the main action is not properly before the court. Frey had no direct interest in the controversy between the insurer and S & S. Therefore, Frey is not aggrieved by that part of the order.

01/31/25 The Chapel v Guide One Insurance Company
Appellate Division, Fourth Department
Lots of Good Stuff in This One. Where Alleged Child Molester Was an Employee of a Religious institution, He Was Not an Insured Because His Acts Were Not in Furtherance of His Employer’s Business, Nor Was His Conduct Accidental. Since the Claims Are Outside of the Grant of Coverage, No Need to Timely Disclaim. However, the Institutional Claims Are Accidental and Timely but Insufficiently Specific Disclaimer Letter Is Worthless and a Follow Up Disclaimer, Even Though Specific Enough, Was Sent 56 Days Later and Thus Untimely and Ineffective.

The Chapel commenced a declaratory judgment action seeking a determination that GuideOne Mutual (“GuideOne”) has an obligation to defend it in an action alleging that Edward Batt (“Batt”), who was a youth group leader in The Chapel’s employ, committed acts of sexual abuse against the tort plaintiff (“victim”) in the underlying action. Batt also sought coverage under the same policy.

The lower court determined that GuideOne must defend Batt. The Fourth Department disagreed.

In support of his motion, Batt contended that the notice of disclaimer issued by GuideOne was untimely as a matter of law. The court noted that that an insurer is not required to issue a disclaimer of coverage under Insurance Law § 3420 (d) (2) when a claim falls outside the scope of the policy's coverage portion/. In addition, an insurer is not required to issue a disclaimer under section 3420 (d) (2) if the underlying claim does not arise out of an "accident" involving bodily injury.

Here, the commercial policies issued to plaintiff defined an insured to include plaintiff's employees, other than its executive officers, "but only for acts within the scope of their employment by you." Assuming that the allegations of sexual abuse in the underlying complaint are true, the court concluded we conclude that Batt departed from his duties for solely personal motives unrelated to the furtherance of [plaintiff's] business". Since Batt was not an insured, no disclaimer was necessary and certainly no timely one.

In addition, even if Batt was an insured under the policies, the court concluded that the underlying claim did not arise out of an accident. Here, the alleged sexual abuse of the tort plaintiff was intended from decedent's point of view and was not an accident .

However, coverage with respect to The Chapel requires a different analysis.

The Chapel was an insured and from the Chapel’s standpoint, this was an accident. It did not expect or intend the injuries.

GuideOne contends, however, that it issued a disclaimer pursuant to Insurance Law § 3420 (d) (2) as soon as reasonably possible. An insurer who delays in giving written notice of disclaimer bears the burden of justifying the delay. The time from which an insurer's obligation to disclaim is measured begins when the insurer first becomes aware of the ground for its disclaimer

Here, the victim notified the Chapel in July 2020 that he was sexually abused by decedent in 1989 and requested information regarding plaintiff's insurance policy. GuideOne was notified of this request on August 3, 2020. GuideOne obtained the relevant policies on September 29, 2020, and notified plaintiff that it was in possession of those policies. The Chapel asserts, and the court agreed, that September 29, 2020, represents the starting date from which GuideOne's time to disclaim should be measured.

GuideOne sent out an email to the Chapel on October. A notice of disclaimer "must promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated"

The October 7 email stated that "it does not appear there was any misconduct coverage added to the policies" and that the policies "includ[ed] a specific exclusion for any misconduct or any type of allegation relating to misconduct."

Even assuming, arguendo, that the email constituted a disclaimer of coverage, the court conclude that it lacks the required specificity and was thus insufficient to satisfy GuideOne's obligation under Insurance Law § 3420 (d) (2) (

GuideOne sent another email dated November 24, 2020, email to plaintiff was a sufficiently specific disclaimer, contrary to the court's determination. The court properly determined, however, that the 56-day delay rendered the disclaimer untimely as a matter of law.

GuideOne contended that the delay was reasonable since the letter that GuideOne received on August 3, 2020, describing the claim as generic and the tort plaintiff did not file his complaint until October 14, 2020. The letter GuideOne received on August 3 described the 1989 claim as "allegations of child sexual abuse that [the tort plaintiff] sustained at the hands of [decedent], whom [the tort plaintiff] came into contact with while [decedent] was a youth group leader for [plaintiff]."

Thus, the nature of the claim was clear from the letter GuideOne received on August 3, and when GuideOne obtained the policies on September 29, it had at that time " 'all relevant facts supporting . . . a disclaimer' ". GuideOne further contends that the delay was reasonable since The Chapel believed that the dates listed in the underlying complaint might be wrong and requested additional investigation from GuideOne into other policies. The court rejected that contention and concluded that plaintiff's request for an additional investigation did not justify the lengthy delay by GuideOne or raise a triable issue on timeliness.

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Nothing from me this time; see you in two weeks.

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

01/30/25 Case v. Hanover Ins. Co.
Superior Court of Connecticut, New Haven
Insured’s Broker Owes No Duty Post-Procurement

Case won a verdict in excess of $13 million against a group home, Oak Hill. She sued Oak Hill’s insurance broker under the Connecticut direct action statute, alleging that it negligently handled the insurance claim.

The broker successfully moved to strike the count against it (two counts against Hanover remain). The broker argued that the direct-action statute, CGS § 38a-321, applies only to an insurance company that issues an insurance policy against which the plaintiff seeks to collect the unsatisfied judgment. The broker was not the insurer that issued the alleged policies, it was only the broker that procured policies from Hanover. Additionally, the broker asserted that it owed no duty to Oak Hill regarding the insurance claim, nor was it acting as an agent of Hanover. Finally, the broker argued that since the underlying verdict is on appeal, there is no final judgment provided standing under the direct-action statute. In opposition, Case argued that since she alleged that the broker was an agent of Hanover, and owed a fiduciary duty to Oak Hill, the court must accept those plead facts as true.

Nevertheless, the court found that a broker owes no duty to an insured post-procurement, relying on the Appellate Court’s 2024 ruling in Deer v. National General.

Ed Note: The parties and court failed to note that the Supreme Court accepted certiorari on the very issue of what continuing duty a broker may owe an insured post-procurement. Further, the decision, while reported on Lexis, does not appear on the court’s docket. On February 3, 2025, the plaintiff withdrew its cause of action against the broker.

02/06/25 Latney v. Fernandez
Superior Court of Connecticut, Hartford
Disputed Existence of Other Auto Policy Defeats UIM Carrier’s Motion

Latney brought an underinsurance claim against his insurer, Amica. Amica moved for summary judgment, arguing that there is evidence of an uncollected insurance policy on behalf of the tortfeasor thus precluding UIM coverage. While the court acknowledged that exhaustion of all available coverage is a prerequisite for a UIM claim, it found that there was a question of fact precluding summary judgment for Amica. The court determined that it is for the trier of fact to determine whether plaintiff exhausted all reasonable efforts to pursue the disputed coverage before releasing the tortfeasor.

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

01/28/25 Liberty Mutual v. Desmond Roy Newman et al.
Supreme Court, New York County
Insurer’s Summary Judgment Motion Denied, as Documentary Evidence of Underwriting Practices Were Not Submitted to Establish Material Misrepresentation

Liberty Mutual issued a car insurance policy to Desmond Roy covering the insured vehicle involved in the subject accident. The defendant sought treatment with the Medical Provider Defendants, who submitted no-fault bills to the insurer. However, Liberty Mutual filed this action seeking a declaration that it was not obligated to cover the no-fault claims because there were material misrepresentations regarding the garaging location and ownership of the insured vehicle and noncooperation with the claim investigation and moved for summary judgment.

Liberty Mutual argued that alleged material misrepresentations by the Individual Defendants constituted grounds for voiding the policy and therefore Plaintiffs had no requirement to provide coverage. In support of their motion, Plaintiffs submitted documentation including affidavits from the claim investigator, an underwriter, and the claims department's Team Manager, as well as the EUO transcripts for the Individual Defendants.

A misrepresentation must be “material” in order to void a policy, meaning that knowledge by the insurer of the facts misrepresented would have led to a refusal by the insurer to enter the insurance contract. It was not disputed that there were likely misrepresentations made regarding the ownership and garaging location of the vehicle in question. The issue was whether it was required that such misrepresentations would have resulted in the insurer’s full denial of a policy or if it was sufficient for a misrepresentation to be material if a correct statement would have led to issuance of a policy for a higher premium rate. The Provider Defendants cited to Second Department cases for the proposition that to be material, a misrepresentation must have meant that otherwise, the policy would not have been issued at all. However, in the First Department, a misrepresentation that would have otherwise resulted in a policy with a higher premium rate is sufficient to establish legal materiality. Therefore, the court determined that it was sufficient that the policy would have been issued at a higher premium rate if the misrepresentation was discovered.

The Provider Defendants also argued that the failure to submit underwriting materials would bar Plaintiffs from establishing prima facie entitlement to their claims. The insurer responded that the sworn affidavit from their underwriter was sufficient and claimed that the Provider Defendants never demanded discovery on underwriting practices. However, the court held that regardless of whether or not a defendant requested discovery regarding underwriting practices, in the First Department a plaintiff must submit documentation of underwriting practices such as "manuals, rules, or bulletins" even with an underwriter's affidavit. Therefore, because the insurer did not submit documentary evidence of its underwriting practices, it did not meet its burden on a motion for summary judgment and the motion was denied.

01/31/25 Nationwide Aff. Ins. Co. of Am. et al v. Karin Gepp, Ph.D. et al.
Appellate Division, Fourth Department
Insurer’s Summary Judgment Motion Is Granted on the Basis That Defendants Failed to Comply with Post-EUO Requests

The insurer in this matter requested examinations under oath of the defendants in relation to medical treatment provided to the insured, after which the insurer submitted additional verification requests. Just before the expiration of the 120 period to respond to these requests, defendants submitted a letter with blanket objections. Plaintiffs thus commenced this declaratory judgment action alleging, inter alia, that defendants were not entitled to receive no-fault reimbursement for the claims in question because defendants failed to comply with 11 NYCRR 65-3.8(b) with respect to their obligations to respond to written requests for information under their control within 120 days or submit written proof providing reasonable justification for failing to comply.

Under the No-Fault Law, an insurer is required either to pay or deny a claim for benefits within 30 days of receipt of the claim. However, such times may be tolled when additional verification is timely sought, to permit the carrier time to obtain information regarding the claim and determine whether it should be paid or denied. "The insurer is entitled to receive all items necessary to verify the claim directly from the parties from whom such verification was requested" (11 NYCRR 65-3.5[c]). If the insurer requests an EUO, the verification is deemed to have been received by the insurer on the day the examination was performed (see 11 NYCRR 65-3.8[a][1]). Further, if the insurer is unable to garner the information it needs from the EUO of a person submitted by the assignee corporation or partnership, the insurer may request additional examinations of the assignee until a person is submitted for examination by the assignee who can provide the items necessary to verify the claim.

Here, the court concluded that plaintiff established their post-EUO requests were proper. Though post-EUO verification requests are not a specifically enumerated disclosure device in the no-fault regulations, plaintiffs were entitled to receive all items necessary to verify the claims and were entitled to continue to request additional EUOs until defendants produced a representative who could provide the items necessary to verify the claim. Defendants, having agreed to provide the additional disclosure—thereby inducing plaintiffs to forgo the additional EUOs to which they were entitled—cannot now claim that post-EUO discovery is impermissible as a matter of course. The court also agreed that the insurer established that defendants failed to comply with their obligation to submit verification within 120 days and that the defendants failed to raise a triable issue of fact as to whether they had a reasonable justification for the failure to comply with the demands. This included basic information including the licenses of the providers rendering care on defendants' behalf, information identifying which provider rendered the care, and data to determine whether the visits were properly billed and coded. Defendants agreed to provide such information during two EUOs, however, they failed to explain why they did not provide such documentation within the requisite time period following plaintiffs' demand. Having failed to do so, defendants failed to raise any triable issue of fact in opposition to plaintiffs' motion.

Accordingly, the Appellate Division reversed the Supreme Court's decision, holding the insurer established their prima facie entitlement to judgment as a matter of law.

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

02/05/25 Crosby Capital USA LLC v. AmGuard Insurance Company
United States Court of Appeals, Second Circuit
Former Mortgage Lender Lacks Standing Under Insurance Policy

Crosby Capital USA, LLC (“Crosby”) alleged in its complaint that it had provided a mortgage loan for a property insured by AmGuard Insurance Company (“AmGuard”) and that AmGuard breached the policy by declining payment to Crosby. Crosby represented that it was the holder of both the promissory note and the mortgage on the property, entitling it to payment. The district court disagreed, finding instead that Crosby had previously transferred the note to another party and therefore lacked standing under the policy. The Second Circuit affirmed.

Under New York law, “the [promissory] note . . . is the dispositive instrument that conveys standing,” and here, it was undisputed that “Crosby transferred its promissory note for the property covered by the insurance policy to a person named Simon Leger via an allonge dated July 7, 2020, before the commencement of this lawsuit.” While Crosby argued that as the “holder” of the note or its “servicer,” it has “every right to enforce all rights under the note” including the right to “act on behalf of Leger,” the Second Circuit was unconvinced.

It did not help Crosby’s case that its representative conceded at a deposition that “Leger was the holder of the note,” which was the only evidence in the record. There was equally no evidence submitted supporting that Crosby had filed the action to protect Leger’s interests.

While Crosby additional asserted that AmGuard waived any standing defense by failing to plead that defense, the Second Circuit noted that AmGuard did not, intentionally relinquish that right and Crosby’s failure to plead the correct scenario resulted in AmGuard’s delay in raising the issue when pleading.

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

01/27/25 Esplanade 2018 Partners, LLC v. Mt. Hawley Ins. Co.
United States District Court, Southern District of New York.
Court Grants Insurer’s Motion to Amend Its Answer to Include a Fraud Affirmative Defense Based on Evidence of the Insured Claiming Damage Not Actually Damaged, Concealing Pre-existing Damage Reports, and Instructing Engineers to Alter Reports to Remove References to Uncovered Damage

The plaintiff filed a claim for hurricane damage to its building. Plaintiff seeks to recover at least $4,681,844.15 to cover the alleged damages, as well as statutory penalties and attorney's fees.

Mt. Hawley alleges it uncovered evidence during discovery that plaintiff knowingly inflated and misrepresented the claim, including claiming damage to a roof that was not actually storm-damaged, concealing pre-existing damage reports, and instructing engineers to alter reports to remove references to uncovered damage.

Mt. Hawley argues that the plaintiff "scheme[d] to artificially inflate their claim" in order to exceed the relevant policy deductible. Plaintiff alleged that replacement of the building's main roof was necessary at a cost of over $550,000, but its internal emails revealed that it had a report from its contractor stating that the main roof was not damaged by the storm. Further reports show that the building's roofs were already in poor condition and plaintiff had planned on replacing them prior to the storm. Mt. Hawley also alleges that plaintiff's internal emails show that it knowingly retained consultants and urged them to "add additional items to the claim" without evidence showing the additional damage resulting from the storm. Mt. Hawley points specifically to a claim for resealing every window in the building at a cost of $981,986.00, while concealing 2017 and 2018 inspection reports showing the window damage pre-existed the hurricane. Finally, Mt. Hawley alleges that plaintiff's public adjusters "literally instructed" Plaintiff's engineers "to alter its report to remove all references to 'wind-driven rain' because wind-driven rain is not covered under the Mt. Hawley Policy." Mt. Hawley contends that an employee of the adjuster issued these instructions "to better reflect the insurance policy language"; that the report was then, in fact, altered by the engineers; and that Plaintiffs submitted the altered report without disclosing the previous draft.

The subject policy condition states that the coverage is void in the event that the insured party "intentionally conceal[s] or misrepresent[s] a material fact concerning" the coverage, the property, the party's interest in the property, or a claim under the insurance coverage”.

The Court held that the insurer demonstrated good cause for leave to amend its answer to add an affirmative defense of fraud after the amendment deadline. The Court said that Mt. Hawley showed good cause to amend after the deadline because it did not have a basis to assert fraud prior to discovery disclosures. In addition, the proposed fraud allegations were sufficiently specific under Fed. R. Civ. P. Rule 9(b), stating the who, what, when, where and how of the alleged fraud.

01/22/25 Khair v. Hyundai Mar. & Fire Ins. Co.
Supreme Court, Kings County
Property Policy Void Ab Initio Due to Material Misrepresentations in the Application as the Insured Failed to Disclose the Existence of an Illegal Basement Apartment

The Court granted Hyundai’s motion to dismiss. A fire damaged the plaintiffs’ property in Brooklyn and Hyundai denied coverage for the claim and rescinded the policy returning all premium.

In the application for homeowners insurance the plaintiff described the property as a three-family house which did not have "illegal rental units, including basement unit" and was not a "boarding or rooming house." Hyundai’s underwriter testified the investigation revealed "that the house was configured with 7 dwelling units, resulting in a house with illegal basement units, a boarding house situation, and a house with greater than four total dwelling units." The Underwriter states that Hyundai "been truthfully advised that the house had these problems, [it] would not have issued this [subject] policy."

Hyundai submitted underwriting guidelines in support and the Underwriter stated that, "[i]llegal dwelling units are prohibited in part because without proper building permits and inspections, illegal units can have egress problems, can contain hazardous conditions that overtax the building's infrastructure, particularly electrical, and lack proper smoke detectors, thus greatly increasing the possibility of a loss."

A misrepresentation is defined as a false statement as to past or present facts made to the insurer by the applicant for insurance or the prospective insured, at or before the making of the insurance contract as an inducement to the making thereof under N.Y. Ins. Law § 3105 [a].

A misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented. To establish materiality as a matter of law, the insurer must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, which show that it would not have issued the same policy if the correct information had been disclosed in the application.

Under New York law, the number of dwelling units contained in a building is determined by its structural configuration and the number of self-contained dwelling units.

The failure to disclose the illegal basement apartment constituted a material misrepresentation. The court determined that no reasonable insurer would provide coverage for a property with undisclosed illegal units due to increased risks. Plaintiffs made material misrepresentations concerning the existence of illegal rental units or basement unit within the Premises. Thus, the insurance policy was void ab initio.

02/03/25 KMS Dev. Partners LP v. Fed. Ins. Co.
United States District Court, Eastern District of Pennsylvania
Because the Forged Documents Were Not Financial Instruments, the Insured's Losses Were Not Covered Under the Forgery Provision of the Policy

The court granted summary judgment to the insurer.

KMS was defrauded by an individual impersonating a wealthy investor. The impersonator signed fraudulent documents including a Term Sheet and Equity Letter. KMS paid $300,000 and $500,000 to the fraudster based on these documents. KMS had an insurance policy with Federal that included a Forgery provision.

The Forgery provision covered losses from "Forgery or alteration of a Financial Instrument committed by a Third Party", not forgery of other documents. Financial instruments are defined as checks, drafts or similar written promises, orders or directions to pay a sum certain in money, that are made, drawn by or drawn upon an Organization or by anyone acting as an Organization's agent, or that are purported to have been so made or drawn.

The Court held that the fraudulent documents signed were not financial instruments as defined in the policy. A plain reading of the policy language requires that a forgery be of a financial instrument to trigger coverage. Because the forged documents were not financial instruments, the insured's losses are not covered under the Forgery provision of the policy.

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

01/30/25 Cubberley v. The Commerce Insurance Company
Massachusetts Supreme Judicial Court
Third Party Claimants Lacked Standing In Direct Action Against Insurer and Were Not Entitled to IDV Damages to Their Vehicles

The plaintiffs, Cubberley and Seaver, each had a vehicle damaged in a collision caused by another driver insured under a policy issued by The Commerce Insurance Company. Each plaintiff, as a third-party claimant, sought compensation from Commerce for damage to their vehicles. Commerce acknowledged liability for the damage caused by its insureds and processed the claims. While Commerce covered the cost of repairs to restore the vehicles to their condition prior to the collision, it refused to compensate the plaintiffs for any alleged IDV (inherent diminished value). As a result, each plaintiff’s vehicle was worth less in the resale market than a comparable vehicle that had not suffered damage in a collision.

The plaintiffs commenced a lawsuit in the Superior Court, on behalf of themselves and similarly situated individuals, against Commerce for a declaration that Commerce was obligated to cover IDV damages and for compensation for Commerce's alleged breach of contract for failing to pay these damages. The plaintiffs asserted that Commerce failed to pay for IDV damages under part 4 of the 2016 standard Massachusetts automobile policy. The plaintiffs also sought a judgment declaring that all IDV damages must be paid and/or tendered to third party claimants where the insured tortfeasor has been determined to be liable for the associated third-party property damage. Commerce moved to dismiss, and the court concluded that part 4 of the 2016 standard policy excludes coverage for IDV damages to third-party vehicles and, therefore, Commerce had no obligation to pay the plaintiffs. The court did not address whether the plaintiffs had standing due to their failure to secure a final judgment against the insureds before suing Commerce. The plaintiffs appealed, and the SJC granted their request for direct appellate review.

As a threshold issue, the plaintiffs lacked standing to pursue their breach of contract claims because they failed to obtain final judgments against Commerce’s insureds. Under Massachusetts law, a third-party claimant must first secure a final judgment against the insured party before suing the insurer for an alleged failure to pay damages under the policy. Instead of obtaining final judgments against the insureds as required, the plaintiffs asserted that they were third party beneficiaries of the 2016 standard policy and sued Commerce directly. As a result, the SJC did not need to address the merits of the breach of contract claim.

However, at the court’s discretion, the SJC looked at the substantive question regarding whether part 4 of the 2016 standard policy provides coverage for IDV damages to a third-party claimant's vehicle. Contrary to the plaintiffs' claims, part 4 of the 2016 standard policy excludes coverage for IDV damages a third party claimant's vehicle. It states: “The amount we will pay does not include compensation for . . . any decreased value or intangible loss claimed to result from the property damage unless otherwise required by law.” Additionally, part 4 limits third-party coverage to “damage or destruction of . . . tangible property,” and damage to tangible property does not include IDV. The SJC also did not find that any other law would require coverage for IDV damages under part 4 of the 2016 standard policy, and the Commissioner of Insurance’s approval of the exclusion was reasonable and consistent with statutory authority.

Accordingly, the SJC affirmed the dismissal of the plaintiffs’ complaint.

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

02/11/25 Est. of Brackin et al. v. Privileged Underwriters Ins. Recip. et al.
Superior Court of New Jersey, Appellate Division
Exclusions and Definitions in Primary Auto Policy Are Deemed Included in Follow-Form Excess Policy

Dr. Butzbach’s two adult children, Phillip and Miles Brackin, were driving Butzbach’s vehicle (Phillip was driving, with Miles in the passenger seat). They were involved in a one-car accident, resulting in Miles’ death.

The vehicle was insured under a primary auto policy issued by USAA, and an excess personal auto policy issued by Privileged Underwriters Insurance Reciprocal (“PURE”). The PURE policy followed form to the terms and conditions of the USAA policy.

The liability part of the USAA policy provided that USAA would pay compensatory damages for bodily injury for which any “covered person” becomes legally liable to pay because of an auto accident. The USAA policy defined a “covered person” as any “family member,” which in turn was defined as a person related to the named insured by blood, marriage, or adoption, who resides primarily in the named insured’s household. The USAA policy provided liability limits of $500,000 per person and $1,000,000 per accident.

The USAA policy also had an uninsured/underinsured motorist coverage part (“UIM”), which provided that USAA would pay compensatory damages which a “covered person” was legally entitled to recover from the owner or operator of an “uninsured motor vehicle” or “underinsured motor vehicle” because of bodily injury sustained by a “covered person” and caused by an auto accident. The UIM part deemed a vehicle as “underinsured,” for purposes of the policy’s definition of an “underinsured motor vehicle,” where the sum of all bodily injury limits of all applicable liability policies was less than the UIM limit under the USAA policy and any other applicable UIM policies. The UIM part of the USAA policy also excluded from UIM coverage any vehicle owned by or available for the regular use of the named insured or any “family member.”

Meanwhile, the PURE policy’s excess liability coverage part provided that PURE would pay for damages that an insured is legally obligated to pay because of personal injury caused by an occurrence, in excess of the limits of the USAA policy. The PURE policy’s liability part excluded from coverage any damages for personal injury to any insured under the policy. Like the USAA policy, the PURE policy defined an “insured” as a “family member,” defined as someone who lived in the named insured’s household, and was related to the named insured by blood, marriage, or adoption.

The PURE policy also contained an excess UIM coverage part, which provided up to $1,000,000 in damages for bodily injury that an insured was legally entitled to receive from the owner or operator of an uninsured/underinsured auto. The UIM part expressly if it followed form to the USAA policy’s UIM coverage part, unless it was excluded by the terms of PURE’s UIM endorsement.

Following the accident, USAA paid its liability limit ($500,000) to Miles’ estate. PURE denied coverage entirely, on the ground that its liability coverage part excluded coverage for personal injury to any insured under the policy, including any resident family members of the named insured. PURE also denied UIM coverage on the ground that its UIM endorsement followed form to the USAA UIM endorsement, which contained a similar intrafamily exclusion.

Phillips’ estate sued PURE, claiming that its reliance on the intrafamily exclusion was against public policy, and that its follow-form provision was ambiguous. PURE moved to dismiss the Plaintiff’s claims on the grounds that the public policy argument had been heard and addressed (in PURE’s favor), and that its follow-form provision was clear and unambiguous. The lower court agreed, and this appeal followed.

The Appellate Division affirmed the findings of the lower court. First, the Court determined that both Miles (the driver) and Phillip (the decedent) were family members of Butzbach (the registered owner of the vehicle) and lived with her. Therefore, both Miles and Phillip were “insureds” under the policy. Since the excess liability part excluded coverage for personal injury to the policyholder or any other insured, the Court determined no coverage was available under the excess liability part of the PURE policy.

The Appellate Division also confirmed no coverage was available under the UIM endorsement. The plaintiff argued that the PURE policy’s follow-form provision was ambiguous because it was contained in the policy’s definitions section instead of the policy’s declarations. The Court disagreed, on the ground that the follow-form provision was not overly-technical, contained no hidden “pitfalls,” and that an insurance policy is not ambiguous simply because its declarations sheet, definitions section, and exclusionary provisions are presented on different pages. The Court cited well-established New Jersey law standing for the proposition that a rule requiring insurers to write every definition and exclusion on the declaration sheet would result in “even more fine print,” would “run the risk of making insurance policies more difficult to understand,” and would “eviscerate the rule that a clause should be read in the context of the entire policy.”

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

02/12/25 Aram Logistics v. United States Liab. Ins. Co.
United States Court of Appeals, Ninth Circuit
Extrinsic Evidence Establishes Exclusion but Not Duty to Defend

Diakon Logistics sued Aram, a rival furniture delivery company, in state court action alleging Aram misappropriated Diakon’s proprietary information. Aram possessed liability insurance through USLI. Within the USLI policy was personal and advertising injury coverage. Aram felt USLI owed a defense in the underlying state court action.

Aram asserted that even if none of Diakon’s claims allege advertising-based damages, extrinsic evidence still required USLI to provide a defense. USLI countered asserting Diakon’s claims were beyond the scope of coverage and if not, then are subject to the policy’s exclusions.

The only extrinsic evidence Aram pointed to was the deposition testimony of Diakon’s CEO. That person stated that one of Aram’s officers is an ex-Diakon employee who copied Diakon’s advertising materials, thus giving rise to a potential covered advertising claim. However, the Appellate Court found that the Knowing Violation Exclusion would apply even a defense duty triggered. The exclusion applies when an injury is:

“caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict ‘personal and advertising injury’.”

So, the testimony of Diakon’s CEO provided evidence not of a duty to defend but the lack of coverage. The court reasoned the testimony indicates that Aram must have knowingly copied Diakon’s advertising materials because Aram’s officer was previous Diakon employee familiar with the materials. Thus, there exclusion applied and USLI’s summary judgment affirmed.

02/11/25 Rosenberg v. Hudson Ins. Co.
United States Court of Appeals, Third Circuit
Intentional Infliction of Emotional Distress Is Not an “Occurrence” and Pennsylvania Law Bars Insuring Criminal Acts

In this tragic matter the Rosenbergs’ son shot and killed a person he befriended at a local community college. The murder occurred at the Rosenbergs’ home. After the murder, the Rosenbergs’ son dragged the victim’s body to a park across the street from the home. It took the police over two months to find the body. However, the Rosenbergs’ marriage counselor found the weapon while hiking on a trail in another park a month prior to the detectives’ discovery of the body.

Due to the delay in discovery of the body, the victim’s mother brought an action against the Rosenbergs’ for intentional infliction of emotional distress. The Rosenbergs possessed two relevant policies. A homeowner’s policy through Chubb and an umbrella policy through Hudson. Under both policies, the Rosenbergs sought a defense. Both policies contain defense obligations for an “occurrence” which each policy defined differently.

The Chubb policy defined “occurrence” as "an accident which begins within the policy period resulting in bodily injury, shock, mental anguish, mental injury, or property damage." The Hudson umbrella defined the term as “an accident or accidental event, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.”

Both Chubb and Hudson denied the Rosenbergs’ defense requests. So, they brought a declaratory judgment against the insurers. The district court found the allegations in the complaint were not fortuitous or accidental and thus, not an occurrence. And even if a defense were owed, Pennsylvania law bars coverage for criminal acts. The complaint contained an allegation of concealing evidence of the crime which is a criminal offence.

On appeal, the Third Circuit affirmed. The complaint alleged the Rosenbergs intentionally concealed the handgun that would have implicated their son and led to the earlier discovery of the victim’s body. Thus, the claim did not involve an accident and failed to qualify as an “occurrence” under the Chubb policy.

While the court noted the subjective component of the Hudson policy’s definition of “occurrence”, it was of no matter. That is because Pennsylvania law forbids insuring criminal acts. Since the Rosenbergs failed to challenge the district court’s independent finding on the Pennsylvania law issue, they cannot prevail on their appeal. Indeed, the Rosenbergs did not develop any argument to contest this issue on appeal.

Editor’s Note: The district court also found the Intentional Act Exclusion and Molestation, Misconduct or Abuse Exclusion applied to preclude coverage under the Chubb policy. But the appellate court does not delve into the application of those exclusions.

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

01/31/25 Rook v. Dibble & Rook v. Wood
Appellate Division, Fourth Department
Fourth Department Modifies Orders in Related Cases Which Granted Defendants’ Summary Judgment Motions Dismissing Plaintiff’s Complaints on the Basis That She Did Not Sustain Serious Injury Within the Meaning of Insurance Law § 5102(d) Where the Evidence Presented by the Defendants Did Not Meet the Initial Prima Facie Burden

These cases stem from two separate motor vehicle accidents which occurred in Erwin, New York, involving the same Plaintiff, Sheryl L. Rook. The first accident occurred on November 22, 2018, when Plaintiff’s vehicle was allegedly rear-ended by a vehicle operated by Defendant Kaitlin Onalee-Irene Wood and owned by Defendant C Terreri-Wood. Shortly after, on December 7, 2018, Plaintiff’s vehicle was involved in another collision with a vehicle operated by Defendant Kevin S. Dibble and owned by Defendant Horseheads Automotive Recycling, Inc.

As a result of these accidents, Plaintiff alleged injuries to her cervical spine, thoracic spine, bilateral median nerve/carpal tunnel syndrome which required surgical release on the right, left shoulder pain, headaches, and depression. She claimed that these injuries met the Serious Injury Threshold under the following categories of Insurance Law § 5102(d): permanent consequential limitation of use, significant limitation of use, and 90/180 day. During the discovery phase, these matters were consolidated. Following discovery, Defendants made motions for summary judgment seeking to dismiss the respective complaints on the ground that Plaintiff did not sustain a serious injury. By Order of Supreme Court, Steuben County, these motions were granted and the complaints dismissed. Plaintiff sought appeal in both cases.

On review, the Fourth Department found that Defendants’ submissions in support of their respective motions failed to meet their initial burden of establishing as a matter of law that Plaintiff did not sustain a serious injury, thus the burden never shifted to Plaintiff to raise a triable issue of fact in opposition. Specifically, the Fourth Department reviewed Defendants’ IME physician’s report which was produced in support of the motions. This physician, who examined the Plaintiff and reviewed all relevant medicals both prior to and after these accidents, opined that Plaintiff suffered causally related strains to her left trapezius and cervical spine, which were exacerbated from the latter of the subject accidents. Further, this IME physician’s report contained a quantitative assessment showing Plaintiff had related range of motion loss.

Since Defendants’ own submissions contained objective proof of a causally related injury and documented range of motion loss sufficient to constitute a serious injury, Defendants failed to meet their prima facie burden on motion practice. Accordingly, the Orders of the Supreme Court, Steuben County, were unanimously modified on the law by denying the motions in part and reinstating the complaints with respect to the claims of serious injury under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d).

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

02/04/25 Scottsdale Ins. Co. v. Sisco Architectural Metals Co.
Supreme Court of the State of New York, New York County
Court Held Insurer Was Not Obligated to Provide Coverage Based on Privity-Based Endorsement and Upheld Disclaimer of Coverage Based on Employee Exclusion Issued 62 Days After Tender

Scottsdale Insurance Company (“Scottsdale”) filed an action against Sisco Architectural Metals Co. (“Sisco”), Emmanuelle Castillo, Shannon Contracting LLC (“SC LLC”), and 14 MP Street Property LLC (“14 MP”). Scottsdale sought a declaration that it was not required to defend and/or indemnify Sisco, 14 MP, or SC LLC in an underlying labor law action. Scottsdale had issued a general liability policy to Sisco, which was in effect at the time of the injuries alleged in the underlying labor law action.

Scottsdale moved for default judgment against Sisco, and summary judgment against the appearing defendants. MP 14 and SC LLC cross-moved for summary judgment, arguing that Scottsdale has a duty to defend and indemnify Sisco as a named insured, and MP 14 and Shannon Contracting as additional insureds. Additionally, the cross-motion asserted that Scottsdale cannot move for default judgment, because they failed to move for the relief within one year of service.

Scottsdale argues that there is no written contract or agreement between MP 14 and Sisco, identifying that MP 14 is to be named as an additional insured which is a requirement for additional insured status in the Scottsdale policy. In opposition, MP 14 identifies that there was a contract between SC LLC and Sisco, which identified that Sisco would name both Shannon Contracting and MP 14 as additional insureds.

Notably, the Scottsdale policy contained a privity-based additional insured requirement, which stated an additional insured was, “any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy.”

Since it was undisputed that there was no written agreement between Sisco and MP 14, the Court held that MP 14 is not entitled to coverage under the Scottsdale policy, because it does not qualify as an additional insured.

In relation to obligations to defend and indemnify SC LLC, Scottsdale asserts that coverage was based by an Absolute Employee and Worker Injury Exclusion, excluding coverage for bodily injuries to an employee of any insured. In opposition, SC LLC asserts that reliance on the exclusion is barred, because Scottsdale failed to timely assert it.

Under Insurance Law 3420(d), an insurer must give written notice of a disclaimer as soon as reasonably possible after it learns of the grounds for disclaiming liability. However, a delay in disclaiming coverage may be excused if an insurer conducts an investigation into issues affecting an insurer’s decision whether to disclaim coverage.

Here, the claim was tendered to Scottsdale on September 24, 2020. Scottsdale disclaimed coverage, asserting the Absolute Employee and Worker Injury Exclusion on November 25, 2020.

The court disagreed with SC LLC that Scottsdale untimely disclaimed coverage. Although the tender stated that Sisco was the employer of the plaintiff in the labor law action, the complaint failed to identify Sisco as the employer. As such, Scottsdale contacted Sisco on October 6, 2020, only one week after receiving the tender. Sisco identified, on October 6, 2020, that the underlying plaintiff was not his employee. Scottsdale additionally acquired a copy of the Worker’s Compensation Board decision, dated October 16, 2020, where Sisco disputed the employee status of the underlying plaintiff.

However, on November 2, 2020, MP 14 filed a third-party complaint in the underlying labor law case, asserting that Sisco was the employer of the injured plaintiff.

Based on the inconsistent information given to Scottsdale, and its continuing investigation, the court found that the two-month delay in disclaiming coverage was reasonable and timely.

As to the default judgment against Sisco, the court found that Scottsdale never abandoned the action. Here, Sisco was served on May 5, 2022, while Scottsdale moved for default judgment on September 5, 2023. Despite the fact that this was a fifteen month delay, the court identified that Scottsdale filed an RJI, contacted Sisco regarding the default, and engaged in discovery with the appearing defendants. MP 14 and SC LLC failed to make a showing of prejudice from the three month delay in Scottsdale moving for summary judgment.

Based on the foregoing, the court ordered that Scottsdale’s motion for summary judgment and default judgment were granted. The court declared that Scottsdale has no obligation to defend or indemnify Sisco, MP 14, or SC LLC in the underlying labor law action.

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

02/14/2025 New York Senate Bill S4433
New York State Senate
The Grieving Families Act has been reintroduced as Bill S4433

On February 4, 2025, the Grieving Families Act was reintroduced as Bill S4423. The Bill again seeks to provide for the types of damages that may be awarded to the persons for whose benefit an action for wrongful death is brought.

This legislation attempts to amend the estates, powers and trusts law, in relation to payment and distribution of damages in wrongful death actions. The bill seeks to expand the available economic or pecuniary losses, including damages for grief and anguish, available to “surviving close family members.”

On December 21, 2024, Governor Kathy Hochul vetoed the 2024 version of this bill, Assembly Bill A9232-B.

Governor Hochul wrote, “[f]or the third year in a row, the Legislature has passed a bill that continues to pose significant risks to consumers, without many of the changes I expressed openness to in (the) previous round of negotiations.”

As it was introduced Bill S4433 is substantively the same as Bill A9232-B which was vetoed by the Governor in 2024.

DOMENICA’S DIARY on BAD FAITH
Domenica D. Hart
ddk@hurwitzfine.com

01/10/25 A&M Warshaw Plumbing & Heating, Inc. v. Mount Vernon Fire Ins. Co.
United States District Court, Southern District of New York
Arguable Difference of Opinion Precludes Bad Faith: New York Reminds Us That Allegations of Simple Error or Disagreements on a Denial of Coverage Are Not Sufficient to Prove Bad Faith

This matter arises from a class action complaint filed by two laborers against A&M Plumbing and A&M Fire in New York State Court, alleging that they had failed to pay their full wages in breach of a public works contract on a building restoration project in Brooklyn. A&M Fire and A&M Plumbing took out separate insurance policies with Mount Vernon Fire Insurance Company to insure against lawsuits brought under the Fair Labor Standards Act ("FLSA") and similar wage laws. The Complaint was later amended to include allegations pursuant to New York Labor Law § 220(3)(a). NYLL § 220(3)(a) requires that laborers on public works contracts be paid "not less than the prevailing rate of wages," and mandates that these contracts "shall contain a provision" requiring payment of those wages. Both parties sought defense and indemnity from Mount Vernon. Mount Vernon denied coverage 3 times on the premise that the policy language covered only claims for alleged violations of the FLSA and similar laws, and the Lawsuit alleged breach of contract claims.

A&M Warshaw (‘A&M”) filed an insurance coverage action against Mount Vernon seeking a declaration that Mount Vernon owed it defense and indemnity, and seeking punitive damages and attorney fees. The Court found that AM Warshaw’s breach of implied covenant of good faith and fair dealing claim was duplicative of the breach of contract claims. As New York law does not recognize a separate cause of action for breach of the implied covenant claim when there is a breach of contract claim based on the same facts, the implied covenant claim was barred. The Court dismissed the punitive damage claim as A&M did not allege intentional tort against Mount Vernon which was egregious conduct directed at the public. Allegations of intentional tort, egregiousness and direction toward the public at large are required elements of a punitive damage claim in New York. The Court finally dismissed A&M’s claim for attorney’s fees. The two exceptions to the New York Law, which does not permit an insured to recover fees and expenses when it sues their insurer to enforce the policy, were not met. Firstly, Mount Vernon had not put A&M in a “defensive posture by legal steps.” The action was an affirmative action by A&M, and denial of coverage, even 3 times, is not a “legal step.”

Secondly, the Court also found A&M was not entitled to attorney’s fees based on Bad Faith. The well-settled New York law prevailed here. There is a strong presumption against a finding of bad faith liability by an insurer. The burden of proving bad faith requires that an insured show that the denial of coverage was so entirely without basis that no reasonable insurer would assert or be expected to assert the denial, given the same facts. Simple error or disagreement/difference of opinion, even if the position is ultimately wrong about coverage obligations, is not enough. Although there was a disagreement between A&M and Mount Vernon regarding claims for any actual or alleged violation of wage-and-hour laws versus breach of contract claims, the court found that the ambiguity created an "arguable difference of opinion" that precludes the finding of bad faith.

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

02/03/2025 904950 Ontario Limited v. Dominion of Can. Gen. Ins. Co. et al.
Ontario Court of Appeal
Plain, Undefined Words in an Insurance Policy Will Be Given Their Ordinary Meaning

If water enters a basement through a pipe that goes through a wall, did the water enter through the wall or the pipe? If it entered through the wall, then there would be no coverage for water damage. If the water entered through the pipe, there is coverage. Two levels of courts in Ontario said there is coverage. This is the stuff that makes coverage lawyers smile in pure happiness. This gives us meaning and purpose ….

This very brief decision is short on detail and gets right to the point. It seems that the Dominion of Canada General Insurance Company (Travelers Canada), issued a property insurance policy to an Ontario numbered company covering property somewhere in Ontario. Like most property policies, property damage caused by water discharging from watermain was covered UNLESS the water entered the insured property through a basement wall.

In this case, a watermain burst. Water from the watermain flooded the basement of the insured property. The water entered the basement through a pipe that transected one of the walls of the basement. We assume that means that the pipe penetrated through the wall, extending from one side of the wall to the other, creating a pathway for the water. Apparently, the pipe was no longer used for any purpose, but it had not been sealed.

Counsel for the insurer argued that the exclusion clause unambiguously applied.

The motion judge disagreed stating “walls and pipes serve conflicting functions. Walls “enclos[e]” and “protect[]” a property against the outside world: Canadian Oxford Dictionary, 2nd ed. (Don Mills: Oxford University Press, 2004), definition of “wall”. Pipes do the opposite. As “tube[s] . . . used to convey water” from place to place, they enable water to flow into or out of a property: Canadian Oxford Dictionary, definition of “pipe”. The same judge held that as the pipe was not sealed, the pipe was still ‘a pipe’. The Court of Appeal stated that the pipe has a different function than a wall.

The Court of Appeal rejected the insurer’s secondary argument that the parties could not have expected that a pipe would transect the wall:

We reject its argument that the parties could not have reasonably expected that a pipe might transect the wall or that extending coverage produces an unrealistic result. Pipes sometimes do transect walls. It is reasonable and realistic to expect insurers to turn their minds to this possibility when drafting policies. Indeed, as the …[insured]… submits, some insurers expressly exclude coverage for damage caused by water that enters through openings in walls….

The Court of Appeal held that the exclusionary language was not ambiguous. Nonetheless, that court went on to say that if it was ambiguous, the ambiguity would be resolved by applying the rule of contra proferentum and reading the exclusion narrowly in favour of coverage. In that case:

“As the insurer who drafted the policy, it could have specifically addressed the entry of water through pipes. It must live with the consequences of an ambiguity that its failure to do so created.”

The insurer was ordered to cover the damage and to pay $8,000 in court costs to the insured.

The moral story is that none of the pipes in the images below are walls:

Labor Law Pointers - Volume XIV, No. 3

Thu, 06 Feb 2025 14:31:17 +0000

Volume XIV, No. 3
Wednesday, February 5, 2025

Note from David R. Adams:

Do you have a situation? We love situations. Give us a call, send an email, drop by; we truly enjoy solving complex Labor Law and risk transfer issues.

Usually, I jump right to the reason you're here—to see the photos and videos we receive or find showing the Darwinist methods utilized by workers across New York State. However, today we begin with a case, given its importance. In the Interiano case, analyzed by Marc below, the plaintiff falls to the flooring of a scaffold but not off the scaffold. The First Department holds that it is a § 240(1) case, although the plaintiff never fell off the scaffold. This will seem like an expansion of the rule. A worker who is injured while attempting to prevent himself from falling, when a safety device fails to provide protection, can claim the extraordinary protection provided under § 240(1). The common example is a worker on a ladder that shifts or otherwise moves, causing him to reach out and grab a portion of the structure and while not falling, he may injure his shoulder. That is a protected incident.

In the case below, the plaintiff was caused to fall due to a scaffold that moved or shifted beneath her. She first fell into the scaffold railings and then onto the scaffold floor. Prior to the incident, the plaintiff had requested that the scaffold be tied to the building to prevent movement, but it was not secured. In my mind, the scaffold prevented the plaintiff from falling to the ground, as it was intended to. However, the First disagreed. They pointed out that the plaintiff was "injured by the very safety device intended to protect her from the gravity-related risks posed by working" at height.

This begs the question; would the court have ruled the same way had the plaintiff not asked that the scaffold be secured? The court emphasized that fact in their opinion. We all know that this will be used by plaintiffs to expand the scope of § 240(1). I welcome any comments on this case. I find it troubling and predict we will see it cited a lot in the coming months and years.

Ok, off my soapbox and onto the reason you’re here: to look at the pictures.

In our first offering of the month, we have a vintage photo taken in 1974 of a "wall of sound," containing 604 separate speakers, being erected by a crew working for Bear Stanley, the sound crew chief for the band. It was designed to allow the playing of distortion-free music for the thousands of fans attending the shows. As they attempted to install the uppermost level of speakers, another worker for the band fell and was seriously injured. § 240(1)? (please apply the law as it stands today, this is not a history lesson, but § 240(1) has been around since 1885, though it has been amended by the legislature and had its reach extended by the judiciary many times over the years.)

Let’s start with the basics. The plaintiff is a person so employed and thus an appropriate plaintiff. The “Wall of Sound” is composed of component parts and thus qualifies as a structure. The owner of the structure, the band, is a valid defendant as is the owner of the property on which the structure is resting. The plaintiff was constructing the “Wall of Sound” and as construction, it is a valid and covered activity, and the plaintiff was injured by a height differential and the effects of the force of gravity. Thus, the plaintiff has a prima facie case under § 240(1). There is no sole proximate cause defendant here, but the band has an exclusive remedy defense under section 11 of the Workers Compensation Law.

Bonus points for the first one to name that band.

Our next photo was taken of my neighbor, who was having a leak repaired to his roof near the vent by a roofing company hired for the job. Since the roof was slate, the owner of the condo (an attorney I would like to point out) suggested—though did not directly instruct—the worker to place a ladder on the roof to help him climb without disturbing the precious slate shingles. Predictably, the worker fell from the roof when the ladder slipped sideways. § 240(1)?

This one is fun. To start, the plaintiff has a prima facie case under § 240(1) if, and only if, the homeowner did not direct or control the work. Let’s start at the beginning. The plaintiff is a person so employed, the property owner is a valid defendant, the task is a repair, and the plaintiff fell from a height. The defendant, the property owner of a single-family house, and will claim that he did not control or direct the work. The plaintiff will argue that the recommendation that the plaintiff use the ladder laid on the shingles rises to a level of direction or control and thus the owner is a valid defendant. In this case, the plaintiff is most likely correct, and the plaintiff would have a valid § 240(1) case.

As always, we remind you all that we are available for a refresher or more advanced session on Labor Law and the ability to transfer risk, should anyone need some training, just let us know. We are available in person or via online seminar.

That’s it for this month. As always, please feel free to reach out to us with any questions Labor Law or Risk-Transfer related. Hope you learned something.

-Marc mas@hurwitzfine.com
-David dra@hurwitzfine.com

Hurwitz Fine P.C.
The Liberty Building
424 Main Street, Suite 1300
Buffalo, New York 14202
Phone: 716.849.8900
Fax: 716.855.0874

Hempstead v Hammer & Steel, Inc.
January 2, 2025
Appellate Division, First Department

Plaintiff was injured when a cement mixer, weighing 600+ pounds, allegedly fell and crushed him. STS manufactured the mixer and H&S distributed it. The trial court denied the motions of 9501 Ditmars Boulevard and Enterprise Holdings, ICS Builders and Peterson for summary judgment dismissing the Labor Law § 240(1) claim.

The First Department affirmed the trial court’s denial of the motion. While the elevation from which the mixer fell to the location where it encountered plaintiff may have been a matter of feet, the mixer was still capable of generating an amount of force significant enough to crush him. Moreover, the mixer needed to be secured for the purposes of the undertaking – indeed, the very purpose of the undertaking was to secure it for transport.

PRACTICE POINT: Remember that the Court of Appeals declared in Outar v City of New York that “falling object” liability under § 240(1) is no longer limited to cases in which falling objects are in the process of being hoisted or secured and includes objects that required securing for the purposes of the undertaking. Here, the Court found that the mixer needed to be secured, and plaintiff’s injury-producing work involved securing it for transport.

Perez v 1334 York, LLC
January 7, 2025
Appellate Division, First Department

Plaintiff fell from a mobile scaffold while taping drywall at a construction site situated on the fifth floor of a large office building. Plaintiff allegedly used a scaffold which lacked guardrails on its long sides only after searching for guardrails and asking his foreman, who told him to proceed with his work. The trial court denied plaintiff’s motion for summary judgment under Labor Law §§ 240(1) and 241(6).

Labor Law § 240(1) (MAS)
The First Department unanimously reversed the trial court’s decision and granted plaintiff’s motion as plaintiff’s testimony that he was provided a scaffold lacking guardrails on its long sides was undisputed. Although defendants indicated that workers were generally aware that railings were available throughout the site, defendants failed to show that their precise locations were made known to the workers. Thus, the Court found that the affidavits of the three foremen and coworker are conclusory as the record failed to specify the location of the guardrails, and at oral argument, counsel was unable to specify where these safety devices could be found. While the record contains photos of the subject scaffold, there are no photos of the missing guardrails that might serve as a guide to their possible location. Accordingly, defendant’s proof demonstrated only the general availability of safety equipment at a work site, which does not relieve defendants of liability.

PRACTICE POINT: Caselaw has not further defined the meaning of “readily available,” beyond qualifying that a safety device need not be “in the immediate vicinity.” However, the seminal Gallagher case states that the worker should at least “know where to find the safety devices.” Where, as here, a defendant cannot show, and does not even know, the location of safety devices in a space the length of a city block, it cannot establish that the devices were “readily available” to support a sole proximate cause defense.

Interiano v Silverstein Galaxy Prop. Owner, LLC
January 9, 2025
Appellate Division, First Department

Plaintiff fell while working on a motorized scaffold at the exterior fourth floor level of a building. Plaintiff asked her coworker to tie off the scaffold to the building, as coworkers on other scaffolds had done, but he refused to do so. On both days, the wind caused the unfastened scaffold to sway noticeably, but the scaffold remained untied. Plaintiff testified that her accident occurred when the wind, coupled with the force of her coworker's drill boring into the facade, again caused the scaffold to sway away from the building, causing her to lose her balance and fall backward into the scaffold railings, and then to the surface of the scaffold. The trial court granted plaintiff’s motion for summary judgment pursuant to Labor Law § 240(1).

Labor Law § 240(1) (MAS)
The First Department unanimously affirmed the trial court’s decision because the scaffold violated the statute’s requirement that it be so constructed, placed and operated as to give proper protection to plaintiff. Specifically, defendants’ failure to fasten the scaffold to the building directly caused plaintiff to be injured by the very safety device intended to protect her from gravity-related risks posed by working on the building’s fourth-floor exterior.

PRACTICE POINT: An injured person needs not fall completely off a scaffold to recover under § 240(1), so long as the injury resulted from an elevated-related hazard. Here, plaintiff’s fall to the scaffold’s second floor from an unsecured scaffold four stories from the ground was covered by the statute’s extraordinary protection.

Barreto v Board of Mgrs. of 545 W. 110th St. Condominium
January 14, 2025
Appellate Division, First Department

Plaintiff sustained injuries while washing windows at an 11-story building owned by a condominium. The trial court denied summary judgment to plaintiff under Labor Law § 240(1) and denied the motions of the condo defendants for summary judgment but granted the contractor’s (Chelsea) motion dismissing plaintiff’s claims against them since they were not a statutory agent of the condo defendants.

Labor Law § 240(1) (MAS)
The First Department affirmed denial of all motions. Plaintiff established his entitlement to summary judgment by showing that his accident arose from a gravity-related risk against which defendants failed to adequately protect him. However, the opinions of the condo defendants’ and Chelsea’s experts, as well as the testimony of plaintiff’s coworker, raised an issue of fact as to whether plaintiff’s failure to use a rope guard and alleged failure to properly position his rope grab above his head was the sole proximate cause of his accident.

Since Chelsea was the only contractor that the condo defendants retained to perform their window-washing project, the First Department held that Chelsea cannot escape liability under § 240(1) because it delegated the work by subcontracting it to plaintiff’s employer. Chelsea’s authority to supervise and control the work is also demonstrated by its subcontracting the work to plaintiff’s employer and it did not matter that Chelsa did not actually supervise, direct or control the injury-producing work.

PRACTICE POINT: An “agent” of the owner or contractor under Labor Law § 240(1) is someone who can control the activity which brought about the injury. Here, Chelsea could not escape statutory liability because it delegated the work to plaintiff’s employer and thus had the authority to supervise and control the injury-producing work.

Pyankaroo v Renali Realty Group 1, LLC
January 14, 2025
Appellate Division, First Department

Plaintiff fell from a ladder while removing or reattaching a canvas storefront sign that was bolted into the building above the store's front entrance. Plaintiff contended he undertook his task to prepare the storefront for the intended work so that a new LED lighting system could be installed in conjunction with the business’s planned project of replacing the storefront’s roll-down security gate on the front of the building, which was to be performed by contracts. The trial court denied plaintiff’s motion for partial summary judgment on liability under Labor Law § 240(1).

Labor Law § 240(1) (MAS)
The First Department unanimously affirmed the trial court’s decision. Even assuming plaintiff met his burden, there are factual issues as to whether this work begun and was underway at the time of his fall, and thus whether plaintiff was engaged in a covered activity.

PRACTICE POINT: We analyze every Labor Law § 240(1) claim using the same four criteria: (1) appropriate plaintiff’; (2) appropriate defendant; (3) appropriate project/work; and (4) elevation-related/gravity-related risk. Here, plaintiff had an issue with the third element as the court noted his injury-producing work had the earmarks of routine maintenance, which is not covered under the statute.

Garcia v Soho AOA Owner, LLC
January 21, 2025
Appellate Division, First Department

Plaintiff's decedent was a site safety manager employed by CRSG. Plaintiff's decedent was struck and injured by a metal sign that measured 4' x 5' and 1/4 -inch thick, which fell from a side wall of an overhead sidewalk shed erected on the premises. The sign was fastened by screws to the shed's parapet wall three years prior to the accident. Plaintiff's decedent noted that there were six screws attached to the sign at the time it fell, and other evidence indicated the sign had eight holes for screws to be inserted and the parapet wall to which the sign was affixed would regularly be removed to allow delivery of materials into the upper level of the building.

Several witnesses, including plaintiff's decedent, testified at depositions that the sign had never previously fallen, that no complaints were registered as to its condition, and that nothing appeared to be amiss with the sign prior to the accident, based on visual observation alone. Witnesses did not note any defects in the parapet wall following the accident. The Soho Defendants claimed they had no notice of the latent, unsecure condition of the sign, but no evidence was offered as to any inspections conducted of the sign and the parapet wall to which it was affixed for several years prior to the accident.

The trial court denied the Soho Defendants motions for summary judgement dismissing plaintiff’s common-law negligence and Labor Law §200 claims and denied Soho and Plaza’s motion for summary judgment for conditional contractual indemnification. The trial court also denied CRSG’s motion to dismiss Soho Defendants’ contractual claims against them.

Labor Law § 200 and Common-Law Negligence (EDA)
The First Department affirmed the trial court’s decision, finding that where an object on the premises is capable of deteriorating, or the hazard it presents is concealed from view, the property owner, as well as a general contractor under Labor Law § 200, must demonstrate that reasonable inspections of the object were conducted to establish prima facie that they lacked notice of the dangerous condition. Absent proof of prior inspections conducted of the sign, the Soho Defendants' burden on their motion never shifted to plaintiff, regardless of the sufficiency of the papers offered in opposition. Even if the Soho Defendants had made out a prima facie case, on this record the Court found factual issues as to whether a reasonable inspection by the building owner or property manager would have detected the latent hazardous condition of the sign before it fell on plaintiff's decedent.

Indemnity Issues in Labor Law (PCSM)
The First Department held that defendants, Soho AOA and Plaza, established their entitlement to summary judgment on their claim for conditional contractual indemnification from CRSG, the site safety contractor. The subject indemnification provision required that CRSG indemnify Soho AOA and Plaza for losses arising out of or resulting from performance of CRSG’s work to the extent the loss was caused in whole or in part by the conduct, acts or omissions of, or breach of contract by, CRSG or anyone directly or indirectly employed by it. The First Department held that this indemnification allowed for conditional contractual indemnification in favor of Soho AOA and Plaza and against CRSG despite the existence of a factual issue as to their negligence. The First Department held, however, that factual issues as to whether CRSG properly performed its obligations under its site safety subcontract precluded dismissal of the third-party claim for contractual indemnification.

Silva v 770 Broadway Owner LLC
January 21, 2025
Appellate Division, First Department

Plaintiff was marking off areas of the floor with duct tape to prepare the floor for painting when he was struck on the back of the head by a ladder, causing him to lose consciousness. The trial court granted defendants’ motions dismissing plaintiff’s Labor Law § 240(1) claims and denied plaintiff’s cross-motion for summary judgment on that same claim.

Labor Law § 240(1) (MAS)
The First Department unanimously reversed the trial court’s decision, granted plaintiff’s cross-motion and denied defendants’ motion. Although plaintiff conceded that he did not see the ladder before the accident, his deposition testimony sufficiently identified the ladder as the cause of his injuries. The evidence also demonstrated that the ladder was not adequately secured for the purposes of the undertaking. Moreover, it was foreseeable for a ladder resting against a wall to topple over and strike a nearby worker.

PRACTICE POINT: It is settled law that an injured worker is entitled to summary judgment in a “falling object” claim where he or she was struck by a falling object, such object required securing for purposes of the injury-producing work, and that the lack of adequate overheard overprotection failed to shield against the falling of such object and therefore proximately caused the injuries.

Mejia v 770 Broadway Owner, LLC
January 28, 2025
Appellate Division, First Department

Plaintiff was struck by a 16-foot-long scaffold pipe that had been left unsecured on its end. The trial court denied plaintiff’s motion for partial summary judgment on his Labor Law § 240(1) claim and granted the motions of Owner and Lhotse dismissing that claim against them. The Court also denied M&M’s motion for summary judgment and dismissed their crossclaims for common-law indemnification.

Labor Law § 240(1) (MAS)
The First Department reversed the trial court and granted plaintiff’s motion for partial summary judgment against Owner and Lhotse. The weight of the pipe and its descent were not de minimis, nor are there any issues of proximate cause or credibility that would preclude summary judgment on that claim in favor of plaintiff and against Owner and Lhotse as the owner and general contractor at the project.

PRACTICE POINT: Although plaintiff’s work did not involve the pipes, and there was no evidence that plaintiff had any knowledge of the presence of the pipes in the area, the record demonstrated that the pipes were not adequately secured for purposes of the undertaking, as required under Labor Law § 240(1). Under that scenario, summary judgment is proper for the injured worker.

Indemnity Issues in Labor Law (PCSM)
The First Department held that M & M was entitled to dismissal of all crossclaims against it, finding no admissible or credible evidence placing M & M at the project to impart common law, statutory, or contractual liability. The First Department further reasoned that though third-party defendant Rock Group’s principal believed that that it had subcontracted work to M&M, and that one of M&M's unnamed employees must have left the pipe at that location, Rock Group failed to proffer any witness testimony placing M&M at the project, nor did it submit any documentary evidence such as invoicing or payment for the alleged work.

Rodriguez v Riverside Ctr. Site 5 Owner LLC
January 28, 2025
Appellate Division, First Department

Plaintiff was injured while working as a delivery truck driver for Port Morris. Plaintiff had just completed a delivery of tiles for other employees to install when he allegedly stepped and fell into a two-foot by three-foot hole near a temporary loading dock ramp. Riverside owned the premises, Tishman was the construction manager for the work taking place. Five Star was the electrical contractor responsible for installing temporary lighting during the project. The trial court granted Five Star’s motion for summary judgment dismissing Labor Law §§ 240(1), 241(6), and 200 claims against them and granted Riverside’s and Tishman’s motion dismissing the §§ 240(1) and 241(6) claims.

Labor Law § 240(1) (MAS)
The First Department reversed the trial court’s decision and granted plaintiff partial summary judgment on liability. Because plaintiff’s work in delivering and unloading tiles to be used in the activity covered by Labor Law § 240(1) was “necessary and incidental” to the protected activity, he was within the class of workers protected by the statute, notwithstanding that he was not assigned to participate in the installation of the tiles.

PRACTICE POINT: The task a plaintiff is performing at the exact moment of their accident is not dispositive of whether they were engaged in a protected activity for purposes of liability under § 240(1). Rather, the inquiry includes whether plaintiff’s employer was contracted to perform the kind of work enumerated in the statute and whether plaintiff was performing work “necessary and incidental” to a protected activity.

Labor Law § 200 and Common-Law Negligence (EDA)
The First Department affirmed the trial court’s decision, noting that, “[t]o be treated as a statutory agent, the subcontractor must have been delegated the supervision and control either over the specific work area involved or the work which [gave] rise to the injury. If the subcontractor’s area of authority is over a different portion of the work or a different area than the one in which the plaintiff was injured, there can be no liability under this theory." Here, Five Star's work as the electrical contractor was limited to providing electrical installation and temporary lighting, and did not encompass either tile work or maintaining the temporary ramp or surrounding areas.

Bravo v 609 W 56th St. Prop., LLC
January 15, 2025
Appellate Division, Second Department

Plaintiff was working at a construction site in Manhattan when he slipped on oil underneath sand on the fourth floor of the site. According to plaintiff, before he slipped, he had been cleaning up debris from the demolition of sheetrock walls, as he had been instructed to do by his foreman and slipped while walking to get a broom and a shovel. The trial court granted plaintiff’s motion for partial summary judgment on liability under Labor Law § 241(6) based on a violation of Industrial Code 23-1.7(d).

Labor Law § 241(6) (TPW)
The Second Department affirmed the grant of summary judgment in favor of plaintiff based on violation of Labor Law § 241(6) predicated on 12 NYCRR 23-1.7(d), which relates to slipping hazards. Plaintiff met his burden by establishing that his injuries were proximately caused by a violation of the Industrial Code section by submitting a transcript of his deposition testimony, in which he testified that, while cleaning up debris from the demolition of sheetrock walls, as he was instructed to do by his foreman, and walking to get a broom and a shovel, he slipped and fell when he stepped on oil, a foreign substance, underneath sand on the floor. In opposition, the defendant failed to offer any evidence, other than mere speculation, to refute the plaintiff's showing.

Medina v 1277 Holdings, LLC
January 22, 2025
Appellate Division, Second Department

Plaintiff and a coworker were pushing a pallet jack up a plywood ramp when the coworker lost control of the pallet jack, which hit plaintiff's shoulder, and caused him to fall from the ramp onto the floor. Plaintiff testified at his deposition that the ramp was wet, slippery, and covered in frozen water at the time of the accident. The trial court denied summary judgment to plaintiff under Labor Law §§ 240(1) and 241(6) based on a violation of 12 NYCRR 23-1.7(f) but granted plaintiff’s motion under § 241(6) based on a violation of Industrial Code 23-1.7(d).

Labor Law § 240(1) (MAS)
The Second Department affirmed the trial court’s decision, finding that plaintiff’s submissions failed to eliminate triable issues of fact as to whether adequate safety devices were provided to him at the work site and, if not, whether the absence of such devices was a proximate cause of the accident. The opinion of plaintiff’s expert failed to establish that the safety devices provided to plaintiff, including the pallet jack and the ramp, were inadequate.

PRACTICE POINT: Where, as here, plaintiff’s expert fails to establish the safety device provided (pallet jack and the ramp) was inadequate, plaintiff cannot meet his or her burden on demonstrating that § 240(1) was violated, and that the violation proximately caused his or her injury. Only after that showing does the burden then shift to defendant to raise a factual issue by presenting evidence that the device furnished was adequate and properly placed and that the conduct of plaintiff may be the sole proximate cause of his or her injuries.

Labor Law § 241(6) (TPW)
The Second Department affirmed the trial court’s decision on the issue of liability pursuant to a violation of Labor Law § 241(6) as was predicated on a violation of 12 NYCRR 23-1.7(d) and (f). Specifically, plaintiff failed to establish that 12 NYCRR 23-1.7(f), which provides that “[s]tairways, ramps or runways shall be provided as the means of access to working levels above or below ground,” was violated. Accordingly, the Court held that the trial court properly denied that branch of the plaintiff's motion. However, plaintiff made a prima facie showing that the ramp was wet and slippery at the time of the accident, in violation of 12 NYCRR 23-1.7(d), which requires employers to remove or cover certain substances, including ice, snow, and water, that may cause slippery footing, and that this violation proximately caused his accident. In opposition, the Court further held that Hiline failed to raise a triable issue of fact.

Velazquez v Mosdos Meharam Brisk of Tashnad
January 22, 2025
Appellate Division, Second Department

Plaintiff commenced an action when he fell through an uncovered opening in the floor where a staircase was to be built while working at a construction site. Plaintiff was employed by AFP who were to install fire sprinklers at the site. The trial court granted plaintiff’s motion for summary judgment against Mosdos & JBE alleging violations of Labor Law 240(1) and 241(6). The parties thereafter entered into a stipulation of settlement in open court, settling plaintiff’s claims. Prior to the settlement, the Second Department reversed a prior order denying AFP’s motion to vacate a prior order granting third-party plaintiff’s motion for summary judgment on contractual indemnification against AFP. After the Second Department’s decision, AFP moved to restore the action to the trial calendar to determine the liability of AFP and third-party plaintiffs. Mosdos & JBE opposed AFP’s motion and moved to dismiss AFP’s counterclaim for contribution arguing General Obligations Law § 15-108(c) barred the counterclaim. The trial court granted AFP’s motion and denied the cross-motion.

Indemnity Issues in Labor Law (PCSM)
The Second Department affirmed the trial court’s decision. Since the liability of AFP and third-party plaintiffs had been adjudicated by the trial court before the parties’ execution of the stipulation of settlement, General Obligations did not apply to bar AFP’s counterclaim for contribution. Moreover, even if it could apply, the trial court properly determined that the parties waived its application. Since the parties agreed in the stipulation that AFP’s insurer would pay the settlement in full, but that AFP’s appeal and the third-party litigation would continue to resolve the question of liability, the Court held that the parties did not intend for AFP to give up its claim for contribution against third-party plaintiffs.

PRACTICE POINT: General obligations Law § 15-108(c) provides that “[a] tortfeasor who has obtained his own release from liability shall not be entitled to contribution for any other person.” However, it does not apply to settlements agreed upon after the adjudication of the liability of the settling tortfeasors. There is nothing in the legislative history or purpose to indicate that the statute was intended to be nonwaivable.

Burgos v Darden Rests., Inc.
January 2, 2025
Appellate Division, Third Department

Plaintiff was injured on the job while demolishing a walk-in freezer at property leased to N & D. Darden managed the restaurant, who hired DMC Facility Services, plaintiff's employer, to demolish the walk-in freezer at the restaurant. While plaintiff was accessing the top of the freezer from the building's roof and cutting around a sprinkler head that went into the freezer's ceiling, the freezer roof collapsed and plaintiff fell to the floor, sustaining injuries to his right side and head. The trial court denied plaintiff's motion for partial summary judgment and granted Darden, N & D and Olive Garden’s cross-motion to dismiss the Labor Law §§ 241(6) and 200 claims against them.

Labor Law § 240(1) (MAS)
The Third Department affirmed the denial of plaintiff’s motion. Although the parties offered conflicting evidence as to what equipment was provided, they seemingly agree that it was sufficient to complete the job from below. Moreover, the affidavits of Munger and Simmons allege that plaintiff was told to demolish the freezer from below and was instructed to call a supervisor if plaintiff had questions or concerns during the job. Therefore, the Court found a triable issue of fact as to whether plaintiff actively ignored the supervisor’s instructions and whether his conduct was the sole proximate cause of his injury. However, to the extent that the trial court in its decision implied that there was no elevation-related hazard as a matter of law, the Third Department disagreed with that finding and instead determined there are also issues of fact in this regard.

PRACTICE POINT: This case is a great example of the sole proximate cause defense. A defendant has no liability under § 240(1) when plaintiff: (1) had adequate safety devices available, (2) knew both that the safety devices were available and was expected to use them, (3) chose for no good reason not to do so, and (4) would not have been injured had he or she not made that choice. Here, plaintiff was not entitled to summary judgment as defendants raised a triable issue of fact as to the sufficiency of the equipment provided and whether plaintiff’s negligence was the sole cause of his injury.

Labor Law § 241(6) (TPW)
The Third Department held that by raising no argument relative to the denial of plaintiff’s motion as to his Labor Law § 241 (6) claim or the granting of defendants' cross-motion for summary judgment as to the Labor Law § 241(6) claim, plaintiff abandoned the arguments on appeal.

James v Marini Homes, LLC
January 9, 2025
Appellate Division, Third Department

Plaintiff, an employee of D & D Masonry., was injured while working at a construction site in a four-foot-deep "dig" excavated for the foundation of a new townhome. Plaintiff was allegedly injured when his coworker, around 10 feet away, threw a wooden board from ground level in plaintiff’s direction while he was inside the dig. Marini Homes was the general contractor which hired D & D Masonry for the foundation work. The trial court denied each party’s motion and cross-motion for summary judgment, finding plaintiff’s proof was insufficient for summary judgment but raised questions of fact to defeat the general contractor’s motion.

Labor Law § 240(1) (MAS)
The Third Department reversed the trial court’s decision and dismissed the Labor Law § 240(1) claim. Defendants’ proof showed that the dig was surrounded by an earthen embankment, which plaintiff described as a “ramp” from ground level to the bottom of the dig where he was working. Accordingly, the Court held that defendant established that plaintiff was not injured by an object that fell, while being hoisted or secured, because of the absence of inadequacy of a safety device of the kind enumerated in the statute. In opposition, the Court determined that plaintiff failed to raise an issue of fact.

PRACTICE POINT: If the defense can demonstrate that plaintiff was not injured by an object that fell, while being hoisted or secured, because of the absence or inadequacy of a safety device of the kind enumerated in the statute, then the burden will shift to plaintiff to raise a triable issue of fact. Here, plaintiff could not do so, requiring dismissal of his § 240(1) claim.

Labor Law § 241(6) (TPW)
The Third Department reversed the lower court’s decision on the Labor Law § 241 (6) claim predicated on 12 NYCRR 23-1.7 (a), which specifies, in pertinent part, "Every place where persons are required to work or pass that is normally exposed to falling material or objects shall be provided with suitable overhead protection". Defendant's proof showed that the dig area was not "normally exposed to falling material or objects", and, in any event, plaintiff was working only four to five feet below grade. Thus, defendant demonstrated the "overhead protection" regulation was not applicable. Accordingly, defendant met its preliminary burden to show that plaintiff could not recover under Labor Law § 241 (6) as a matter of law. Plaintiff was unable to raise an issue of fact.

Labor Law § 200 and Common-Law Negligence (EDA)
The Third Department unanimously affirmed the trial court’s decision that, in viewing the evidence in the light most favorable to plaintiff as the nonmovant, a jury could find that defendant exercised direct supervision or actual control over the construction site or the work activity bringing about the injury. Accordingly, the summary judgment burden never shifted to plaintiff on those claims, and the rial court appropriately declined to dismiss them.

New York Industrial Code Regulations (EDA)

Regulation § 23–1.26(a) Lead fumes and dust from structural steel.

(a) General.

All hot riveting, welding, flame cleaning and flame cutting of structural steel or other metal which has been coated with any compound containing lead or with any other substance which may create toxic fumes when heated shall be performed in the following manner.

Cerverizzo v New York, 116 AD3d 469, 983 NYS2d 515 (1st Dept 2014) (§ 23-1.26, which prescribes safety measures, including provision of respirator, when cleaning or heating of structural steel or metal could expose workers to lead or other toxic fumes, inapplicable to plaintiff’s bracket installation work performed in aeration tank).

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Premises Pointers - Volume VIII, No. 8

Thu, 13 Feb 2025 21:03:42 +0000

Volume VIII, No. 8
January 31, 2025
A Monthly Electronic Newsletter

NOTE FROM THE EDITOR:

Exciting news to share as we’ve officially opened a brick & mortar Rochester office! We are fortunate to announce our two new attorneys, Elizabeth K. Ognenovski and Bradon S. Carlson. While we have had a Rochester presence for the past five years with NYS Labor Law Attorney Tim Welch, we are excited about our expansion to further serve our clients.

Elizabeth K. Ognenovski joins Hurwitz Fine as Litigation Special Counsel. She focuses on retail & hospitality liability, premises liability, construction accidents/New York Labor Law, products liability, and property damage claims. With extensive experience in civil defense litigation, including appellate work, she has successfully represented corporations, small businesses, and individuals in both state and federal courts. Elizabeth is also highly skilled in risk management strategies, accident investigations, and regularly provides in-house legal training to retailers.

Bradon S. Carlson joins Hurwitz Fine as a Litigation Associate. Bradon focuses on premises liability, retail liability, product liability, automobile liability, and New York State Labor Law. With experience defending complex litigation matters, Bradon has a background in civil defense and is also dedicated to pro bono work, assisting tenants facing eviction and providing legal counsel on various matters.

Please let me know if you’d like to connect with Elizabeth or Bradon—I’d be happy to make an introduction!

This month, firm member Anastasia McCarthy focuses on recent Executive Orders at the Federal level and several new State laws that Employers should know about. Give that much of the focus at the Federal level has been on DEI/DEIA programs, understandably many people are concerned, and employers have questions, and we are happy to answer them. Please feel free to reach out to Anastasia who can walk you through many of these issues.

-Jody

Retail, Restaurant and Hospitality Happenings Around New York State and Beyond
By: Jody E. Briandi jeb@hurwitzfine.com

This month we are covering several recent cases—1 case from the Eastern District of New York and several other retail federal court cases from other jurisdictions around the country.

1/30/2025 Persaud v. Costco Wholesale Corp.
United States District Court, Eastern District of New York
Defendant’s motion to compel medical records is granted.

This case involves a discovery issue. By way of background plaintiff slipped and fell on juice in defendant's store on August 25, 2023, and claims injuries to her lumbar spine, left knee, and left shoulder. However, plaintiff's medical records indicate she received treatment for bilateral myopia and arcuate defects affecting her vision. Hence, defendant sought to compel production of plaintiff's pre- and post-accident eye care records. The court determined that plaintiff put her eye condition at issue by submitting medical records indicating treatment for vision issues and claiming broad damages including loss of enjoyment of life. Further, the court found that eye records are relevant to assessing plaintiff's ability to see the hazard that caused her fall and to evaluating her claimed damages. Finally, relying on the Federal Court discovery standard, the requested records were deemed proportional to the needs of the case given the broad scope of damages claimed. Therefore, the court granted defendant's motion to compel production of plaintiff's pre- and post-accident eye care records.

1/29/2025 Saavedra v. Dollar Gen. Corp
United States District Court, Eastern District of Louisiana
Whether a condition is unreasonably dangerous involves balancing multiple factors, which is typically a task for the jury, according to the court.

Plaintiff Kenneth Saavedra tripped and fell over metal shelving in a Dollar General store aisle on August 23, 2023. The shelving was placed at the edge of an aisle by store employees during merchandising. The shelving was approximately 5 feet by 2.5 feet and stacked vertically. Plaintiff claims he could not see the shelving until he turned down the aisle. No warning signs or cones were placed near the shelving. The court reasoned that while large objects in store aisles are typically considered open and obvious, the placement of merchandise may be unreasonably dangerous if located where a shopper might unexpectedly encounter it. The court found that the shelving's placement at the edge of the aisle prevented it from being apparent to everyone who may potentially encounter it, as evidenced by the plaintiff's testimony. The court also noted that determining whether a condition is unreasonably dangerous involves balancing multiple factors, which is typically a task for the jury. Therefore, defendant's Motion for Summary Judgment was denied.

1/28/2025 Pacheco v. Home Depot U.S.A., Inc.
United States District Court, Northern District of California
Home Depot’s fraudulent joinder motion was denied and case was remanded back to state court.

Plaintiff Pacheco filed a slip-and-fall lawsuit in state court against Home Depot and its employee Souza. Home Depot removed the case to federal court claiming diversity jurisdiction. While Pacheco and Souza are both California citizens, Home Depot argued Souza was fraudulently joined to defeat diversity. The court ruled that Home Depot failed to show by clear and convincing evidence that there is no possibility Souza could be liable under state law and further that plaintiff's motive for joining Souza is irrelevant to the fraudulent joinder analysis. The court further held that given clear precedent rejecting similar arguments, Home Depot lacked an objectively reasonable basis for removal and not only granted plaintiff's motion to remand the case to state court and awarded $4,050 in attorney's fees to the plaintiff.

1/24/2025 Tran v. Costco Wholesale Corp.
United States District Court, Southern District of California
Plaintiff’s motion to amend the complaint and add a state defendant which would defeat diversity was granted and the case was remanded.

The alleged incident occurred on April 21, 2021 at a Costco store in San Diego. Plaintiff filed a slip-and-fall lawsuit against Costco in state court. Costco removed the case to federal court based on diversity jurisdiction. Plaintiff moved to add Tim Coyle, the Costco Warehouse Manager, as a defendant. 28 U.S.C. § 1447(e) - Joinder of non-diverse defendants after removal is the controlling statute. The court granted the plaintiff's motion to amend the complaint to add Tim Coyle as a defendant. As this destroyed diversity jurisdiction, the court also granted the plaintiff's motion to remand the case to state court. The court analyzed six factors to determine whether to allow joinder:

Joinder is needed for just adjudication as the store manager may be personally liable under California law.
The statute of limitations would bar a separate action against Mr. Coyle in state court.
Plaintiff timely sought to add Mr. Coyle after learning his identity.
Plaintiff's motive for joinder is not solely to defeat diversity jurisdiction.
The claims against Mr. Coyle appear facially valid.
Denying joinder would prejudice the plaintiff by requiring separate lawsuits.

Labor & Employment for Retailers, Hospitality, and School District Litigation
By: Anastasia M. McCarthy amm@hurwitzfine.com

Dear Readers,

This month’s column focuses on a flurry of changes (and anticipated changes) to state and federal law that employers should be following. If you need assistance navigating these developing situations, please call us.

President Trump Executes Four Executive Orders Anticipated to Drastically Impact Private Sector DEI/DEIA Programs
On his first few days in office, President Trump executed four executive orders intended to halt allegedly unlawful and discriminatory DEI/DEIA programs, policies, mandates, preferences, activities, guidance, regulations, enforcement actions, consent orders and requirements both inside and outside of the federal government. Arguably, the most important Executive Order for private sector employers to understand is the January 20, 2025 Order entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” although a total of four DEI/DEIA related Executive Orders have been executed to date.
Read More.

Governor Kathy Hochul’s 2026 Budget Introduces Several Employment-Law Changes
New York State Governor Kathy Hochul has introduced her Fiscal Year 2026 Executive Budget, proposing several changes that could impact employers throughout the state. Key proposals include...
Read More.

NY’s Retail Worker Safety Act to take effect in March 2025
In a few short months, New York’s Retail Worker Safety Act will take effect. This law requires retail business owners with at least 10 employees to...
Read More.

Homeowner Liability, Recreational Accidents, and Discovery Angles
By: Marc A. Schulz mas@hurwitzfine.com

Hello Subscribers,

This month’s edition involves a conditional order of dismissal and the harsh consequences of failing to provide evidence of plaintiff’s purported inability to attend a deposition due to medical issues. Resolution of discovery disputes and the nature and degree of the penalty to be imposed pursuant to CPLR 3126 are matters within the sound discretion of the trial court. Pursuant to CPLR 3126(3), “[i]f any party … refuses to obey an order for disclosure or willfully fails to disclose information which the court finds ought to have been disclosed [,] the court may make such orders with regard to the failure or refusal as are just,” including, an order “dismissing the action.” This statute “broadly empowers a trial court to craft a conditional order,” which imposes a sanction “unless within a specified time the resisting party submits to the disclosure.” If a party fails to comply with the order by the specified date, “the conditional order becomes absolute.”

To be relieved of the impact of a conditional order under CPLR 3126, a party must demonstrate a reasonable excuse for their failure to comply with the conditional order and the existence of a meritorious claim or defense. If you fail to demonstrate a reasonable excuse for failing to comply with a discovery order, then it does not matter if you have a meritorious claim. Please reach out and share your experience with prevailing on enforcing conditional orders of dismissal.

Until next issue, here’s hoping you’re not as predictable as Sean McDermott and you have the ability to switch things up on fly!

Marc

1/15/2025 Winters v City of New York
Appellate Division, Second Department
Plaintiff’s complaint dismissed because he failed to comply with the terms of the conditional order and could not present a reasonable excuse for his failure to comply with several prior court orders.

The record demonstrated that plaintiff failed to appear for a deposition over a span of three years. He was first directed to appear for a deposition at a preliminary conference. He was again directed to appear for a deposition at the next conference by a date certain. Two additional orders directed plaintiff to appear for a deposition on specific dates; but he did not appear. The trial court adjourned defendant’s motion to compel discovery and directed plaintiff to appear for a deposition by a date certain “or [he] may be precluded”; plaintiff again failed to appear. The trial court again adjourned the motion and directed plaintiff to provide admissible evidence of his “confinement,” that is, evidence of his purported inability to attend a deposition due to medical issues, “or this action shall be [d]ismissed.” The trial court thereafter vacated the note of issue and directed dismissal of the complaint because plaintiff had failed to comply with its prior orders.

The Second Department affirmed dismissal of the complaint because the record established that plaintiff failed to comply with the terms of the conditional order of dismissal and failed to demonstrate a reasonable excuse for his failure to comply. Since plaintiff failed to demonstrate a reasonable excuse for his failure to comply with the trial court’s prior orders, the Second Department found it unnecessary to determine whether he demonstrated the existence of a potentially meritorious cause of action.

Are You Fall Real? Slip and Fall/Snow and Ice/Storm in Progress/Espinal
By: Patrice C. S. Melville pcsm@hurwitzfine.com

Hi Readers,

Happy 2025! Though we may be too far into the year to still be sending “New Year” wishes, I couldn’t let this issue go by without telling you all, and I do hope your year is off to a prosperous start! In the premises liability world, the year is already off to a great start if you are on the defense side! This issue highlights two cases where property owners were able to escape liability for accidents that occurred on their premises in a battle against pure conjecture and speculation. I hope you enjoy.

1/28/2025 Maignan v Watsky & Damm, Inc.
Appellate Division, First Department
A Plaintiff will need more than conjecture to establish that an out-of-possession owner created a dangerous condition such that liability may be imputed to the out-of-possession owner.

Plaintiff slipped and fell on ice in the parking lot of a premises that was owned by Watsky & Damm, Inc., also known as Old Albany Post Road, Inc. (Old Albany). Old Albany leased a portion of the premises, including four parking spaces in the parking lot, to Bark, Bathe & Beyond (BBB). The plaintiff’s accident took place in a portion of the parking area that was leased to BBB. During discovery, the testimony of Old Albany’s and BBB’s principals established that both parties understood BBB to have assumed responsibility for clearing the designated parking spaces. In fact, BBB assigned the task of clearing the designation parking spaces to an employee and provided cleaning equipment and supplies.

The plaintiff filed a motion for partial summary judgment arguing that Old Albany created the dangerous condition in the parking lot due to its alleged improper construction of the building, which plaintiff argued created water accumulation in the parking. Old Albany filed its own summary judgment arguing that it was an out-of-possession owner with no obligation to clear the subject parking area. The Court denied plaintiff’s motion for partial summary judgment and granted Old Albany’s motion. The plaintiff appealed.

On appeal, the First Department found that the lease agreement between Old Albany and BBB, established that Old Albany was an out-of-possession landlord with no obligation to clear snow and ice from the four parking spaces leased to BBB. The First Department, addressing plaintiff’s “improper construction” argument, held that while liability may attach to an out-of-possession owner who has affirmatively created a dangerous condition, the plaintiff in this case failed to present any evidence that any code or regulation was violated by the building’s construction, that any violations were issued based on improper drainage, or that there were any prior accidents or complaints of water or ice accumulation in the parking area. Plaintiff also failed to present any expert opinion to support her arguments. Ultimately, the First Department reasoned that plaintiff’s arguments amounted to pure conjecture and was thus insufficient to preclude summary judgment in favor of Old Albany or to award summary judgment in favor of the plaintiff. The Appellate Division, First Department affirmed the lower court’s ruling unanimously.

1/24/2025 Meyer v. New York Lessee LLC and Hilton Management LLC
Supreme Court of New York, New York County
An owner is not required to provide a constant ongoing remedy for an alleged slippery condition caused by moisture tracked indoors during an ongoing storm

Plaintiff alleged that he slipped and fell on a wet floor while walking through a revolving door into the lobby of the Hilton New York Midtown Hotel during rainy weather. According to the plaintiff, it had been raining continuously from the time he left his apartment until the time he arrived at the hotel's entrance. He testified that the area between the sidewalk and the entrance was wet and that he did not see any caution signs warning of a wet floor, nor did he see anyone directing him away from the revolving door to the hotel. The plaintiff alleges that there was a mat at the entrance, but the mat was soaked. The plaintiff testified that moisture came up from the mat when he tried to wipe his shoes on it. The plaintiff then entered the compartment for the revolving door where he slipped and fell. The plaintiff filed suit against the building’s owner and property management company.

Defendants moved for summary judgment dismissal of the Complaint arguing that they did not have actual or constructive notice of the slippery condition. Plaintiff, in opposition, submitted an expert report, which opined, among other things, that because the volume of foot traffic overwhelmed the mat's ability to absorb rainwater and prevent water from being tracked into the revolving door, defendants should have stationed personnel at the door to monitor the area and to be ready to close the door at any time, and should have had a wet vacuum in use to remove excess water from the mat.

As an initial matter, the Court found the plaintiff’s expert’s report, not supported by any published industry or professional standard, to be conclusory and speculative, and thus insufficient to raise a triable issue of fact. The Court then reasoned that an owner is not required to provide a constant ongoing remedy for an alleged slippery condition caused by moisture tracked indoors during an ongoing storm and is only required to take reasonable maintenance measures to address wet conditions such as laying down mats, mopping, and placing caution signs on the floor. The Court ultimately found that the defendants met their burden by establishing that they took such reasonable measures; that a housekeeper had last dry-mopped the floor under the revolving door 30 minutes prior to the accident; and that there were no prior reported incidents or complaints of anyone slipping within the revolving door. The Court granted the defendants’ motion for summary judgment dismissal of the plaintiff’s Complaint.

School District & Municipal Liability
By: Jennifer I. Lopez

1/29/2025 Brauner v. Locust Val. Cent. Sch. Dist.
Appellate Division, Second Department
The Second Department recently reversed a decision dismissing two causes of action for negligence; and negligent hiring, retention, training, and supervision.

As we know, to establish a cause of action based on negligent hiring, negligent retention, or negligent supervision, it must be shown that the employer knew or should have known of the employee’s propensity for the conduct which caused the injury and that there exists a connection between the defendant’s negligence and the plaintiff’s injuries. Where the complaint alleges negligent supervision due to injuries related to an individual’s intentional acts, actual or constructive notice to the school of prior similar conduct is required. However, the adequacy and proximate causal relation is for the jury to decide.

Here, the appellate division found defendants failed to establish, prima facie, that the school district was not negligent with respect to hiring the teacher. Specifically, because defendants’ submissions in support of their motion failed to eliminate triable issues of fact as to whether the school district took appropriate measures to evaluate the teacher’s employment and fitness at the time she was hired.

Additionally, defendants failed to establish that the school district lacked constructive notice of the teacher’s abusive propensities and conduct. In particular, defendants failed to eliminate triable issues of fact as to whether the district should have known of the abuse alleged to have occurred with great frequency, between 50 and 100 times over two school years in a classroom and the school parking lot during school hours.

The appellate division also found that defendants failed to demonstrate that the school district’s supervision of both the teacher and the plaintiff was not negligent given that, the teacher was on “probationary” status during the relevant period, some of the incidences occurred while the plaintiff was alone with the teacher in her classroom, the teacher’s personnel file contains only a single evaluation from the school during the relevant period, and multiple former students testified at their respective depositions that the teacher’s inappropriate relationship with the plaintiff was readily apparent, inter alia.

Based on these shortcomings, the appellate division deemed the sufficiency of plaintiff’s opposition papers as irrelevant and found the supreme court should have denied defendant’s motion for summary judgment dismissing the second and fourth causes of action.

Coverage Pointers - Volume XXVI No. 17

Fri, 31 Jan 2025 14:11:50 +0000

Volume XXVI, No. 17 (No. 690)
Friday, January 31, 2025
A Biweekly Electronic Newsletter

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at ddk@hurwitzfine.com or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.

Our third issue of 2025, there being three alternating Fridays in the month. Between our cover note and the attached issue, we present over 15,000 words for your reading and dancing pleasure. Where else can you get that much information about insurance at even twice the price of a subscription?

We welcome our newest columnist, Domenica Hart, and her offering under the heading Domenica’s Diary on Bad Faith. We’re delighted to have her join our editorial staff.

I am completing five weeks in Scottsdale, a working vacation. Other than the unfortunate AFC Championship game, it was a splendid time to be in warmer weather. Back to the snow and cold on Saturday.

Imputing Negligence and Risk Transfer

You all realize that wherever you go, there are Coverage Pointers subscribers.

As I was coming out of an excellent breakfast restaurant in Scottsdale a couple of weeks ago, I had the good fortune of serendipity and met Julian D. Ehrlich, who is national managing director, construction claims, at Aon Global Risk Consulting and a CP subscriber. He alerted me to an article he penned for the New York Law Journal, which appeared in New York Journal Online on January 29 and the in Outside Counsel column of the January 30 printed edition on page 4.

He discusses the very timely and interesting (and heavily debated) topic of whether the claimant’s negligence can be imputed to his or her employer to establish additional insured status. In a well-reasoned article and after reviewing recent case law, including a December 12, 2024, decision out of the First Department in Vargas (reported in Labor Law Pointers) and others, which allow a claimant’s culpability to be impute to the employer for liability purposes, the author posits that:

Thus, if workers' comparative negligence can be imputed to their employers for liability purposes, then those same worker's acts and omissions should be relevant to determining whether the employer was the proximate cause of the injury for AI coverage.

I’m not sure whether I agree with Mr. Ehrlich’s conclusion, but I surely appreciate his scholarship. It is rare that an employee’s conduct has no role in an accident. If he or she is even the slightest bit at fault in causing the accident, that conduct would trigger AI coverage in almost every case involving an employee accident. I would posit that Burlington, and cases that follow, would look to the employer’s involvement in causation rather than the employee who is bringing the lawsuit.

Time will tell.

Mediation Practice

Over the last four or five years, an increasing number of requests for services have been made for mediation. For many years, we have represented a variety of clients in commercial mediation disputes, from risk transfer/Labor Law, to personal injury actions of all styles and shapes, in all kinds of commercial disputes. I have been asked, on many occasions, to serve as a mediator in inter-company disputes as well as in matters pending in courts throughout the country.

I was delighted to learn of my recent addition to the New York Court ADR/Mediation panel for the Ninth Judicial District, covering Westchester, Putnam, Dutchess, Rockland, and Orange Counties. This appointment complements my existing roles on ADR panels for Bronx, Kings, Richmond, Nassau, and Erie Counties, as well as the United States District Court for the Western District of New York.
I am available for both court-annexed and private mediations.
Areas of Expertise:

I specialize in mediating:

Commercial cases;
Personal injury cases, both simple and complex;
Risk transfer challenges in construction and premises cases;
Insurance coverage disputes, third party and first party.

For insurers, with my 45 years of insurance coverage and trial experience, I have particular affection for inter-company coverage and risk transfer mediations where insurers rather resolve disputes quickly and efficiently rather than risk creating adverse precedent after years of expensive litigation.
If you need assistance resolving civil cases in these areas, I’d be happy to help.

Feel free to reach out:

Email: ddk@hurwitzfine.com
Phone: 716-445-2258

Let’s work together to find effective resolutions for your legal matters!

Newsletters:

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at jeb@hurwitzfine.com to be added to the mailing list.
Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at dra@hurwitzfine.com to subscribe.
Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact V. Christopher Potenza at vcp@hurwitzfine.com to subscribe.
Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at emm@hurwitzfine.com to subscribe.

Some Issues Never Disappear – 100 Years Ago:

The Ithaca Journal
Ithaca, New York
31 Jan 1925

Checking Human Smuggling

In its efforts to check the flock of “bootleg” immigrants, the United States is to have the assistance of the Mexican government. This is the announcement of Acting Secretary of Labor E.J. Henning, after a series of conferences with the newly inaugurated President of Mexico, Elias Plutarco Calles, relating to the especially perplexing problem confronting immigration authorities on our southern boundary.

There is much reason for satisfaction in the outcome of this conference, in view of the large increase in immigration, through Mexico that has been noted as immigration restrictions became tighter. Unable to gain entry to the United States under the regular quota, foreigners in increasing number have entered Mexico with no object of partaking of Mexican prosperity under the more orderly regime of recent years, but with the single intent of stealing their way into the more prosperous and favored land farther north.

And they have been successful in carrying out this intent. Just as smuggles liquor has continued to pour in along our northern boundary, smuggled immigrants have continued to find entrance along the Mexican border, despite the best efforts of our officials.

Although it is the opinion of Immigration Commissioner Curran that we are getting immigrants of a quality twice as good under the new law as under the old, no one can vouch for the quality of immigrants who enter thus stealthily and illegally. Nor can there be much more accuracy in estimates as to their number, than in estimates as to the volume of the other bootleg article.

Peiper on Property (and Potpourri):

Dear Readers:

Staying busy. Interesting case for you this week, of course. See you in two.

Steve
Steven E. Peiper
sep@hurwitzfine.com

Juror Predisposition – 100 Years Ago:

Daily News
New York, New York
31 Jan 1925

JUROR ORDERED TO EXPLAIN
CHARGE AFTER RUM TRIAL

As result of statements made from the witness stand under oath by Everett H. McLeod, a juror in the recent trials growing out of the $50,000,000 rum running scandal at Weehawken, N.J., Judge Charles M. Egan in Jersey City yesterday ordered that Louis Hackman, of 91 Claremont av., Jersey City, another juror, be requested to appear before him either today or tomorrow.

In his testimony, Mcleod said that Hackman told him he had heard a member of the jury, who was deaf, say he had made up his mind not to convict police officials.

At the opening of the hearing, Judge Egan said he did not have the right to inquire into the deliberations of the jury unless there was something to indicate that corrupt influences have been at work.

Col. George T. Vickers, special prosecutor in the liquor cases, said: “If it can be shown that a juror at any time during the trial of a case, before the case went to the jury, expressed a predetermination to find a verdict regardless of the evidence, that would be as much a matter for inquiry as I corruption has been attempted.”

Lee’s Connecticut Chronicles:

Dear Newsies:

I am recuperating after being sick all of last week. That said, I have an interesting case for you involving a light bulb, a marijuana plant (or 998 of them), and a business income claim. Read on to learn the details.

In the meantime, keep keeping safe.

Lee
Lee S. Siegel
lss@hurwitzfine.com

Worth About $450,000 Today – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
31 Jan 1925

WIDOW WINS
NEW VERDICT
OF $25,000

Previous award of $20,000
for death of husband was
set aside.

A jury in Justice O’Malley’s court yesterday afternoon reported a verdict of $25,000 in favor of Mrs. Caroline Wilks, who lives in Grote street near Hertel avenue, and against the New York Telephone company and the Federal Telephone & Telegraph company. It was the second trial of the suit. On the former trial $20,000 damages were awarded. This verdict was upset by the higher courts because of a legal error.

Mrs. Wilks, a widow with two young children, sued for damages for the death of her husband, Joseph, 26 years old, who was killed on November 20, 1918. He stepped into the yard at the rear of his home, No. 172 Elmwood avenue, and was electrocuted when a falling wire struck his neck.

Ruffner’s Road Review:

Dear Readers,

I have unfortunately been out sick the past few days and, therefore, do not have any auto decisions to report this week.

Until next time,

Kyle
Kyle A. Ruffner
kar@hurwitzfine.com

A “Disorderly House” Verdict – 100 Years Ago:

The Buffalo News
Buffalo, New York
31 Jan 1925

WOMAN MUST STAY IN JAIL

Lizzie Mitchell cannot be free on bail pending decision by the appellate division on her appeal from a conviction in County court on a charge of operating a disorderly house at 178 Elm street, according to Justice Crosby’s ruling in Supreme court. She was sentenced to two months in the penitentiary and fined $300.

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

My basement renovation has commenced and we’re already over budget. Amazing how fast that happens. It will look great once it’s done, but it won’t be done until it’s done. Cheers to living under construction.

This edition, I have summarized a decision out of the Southern District of New York relative to a contractor injury exclusion. The Court applies logic and reasoning with the best of ‘em.

Until next time…

Ryan
Ryan P. Maxwell
rpm@hurwitzfine.com

“2 Down” – 100 Years Ago:

The Buffalo News
Buffalo, New York
31 Jan 1925

Crossword Puzzle Used in
U. of B. History Examination

Eight of 122 Students Never Worked One Before, But
Emerged Triumphant.

Eight students in History 101 at the University of Buffalo admitted to Dr. Augustus H. Shearer that they had never delved into the elusive mysteries of the crossword puzzle covering the period of the hundred years war.

In spite of this handicap, these eight and the 114 others in the class managed to solve the enigma with almost complete success.

The design strikes out into the open fields of originality and has the general appearance of having been conceived when the 100 years’ war was at its height. However, it was almost impossible to build a perfect interlocker in view of the fact that the idea was to exclude all terms that did not have a direct bearing on the period under discussion.

Dr. Shearer said that the practice will not be continued. It was introduced into the latest examination because of the general interest.

Storm’s SIU:

Hi Team:

Let’s not talk about football.

Writing to you from my lounge chair recovering from a knee replacement two weeks ago. Thus, my lack of an article in the last edition of Coverage Pointers.

One interesting case for you this week:

Denial of Insured’s 1^st-Party Property Claim Due to 82-day Delay in Reporting is Upheld as a Matter of Law. The Insured’s Representative’s Self-Serving and Uncorroborated Assertions of Providing the Agent With Notice Earlier is Insufficient to Defeat Summary Judgment.

This is a good reminder that there is a HUGE difference between the law pertaining to 1^st party property v. 3^rdparty liability claims with respect to a late notice defense. New York has a very favorable body of case law for insurers with respect to 1^st-party property claims, as the AMVS, Inc. v. Mt. Hawley case summarized this week demonstrates. An insurer does not need to prove prejudice with respect to 1^st party property claims. Delays of little as 10 to 53 days have been found unreasonable as a matter of law, discharging insurers’ coverage obligations. Justifiable excuses for the insured’s late notice are few and far between.

However, case law deciding late notice issues in 3^rd-party liability cases is onerous for insurers and vastly different due to Insurance Law § 3420[c][2][A][ii]. The statute provides shifting burdens of proof regarding prejudice based upon the amount of time which had elapsed. It states in pertinent part:

(A) In any action in which an insurer alleges that it was prejudiced as a result of a failure to provide timely notice, the burden of proof shall be on: (i) the insurer to prove that it has been prejudiced, if the notice was provided within two years of the time required under the policy; or (ii) the insured, injured person or other claimant to prove that the insurer has not been prejudiced, if the notice was provided more than two years after the time required under the policy.

For an example of a case applying the statute in a 3^rd-party liability case see Dan’s discussion of 244 Madison Realty Corp. v. Utica First Insurance Company in the December 20, 2024, edition of Coverage Pointers. Ryan Maxwell also discusses that case on LinkedIn.

3^rd-party coverage denials based on late notice are also subject to the timeliness requirements of Insurance Law § 3420(d)(2), whereas first-party property denials are not.

The law is dramatically different between 1^st party property and 3^rd party liability claims pertaining to a late notice coverage defense. It is crucial for insurers to be aware of the distinction. Tell your friends, family and neighbors.

I look forward to talking with you again in two weeks.

Scott
Scott D. Storm
sds@hurwitzfine.com

Too Many Wild Women – 100 Years Ago:

Buffalo Courier
Buffalo, New York
31 Jan 1925

COZY CORNER CONFIDENCES
By Mrs. Martha Wheeler

The Wild Women.

Dear Mrs. Wheeler:

I’d like to post my opinion of all girls, rich or poor. I know a few of each class so I consider myself an able judge. I don’t believe there is a decent acting of speaking girl in Buffalo, I mean girls who like to go out for a good time.

All girls, good or bad, claim the men spoil them, make them what they are.

It isn’t the men, it’s a certain lot of -well, for the lack of a better name, we’ll call them flappers, vamps. Just as soon as these vamps come in contact with a decent girl or man they try to make her or him, as the case may be, as rotten as themselves. Who can say I’m not right?

About a week ago I was waiting for a street car at midnight. Two boy friends, who love the females as much as I, and myself. Two young lads with three wild women came out of a nearby building, possibly from a dance hall. One of the girls grabbed the smaller of the boys around the waist and started dancing with him (please remember this was in the middle of the street). As if that wasn’t enough she suddenly threw her arms about him and started kissing him.

Now just a few lines for that good sport whose letter was printed in Friday’s paper. I supposed she’s trying to kid herself along (a girl who’ll take a mild drink, who’ll dance, sing, swim, take auto rides, who doesn’t mind a kiss, etc.), I heartily despise her.

No, I’m no old man: I’m only nineteen. J.C.

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

The courts have been pretty quiet this past fortnight, so I have something a little different to offer this edition. This week’s case from the Nevada Supreme Court looks at priority of claims against an insurer’s assets when the insurer becomes insolvent. A private insurer with a subrogation claim sought a higher priority under the relevant statute’s priority schedule, and the court discussed the statute’s language and purpose. I found it an interesting read and hope that you enjoy it.

Catch you later. Enjoy the Super Bowl.

Kate
Katherine A. Fleming
kaf@hurwitzfine.com

Vaccines Might Help … – 100 Years Ago:

Daily News
New York, New York
31 Jan 1925

Children’s Disease Toll
Too High, Doctor Warns.

Harford, Conn., Jan. 30. – Declaring that 12,000 children died of Diphtheria during 1923 and 20,000 from measles and whooping cough, usually considered a trivial disease, Dr. Frederick L. Hoffman told the Connecticut Nursing association today that mortality from maladies of infancy is appalling.

The number of deaths has been greatly reduced, he said, but the figures are still too high and can be lowered by a proper understanding of the services of the visiting nurse.

Gestwick’s Garden State Gazette:

Dear Readers:

I’m getting tired of saying “next year the Bills will win it all.” When is “next year,” anyway? I’ve been saying that for the last five or so years and “next year” clearly has not arrived yet.

Anyway, I have two cases for you this week. One is from the New York Appellate Division (yes, I know, I’m supposed to write about New Jersey, but this one *kind of* involves New Jersey). The other, a “real” New Jersey case, examines whether an assignee of rights under an insurance policy is bound by the policy’s arbitration clause. Read on to find out the answers!

Until next time.

Evan
Evan D. Gestwick
edg@hurwitzfine.com

Banning Those Who Disagree with the President – 100 Years Ago:

The Buffalo News
Buffalo, New York
31 Jan 1925

PRESIDENT APPROVES
BANNING INSURGENTS

WASHINGTON, Jan. 30. – President Coolidge approves the course of Republican leaders of the house in excluding from the party caucus all members except those who remained regular as to party organization during the campaign.

Such action is believed by the President to be the only means whereby the party can carry out its pledges.

O’Shea Rides the Circuits:

Hey Readers,

I will not address the Buffalo in the room. Aside from that disappointment, the Ottawa Senators are now firmly in the NHL Playoff race. Hopefully Linus Ullmark is back tending the goal soon and then we can really make a push.

This week I have a couple of cases. One involves the failure to meet the federal pleading standard. The other involves the recovery of interest on claim settlement funds based upon an independent contractual promise.

Until Next Time,

Ryan
Ryan P. O’Shea
rpo@hurwitzfine.com

Gas Prices Skyrocketing – 100 Years Ago:

The Buffalo News
Buffalo, New York
31 Jan 1925

THIRD GASOLINE INCREASE
ORDERED BY STANDARD OIL

NEW YORK, Jan. 30. – For the third time this year, the Standard Oil company of New York tomorrow will increase the price of tank wagon gasoline one cent a gallon in New York and New England to 19 1/3 cents. This is an increase of 4 cents since January 1.

Rob Reaches the Threshold:

Dear Readers,

The dream is dead. The last time I wrote to you; the Bills were riding high heading into a matchup at home against Baltimore. Fast forward two weeks - not only are the Bills now out of the Playoffs, they, yet again, lose in heartbreaking fashion to Kansas City. To make matters worse, America now has to sit thru another Chiefs/Eagles Superbowl. As a born and raised Giants fan from Staten Island, who is now also a member of Bills Mafia, I HATE IT. I will now gladly be pivoting this column towards all things New York Knicks, New York Yankees, and all things Golf.

In better news, we now have some cases to report on for Serious Injury this time around. Please enjoy the analysis of a Second Department case examining the standard on summary judgment motion practice specific to the 90/180-day category of insurance Law Section 5102(d).

Hope you all enjoy the read.

Rob
Robert J. Caggiano
rjc@hurwitzfine.com

Election Fraud – 100 Years Ago:

Times Union
Brooklyn, New York
31 Jan 1925

ELECTIONS CLERK JAILED
AS BALLOT TAMPERER

George Rosken, tally clerk in the Twenty-third Election District of the Eighth Assembly District, Manhattan, who has been indicted for perjury in connection with the tampering of ballots in the contest between Congressman Nathan D. Perlman, Republican, and Dr. William I. Stirovich, Democrat, was remanded to the Tombs Prison to-day in default of $2,000 bail by General Sessions Judge Talley.

LaBarbera’s Lower Court Library:

Dear Readers:

I saw some colleagues the other day exchanging phones and looking at photos. I heard the words “cute” and “sweet.” Without thinking, I interrupted and blurted out my request that I see the photos of the dogs they were exchanging. Well, they were actually looking at pictures of their babies. Needless to say, if anyone has any photos of their dogs they would like to share, feel free to pass them along. I will surely enjoy them.

This week I am reporting on a Kings County decision, involving a material misrepresentation on an application of an insurance policy regarding number of units at the insured property. The decision should not come as a shock to all of you, as it does not differ from long-standing principals on this topic. The interesting part of this case comes down to the procedural posture. The insurer was able to successfully obtain a dismissal, and ultimately a rescission of the policy, on a pre-answer motion to dismiss.

Until next time …

Isabelle
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Chubb’s Insurance – 100 Years Ago:

The Brooklyn Daily Times
Brooklyn, New York
31 Jan 1925

MRS. HELEN CHUBB
LEAVES $1,000,000
TO HER HUSBAND

Will of Insurance Man’s Wife
Filed in Nassau – Was
Flower Show Patron

Mineola, Jan. 31. – The will of Helen Low Chubb, wife of Percy C. Chubb, of the insurance firm of Chubb & Son, Manhattan, was filed for probate in the Surrogate’s office here this morning. The entire estate is left to her husband and is thought to be valued at over $1,000,000.

A clause of the will provided that if her husband predeceases her $400,000 of her estate was to be used as a trust fund for her sister, Edith Low Bush, and then go to her sister's children. The residue was to have been given to her husband’s brother, Henden Chubb.

When Mrs. Chubb, who died at Aswan, Egypt, December 27, 1924, resided at her country place, Ratting Springs, Glen Cove. She was an ardent devotee of flower culture and was a frequent winner at flower shows all over the country. She was the daughter of Daniel and Martha Westervelt Low, of 109 West Fifty-third street, Manhattan.

Lexi’s Legislative Lowdown:

Dear Readers,

Last weekend two of my closest friends got married. A highlight was when they played the Bills Shout song for a crowd of hopeful Bills fans. Luckily the wedding was before the tragic loss on Sunday.

This week we discuss an assembly bill that would prevent liability carriers who issue policies to rental property owners from excluding coverage for damages caused by exposure to lead-based paint.

Thanks for reading,

Lexi
Lexi R. Horton
lrh@hurwitzfine.com

Plea to Ban Toy Guns – 100 Years Ago:

The Brooklyn Daily Times
Brooklyn, New York
31 Jan 1925

Justice O’Keefe, Who Holds Boy
For Death of Playmate, Issues
Urgent Plea for Ban ON Toy Guns

Justice George J. O’Keefe, in the Children’s court yesterday, after holding 11-year-old Victor Reuben, 2 Oceanview avenue, Coney Island, who accidentally shot and killed his chum, George Marcus, 10506 Oceanview Avenue, in $500 bail on a charge of juvenile delinquency, at the request of the newspaper representatives issued a statement condemning the possession of firearms by minors.

The Statement follows:

“I cannot let this opportunity pass without again repeating and emphasizing what I have said time and again, in season and out of season, in public and in private, and not I alone, but the District Attorney and my associates when I was in Special Sessions and now that I am here, concerning the great danger, the terrible evil, the disastrous consequences that follow in the possession of firearms by young children.”

Domenica’s Diary on Bad Faith:

Hello Coverage Pointers Subscribers,

My greetings to you all from New Jersey. I feel honored to be a part of this longstanding, brilliant newsletter. I look forward to bringing you interesting bad faith cases and lighter notes.

I have a good decision, out last week, from the District Court for the Southern District of New York which reminds all of us how seriously New York considers “within a reasonable time.” From the perspective of a former Claims Counsel, who dealt with coverage nationally, draconian or not, New York’s “timeliness” considerations, both from the insured and carrier, deserves extra care.

Domenica
Domenica D. Hart
ddh@hurwitzfine.com

Canadian Border Restrictions – 100 Years Ago:

The Lethbridge Herald
Lethbridge, Alberta, Canada
31 Jan 1925

ABOLISH SENATE
IS PROPOSAL OF
TRADES BODY TO
OTTAWA CABINET

Delegation Headed By Tom
Moore Submits Proposals
To Premier King

PROTEST AGAINST U.S.
QUOTA RESTRICTIONS

OTTAWA. Jan. 31. – (Can. Press.) – Abolition of the senate, establishment of unemployed insurance and old age pensions, and a request that Canada ask the United States government to remove the discrimination between Canadian-born and other Canadian citizens in the quota restrictions, were among the legislative proposals submitted to the prime minister and cabinet this afternoon by a deputation from the Trades and Labor Congress of Canada.

North of the Border:

This week, I'm in Toronto participating in a two-day strategic planning meeting with the Canadian Defence Lawyers (CDL) board. The board members are not only incredibly talented professionals but also genuinely exceptional individuals. It is a pleasure to be in their company.

This week’s column discusses an important decision on the follow settlement clause found in reinsurance contracts. Until next time.

Heather
Heather A. Sanderson
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

A Disclaimer Directed to the Named Insured Is Not a Disclaimer Directed to an Additional Insured and Results in 3420(d)(2) Waivers of Exclusions

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Review of Claims File for Depo Prep Results in Waiver of Material Prepared in Anticipation of Litigation Exemption

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

Marijuana Business Income Claim Goes Up in Smoke
Notice of Cancellation Subject to Mailbox Rule
Insurer Bad Faith Not Protected by Litigation Privilege

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

Out Sick This Week. See You in Two.

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

Language Matters in Exclusions. Southern District of New York Reminds Us That “Any Insured” Language Is Broader Than “The Insured”

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

Denial of Insured’s 1^st-Party Property Claim Due to 82-Day Delay in Reporting Is Upheld as a Matter of Law. The Insured’s Representative’s Self-Serving and Uncorroborated Assertions of Providing the Agent With Notice Earlier Is Insufficient to Defeat Summary Judgment

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

Private Insurance Company With Subrogation Claim Not Among the High-Priority Claimants to Recover From an Insolvent Insurer

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

An Employer’s Right to Reimbursement of Workers’ Compensation Benefits is Governed by the Law of the State In Which Benefits Were Paid
Insurer Cannot Restrict Insured’s Post-Loss Ability to Assign Rights to the Policy

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

Failure to Plead Specific Facts and Timely Amend Complaint Proves Fatal to Complaint Regarding Property Damage to 18 Insured Properties
Standalone Promise to Pay Interest in Homeowners Policy Creates Private Cause of Action Under Florida Case Law

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

Second Department Reverses Order Granting Plaintiff’s Summary Judgment Motion, Finding That Plaintiff Failed to Establish Serious Injury under 90/180 Category

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Pre-Answer Motion to Dismiss Granted Based on Material Misrepresentation on Application for Insurance Regarding Number of Units and Illegal Basement Unit

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

Proposed Legislation to Prohibit the Exclusion for Coverage for Losses or Damages Caused by Exposure to Lead-Based Paint

DOMENICA’S DIARY on BAD FAITH
Domenica D. Hart
ddh@hurwitzfine.com

No Proof of Bad Faith: 82-Day Delay of Loss Notice Is “Unreasonable” and Is a Reasonable Basis for Denial in Itself

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

A Follow Settlements Clause in a Reinsurance Contract Requires a Reinsurer to Honour its Portion of Reinsurance Where the Claim as Recognized by the Lead Insurer Falls Within Coverage "As a Matter Of Law" and the Lead Insurer Took All "Proper And Businesslike Steps” to Resolve the Claim

That’s all she wrote. See you in two, just in time for Valentine’s Day.

By the way, it’s Valentine’s Day not Valentines Day.

Dan

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut and New Jersey.

NEWSLETTER EDITOR
Dan D. Kohane
ddk@hurwitzfine.com

ASSOCIATE EDITOR
Agnes A. Wilewicz
aaw@hurwitzfine.com

COPY EDITOR
Evan D. Gestwick
edg@hurwitzfine.com

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
ddk@hurwitzfine.com

Steven E. Peiper, Co-Chair
sep@hurwitzfine.com

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Domenica D. Hart

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

Victoria S. Heist

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
sep@hurwitzfine.com

Michael F. Perley

Scott D. Storm

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
ddk@hurwitzfine.com

Ryan P. O’Shea
rpo@hurwitzfine.com

Kyle A. Ruffner
kar@hurwitzfine.com

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com

Topical Index

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Gestwick’s Garden State Gazette

Lexi’s Legislative Lowdown

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

01/23/25 New York Marine, et al. v. Rockingham Insurance Company
Appellate Division, First Department
A Disclaimer Directed to the Named Insured Is Not a Disclaimer Directed to an Additional Insured and Results in 3420(d)(2) Waivers of Exclusions

Stateside and Astra, who qualify as additional insureds on a policy issued by Rockingham, established that they submitted a tender letter to Rockingham, but that Rockingham failed to timely disclaim coverage as to plaintiffs, as required by Insurance Law § 3420(d).

The denial letter Rockingham sent to its named insured, disclaiming coverage solely as to that named insured, did not constitute notice to plaintiff additional insureds. The notice was not sufficiently definite as to apprise plaintiffs (the additional insureds) that defendant was also denying coverage to them based on certain policy exclusions.

The Court also upheld sanctions against Rockingham for its failures in the discovery process.

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

01/23/25 Allied World National Assurance Co. v. AIG Specialty Ins. Co.
Appellate Division, First Department
Review of Claims File for Depo Prep Results in Waiver of Material Prepared in Anticipation of Litigation Exemption

Defendant Ironshore moved to strike the Note of Issue to conduct additional discovery, including requests for production of the claims files from Allied World and Endurance. Ironshore also sought a deposition of Ironshore’s retained, and disclosed, expert.

In affirming the trial court’s ruling, the Appellate Division rejected Ironshore’s requests for additional discovery from Allied World. Essentially, the court held that Ironshore waited too long, and as such was too close to the deadline to close discovery, before it requested depositions and additional document disclosure.

With regard to the discovery sought against Endurance, however, the Court stuck a more balanced tone. With regard to the timeliness of the request, the Appellate Division found that Endurance’s own delay caused the time crunch. In addition to the timeliness objection, Ironshore also argued that Endurance owed unredacted portions of the claims file because the witness had reviewed the entire file in preparation for a deposition. It is long understood that review of the entire file waives the conditional privilege for material prepared in anticipation of litigation.

The court clarified, however, that privileges of attorney work product and/or attorney-client privilege are not waived by mere review of the materials in preparation for deposition. Nevertheless, the party asserting the privilege must establish its applicability to protect the items from production. The Court remanded the matter to the trial court for in camera proceedings consistent with its ruling.

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

01/18/25 Theraplant, LLC v. Nat'l Fire & Marine Ins. Co.
United States District Court, Connecticut
Marijuana Business Income Claim Goes Up in Smoke

The district court granted National Fire summary judgment, finding that the insured did not suffer an actual business income loss due to a necessary suspension of operations, following smoke damage to the insured’s marijuana plants.

Theraplant is in the cannabis business. Its Watertown, Connecticut plant suffered fire damage when a light bulb burst causing a fire in Flowering Room 2. The insured destroyed 998 marijuana plants that had suffered smoke damage. The Flowering Room was offline for about two months, undergoing repairs. National Fire paid almost $500,000 for damage to the building and equipment, but it denied the insured’s $1.3 million business income claim. This lawsuit followed.

Like most BI provisions, National Fire agreed to pay “for the actual loss of Business or Rental Income you sustain due to the necessary "suspension" of your "operations" during the "period of restoration." The "suspension" must be caused by the direct physical loss of or damage to Covered Property under this policy…” The insurer argued that there was no causal link between the actual loss of income and the necessary suspension of operations at the cannabis plant. The court agreed that the evidence failed to support a business income loss.

Theraplant has not put forward any evidence that it would have used Flowering Room 2 for another income-generating purpose had the repairs not been ongoing between February and April 2020. No evidence supports a finding that the room, equipped only for the flowering stage, could be used for another stage of cultivation. Nor has Theraplant put forward evidence that the ongoing repairs delayed the transfer of plants from one flowering room to another. The parties agree that a lengthy delay would have caused a drop in Theraplant's income, but Theraplant can point to no evidence of a delay…. Theraplant fails to explain how the suspension itself caused the business income loss. Plaintiff simply assumes the existence of a causal relationship, but the Court cannot do the same.

The court acknowledged the insured’s loss of product but found that fact alone did not permit a business income recovery. Noting that the purpose of the coverage is to insure against loss arising from the inability to continue normal operations, the court pointed out that business income coverage does not insure for the loss of profit due to damaged inventory. “Business interruption insurance does not exist to help the insured recover for damaged or destroyed property. See Nw. States Portland Cement Co. v. Hartford Fire Ins. Co., 360 F.2d 531, 533 (8th Cir. 1966).”

01/03/25 DiRenzo v. State Farm Fire & Cas. Ins. Co.
Superior Court of Connecticut, New Britain
Notice of Cancellation Subject to Mailbox Rule

The court found that there is a genuine issue of fact as to whether the insured received notice of cancellation of her auto insurance policy, denying State Farm summary judgment.

In December 2022, plaintiff was involved in a motor vehicle accident, but State Farm refused to pay for repairs, claiming that the policy had been cancelled for non-payment. State Farm claimed it cancelled to policy by sending a notice of cancellation in October 2022, memorialized by a certificate of mailing. In support of summary judgment, State Farm also submitted a ledger showing non-payment and an employee’s affidavit. In opposition, the insured averred that she had not received the notice of cancellation, evidence of post-accident payments, and claim correspondence from State Farm in regard to the accident which did not refer to the cancellation.

Cancellation of an auto policy for non-payment is governed by CGS § 38a-3434(a), which provides in part that where cancellation is for non-payment of premium notice “shall be given.” The statute also indicates that notice is to be “delivered or sent” to the insured.

In reviewing the law, the court struggled with whether the insured could defeat cancellation by claiming non-receipt. Some case law provides that a denial of receipt, by itself, is insufficient to defeat presumption of receipt under the mailbox rule. However, the court fund that “denial of receipt alone could be sufficient evidence to overcome the presumption of receipt established by the mailbox rule.” The court denied the motions, referring ultimate conclusion of cancellation to the trier of fact.

01/21/25 Bouazza v. GEICO General Ins. Co.
Appellate Court of Connecticut
Insurer Bad Faith Not Protected by Litigation Privilege

The Appellate Court reversed, reinstating the plaintiff’s bad faith claims which had been improperly dismissed on the basis of the litigation privilege.

This matter arises from the plaintiff's UIM claim against GEICO. In 2017, she was injured in a car accident, collecting the tortfeasor’s $20,000 per person limit. She then made a claim for UIM benefits to GEICO under her $100,000 policy. Two years later, plaintiff sued GEICO and made an offer of judgment for $50,000, which was rejected. At trial, the jury awarded plaintiff $2.262 million. On post-trial motion, the court reduced the verdict to $79,000 in accordance with the express terms of the UIM policy and statute.

The court had bifurcated the plaintiff’s bad faith claim and then later granted GEICO’s motion to dismiss, finding that GEICO was immune from suit under the litigation privilege. The trial court held that all the bases for the bad faith claim arose from GEICO’s conduct in negotiating a settlement of the UIM claim “in the course of and related to a judicial proceeding.”

On appeal, the insured argued that the trial court overlooked GEICO’s pre-litigation conduct, plus she argued that GEICO’s abuse of process trumped the immunity defense. The court agreed that some of the conduct complained of occurred outside the course of the litigation and, therefore, was not subject to the litigation privilege. Claims that GEICO refused to adjust the claim promptly and appropriately did not necessarily involve litigation conduct. Accordingly, the court reversed and remanded the case to the trial court for further proceedings.

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

Out sick this week. See you in two.

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

01/29/25 Am. Eur. Ins. Co. v. Eire Concrete Inc.
Southern District of New York
Language Matters in Exclusions. Southern District of New York Reminds Us That “Any Insured” Language Is Broader Than “The Insured”

In a tale as old as time, the Southern District of New York was asked to determine whether coverage was available for a construction worker injured on a construction site. American European Insurance Company (“AEIC”) insured a subcontractor at the project, Eire Concrete Inc., and provided additional insured coverage to ARA Construction Corp., the project’s general contractor. The policy contained an exclusion for bodily injury to any contractor or any employee of any contractor or its employee performing services of any kind or nature whatsoever.

An employee of another contractor on site that had also contracted with ARA, Nu-Way, was injured following an alleged worksite fall on some incomplete dried cement and/or construction material or debris.

Finding the exclusion applicable, the SDNY dispelled various arguments involving the lack of contractual privity between Eire and Nu-way, as well as the intended scope of the employee injury exclusion and its interplay with a separation of insureds provision.

Relative to the scope of the exclusion, the SDNY made clear that it cannot rewrite the exclusion. While similar exclusions may have their origins in avoiding overlaps with coverage under workers’ compensation system, the exclusion must be interpreted according to its language, which is much broader than simply precluding coverage for what would otherwise be covered by the employer’s workers’ compensation policy. Specifically, the SDNY noted that this exclusion applies equally to all insureds, regardless of who employed the claimant, on account of its use of “any contractor,” rather than simply those contractors that might have been engaged by “the insured” looking for coverage. In other words, the use of “any contractor” and its employees (regardless of who hired them) was meant to supersede the application of a separation of insureds provision, which applies in the context of exclusions limiting their application to “the insured.”

Maxwell’s Minute: This case has a great discussion about the difference in interpretation between “the insured” and “any insured,” so please email me if you would like a copy of the decision. I will note that the case did not actually hinge upon that question, but rather a very similar question involving the language “any contractor”. Since the court did not see language indicating that such contractor must have contracted with Eire, it concluded ultimately that contractor injuries were excluded for all insureds, regardless of who hired them, on account of the plain meaning of the words it confronted.

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

01/23/25 AMVS, Inc. d/b/a Super 8 Motel v. Mt. Hawley Ins. Co.
United States District Court, S.D. New York
Denial of Insured’s 1^st-Party Property Claim Due to 82-Day Delay in Reporting Is Upheld as a Matter of Law. The Insured’s Representative’s Self-Serving and Uncorroborated Assertions of Providing the Agent With Notice Earlier Is Insufficient to Defeat Summary Judgment

Mt. Hawley issued a commercial property insurance policy to AMVS, a Texas-based hotel operator, covering a Super 8 Motel in Harlingen, Texas.

The Policy has a condition that, in the event of loss or damage to covered property, AMVS must "[g]ive prompt notice of the loss or damage." In addition, a Windstorm or Hail Loss Reporting Limitation Addendum to the Policy provided:

Regardless of anything to the contrary in this policy to which this endorsement is attached, the following limitations apply in reference to reporting of claims under this policy:

With respect to loss or damage caused by windstorm or hail, including any named storm, you must give us prompt notice of the loss or damage and include a description of the property involved, and as soon as possible give us a description of how, when and where the loss or damage occurred. In no event may a claim be filed with us later than one year after the date of the loss or damage that is the subject of the claim.

A choice-of-law provision in the Policy stated that all matters including questions relating to the validity, interpretation, performance and enforcement of the policy are to be determined in accordance with N.Y. the law.

A windstorm allegedly damaged the property on October 22, 2021. Nearly three months later, on January 12, 2022, AMVS, through its attorney, reported a claim under the policy. However, AMVS’s corporate representative Jhaveri maintains that he reported the loss to his insurance agent "way ahead" of January 12, 2022, but has "no records" of it.

Mt. Hawley determined that the only covered damage attributable to the windstorm was twenty-six detached shingles on the roof. AMVS alleged, however, that the windstorm caused irreparable damage to the Property's roof and envelope, resulting in damages in the amount of $652,667.20.

Mt. Hawley denied the claim on June 23, 2022, concluding that the damage to twenty-six shingles would not exceed the applicable $25,000 policy deductible, and noted in the letter that AMVS did not timely notify Mt. Hawley of the Claim pursuant to the Loss Conditions.

AMVS sued seeking damages for the breach of contract, and recovery of attorneys' fees for the violation of the Texas Insurance Code. Mt. Hawley’s motion for summary judgment is granted.

AMVS argued in response that it complied with the prompt notice condition, which it construes to allow for reporting up to one year from a wind-related loss. AMVS also maintained that Jhaveri's deposition testimony that he notified an insurance agent about the loss before January 12, 2022, created an issue of fact. Lastly, AMVS asserted a claim for attorney's fees, contending that Mt. Hawley exhibited bad faith by denying its claim.

In considering the choice of law issue, the Court concluded that New York law applied. Section 5-1401 of New York's General Obligations Law provides that the parties to a contract involving at least $250,000 "may agree that the law of this state shall govern their rights and duties in whole or in part, whether or not such contract, agreement or undertaking bears a reasonable relation to this state." Section 5-1401 applies to the policy at issue here, which has a per occurrence loss limit of $3,880,000.

In citing other decisions, the Court recognized that under New York law, compliance with a notice-of-occurrence provision in an insurance policy is a condition precedent to an insurer's liability under the policy. Where the policy holder does not comply with this condition precedent, the failure to do so as a matter of law vitiates the contract, regardless of prejudice.

Notice must be given within a reasonable time in view of all of the facts and circumstances. "When considering the reasonableness of a delay, `courts have found relatively short periods to be unreasonable as a matter of law", citing cases including American Home Assur. Co. v. Republic Ins. Co., 984 F.2d 76, 78 (2d Cir. 1993) (collecting cases that hold delays ranging from 10 to 53 days unreasonable as a matter of law, thereby discharging the insurer's coverage obligations).

"A notice obligation is triggered when the circumstances known to the insured . . . would have suggested to a reasonable person the possibility of a claim [citation omitted]”. AMVS' corporate representative Vijay Jhaveri was present at the Property during the windstorm, and he observed damage to the Property. As such, the Court found the possibility of a claim was clear on date of loss, triggering the policy's notice obligation.

AMVS argued that the Windstorm or Hail Loss Reporting Limitation Addendum to the policy created a longer acceptable notice period [quoted above]. AMVS argued it "expressly allows for hail/wind losses to be reported up to one (1) year from the date of loss.".

Interpreting the contract giving words and phrases their plain meaning and construing it to give full meaning and effect to all of its provisions, the Court found that AMVS' interpretation of the addendum failed because it rendered the prior sentence, requiring that AMVS "must give" Mt. Hawley "prompt notice of the loss or damage" and provide a description of the loss "as soon as possible", meaningless. Conversely, the Court said that Mt. Hawley gives meaning to both parts of the addendum, arguing that the provision mandates prompt notice in relation to when a claim is discovered, and further provides that "wind and hail claims reported more than one year after the reported loss are untimely regardless of the circumstances surrounding the delay. In other words, the Addendum imposes two independent requirements: (1) AMVS must give prompt notice to Mt. Hawley, within a reasonable time from when it should have become aware of the possibility of a claim; and (2) AMVS must file a claim within one year of the date of loss or damage, regardless of when AMVS might discover its claim. "This accords with the word ‘limitations,' in plural form, in the first sentence of the Addendum, rendering both limits independently enforceable. It is the only reasonable interpretation that follows from the plain language of the Policy and does not render one of its two clauses superfluous."

AMVS also alleged that Jhaveri's testimony created an issue of fact as to when they reported the loss, arguing that "[w]hile the exact timing is unclear, Mr. Jhaveri testified that he notified Plaintiff's insurance agent of the loss ‘way ahead' of the written notice of loss subsequently provided by Plaintiff's counsel on January 12, 2022. Mt. Hawley argues that this self-serving, uncorroborated testimony fails to raise a genuine issue of fact sufficient to defeat summary judgment.

A court generally cannot grant summary judgment based on its assessment of the credibility of the evidence presented. Nevertheless, AMVS is still required to offer some hard evidence showing that its version of the events is not wholly fanciful. The vague testimony in which Jhaveri acknowledges that he has "no records" of calling the insurance agent is a self-serving statement and insufficient to defeat a motion for summary judgment. As the non-moving party, AMVS may not defeat summary judgment by simply showing that there is some metaphysical doubt as to the material facts.

"’Because New York courts have repeatedly held notice delays of less than two months to be unreasonable as a matter of law,’ and because AMVS fails to show any excuse to justify its 82-day delay in reporting the claim to Mt. Hawley, the Court concludes that AMVS' notice was untimely”.

AMVS sought to recover its legal expenses. AMVS based its request for attorneys' fees on the Texas Insurance Code. As this action is governed by New York law, AMVS' claim for fees under Texas law was deemed unavailing.

Under New York law, AMVS was said to have failed to overcome the strong presumption against finding that an insurer denied coverage in bad faith. AMVS' untimely notice constituted a reasonable basis for denial.

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

01/16/25 Protective Ins. Co. v. State, Comm’r of Ins.
Nevada Supreme Court
Private Insurance Company With Subrogation Claim Not Among the High-Priority Claimants to Recover From an Insolvent Insurer

Zeljkovich, the driver of a tractor trailer collided with Matthews. Zeljkovich had automobile liability insurance coverage with Spirit Commercial Auto Risk Retention Group, and Matthews had insurance through Protective Insurance Company. Matthews sued Zeljkovich in Virginia, where the accident occurred, for negligence. Spirit began defending Zeljkovich and negotiated a settlement with Matthews. Before the settlement was finalized, Spirit became insolvent and was placed into receivership and liquidation. Since Spirit was in receivership, Matthews sought UM/UIM coverage from his insurer. Protective settled and paid Matthews. Protective asserted that it acquired subrogation rights from Matthews against Spirit’s estate. In Nevada, claimants to an insolvent insurer’s estate are subject to a mandatory process in which a receiver caps and prioritizes claims against the insurer’s limited remaining assets according to the priority schedule in the statute. Spirit’s Special Deputy Receiver notified Protective that its claim would fall within the residual prioritization category and could go unpaid due to insufficient funds. Protective argued its claim should be higher on the priority schedule because it had not been indemnified. The district court affirmed the Special Deputy Receiver’s decision.

On appeal, the court noted the issue with Protective’s argument was that it would give it more rights as the subrogee than the subrogor under the statute. The statute excluded from that class any loss for which indemnification is provided to the claimant, and Protective had indemnified the underlying claimant. Since the underlying claimant would be excluded from that class, Protective’s subrogation claim also must be excluded. The court also rejected Protective’s argument that because the statute included some statutory guaranty associations’ subrogation claims, then it must include UM/UIM private insurer subrogation claims.

The court reasoned that from a public policy perspective, a private insurer with a subrogation claim is not among the class of litigants the statute seeks to protect. When an insurance company goes under, it may not have sufficient assets to cover all claims. For individual claimants, the inability to recover may mean anything from the loss of their home or ruinous liability to a shortage of money for emergency situations. The statute seeks to prioritize those who most immediately and urgently needs to recover from their insurer because not everyone can be paid. Accordingly, the statute prioritizes policyholders and the persons who sustain bodily injuries or property damage because they are often least able to absorb a loss. Similarly, the statute prioritizes statutory insurance guaranty associations to protect policyholders if their insurers become insolvent. If an insurance company fails, then the statutory guaranty organizations pay the policyholders of the failed company, so they must remain solvent to fulfil their consumer protection duties. As a private insurance company, the court noted that Protective is not among the vulnerable, high-priority claimants under what is a consumer protection statute, and allowing the insurer to recover would risk decreasing the amount that policyholders could recover, harming consumers. As a result, the court affirmed the district court’s decision that Protective’s claim properly fell within the residual category.

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

01/29/25 Gomez-Jimenez, et al. v. Wilson et al.
New York Appellate Division, Second Department
An Employer’s Right to Reimbursement of Workers’ Compensation Benefits Is Governed by the Law of the State in Which Benefits Were Paid

The plaintiff, a resident of New Jersey, was injured in a car accident in Brooklyn, New York, while driving a vehicle owned by his employer. The plaintiff sued the driver of the car that struck his (in New York Supreme Court), in addition to filing for (and eventually receiving) workers’ compensation benefits from his New Jersey employer.

After the plaintiff received his workers’ compensation benefits, the defendant’s auto carrier tendered its $25,000 policy limit to settle the case. Plaintiff’s employer’s carrier placed a subrogation lien on the settlement to cover the plaintiff’s worker’s compensation claim. The plaintiff’s motion to vacate the lien was denied by the New York trial court, and this appeal followed.

The law of the land in New York is in the title of this article—the right of an employer to be reimbursed for workers’ compensation benefits paid to an employee are governed by the law of the State in which the benefits were paid. Here, the plaintiff’s workers' compensation benefits were paid in New Jersey. So, New Jersey law governs the rights of the plaintiff’s employer to recover the benefits that were previously paid.

The Appellate Division properly denied the plaintiff’s motion to vacate the lien asserted by his employer.

01/29/25 Edwards v. Certain Underwriters at Lloyd’s London
United States District Court, District of New Jersey
Insurer Cannot Restrict Insured’s Post-Loss Ability to Assign Rights to the Policy

The plaintiff sued the City of Trenton in the underlying action, asserting violations of the Fourth and Sixth Amendments. Plaintiff and the City executed a settlement agreement and entered a consent judgment, wherein the City would be liable to the Plaintiff for $5,000,000. Of that $5 million, the City was to pay $500,000 to the Plaintiff and assign to the Plaintiff all of its rights against its insurance carrier, allowing the Plaintiff to pursue recovery directly against the carrier for the remaining $4,500,000.

After the Plaintiff moved the Court to approve the settlement and enter the consent judgment, Underwriters moved to intervene in the action. To intervene in an action, a party must show that it has sufficient present interest in the litigation. Underwriters claimed that its economic interest in mitigating the underlying judgment it may later be called upon to reimburse was sufficient to allow it to intervene. The Court disagreed, holding that Underwriters’ interest is contingent (and not yet a present interest) because it depended entirely on whether coverage was available under its own policy (a point Underwriters wasn’t yet ready to concede).

Underwriters then moved to compel the Plaintiff to arbitrate the coverage dispute (and the effectiveness of the assignment of rights). The Plaintiff opposed the motion, maintaining that the policy’s arbitration clause had no effect, since the Plaintiff was not a party to the policy, and because the underlying claims were outside the scope of the policy’s arbitration clause.

The Federal Arbitration Act permits courts to compel arbitration upon a determination that: (1) there is a valid agreement to arbitrate between the parties; and (2) the merits-based dispute falls within the scope of that agreement. The Court here noted that, under these facts, the assignment of the policy must be valid in order to for the arbitration agreement to have any effect.

The Court held that the City’s assignment of the policy to the Plaintiff was valid because it occurred post-loss. The Court noted that, in most U.S. jurisdictions, provisions prohibiting the post-loss assignment of an insurance policy, or requiring the carrier’s consent to do so, are void. Since the City assigned its rights under the policy to the Plaintiff only after the loss had already occurred, the Court found that the assignment was valid.

Turning back to the arbitration clause itself, the Court noted that the clause was valid as applied to the City. Since, given the valid assignment, the Plaintiff simply “stands in” for the City under the policy, the Court rules that the arbitration clause was valid against the City as well.

In the end, the Court ruled that because the assignment from the City to the Plaintiff was valid, the Plaintiff is privy to the policy just as the City would have been. In other words, the policy served as a valid, binding agreement between the Plaintiff and Underwriters, although the amount owed by Underwriters remains to be determined at arbitration.

Editor’s Note: This one was hot off the press; it’s not available online as of yet. A copy is available upon request.

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

01/27/25 Spinosa v. Foremost Ins. Co. Grand Rapids Mich.
United States Court of Appeals, Fifth Circuit
Failure to Plead Specific Facts and Timely Amend Complaint Proves Fatal to Complaint Regarding Property Damage to 18 Insured Properties

Spinosa commenced an action asserting breach of contract and bad faith under Louisiana law based on Foremost’s alleged failure to investigate and pay claims for hurricane damage. Spinosa sought recovery for 19 properties. The district court dismissed claims on 18 of the properties for failure to state a claim and denied leave to amend. The 19^th property was transferred to another court since it was located in a different jurisdiction from the deciding court.

Spinosa appealed and the Court of Appeals affirmed the dismissal. Under Louisiana law, a claim for breach of an insurance policy requires citing a specific policy provision. The court noted that the federal pleading standard applied but nonetheless held Spinosa’s complaint made generic conclusory allegations that a hurricane damaged his properties. In essence, Spinosa failed to plead facts which ultimately proved fatal due to the heightened pleading standard at the federal level.

On the leave to amend issue, Spinosa declined to amend his complaint within 21 days of receipt of Foremost’s motion to dismiss. Instead, he filed his opposition 144 days later, nor did Spinosa file a motion for leave to amend. Further, Spinosa did not include a proposed amended complaint in his opposition and only argued that his opposition should be construed as requesting an amendment. Due to the above deficiencies, the appellate court found no abuse of discretion occurred in the denial of the leave to amend.

01/16/25 Safont v. State Farm Fla. Ins. Co.
United States Court of Appeals, Eleventh Circuit
Standalone Promise to Pay Interest in Homeowners Policy Creates Private Cause of Action Under Florida Case Law

The Barbato’s sued State Farm for breach of contract after State Farm paid the Barbatos’ claim without interest. In 2018, the Barbatos’ home was damaged by Hurricane Irma, and they received an appraisal resulting in State Farm paying the claim. However, State Farm failed to include interest in the payment.

Within the Barbatos’ policy was a Loss Payment provision that provided “"interest will be paid in accordance with Section 627.70131(5) of the Florida Insurance Code.” The district court dismissed the amended claim complaint with prejudice because it felt recovery was barred under Florida Statute § 627.70131(5)(a). An appeal followed.

Review was limited to whether the Barbatos’ claim was barred under §5(a)’s limitation since that statute was the basis of the underlying decision. The statute of interest provides:

“Any payment of an initial or supplemental claim ... made 90 days after the insurer receives notice of the claim or made more than 15 days after there are no longer factors beyond the control of the insurer which reasonably prevented such payment, whichever is later, bears interest at the rate set forth in s.55.03. Interest begins to accrue from the date the insurer receives notice of the claim. The provisions of this subsection may not be waived, voided, or nullified by the terms of the insurance policy ... However, failure to comply with this subsection does not form the sole basis for a private cause of action.”

The district court relied heavily on the emphasized “no private cause of action” language to dims the claim. It also relied upon a Florida State Court case with nearly identical facts as the reasoning for its position. But in that state court case, on appeal, found that §5 is broad enough to create a sole private cause of action if the policy contains a standalone, independent obligation to pay interest. (Taylor v State Farm Florida Ins. Co., 388 So 3d 307 [Fla Dist Ct App 2024])

On appeal in our case, State Farm acknowledged that the Loss Payment in the present matter and Taylor were identical. Since the amended complaint alleged a violation of the Loss Payment Provision, a standalone obligation to pay interest, Taylor applied to create a private right of action.

The appellate court explained that while the policy states interest will be paid in accordance with §5(a), under Taylor’s reasoning that language is merely a reference to the manner in which the obligation will be performed. The citation to the statute does not nullify State Farm’s promise to pay interest. Due to Taylor’s reasoning and being an intermediate state appellate decision, the Eleventh Circuit held it was bound to apply its reasoning.

All of State Farm’s arguments in opposition were rebuked. First, State Farm advised it sought rehearing of Taylor. That rehearing was granted, and State Farm fared no better. Second, State Farm moved to stay the Barbatos’ appeal after Taylor was decided or provide a limited remand regarding the stay of appeal. State Farm’s abstention argument was rejected because only State Farm is a defendant in both cases, Taylor is not a certified class action, and the Barbatos were not and had never been parties in the Taylor matter. Finally, State Farm pointed to a 2011 Florida appellate decision for the proposition it created a conflict in Florida appellate authority. This was rejected as Taylor distinguished the contrasting authority and Taylor is the only Florida appellate decision that addressed the issue on appeal.

Editor’s Note: Why is the case captioned as Safont instead of Barbato? It is because Sandra Safont brought the action individually, and on behalf of all others similarly situated, which included the Barbatos . Hence as named parties. That is why State Farm sought abstention and attempted to place the Barbatos in the same class as those in Taylor. Ms. Taylor also brought her action on behalf of all those similarly situated but the Barbatos were not named in that matter.

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

01/22/25 Irving, et al. v. Limberis
Appellate Division, Second Department
Second Department Reverses Order Granting Plaintiff’s Summary Judgment Motion, Finding That Plaintiff Failed to Establish Serious Injury Under 90/180 Category

Irvin’s vehicle collied with one owned and operated by Limberis on February 11, 2020, in Queens, New York. As a result, the Plaintiff alleged injuries to her neck, back, head, left shoulder, both knees, and both feet. Plaintiff’s husband asserted derivative claims. Plaintiff claimed her injuries qualified as serious under multiple categories of Insurance Law § 5102(d), including the 90/180 day category.

Prior to depositions being taken or an IME being conducted, Plaintiffs moved for summary judgment on the issue of serious injury. The trial court granted the Plaintiffs’ motion on this issue. Defendant appealed.

The Second Department reserved on the ground that the motion was premature, reasoning that neither depositions nor an IME had been conducted. In the Court’s words, "[A] party should be afforded a reasonable opportunity to conduct discovery prior to the determination of a motion for summary judgment.”

The Second Department also found that Plaintiffs failed to establish, prima facie, that Plaintiff Irving sustained a serious injury under the 90/180 category of § 5102(d). Plaintiff Irving did not submit any medical evidence showing that she was unable to perform substantially all of her daily activities for fewer than 90 of the first 180 days after the subject accident. The medical provider that attested to Plaintiff Irving’s medical condition saw Plaintiff Irving over a year after the accident and failed to opine on the 90/180 issue. The Court also found that Plaintiff Irving’s own statements to the physician regarding her ability to perform activities during the first three months post-accident were insufficient. The physician’s report also failed to meet Plaintiff’s prima facie burden that her injuries were proximately caused by the subject accident.

Accordingly, the Second Department reversed the trial court’s order which found that Plaintiff Irvin sustained a serious injury within the meaning of Insurance Law § 5102(d), that her injuries were proximately caused by the subject accident.

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

01/22/25 Khair v. Hyundai Mar. & Fire Ins. Co., Ltd.
New York State Supreme Court, Kings County
Pre-Answer Motion to Dismiss Granted Based on Material Misrepresentation on Application for Insurance Regarding Number of Units and Illegal Basement Unit

Abul Khair and Monoara Begum (the “Insureds”) owned a property located at 183 Minna Street, Brooklyn, New York (the “Premises”). The Insureds purchased an insurance policy from Hyundai Marine & Fire Insurance Co., Ltd (“HMFIC”).

On December 16, 2022, a fire erupted at the Premises, resulting in the Insureds submitting a claim to HMFIC. HMFIC denied coverage, on March 8, 2023, and rescinded the homeowner’s policy issued to the Insureds. Following the rescission, the Insureds commenced an action, seeking damages resulting from the fire loss. The Insureds’ alleged that HMFIC inspected the Premises, and knew the use, layout, type, occupancy and condition. As such the Insureds assert that HMFIC

HMFIC filed a pre-answer motion to dismiss pursuant to CPLR 3211(a)(1) and (7).

In support of the motion, HMFIC attached various documents, testimony, and evidence. HMFIC attached the Insureds’ October 26, 2021, application for insurance, signed by the Insured, describing the Premises as a three-family house.

Under the HMFIC “Eligibility Criteria/Material Information” on the application, Abul Khair confirmed that the Premises did not have “illegal rental units, including basement unit,” and was not a “boarding or rooming house.” In addition, HMFIC offered the underwriting guidelines, which identify that HMFIC is unable to issue policies with any “unusual or potentially hazardous condition that may increase exposure to loss – refer to underwriter.” HMFIC offered testimony from an underwriter identifying that the investigation revealed that the house was configured with seven dwelling units, resulting in a house with illegal basement units mimicking a boarding house situation. The underwriter further testified that illegal dwelling units are prohibited, in part, because without proper building permits and inspections, illegal units have egress problems, contain hazardous conditions that overtax infrastructure, lack of proper smoke detectors, thus greatly increasing the possibility of a loss.

HMFIC attached the FDNY’s incident report and complaint to the New York City Department of Buildings (“DOB”). The report identifies that there were no smoke detectors in the basement where the fire started. Further, the report identifies a DOB complaint, identifying an illegal conversation at the Premises. The DOB records confirm that there were six violations for illegal construction and quality of life violations. Multiple violations cited that the Premises were converted, maintained, and/or occupied with three or more additional dwelling units than legally authorized by the DOB records.

HMFIC attaches their Cause and Origin report, and photographs of the manufacture dates on the basement wall board/sheetrock, and wall studs, dated September 2020 and January 2020, respectively. The report summarizes that the basement was converted into a fourth apartment, with four bedrooms. The report summarizes an interview with Khair, purportedly stating the basement was rented to a tenant, on a monthly basis. The report further identifies that three additional individuals resided in the basement, and paid rent.

HMFIC included an affidavit of its field adjuster, who inspected the property on December 28, 2022, and observed at least one additional living unit in the basement of the house, including, “living areas, a kitchen, a refrigerator, a gas stove, a bathroom, beds, and an egress door.”

Based on all of the evidence submitted, HMFIC argued that by stating the Premises were occupied by only three families, and included an unfinished basement, the Insureds made a material misrepresentation. As such, HMFIC argued that the policy is void ab initio. HMFIC further argued that the Insureds violated the concealment or fraud condition contained in the policy, which acts as a separate basis to disclaim coverage. Lastly, by accepting the premium refund check, there was an accord and satisfaction argument raised, by HMFIC. HMFIC argued that by cashing the premium refund check, the Insureds were unable to challenge the decision to rescind the policy.

In opposition, the Insureds identify that the Premises is a legal three-family owner-occupied house. The Insureds argue that the basement was not a separate dwelling or apartment unit. Plaintiffs attempt to argue that the underwriting guidelines do not specifically reference HMFIC’s refusal to insure a building with illegal rental unit, and therefore HMFIC cannot show that the misrepresentation is material. The Insureds argue that an illegal basement unit does not fall under the category of “boarding and rooming homes” which are ineligible to receive coverage. Lastly, the Insureds assert that the application questions were ambiguous.

As a procedural matter, the Insureds contend that HMFIC does not offer sufficient documentary evidence to warrant a dismissal under CPLR 3211(a)(1). Further, the Insureds allege that they have plead facts to fit within a cognizable legal theory, and thus the portion of the motion under CPLR 3211(a)(7) must be denied.

The Court identified that under CPLR 3211(a)(7), the Court’s analysis is limited to whether the pleading states a cause of action, not whether there is evidentiary support to the complaint. Further under CPLR 3211(a)(1), a complaint will only be dismissed if there is documentary evidence that “utterly refutes the factual allegations of the complaint and conclusively establishes a defense to the claims as a matter of law.” The Court recognized that affidavits, deposition testimony and letters are not considered documentary evidence under CPLR 3211(a)(1).

The Court analyzes the well-standing principles of New York Insurance law. First, identifying that to establish the right to rescind, an insurer must demonstrate that the insured made a material misrepresentation in acquiring the policy. A misrepresentation is a false statement as to past or present fact, made to induce an insurance contract. Further, a misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented.

The Court notes that the issue of materiality is generally a question of fact for the jury. However, an insurer may establish materiality as a matter of law, if the insurer presents documentation concerning underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, which show it would not have issued the same policy if the correct information had been disclosed in the application.

The Court iterates that under New York law, the number of dwelling units contained in a building is determined by its structural configuration and the number of self-contained dwelling units. Under New York law, a self-contained unit has its own kitchen, bathroom, living space and separate entrance.

The Court found that it undisputed that the Insureds reside on the first floor, and that the second floor contains two apartments. The Court identified that HMFIC proffered evidence establishing that the basement contained an additional dwelling unit, with a living area, kitchen, bathroom, beds, and an egress door.

The Court wrote “Plaintiffs’ contention that because the Premises is legally designed as a three-family home, there was no reason to indicate anything other than three families on the application is without merit.” The First Department has rejected similar arguments, finding the only reasonable interpretation of the question ‘# Families’ is that it seeks the number of separate dwelling units in the building. The Court found that the illegality of the additional apartment was unavailing for the purposes of the analysis.

The Court further next moved to HMFIC’s argument that there was a material misrepresentation in the application, where the Insureds identified that there were no illegal basement apartments. The Court stated that based on the totality of the evidence presented, it would be illogical to conclude that the Premises did not contain a basement unit or had proper permits.

The Court, when viewing the evidence, identified that the Insureds set forth no more than conclusory statements, belied by the record. Even the estimate submitted by the Insureds confirmed that the basement contained four bedrooms, a kitchen, dining room, and a bathroom.

Upon consideration of the papers submitted, the Court found that the Insureds made a material misrepresentation concerning the existence of illegal rental units or basement unit within the Premises. As such, the Court found that the insurance policy was void ab initio, and HMFIC denial of coverage does not constitute a breach of contract. As such, the Court granted the motion to dismiss.

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

01/31/25 New York Assembly Bill A1067
Proposed Legislation to Prohibit the Exclusion for Coverage for Losses or Damages Caused by Exposure to Lead-Based Paint

Bill A1067 was introduced in the start of the 2025-2026 legislative session. The Bill seeks to prohibit liability policies issued to rental property owners from excluding coverage for losses or damages caused by exposure to lead-based paint.

The Bill reads as follows:

Section 1. The insurance law is amended by adding a new section 3463 to read as follows:

§ 3463. Exclusion for lead hazards prohibited. No insurer licensed or permitted by the superintendent to provide liability coverage to rental property owners shall exclude, after twenty-six months following the effective date of this section, coverage for losses or damages caused by exposure to lead-based paint. The department shall not permit, authorize or approve any exclusion for injury or damage resulting from exposure to lead-based paint, except as specifically provided for in law, that was not in effect as of the effective date of this section, and all previously approved exclusions shall terminate on or before twenty-six months following the effective date of this section.

§ 2. This act shall take effect immediately.

DOMENICA’S DIARY on BAD FAITH
Domenica D. Hart
ddk@hurwitzfine.com

01/23/25 Amvs, Inc. v. Mt. Hawley Ins. Co.
Southern District of New York
No Proof of Bad Faith: 82-Day Delay of Loss Notice Is Unreasonable and Is a Reasonable Basis for Denial in Itself

Mt. Hawley, an Illinois-based insurer, issued a commercial property insurance policy to AMVS, a Texas-based hotel operator. The Policy covered a Super 8 Motel for Special Causes of Loss. The policy imposed a condition that, in the event of loss or damage to their covered property, AMVS must give Mt. Hawley “prompt notice” of the loss or damage. The policy also provided an addendum with further limitations in reporting a claim of loss or damage caused by a windstorm or hailstorm. In addition to “prompt notice”, AMVS must give a description of the property involved and as soon as possible give us a description of how, when and where the loss or damage occurred. In no event may a claim be filed with Mt. Hawley later than one year after the date of the loss or damage.

The subject claim involved a windstorm that damaged the Property's roof, stucco, windows, and interior on October 22, 2021. On January 14, 2022, Mt. Hawley acknowledged receipt of the claim. AMVS’s principal claimed that he reported the loss to his insurance agent "way ahead" of January 12, 2022, but he had no records of the same. Mt. Hawley's engineer submitted a report in April 2022 concluding that the only covered damage attributable to the windstorm was twenty-six detached shingles on the roof. Mt. Hawley denied the claim in June 2022 for 2 reasons: (1) the damage to twenty-six shingles would not exceed the $25,000 Policy deductible and (2) AMVS did not timely notify Mt. Hawley of this Claim pursuant to the Loss Conditions set forth in the Policy; Mt. Hawley’s notice was nearly three months after the loss.

The choice-of-law provision in the Policy set forth the State of New York for all coverage disputes. AMVS filed an action in December 2022, alleging breach of contract based on Mt. Hawley's refusal to pay the damages, and failure to promptly pay the claim in violation of the Texas Insurance Code. They also sought Bad Faith, seeking to recover its expenses from bringing this Action. After answering the complaint, Mt. Hawley moved for summary judgment in August 2024, arguing that AMVS' late notice of the loss defeats the breach of contract claim, and that AMVS cannot sustain its prompt payment claim under New York law. AMVS rebutted in part that it complied with the prompt notice condition, which AMVS construed to allow reporting up to one year from a wind-related loss.

The Court, rejecting AMVS’ contention that Texas law governs first-party disputes, applied New York Law to the case. The court interpreted the addendum to impose two independent requirements:" (1) AMVS must give prompt notice to Mt. Hawley—within a reasonable time from when it should have become aware of 'the possibility of a claim; and (2) AMVS must file a claim within one year of the date of loss or damage, regardless of when AMVS might discover its claim. The court found AMVS’s assertion of having given “way back” notice to the agent, without proof, was insufficient. AMVS’s 82-day delay, the Court found that unreasonable and AMVS’s notice was untimely. The Court cited to other cases in considering the reasonableness of a delay. Citing First and Second Department cases, courts have found relatively short periods to be unreasonable as a matter of law, referencing delays ranging from 10 to 53 days as unreasonable, thereby discharging the insurer's coverage obligations.

With regard to the bad faith claim, AMVS based its argument on Mt. Hawley's conclusion that only minimal damage was attributable to the windstorm, ignoring the untimely notice referenced in the claim decision letter. The Court found AMVS' untimely notice constituted a reasonable basis for denial in itself. AMVS failed to demonstrate that Mt. Hawley denied the claim in bad faith. Mt Hawley’s summary judgment motion was granted.

Editor’s Note: Like a few others this issue, a copy of this order is unavailable via any free platform. A copy is available upon request.

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

01/16/25 Wiener Städtische Versicherung AG Vienna Ins. Grp. v. Infrassure Ltd
Ontario Court of Appeal
A Follow Settlements Clause in a Reinsurance Contract Requires a Reinsurer to Honour Its Portion of Reinsurance Where the Claim as Recognized by the Lead Insurer Falls Within Coverage "As a Matter of Law" and the Lead Insurer Took All "Proper And Businesslike Steps” to Resolve the Claim

The Ontario Court of Appeal released the first Canadian decision on the interpretation of the ‘follow settlements clause’ in a reinsurance contract[1] and, as well the duties and obligations of a retrocedent and a retrocessionnaire under a retrocession agreement.[2]

Only a really big loss will engage insurance at that level. That really big loss occurred at the Vale Canada mine site in Sudbury, Ontario. That loss began February 6, 2011, when approximately 300 to 400 tons of molten material leaked out of "tap holes" in one of the two flash furnaces at Vale Canada's smelter in Sudbury, Ontario. The molten material severed cooling water lines and set off steam explosions. The flash furnace was shut down for 26 weeks, resulting in a significant loss of Vale Canada's production capacity of finished nickel.

The claim was promptly reported to Vale’s primary property insurer, Zurich Canada. A steering committee formed by Zurich and Zurich’s reinsurers was struck to deal with the physical damage together with the loss of production. The members of the Steering Committee each hired lawyers, adjusters, and forensic accountants. In January of 2012, Vale Canada presented the steering committee with a business interruption claim of $484 million. In July of 2013 that claim was reduced to $254 million using different methodology.

In December 2014, Zurich settled Vale’s claim at $140 million.

Zurich held significant reinsurance. One its reinsurers was Wiener Städtische Versicherung AG Vienna Insurance Group, which is referred to in this case as “VIG”. The attachment point of its reinsurance (the dollar value where the re-insurance would ‘kick in’) was US$50 million/C$63.465. VIG had, in turn, entered into a retrocession agreement with Infrassure Ltd. under which VIG ceded 99.89% of the risk and the associated premium to Infrassure. In March 2015, VIG honoured its reinsurance contract with Zurich by paying Zurich $8.433 million for its share of the settlement.

VIG asked Infrassure to reimburse 99.89% of the amount that it paid to Zurich under the follow settlements clause of the retrocession agreement. Infrassure refused stating that the follow settlements clause was not part of the retrocession agreement. That refusal triggered legal proceedings in multiple jurisdictions which culminated in a 13-day trial in Ontario. The trial judge found that Infrassure was obligated to indemnify VIG as claimed. Infrassure appealed. In a decision released January 16, 2025, the Ontario Court of Appeal upheld the trial judgment.

Infrassure argued that the trial judge mis-interpreted its retrocession agreement with VIG; that its “Claims Agreement Right” under a subscription agreement qualified its obligation under the follow settlements clause of the retrocession agreement, such that it had no obligation to contribute to a settlement to which it had not agreed.

The retrocession agreement between VIG and Infrassure consisted of a 15-page "Risk Details Form", setting out the terms and conditions of the contract and a 7-page "Contract Administration and Advisory Details Form", addressing various matters relating to the administration of the Risk Details Form. Together, these two forms were called the "Slip” and are standard London market forms containing standard London market clauses and terminology.

The key contract details were in the “Risk Details Form” which described the parties, the risks covered, limits on coverage and cancellation rights. It also contained the Follow Settlements Clause and the "Claims Co-operation Clause". The terms and conditions of the Retrocession Agreement would follow in all respects the terms and conditions of the Primary Policy. This meant, amongst other things, that the risks insured under the Retrocession Agreement were co-extensive or "back-to-back" with those under the Primary Policy unless any express term states otherwise.

The Claims Co-Operation Clause mandated that VIG keep Infrassure fully informed of any developments regarding the claim. VIG was further required to cooperate with Infrassure, or any persons designated by Infrassure, in the investigation, adjustment and settlement of such claims. However, the Claims Co-operation Clause did not require VIG to secure Infrassure's approval of any settlement reached under either the Primary Policy, or VIG's reinsurance policy with Zurich.

The Contract Administration and Advisory Details Form included a subscription agreement which identified Infrassure as the "Slip Leader" and, as such, as a "Claims Agreement Party". It also contained a section entitled "Basis of Claims Agreement" which provided that reinsurers under the Retrocession Agreement agreed on how claims were to be managed. This section stated that "Non-Bureau/Overseas Reinsurers" were to "agree each for their own proportion".

Infrassure argued at trial and at the Court of Appeal that these provisions in the subscription agreement are an "express term that provides otherwise" and therefore qualify or limit Infrassure's obligation under the Follow Settlements Clause to be bound by settlements reached under the Primary Policy. For this reason, amongst others, it claimed the right not to participate in any settlement to which it has not agreed.

In fact, Infrassure did not agree with the settlement that Zurich reached with Vale. Infrassure was a full participant in the settlement negotiations but walked out when Infrassure became convinced that Zurich was not paying appropriate regard to coverage issues and other issues that in Infrassure’s view, severely augmented the quantum.

The trial judge held that the wording in the subscription agreement relied upon by Infrassure was general and that it “does not purport to give rights that would override a clear obligation in the Risk Details Form to follow settlements under the Local Policy between Zurich and Vale.” In support of this conclusion, the trial judge relied upon evidence of the negotiation of Zurich’s reinsurance in which Infrassure had participated. Zurich was clear during that negotiation that it would only accept reinsurers who agreed to be bound by settlements it reached with Vale. The trial judge relied upon that evidence as context for the follow settlement clause in the retrocession agreement.

On appeal, Infrassure argued that it was improper to use this extrinsic evidence to interpret the contract. The Court of Appeal rejected that argument stating “… the evidence was admissible as part of the factual matrix, relevant to understanding the Retrocession Agreement's genesis, purpose and commercial context. This is not a case where the trial judge used the evidence to overwhelm the words of the agreement or deviate from the text to create a new agreement.”

The Court of Appeal agreed with the trial judge’s conclusions on the structure of the policy which leant further support to the trial judge’s interpretation of the retrocession agreement. On this basis, the Court of Appeal found that the trial judge reasonably found that there were no "express terms to the contrary" that qualified or limited Infrassure's obligation to follow settlements reached by Zurich under the Primary Policy.

The Court of Appeal then reviewed the trial judge’s examination of the obligation of a reinsurer to follow the settlements entered into by the reinsured under a local or primary policy. Is that obligation absolute or is it qualified?

The trial judge accepted a number of UK cases that held that Infrassure's obligation to follow the settlement is not absolute. The trial judge held that regardless of the language used, a reinsurer is only required to follow settlements reached by the lead insurer where:

the claim as recognized by the lead insurer falls within coverage "as a matter of law"; and
in settling the claim, the lead insurer must have proceeded in good faith and have taken all "proper and businesslike steps".

The Court of Appeal agreed with the trial judge’s view that these two conditions (the "Scor Conditions") fairly balance the competing interests at stake since a reinsurer that has agreed to follow settlements should not be entitled to require the lead insurer to prove every element of the insured's underlying claim, provided that the settlement by the lead insurer falls within the bounds of coverage and is entered into on the basis of proper and businesslike steps.

The trial judge determined that both Scor Conditions were met in this case. The first requirement — that the claim falls within coverage "as a matter of law" — is met if the claim as accepted by the insurer is "arguably" covered under the policy, even if the claim might well have failed if the matter had proceeded to trial.

In this case, the trial judge considered whether two exclusions in the policy applied so as to limit the claim under the Primary Policy. One of the exclusions was dependent upon the evidence as to the cause of the explosion and where it occurred. VIG and Infrassure each offered evidence at trial on this issue. The trial judge considered the evidence to be inconclusive on the key issues of where the explosion originated, as well as its cause. In view of the uncertainty, an exception to the exclusion arguably applied. The trial judge then reviewed a coverage opinion provided by Blaney McMurtry LLP, Zurich's coverage counsel that was prepared a year prior to the settlement. That opinion concluded that this exclusion would not apply because Vale would be able to tender evidence that the damage to the refractory lining was from an insured peril external to the furnace, bringing the claim within the exception to this particular exclusion.

Infrassure pointed to another exclusion that was dependent upon proof that oxidation had occurred. Once again, the trial judge held that the evidence on that point was also inconclusive and therefore there was no basis to apply the exclusion. This determination was also consistent with the Blaney coverage opinion.

Thus, on this basis, the trial judge concluded that the settlement was within coverage "as a matter of law”. As VIG proved that it paid Zurich and as the trial judge had concluded that the settlement was arguably covered as a matter of law under the Primary Policy, VIG had established the first of the Scor conditions. The Court of Appeal held that the trial judge did commit a palpable and overriding error in reaching that conclusion. In fact, the Court of Appeal accepted English authority stating that “…it is well understood that many insurance settlements require good faith compromises on liability and quantum. Yet insurers would be reluctant to make such compromises if they understood that a reinsurer who had promised to follow the settlement could nevertheless thereafter insist that the insurer re-prove the original insured's claim. Not only would this incentivize litigation over settlement, to the detriment of both insureds and insurers who might otherwise have reasonably settled the issues in dispute, it would also tend to increase needless duplication of claims procedures by insurers and their reinsurers. The ‘arguability’ standard leaves scope for insurers to reasonably and efficiently settle claims, while also protecting reinsurers from being required to contribute to a settlement that clearly falls outside the bounds of the coverage that has been agreed to.”

The second Scor Condition is to show that the settlement was achieved in a proper and businesslike manner. Infrassure argued that Zurich entered into a rushed settlement without properly investigating and adjusting Vale Canada's claim. The trial judge rejected that argument. The trial judge pointed to the mediation brief that Blaney’s prepared for Zurich which enumerated Vale’s positions, the evidence supporting those positions, Zurich’s reply and the evidence in support. It was clear that Zurich had turned its mind to the prospects of success and the risks of failure and on this basis, the second of the Scor conditions was met as Infrassure did not meet its burden to show that Zurich failed to act in a proper and businesslike manner when it agreed to the settlement.

Infrassure then argued that VIG had an obligation to Infrassure not to follow Zurich’s settlement when it knew that its “fronting insurer”, Infrassure did not approve. The retrocession agreement required Infrassure to follow settlements reached by Zurich. However, it imposed no obligation on VIG to follow positions taken by Infrassure. Moreover, VIG was required under its reinsurance contract with Zurich to follow Zurich's settlements under the Primary Policy, rather than positions taken by Infrassure, who was a stranger to the reinsurance contract. The reinsurance contract is wholly independent of the retrocession agreement.

Accordingly, Infrassure’s action was dismissed by the Court of Appeal; Infrassure must reimburse VIG for 99.89% of the amount it paid to Zurich under the reinsurance contract plus pre-judgment interest. Infrassure was directed to pay VIG $150,000 in court costs for the appeal which is in addition to the unstated amount of costs that Infrassure was ordered to pay VIG for the trial.

[1] A contract of reinsurance involves one party (the reinsurer) agreeing to indemnify another party (the reinsured) against loss or liability that arises by reason of a risk that the reinsured has assumed under a separate insurance contract: See Hill v. Mercantile and General Reinsurance Co. Plc., [1996] 1 WLR 1239 (U.K. H. L.), at 1251 ("Hill v. Mercantile").

[2] A retrocession agreement is one whereby a reinsurer cedes some or all of the risk that it has assumed to a further reinsurer. Such "reinsurance of reinsurance" is termed a retrocession agreement in order to distinguish it from a traditional contract of reinsurance. The reinsurer ceding the risk (in this case, VIG) is called the "retrocedant", while the further reinsurer who assumes the risk ceded (in this case, Infrassure) is termed the "retrocessionaire".

Coverage Pointers - Volume XXVI No. 16

Fri, 17 Jan 2025 21:59:26 +0000

Volume XXVI, No. 16 (No. 689)
Friday, January 17, 2025
A Biweekly Electronic Newsletter

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at ddk@hurwitzfine.com or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

Do you have a situation? We love situations.

We send our heartfelt sympathy and support to those facing the terrible fires in California. Thanks to the insurance industry for their help in rebuilding.

We love our Buffalo Bills, the only New York football team.

It’s CP Lite today – the courts were very quiet over the last two weeks. My editors never sleep (well perhaps they do) but there was little to report on since last issue. Don’t blame the messengers. As Heather reminded me this week, this is one of those rare months when we publish three issues, January 3, 17, and 31.

Greetings from Scottsdale. Better here in the warmer weather than at home in the snow.

Congratulations to the newest member of our Coverage Team, Victoria Heist

Victoria Heist was sworn into the Bar this week. She has been an active member of our coverage team since she arrived but is now an admitted lawyer and adds to our growing ranks.

Victoria earned her J.D. at the University at Buffalo School of Law, graduating cum laude. She received her undergraduate degree from the State University of New York at Oswego, graduating summa cum laude with a Bachelor of Arts in Economics. Prior to law school, she worked in the banking industry.

While in law school, Victoria served as the Head Note & Comment Editor of the Buffalo Law Review. She gained practical experience as the court clerk in the Village of Williamsville, and as an intern with the Erie County Attorney’s Office.

Victoria also participated in the New York Bar Association Mediation Competition, and the IBA-VIAC CDRC Vienna Mediation Competition. This year, Victoria will be coaching the UB Law team in the ABA Regional Mediation Competition.

Victoria grew up in Alden, New York and currently lives in Buffalo with her husband. She is a cat mom to Moo and her new kitten, Sasha. In her spare time, she enjoys reading, being outdoors, and spending time with her friends and family.

Hurwitz Fine Expands Rochester Presence with Two Great Lawyers and a Brick-and-Mortar Office

We are pleased to announce that the firm is expanding our presence in Rochester! We have been very fortunate to have Tim Welch as our Rochester attorney over the past five years. Having Tim in Rochester has allowed us to grow our Rochester legal work since he joined the firm. Tim has played a key role supporting numerous firm clients by handling work in Rochester and the surrounding areas.

Therefore, we are excited to announce the addition of two new Rochester attorneys and one legal assistant/paralegal.

The team joining the firm consists of attorneys, Elizabeth Ognenovski and Bradon Carlson, and legal assistant/paralegal, Heather Aultman, all of whom previously worked for the Law Office of Janice M. Iati until Janice’s passing last August.

We are also hanging a Hurwitz Fine shingle in Pittsford, New York, where the entire Rochester team will work! Our new office will be located at 100 Office Park Way.

Mediation Services – New Judicial Panel Added

I am now on the mediation panels for the US District Court for the Western District of New York, and the court-annexed mediation panels for Bronx County, Kings County, Richmond County, Nassau County, and this week, was added to the Panel for the Ninth Judicial District, covering Dutchess, Orange, Putnam, Rockland, and Westchester counties.

Let me help mediate your disagreement to see if there is some mutual agreement we can reach that will not box us into a corner. Reach out to me. I will be pleased to mediate your dispute.

Newsletters:

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant, and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at jeb@hurwitzfine.com to be added to the mailing list.
Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at dra@hurwitzfine.com to subscribe.
Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework, and governmental agencies. Contact V. Christopher Potenza at vcp@hurwitzfine.com to subscribe.
Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at emm@hurwitzfine.com to subscribe.

Ford Has a Better Idea – 100 Years Ago:

The Buffalo News
Buffalo, New York
17 Jan 1925

RUSSIA ORDERS 2000
TRACTORS FROM FORD

DETRIOT, Jan. 17. – the receipt of a million-dollar order for 2000 tractors and their parts for immediate shipment to Russia was announced today by the Ford Motor company.

A shipment of 900 tractors was made to Russia last August, according to the company.

The company also announced domestic retail deliveries for 1924 totaled 1,873,581 cars and trucks, an increase of 87,736 over 1923.

Peiper on Property (and Potpourri):

The first two weeks of 2025 bring us at least one interesting decision. In a lengthy decision from Judge Troutman, the Court of Appeals provides some long-awaited clarification on what damages are available for a potential violation of General Business Law, Section 349. As you likely know, GBL 349 is a deceptive practices statute which was intended to protect consumers from predatory/fraudulent conduct. It imposes sweeping applicability but has limited damages which include the actual damage or $50 whichever is greater. A successful litigant is also entitled to attorneys’ fees and treble damages. The treble damages, however, appear to be limited to $1,000 per the language of the statute.

Parties, for years, have been trying to expand the amount of punitive damages beyond the monetary threshold. In Hobish, the Court makes it very clear that punitive damages for breach of contract are still subject to the Rocanova/NYU test which requires proof that “(1) defendant’s conduct is actionable as an independent tort; (2) the tortious conduct is of the egregious nature…; (3) the egregious conduct is directed to the plaintiff; and (4) it is of a pattern directed at the public generally.”

Further, regardless of the size of the compensatory damages, treble damages cannot exceed the $1,000 threshold established by the legislature when the bill was enacted in 1980.

The upshot of this remains that while General Business Law, Section 349 claims remain an issue to be dealt with by insurance coverage counsel, the primary exposure remains the potential imposition of attorneys’ fees. This, however, is a significant issue. Recall that under New York law, a carrier is not responsible for fees incurred to challenge a coverage denial. However, if a GBL violation is also affirmed, those litigation costs may well be taxed against the carrier. A penalty that far exceeds the $1,000 cap on treble damages.

That’s it for this week. I know most of the country has been cold for weeks, but we’ve been quite seasonal here in the Great Lakes. That, it appears, is about to change. Stay warm and stay safe.

Oh, and one more thing. Go Bills. We’ll meet you in Kansas City in ten days!

Steve
Steven E. Peiper
sep@hurwitzfine.com

For Better or for Worse – 100 Years Ago:

The Buffalo News
Buffalo, New York
Jan 17, 1925

WOULD HELP PARENTS
BY RAISING BACHELOR TAX

PARIS, Jan. 17. – Bachelors and childless couples are to be still more heavily taxed for the benefit of large families under the terms of a bill introduced in the chamber of deputies and backed by members belonging to almost all the parliamentary groups.

The bill proposed to raise the monthly allowance to parents with large families from 90 francs, as provided by the law passed in July 1923, to 360 francs. To provide the necessary funds the incomes of bachelors of both sexes would be taxed on a sliding scale.

Lee’s Connecticut Chronicles:

Dear Nutmeggers:

Been on the go-again. No time to tell you about all the important Connecticut insurance decisions, so tune in next edition for a Connecticut double-dip. On the home front, we are preparing to send the kids back to college and welcome being empty nesters once again. Someone needs to explain to me why college winter break goes on seemingly forever. On the construction front, we’re finally in the home stretch and we might even have working appliances by my next report. We’ll keep you updated.

Until then, keep keeping safe (and warm!).

Lee
Lee S. Siegel
lss@hurwitzfine.com

Race Problem Solutions? – 100 Years Ago:

The Buffalo News
Buffalo, New York
17 Jan 1925

ASKS NEGRO COMMISSION
TO MEET RACE PROBLEM

WASHINGTON, Jan. 17.—Creation of a negro industrial commission to work out plans for the solution of the different problems confronting the negro race of the country has been proposed in a resolution introduces in congress by Senator Cummins of Iowa, president pro tempore of the senate.

Formulation of a policy for mutual understanding between the races, the encouragement of the general promotion of his general welfare in industrial pursuits would be some of the duties of the commission.

Ruffner’s Road Review:

Dear Readers,

Buffalo is off to a good start in the playoffs and, once again, are headed to the Divisional round, our arch nemesis the past few years. Hopefully, they can finally pull through this year against a tough Ravens team. Go Bills!

I have one no-fault case and one SUM case for this week. In the no-fault matter, the Appellate Division reversed the Supreme Court, holding the insurer’s summary judgment motion should have been denied, as they did not provide sufficient evidence that the insured’s misrepresentations were material. In the SUM matter, the Appellate Division upheld the Supreme Court’s decision to stay the insured’s demand for supplemental uninsured motorist benefits pending a framed issue hearing as to whether the other driver’s insurer properly disclaimed liability coverage.

Kyle
Kyle A. Ruffner
kar@hurwitzfine.com

Prevention of Wild Fires in California – 100 Years Ago:

The Whittier News
Whittier, California
17 Jan 1925

PLANS APPROVED
FOR PREVENTION
OF FOREST FIRE

SAN FRANCISCO, Jan. 17. – Plans for forest fire prevention and control in Southern California tentatively approved by Colonel W. B. Greeley, chief of the United States foreign service is announced here.

The plans involved creation of a new national forest, wider distribution of recreational activities, extension of fire lines, communication roads and telephone lines and new methods of financing.

The plan was drawn up by the board of fire review for Southern California after extended investigation of the San Gabriel fire of last summer.

The board recommended that the Angeles national forest be divided into two separate unites, the San Gabril division of the forest to continue under the present organization, and the eastern division to be organized as the new San Bernardino national forest, with headquarters at San Bernardino. The new forest would have an area of 510,000 acres.

It was also recommended that about 10,000 acres of Indian reservation lands and private property, lying along the southern boundary of the present Angeles forest, be excluded from the federal area.

The system of roads, trails and fires lines in all southern forests would be enlarged, with a dual purpose, first to allow better access to fires; second to stimulate recreationists to penetrate father into the higher country thus relieving congestion in the foothill country.

The board also suggested that a special bill be introduced into congress providing for an appropriation of $1,000,000 for the protection of these brush and forest areas contingent on the expenditure of an equal amount by private agencies.

These private agencies were urged in times of fire stress to submit to direction of the forest service, for the general protection of valuable watershed lands to the end that firefighting may be “systematic and not chaotic.”

Ryan’s Federal Reporter:

Go Bills! Beat Baltimore (please).

Nothing from my column this week.

Until next time …

Ryan
Ryan P. Maxwell
rpm@hurwitzfine.com

Better Fire Service in California – 100 Years Ago:

Los Angeles Evening Post-Record
Los Angeles, California
17 Jan 1925

BETTER FIRE SERVICE

Protests by residents of territories annexed to Long Beach has resulted in action taken by the Long Beach city council to provide better fire and police protection.

Virginia City as well as the other territory have been without fire or police protection for all telephone calls were made by long distance. It has now been authorized to string telephone lines from the communities to the police and fire stations in Long Beach, along the Postal Telegraph company poles.

Storm’s SIU:

Nothing this week. Go Bills!

Scott
Scott D. Storm
sds@hurwitzfine.com

It Took Eight More Years for Mayor’s Dream to Come True – 100 Years Ago:

The Buffalo News
Buffalo, New York
17 Jan 1925

MAYOR WANTS TROLLEY
TAKEN OFF MAIN STREET

Substitution of bus service for street cars in Main street is advocated by Mayor Schwab. The tracks could be torn up and the trolley wires and poles removed, and Buffalo would have a clean wide street like New York’s fifth avenue, the mayor contended.

A committee of Main street businessmen recently conferred with the mayor regarding the removal of poles and wires from Main street. There are overhead signals for the police and fire departments in Main street and it would cost the city a considerable sum, according to the mayor, to put these underground.

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

It has been chilly this January, but I suppose the cold is better than the snow. Of course, the football has kept us entertained.

In this week’s case from the South Carolina Supreme Court, the Court considered two issues: (1) whether a first-party insured can bring both a negligence and bad faith claim against their UIM insurer; and (2) whether the court of appeals erred in holding the insurer did not act in bad faith during settlement negotiations of the insured’s UIM claim or in taking a disparate position on a key factual issue in two underlying tort actions.

Catch you later. Go Bills.

Kate
Katherine A. Fleming
kaf@hurwitzfine.com

A Scotch Verdict – 100 Years Ago:

The Herald Statesman
Yonkers, New York
17 Jan 1925

Why do We Say
A Scotch Verdict

A “Scotch verdict” may mean a decision which decides nothing, because both parties are declared to be right, or else one that affirms the full guilt of the accused yet holds him free from culpability.

The phrase is based upon one of two anecdotes. You may take your choice. According to one, the plaintiff had been heard and the judge said, “You are right.” Then the defendant presented his case so cleverly that the judge said to him, too, “You, too, are right.” Then the prosecutor remarked, “Your honor, it is quite impossible for both to be right.” Whereupon the judge said, “You are right, too.”

The other story tells of a judge who, after listening to a man whose defense was as excellent as his guilt was obvious, rendered this decision. “Not guilty, but don’t do it again.”

Gestwick’s Garden State Gazette:

Dear Readers:

The Buffalo Bills time to break through what has been the barrier in recent years has arrived—the Divisional Round. We’re up against the Baltimore Ravens, who creamed us the first time around this season. However, with the likes of Matt Milano, Terrell Bernard, and Taron Johnson in the lineup—all of whom were unavailable due to injury the first go-around—perhaps the result will be different.

Unfortunately, I do not have a case to report on this time around. See you in two weeks.

Evan
Evan D. Gestwick
edg@hurwitzfine.com

Love Costs – 100 Years Ago:

International Gazette
Black Rock, New York
17 Jan 1925

YAX GETS $1000 VERDICT

Heart balm in the Shape of a $1000 verdict was given to Albert C. Yax, foreman at the American Body company, who brought a $50,000 alienation of affections suit against James W. Morris, structural engineer. He claimed the loss of his wife’s love was due to Morris. The suit was tried before Justice O’Malley and a jury in Supreme court.

O’Shea Rides the Circuits:

Hey Readers,

As the weather has been persistently cold, it may be time to check if the ponds are frozen for skating. I’m a proponent of pond hockey, as it is the game in its natural state.

On another note, one of my dogs developed a habit on his walks. He likes to find the largest stick possible (basically a tree branch), and strut through the village. He then deposits it either in our neighbor’s yard or at the side door. So, a steady collection has developed in the side yard. I think he is developing a hoarding habit.

This week I have a quick read from the Tenth Circuit affirming the denial of an insurer’s liability denial regarding a §1983 judgment. The claimant received a $4 million jury award, which included punitive damages. Oklahoma’s punitive damage standard established the denial.

Ryan
Ryan P. O’Shea
rpo@hurwitzfine.com

Education of Insurers in the UK – 100 Years Ago:

Liverpool Daily Post
Liverpool, Merseyside, England
17 Jan 1925

LINKING UP WITH UNIVERSITIES.

EDUCATION OF
INSURANCE STAFFERS.

A scheme to bring the educational training of insurance staffs into definite association with the universities was foreshadowed at the annual dinner of the Insurance Institute of Liverpool, at the Exchange Station Hotel, last evening. Mr. A. O. Roberts (president of the institute) presided over a large gathering, the visitors including the presidents of the Yorkshire, Leeds, Manchester, and Nottingham institutes.

A Scholarship Suggestion.

Mr. Ernest Self (president of the Insurance Institute of Yorkshire), in proposing “The Charted Insurance Institute and the Insurance Clerks’ Orphanage,” suggested that the institute should extend the educational side if its activities by linking up with the universities. The trend of modern education was to make a man feel he was a waster if he did not give as well as receive. It would be a fine thing if the Council of the Institute could arrange for universities to organize classes in insurance work, and if some of the leading insurance offices would endow university scholarships for their staffs.

Rob Reaches the Threshold:

Dear Readers,

As a football fan, I am genuinely looking forward to some upcoming Divisional Round playoffs games. As a football fan who lives in Buffalo, New York, I am genuinely terrified to watch the Bills defense attempt to tackle Derrick Henry on Sunday night in temperatures forecasted to be below 10 degrees. Ever since moving to the Western New York area, I have become infatuated with Bills Mafia, and the overall level of devotion this community has for its team. This city is truly more alive when the Bills are circlin' the wagons and hopefully they keep this thing going at least another week.

Unfortunately, there is nothing new to report from the Appellate Division on Serious Injury Threshold this time around. We will try again in two weeks.

Please enjoy the articles from my colleagues.

Rob
Robert J. Caggiano
rjc@hurwitzfine.com

Women? What Women? – 100 Years Ago:

The Indianapolis Star
Indianapolis, Indiana
17 Jan 1925

STATE INSURANCE
MEN TO MEET HERE

Eight Underwriter Organizations
Plan Three-Day Session Here.

A three-day program, the chief observance of which will be Indiana Insurance day, has been arranged by eight Indiana insurance organizations to be held at the Claypool hotel Jan. 19, 20, and 21.

LaBarbera’s Lower Court Library:

Dear Readers:

Another two weeks zoom by. Last weekend, I made my very first vision board with a few friends to plan our goals for the next year. After nearly three hours of work meticulously cutting each picture from the magazines, I had a final product. My dog must not have liked it so much, because in thirty minutes, he shredded it to pieces.

This week I am discussing a New York County decision reminding us all that under an insurance policy, bodily injuries are not necessarily limited to physical injuries in New York. This case further highlights that even if certain claims are excluded from coverage, there remains a duty to defend those claims potentially covered under the policy. Hope you enjoy the read.

Until next time…

Isabelle
Isabelle H. LaBarbera
ihl@hurwitzfine.com

How Much is Your Life Worth? – 100 Years Ago:

The Evening Times
Sayre, Pennsylvania
17 Jan 1925

How much insurance do you carry? The American people start 1925 with their lives insured for a total of 64,000 million dollars.

This amounts to about $560 of insurance for every man, woman, and child. All records were broken during 1924, when 13,500 million dollars of new life policies were taken out by the people.

The public has three times as much life insurance as it has money in the savings banks. The two are closely related. Life insurance is an approved method of saving money.

A considerable part of the population lacks the thrift instinct. They are unable to save systematically. To such people, life insurance is doubly a blessing. It is equivalent to buying a savings account and paying for it on the installment plan.

A nation that has 64,000 millions of dollars of life insurance, a third as much in savings banks, and savings invested in homes, certainly cannot be accused of being a spendthrift.

The main purpose of life insurance, of course, is protection for dependents in event the breadwinner dies. The fear that his death would bring financial suffering to his family haunts the man who has not provided for the future.

Lexi’s Legislative Lowdown:

Dear Readers,

Not much on the agenda this weekend, other than watching the Bills game, of course.

This week we discuss a proposed amendment to Insurance Law that would allow for alternative forms of identification for renters insurance.

Have a nice two weeks.

Thank you,

Lexi
Lexi R. Horton
lrh@hurwitzfine.com

Buy Insurance! – 100 Years Ago:

Democrat and Chronicle
Rochester, New York
17 Jan 1925

He knocked on wood;
He never had an accident

A man bought a new auto for $1,600. The dealer advised him to insure it. He didn’t—because he had never had an accident.

Several insurance agents tried to induce the man to carry insurance on the machine. He told them: “I never had an accident.”

So instead of purchasing he bought $150 worth of accessories - stoplight, spotlight, motometer, gauges and balloon tires.

A few days later he skidded off the state road into a little girl. His lawyer advised him to settle for $3,000.

MORAL: Spotlights, motormeters, gauges and balloon tires are all very fine by they won’t pay the piper, Automobile insurance is the most important accessory. It should come first after the purchase of the car.

AN UNINSURED AUTO IS A DISTINCT LIABILITY. It is a lien on your real estate; it is an attachment on your bank account; it is a mortgage on your future.

North of the Border:

This past weekend, my two-year-old grandson told me with a mournful sigh, “Christmas is over.” Indeed, it is. We have even slid into mid-January … and we are back in full gear with new claims and issues mixed with moving the older pieces of litigation forward. All is good. In this week’s column I have reached back to November to discuss an Ontario case that used the commercial context in which the policy was negotiated as an interpretive aid in a coverage dispute. Until next time.

Best,

Heather
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

Not a single coverage case upon which to report during this two-week period. Perhaps the fourth or fifth time in 26 years. Sniff

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

High Court Clarifies Penalties Available Under Section 349 of the GBL

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

Nothing from the Connecticut courts this week. See you in two.

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

Appellate Court Upholds Stay of SUM Arbitration Pending a Framed Issue Hearing on Validity of Coverage Disclaimer
Appellate Court Reverses Supreme Court, as Insurer Did Not Establish Material Misrepresentations

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

Nothing for me this time around. Until next time …

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

Nothing this Week

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

First-Party Insured’s Negligence Claim Was Duplicative of Her Bad Faith Claim Against Her UIM Insurer. Carrier Did Not Act in Bad Faith During Settlement Negotiations or Take Disparate Positions on Key Factual Issues

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

Nothing new from the New Jersey courts this time around. See you all in two weeks.

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

“Reckless” Not Ambiguous, so Policy Is Not Illusory Barring Recovery of $4 Million Judgment Received by Claimant in § 1983 Action

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

Nothing new from the Appellate Division on Serious Injury Threshold in 2025 - we will try again in two weeks. Enjoy the articles from my colleagues!

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Court Holds That Commercial General Liability Insurers Had Obligation to Defend Insured in Action for Claims of Emotional Distress, Fear, and Anxiety

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

Proposed Legislation to Allow for Alternative Forms of Identification for Renters Insurance

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

When Asked to Interpret an Insurance Policy, a Court Will Consider the Terms Used in Light of the Surrounding Circumstances of the Policy, in Order to Protect the Reasonable Expectations of Both the Insurer and the Insured

Our heart goes out to those suffering in California.

Dan

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut and New Jersey.

NEWSLETTER EDITOR
Dan D. Kohane
ddk@hurwitzfine.com

ASSOCIATE EDITOR
Agnes A. Wilewicz
aaw@hurwitzfine.com

COPY EDITOR
Evan D. Gestwick
edg@hurwitzfine.com

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
ddk@hurwitzfine.com

Steven E. Peiper, Co-Chair
sep@hurwitzfine.com

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Domenica D. Hart

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

Victoria S. Heist

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
sep@hurwitzfine.com

Michael F. Perley

Scott D. Storm

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
ddk@hurwitzfine.com

Ryan P. O’Shea
rpo@hurwitzfine.com

Kyle A. Ruffner
kar@hurwitzfine.com

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com

Topical Index

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Gestwick’s Garden State Gazette

Lexi’s Legislative Lowdown

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

Not a single coverage case upon which to report during this two-week period. Perhaps the fourth or fifth time in 26 years. Sniff.

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

01/14/25 Hobish v. AXA Equit. Life Ins. Co.
New York Court of Appeals
High Court Clarifies Penalties Available Under Section 349 of the GBL

Plaintiff purchased a universal life insurance policy from defendant in 2007. The plan purchased required that plaintiff’s trust remit premium payments which would cover the cost of insurance. Essentially, money was held by defendant in an interest-bearing account, and the “premium draw” would be taxed against the account. In exchange for a lower cost of insurance deduction, the policy indicated that any monies in the account at the time of the insured’s death would be kept by defendant. There was a second option which would revert premiums back to the trust, but it required a higher cost of insurance calculation.

The cost of insurance debits was determined by a formula adopted by defendant in 2004. The policy was purchased in 2007 and provided a $2,000,000 death benefit. In late 2015, defendant advised that the cost of insurance debit was increasing for members of certain classes. The classes were participants holding policies with a benefit in excess of $1,000,000 and either 70-70 or 80 and above. Although the policy permitted amendments to the cost of insurance debits, the changes increased plaintiff’s monthly contribution rate approximately $3,500 per month.

Faced with the increase in cost, plaintiff elected to cancel the policy “under protest.” In so doing, plaintiff recovered the $412,688.01 being held in the plaintiff’s account with defendant; less a $35,586.49 early termination fee.

Plaintiff immediately, then, commenced an action alleging breach of contract, bad faith, and violations of General Obligations Law, Section 349. Plaintiff argued that defendant breached the policy by improperly raising cost of insurance debits on classes that were otherwise not defined at the time the policy incepted. Plaintiff posited that he was entitled to $1,600,000 in damages. Essentially, the full policy limit of $2,000,000 less the approximately $400,000 which would have been rightly kept by the defendant upon plaintiff’s death. Plaintiff also sought approximately $250,000 in restitution because, under his theory, the account with defendant would have been less than $400,000 at the time of death.

For the breach of contract, plaintiff argued that she was placed in the “class” of Standard, Non-Smoker at that time policy incepted. As she was not placed in an age-related class, plaintiff argued it was improper to do so for purposes of raising cost of insurance debits. Further, because the policies were marketed to elderly people, it was submitted that the bait and switch of class certifications was a deceptive business practice.

As for the breach of contract question, the Court of Appeals affirmed the trial court and Appellate Division who had previously held a question of fact existed on the definition of “class.” Because the court concluded that the term “class” could be interpreted in at least two different ways, it was ambiguous. Further, because extrinsic evidence did not resolve the ambiguity, the matter had to be set to a jury for determination. It is noted that the Court of Appeals rejected plaintiff’s argument that the term should be construed against defendant under principles of contra preferentem.

Plaintiff’s theory of damages for the breach of contract, however, was rejected. The Court observed that defendant did not breach, at all, the terms of the agreement. Rather, plaintiff elected to trigger the cancellation benefit and withdraw from the program. Plaintiff’s claims for actual damages under the GBL 349 claim were also rejected for the same reason. The decision to cancel the policy meant that plaintiff elected a remedy that was beyond the $2,000,000 policy limit that could have been realized had she remained in the program.

With regard to the claims of bad faith, the Court reiterated the long-standing rule that punitive damages on a breach of contract are only available where “the fraud, aimed at the public generally, is gross and involves high moral culpability … or when it evinces a high degree of moral turpitude and demonstrates such wanton dishonesty as to imply criminal indifference to civil obligations.” The Court, not surprisingly, took precious little time to determine that there were no allegations rising to the level required to successfully maintain a bad faith/punitive damages claim.

The Court also specifically addressed the measure of damages available under GBL 349. As an initial matter, the Court specifically noted that punitive damages, in the traditional sense, were not available under Section 349. What is available, however, is treble damages (of proven compensable damages). However, that limit is subject to the statutory cap of $1,000 as provided by the statute. Although the Court seemed to recognize the relatively paltry cap of $1,000, it was unwilling to change the threshold which was set by the legislature in 1980.

In a quick, but direct, dissent, Judge Halligan disagreed with her colleagues on the breadth of damages available for violations of GBL 349. In short, she would have passed on the question of whether punitive damages are available under the statute because it was not fully briefed on the Record in her opinion and did not need to be decided under the particular circumstances of this case.

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

Nothing from the Connecticut courts this week. See you in two.

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

01/08/25 In the Matter of Nationwide Gen. Ins. Co. v. Discolo
Appellate Division, Second Department
Appellate Court Upholds Stay of SUM Arbitration Pending a Framed Issue Hearing on Validity of Coverage Disclaimer

The respondent, Francis P. Discolo, was involved in a motor vehicle collision with a vehicle owned by additional respondent Xudong Ping. The Ping vehicle was insured by Country-Wide Insurance Company, which denied Discolo's bodily injury claim because its investigation had revealed that the Ping vehicle was in "a state of theft" on the date of loss. Respondent served his insurer, Nationwide, with a demand for arbitration of his claim for SUM benefits. Nationwide commenced this proceeding to permanently stay arbitration, arguing the Ping vehicle was insured on the date of the collision. In an order entered July 6, 2023, the Supreme Court granted the branch of the petition to temporarily stay arbitration pending a framed-issue hearing. Respondent appealed.

The Appellate Court held the Supreme Court properly granted the petition to temporarily stay arbitration pending a framed-issue hearing as to whether Country-Wide properly disclaimed coverage of the Ping vehicle. The uninsured motorist endorsement of an insurance policy does not operate unless and until it has been established that the offending vehicle was uninsured on the date of the accident. An insurance carrier seeking to stay the arbitration of an uninsured motorist claim has the burden of establishing that the offending vehicle was insured at the time of the accident. Once such a prima facie case of coverage is established, the burden shifts to the opposing party to come forward with evidence to the contrary.

In this case, the court determined that Nationwide established a prima facie case with respect to the existence of insurance coverage for the Ping vehicle by producing a police accident report, which contained the Ping vehicle's insurance code. Country-Wide's letter to Respondent’s counsel, stating that it was denying Respondent’s bodily injury claim because its investigation had revealed that the Ping vehicle was in "a state of theft" on the date of loss, merely raised an issue of fact as to whether the disclaimer by Country-Wide was proper. Under these circumstances, the Court held the Supreme Court properly determined that a framed-issue hearing was necessary to determine whether Country-Wide properly disclaimed coverage and therefore upheld the temporary stay of the arbitration.

01/14/25 State Farm Mut. Auto. Ins. Co. v. Able Chiropractic, P.C.
Appellate Division, First Department
Appellate Court Reverses Supreme Court, as Insurer Did Not Establish Material Misrepresentations

In this case, the Supreme Court granted plaintiff's motion for summary judgment as against defendant medical providers Full Psychology, P.C., Metro Pain Specialists Professional Corporation, Big Apple Medical Group Corp., ERF Physical Therapy, P.C., and Michele Glispy, LAC. The Appellate Division unanimously reversed and remanded for further proceedings.

The First Department determined that the Supreme Court should have denied plaintiff's motion for summary judgment as against defendant medical providers. The court determined that, even assuming plaintiff established that the insureds misrepresented their residence and the primary garaging location of the insured vehicle, plaintiff failed to establish, as a matter of law, that the misrepresentations as to the insureds' correct address and garaging location were material misrepresentations. This was because the affidavit of plaintiff's underwriter was merely "conclusory and not supported by relevant documentary evidence such as underwriting manuals, rules, or bulletins" sufficient to establish the materiality of the misrepresentations. Accordingly, the Appellate Court remanded the matter for further discovery.

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

Nothing for me this time around. Until next time.

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

Nothing this week.

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

01/08/25 Hood v. United States Auto Ass’n
South Carolina Supreme Court
First-Party Insured’s Negligence Claim was Duplicative of Her Bad Faith Claim Against Her UIM Insurer. Carrier Did Not Act in Bad Faith During Settlement Negotiations or Take Disparate Positions on Key Factual Issues

Hood was involved in a three-car accident in which she (car two) was t-boned by car one and then collided with oncoming traffic (car three). The driver of car three sued Hood and car one, and USAA, Hood’s UIM carrier, provided Hood with counsel. The main issue concerning Hood’s liability was whether she had headlights on or not at the time of the accident. Hood argued they were on, and the other cars argued that they were off.

Hood sued car one for her damages, and after car one’s insurer paid its policy limits, USAA stepped into car one’s shoes and defended the suit under Hood’s UIM policy. Before trial, USAA and Hood mediated the claim but failed to settle. At trial, USAA stipulated that Hood’s headlights were off, but Hood argued they did not need to be on because it was not dark out yet. Hood won the UIM suit with the jury finding her 49% at fault. The verdict exceeded Hood’s UIM limits even with the reduction, and USAA paid that sum to Hood.

While the UIM Action was still pending, Hood brought the third lawsuit against USAA, alleging bad faith, negligence, breach of contract, negligence per se, barratry, and outrage, alleging USAA took disparate positions on Hood's headlight use in the UIM Action and the action against Hood by car three. She claimed she suffered emotional distress and incurred the costs of prosecuting the UIM action. Before trial, the court granted USAA summary judgment on (1) the barratry cause of action because no evidence supported the claim; (2) the outrage cause of action because the conduct did not rise to the level of outrage; (3) the breach of contract cause of action because the award had been paid and the UIM limits tendered; and (4) the negligence per se cause of action. During trial, USAA made a directed verdict motion on the remaining causes of action, which the trial court granted in part. It held Hood was not entitled to excess verdict damages, that the jury could not consider USAA's conduct during mediation because USAA did not have a duty to offer the full amount of its settlement authority, and there was insufficient evidence of emotional distress. Thus, the court submitted only the claims of bad faith and negligence to the jury. The jury found in favor of Hood for both claims. USAA moved for JNOV, arguing a first-party insured could only bring a bad faith claim. The trial court granted USAA’s motion for JNOV on the negligence claim.

Hood appealed, and the court of appeals affirmed the trial court's decision, holding that a first-party insured has no separate cause of action in negligence under the duty of good faith and fair dealing. It also held that as an additional sustaining ground, no reasonable jury could find USAA acted in bad faith, explaining that USAA had no duty to offer its full reserves or settlement authority during mediation of the UIM Action and there was no evidence of USAA taking disparate positions as to Hood's headlights.

The South Carolina Supreme Court granted certiorari on two issues: (1) whether a first-party insured can bring both a negligence and bad faith claim against their UIM insurer; and (2) whether the court of appeals erred in holding USAA did not act in bad faith during settlement negotiations of Hood's UIM claim or in taking a disparate position on a key factual issue in two underlying tort actions. For the first issue, the Supreme Court disagreed with the lower court, reasoning that courts have specifically rejected a freestanding negligence claim as being duplicative of a bad faith claim. the relevant case law. Furthermore, South Carolina's case law contemplates negligence as merely evidence for a bad faith claim. For the second issue, the Supreme Court found Hood’s arguments were meritless. The Supreme Court noted that its bad faith precedent has never required an insurance company to disclose or offer its reserves or full settlement authority to an insured. Instead, the insurance company must act in good faith in paying an uncontested claim and in claim processing. Once car one settled with Hood, USAA was allowed to step into car one’s shoes to litigate the UIM Action for its own benefit; it was not required to simply hand over the UIM policy limits to Hood. Further, courts in South Carolina have found that when an insurance company has a valid defense, it can offer and settle for less than the claim's objective value as long as the offer is reasonable. As for the headlights argument, USAA defended Hood in the action against her by car one. USAA was not a party to that action, and once it stepped into car one’s shoes in the UIM action, it was allowed to contest liability for UIM benefits. Further, Hood ended up conceding that her headlights were not on. Accordingly, the Court affirmed the lower court’s decision.

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

Nothing new from the New Jersey courts this time around. See you all in two weeks.

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

01/14/25 Ousterhaut v. Morgan
United States Court of Appeals, Tenth Circuit
“Reckless” Not Ambiguous, so Policy Is Not Illusory Barring Recovery of $4 Million Judgment Received by Claimant in § 1983 Action

Osterhout was the victim of beating during a traffic stop by LeFlore County Undersheriff Morgan. Ousterhout filed a §1983 action for excessive and received a $4 million jury award. After the judgment Ousterhout commenced a garnishment proceeding against ACCO-SIG based upon its liability policy with LeFlore County. ACCO-SIG moved for summary judgment based upon the portions of the liability policy that disclaimed coverage for “reckless conduct.”

The district court granted ACCO-SIG’s motion and Ousterhout’s challenged that decision on whether the conduct was “reckless” and that the policy was unambiguous, thereby rendering Oklahoma’s reasonable expectations doctrine applicable.

Like other states, Oklahoma employs the “reasonable expectations” doctrine only where the contested is ambiguous or exclusions use technical, obscure language, as well as where exclusions are hidden. Thus, if a term is ambiguous and the insurer, or its agent, creates a reasonable expectation of coverage which is not supported by the policy, then the expectation prevails over the policy.

The appellate court identified five places within the policy where liability coverage is excluded for “reckless” conduct. It noted the jury awarded punitive damages, which is available only for malicious or reckless conduct. Thus, the jury must have found Morgan’s conduct either malicious or reckless, something both litigants agreed upon. Ousterhout’s agreement was unappealing since he cited no authority that the term “reckless” is ambiguous, and the court affirmed the district court’s finding on this ground.

It also rejected the secondary argument that the policy is an illusory contract in instances where a police officer uses excessive force. Since the policy was unambiguous, the court determined LeFlore County and ACCO-SIG agreed for themselves what conduct would and would not be covered. Accordingly, the court could not rewrite the terms of the policy.

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

Nothing new from the Appellate Division on Serious Injury Threshold in 2025 - we will try again in two weeks. Enjoy the articles from my colleagues!

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

12/26/24 Aspen Specialty Ins. Co. v. Associated Indus. Ins. Co., Inc.
New York State Supreme Court, New York County
Court Holds That Commercial General Liability Insurers Had Obligation to Defend Insured in Action for Claims of Emotional Distress, Fear, and Anxiety

Aspen Specialty Insurance Company (“Aspen”), Falls Lake National Insurance Company (“Falls Lake”), and HDI Global Specialty SE (“HDI”), brought suit against Associated Industries Insurance Company (“Associated Industries”), Greater New York Mutual Insurance Company (“Greater New York”), and Green Skyline Apartments, LLC (“Green Skyline”). The Plaintiffs sought a declaration that Associated Industries and Greater New York owed a duty to defend Green Skyline in a class-action lawsuit filed in Onondaga County (the “Underlying Action”).

Greater New York issued a commercial general liability policy to Green Skyline from December 2016 to February 2017. Associated Industries later assumed the risk and issued multiple commercial general liability (“CGL”) policies to Green Skyline from February 2017-2019.

The Associated Industries policies defined “bodily injury” as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.” “Occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”

The Greater New York policy defined “bodily injury” as “bodily injury, sickness or disease sustained by a person, including mental anguish or death resulting from any of these at any time.” “Occurrence” is defined identically under the Greater New York policy as the Associated Industries policies.

The Underlying Action alleged that Green Skyline caused damages to the residential tenants asserting causes of action sounding in a breach of the warranty of habitability and the covenant of quiet enjoyment. It is further alleged that because of Green Skyline’s failure to provide adequate security, the tenants were regularly harassed, assaulted, robbed, and on one occasion, murdered. The plaintiffs in the Underlying Action allege to have suffered emotional distress, fear and anxiety. The Underlying Action sought compensatory damages, including rent abatement. After receiving notice of the Underlying Action, Associated Industries and Greater New York disclaimed coverage to Green Skyline.

In the motion for summary judgment, Plaintiffs argued that because of the exceedingly broad duty to defend, Associated Industries and Greater New York owed an obligation to participate in the defense of Green Skyline in the Underlying Action. Plaintiffs argued that the Underlying Action sought compensatory damages and contained allegations of “bodily injury” as defined under the Associated Industries and Greater New York policies. Plaintiffs argued that the claims of emotional distress, fear, and anxiety satisfy the definition of “bodily injury” under the Associated Industries and Greater New York policies.

The Defendants cross-moved for summary judgment, and argued for an obligation to defend to arise, the complaint in the Underling Action must seek damages that would compensate a claimant directly for alleged bodily injuries. Further, Defendants alleged that the only compensatory damages for breach of the warranty of habitability sought in the Underlying Action are for rent abatement and/or rent credit, not directly related to any alleged claims of bodily injury.

In their analysis, the Court identified that the Underlying Action sought damages for rent abatement, compensatory damages and attorneys’ fees because of “bodily injury” caused by an “occurrence.” Citing to the Court of Appeals holding in Lavanant v. General Acc. Ins. Co. of Am., the Court wrote that it is clear “that claims for rent abatement and the breach of the warranty of habitability can be covered under a standard commercial liability policy such as the ones at issue here even if the requested relief is something other than straight monetary compensation for those covered injuries.” The Court identified that it is the nature of the injury, not the type of relief sought, which is relevant in determining a duty to defend.

The Court makes clear that under New York law, the duty to defend goes beyond what the insurer might be expected to have to indemnify at the conclusion of the Underlying Action. The Court further writes that even assuming the breach of the warranty of habitability is proven to be an uncovered claim, where no indemnity is owed, the duty to defend is not diminished. As long as any of the facts or grounds that may potentially bring the claim within coverage are alleged, an insurance carrier must defend their insured for the entirety of the action.

To sum up the discussion, the Court identifies that the allegations in the Underlying Action are sufficient to trigger the duty to defend under the Associated Industries and Greater New York policies. As such, the Court granted Plaintiffs’ motion for summary judgment and denied Defendants’ cross-motion. The Court declared that Associated Industries and Greater New York have a duty to defend Green Skyline in the Underlying Action and must reimburse Plaintiffs for their allocated share of attorneys’ fees, costs, and disbursements incurred in the defense of Green Skyline in the Underlying Action.

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

01/17/25 New York Assembly Bill A125B
New York State Assembly
Proposed Legislation to Allow Alternative Forms of Identification for Renters Insurance

The proposed legislation was introduced on January 4, 2023, and was delivered to the Senate on March 4, 2024. A125B seeks to amend Insurance Law by adding a new section § 3423 which would allow for alternative forms of identification to be used to obtain renters insurance. Alternative forms include a municipal identification card, or a state or local government issued identification card.

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

11/25/24 Pryce v. Lawyers’ Professional Indemnity Company
Ontario Superior Court of Justice
When Asked to Interpret an Insurance Policy, a Court Will Consider the Terms Used in Light of the Surrounding Circumstances of the Policy, in Order to Protect the Reasonable Expectations of Both the Insurer and the Insured

In order to practice law in any Canadian province or territory, one must be a member of the law society of a provincial or territorial law society. These societies, known in Quebec as the Barreau, and elsewhere as ‘law societies’ regulate the legal profession in each province and territory.

Canadian lawyers must maintain at least $1 million in professional liability insurance in order to be a member in good standing in any of these law societies. In the Province of Quebec, the minimum limits are $10 million.

The primary layer of mandatory professional liability insurance is offered through affiliates of the law societies. It also includes basic cyber coverage. Many lawyers obtain excess liability coverage and excess cyber coverage purchased through the private market to supplement their basic policies. In short, there is no exception to the rule that lawyers carry professional liability insurance: “One way or another, every lawyer in private practice in Canada has professional liability insurance – and must have it in order to practice,” says Dan Pinnington, Vice-President Claims Prevention and Stakeholder Relations of LawPRO (Lawyers' Professional Indemnity Company), which provides professional liability insurance to Ontario lawyers.

And so, when a client of Law Society of Ontario member Jamie Bruce, a partner with the Oshawa, Ontario firm, Kelly Greenway Bruce, sued Bruce and his paralegal Michael Pryce for errors and omissions associated with accident benefits and tort claims arising from a motor vehicle accident, Bruce reported the action to LawPRO. LawPRO confirmed coverage for Bruce and appointed counsel to defend him.

In Ontario, paralegals are also regulated by the Law Society of Ontario. As part of their licensing requirements, they must hold professional liability insurance. Pryce was insured under a mandatory Paralegal Professional Liability policy issued by Lloyd’s Underwriters.

Lloyd’s was notified and agreed to defend Pryce. However, Pryce also tendered the action to LawPRO and asked that he be defended under Bruce’s policy. LawPRO declined coverage for Pryce. Not taking ‘no’ for an answer, Pryce sued LawPRO. The issue of whether LawPRO was correct in its position was heard by Mr. Justice Lee Akazaki in the Ontario Superior Court in October 2024 and the reasons for judgment were issued in December 2024.

Pryce argued that as there was no dispute that throughout, he was employed by Bruce’s firm as a paralegal; that he was acting within the course and scope of his duties with Bruce; and, as there was also no dispute that Bruce was vicariously liable for his conduct; LawPRO, being the insurer of Bruce, was required to defend him.

In response to this argument, the Court held that the Canadian common law applicable to employment contracts does not give rise to a duty on the employer to defend those for whom the employer is vicariously liable in litigation. Even if it did (which is not the case) Pryce failed to establish that he is covered under Bruce’s LawPRO policy. That is because the LawPRO policy covers the errors and omissions of individual lawyers, not the errors and omissions of paralegals.

From a coverage point of view, what is significant about this decision is that the Court discussed how the “commercial atmosphere in which the insurance was contracted” influenced the Court’s interpretation of the LawPRO policy. The Court analyzed the applicable Law Society of Ontario by-law requiring member lawyers to obtain mandatory professional liability insurance through LawPRO; took judicial notice of the history and formation of LawPRO; that the LawPRO policy is a policy of adhesion to be interpreted broadly but in doing so the Court stated that it cannot extend the plain words of the coverage agreement to individuals who are not lawyers as the Court cannot rewrite the terms of insurance contracts.

(Prior to his appointment to the bench in December 2022, Mr. Justice Lee Akazaki was a long-time director of Canadian Defence Lawyers.)

Coverage Pointers - Volume XXVI No. 15

Fri, 03 Jan 2025 14:11:32 +0000

Volume XXVI, No. 15 (No. 688)
Friday, January 03, 2025
A Biweekly Electronic Newsletter

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at ddk@hurwitzfine.com or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.

I do love the time zone here. It’s 5:30 PM at home as I craft and send this note, but only 3:30 here. Still can get a bit of pool time in.

Happy New Year. Greetings from Scottsdale. It’s 75 degrees here right now. That ain’t bad. Watched the Peach Bowl yesterday, ASU-Texas -- yesterday afternoon – college football is a religion around here, It was tremendous game, going into double overtime.

Luckily, we have someone watching the home front in order to respond to my Ecobee thermometer warning that heat was not being generated by the furnace.

As we start the new year, we remind you of the firm and the individuals who provides this entertaining publication.

Hurwitz Fine P.C. is celebrating its 48^th anniversary later this year, starting from a four-lawyer insurance defense firm to a 55+ lawyer regional and national insurance coverage, litigation, and transactional firm. We defend nursing homes, premises, professional liability, Labor Law, construction defect, commercial litigation, CGL, personal injury, personal and commercial auto claims, products, and all the rest. With lawyers located throughout New York State, including a half dozen or so on Long Island, and others in Rochester, Albany and elsewhere in New York, we also have lawyers resident in New Jersey and Connecticut.

We have a vibrant practice in the five boroughs, Long Island, Westchester, the Capital District, the North Country, the Southern Tier, Central and Western New York, Connecticut, New Jersey and all places in between. We consult on coverage nationwide and across the pond.

Coverage Pointers, and its sister publications, are here to educate.

We have a great editorial staff, with special thanks to Evan Gestwick who handles the final details in getting the article in place and our great contributors, each of whom submits a timely and relevant column and cover note: Steve Peiper, Lee Siegel, Kyle Ruffner, Ryan Maxwell, Scott Storm, Kate Fleming, Evan Gestwick, Ryan O’Shea, Rob Caggiano, Isabelle LaBarbara, Lexi Horton, and our Canadian correspondent, Heather Sanderson. Special thanks to our support staff – Donna Boice and Sarah McCandless, for their editorial assistance each and every issue.

These are superb professionals, each of them, and they make sure you have an issue in your mailbox on alternating Friday mornings.

Need a mediator for an insurance dispute? Coverage mediation is a thing!

We don’t want to litigate every coverage disagreement. Why? Because the position we oppose today may be the one we advocate tomorrow. Face it. We all understand that. Let me help mediate your disagreement to see if there is some mutual agreement, we can reach that will not box us into a corner. Reach out to me. I will be pleased to mediate your dispute.

My partners, Mike Perley and Ann Evanko, are also available to help resolve other challenges.

Try mediation.

Newsletters:

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at jeb@hurwitzfine.com to be added to the mailing list.
Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at dra@hurwitzfine.com to subscribe.
Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact V. Christopher Potenza at vcp@hurwitzfine.com to subscribe.
Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at emm@hurwitzfine.com to subscribe.

Draining Drinkeries – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
3 Jan 1925

CHURCH COUNCIL
TAKES UP FIGHT
ON DRINKERIES

Complains against twenty places,
But mayor Schwab says he wants evidence

Soft drink license revocation proceedings in the mayor’s office yesterday disclosed that the Buffalo Council of Churches has recently complained to the police that there are at least twenty such places which are violating the law.

Joe Vath, dry squad leader, told about it. The mayor’s response was to the effect that the church council always seemed to be free with complaints while what he wants is evidence and not information.

Vath produced two bottles that he had picked up in his efforts to stop soft drinkeries from selling anything but soft stuff. The mayor wants the stuff analyzed as he is curious to know that chemical composition of the moonshine that it peddled at fifteen cents a shot.

Only one of eleven licenses were revoked by the mayor. Frank Lesnewski of No. 316 Frank Street lost his license after dry squad members testified that a woman in the place used vile language when she was caught selling booze.

Peiper on Property (and Potpourri):

Happy New Year.

We start this year off by looking at a final decision from 2024. In the Bacon, Jr. decision the Fourth Department rules that a subcontractor cannot be liable for a common law negligence unless they were supervising the means and methods of the injury producing incident. The court also appears to suggest that being alleged to have created a dangerous condition is insufficient, standing alone, to create a negligence claim. Extending this thread further, the Appellate Division ruled that Labor Law 200/Common Law Negligence claims should have been dismissed against a potentially implicated electrical subcontractor

What is strange, and frankly unsettling to us, is that in the next paragraph the Fourth Department then found a question of fact as to whether the subcontractor created the condition which caused the plaintiff to trip and fall.

Thus, creating a scenario where the cross-claiming defendant could seek contribution/indemnification, but the injured party had no right for a direct claim against the potentially responsible party. If plaintiff is able to demonstrate that the owner and/or general contractor had actual or constructive notice, this is a distinction without difference. The responsible owner and/or general contractor will be able to prosecute the crossclaim for common law indemnity/contribution, and if successful, shift exposure to the responsible subcontractor. If, however, plaintiff is unable to demonstrate notice was, or should have been, had by the owner and/or general contractor, then it will be out of luck. The common law claims against the owner/GC will be dismissed due to lack of notice, and any avenue to recover against the actual culpable party will have been precluded by operation of this decision.

To be candid, we had always assumed that a party who creates a dangerous condition on a work site resultingly creates a duty to the plaintiff. The Bacon, Jr. decision, at least for the time being, has us rethinking that logic.

That’s it for now, as we close out another abbreviated work week. See you in two weeks and stay warm in the meantime.

Steve
Steven E. Peiper
sep@hurwitzfine.com

Lynching Losing – 100 Years Ago:

The Buffalo News
Buffalo, New York
3 Jan 1925

ILLEGAL as well as legal executions appear to be going out of style. The year 1924 saw 16 lynchings as against 83 in 1923.

Lee’s Connecticut Chronicles:

Dear Nutmeggers,

Wishing everyone a very healthy and happy 2025! Already eyeing a full docket, so it’s time to get back to work!

Lee
Lee S. Siegel
lss@hurwitzfine.com

Priest v. Undertaker – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
3 Jan 1925

JURY RETURNS
GUILTY VERDICT
AGAINST CLERIC

Father Paul Kuznik convicted of hitting undertaker during row over burial.

PLEADED SELF-DEFENSE

Attorneys make motion for new trial; sentence imposed on Wednesday.

A jury yesterday in city court found the Rev. Paul Kuznik, pastor of the Holy Mother of Rosary, independent Polish Catholic church, guilty of assaulting Anthony Orlowski, an undertaker of No. 173 Stanislaus street but recommended leniency.

Attorney Henry Adsit Bull made a motion for a new trial on the ground that the verdict was against the weight of evidence. Judge Keeler denied the motion. He will impose sentence on Wednesday.

The undertaker went to the rectory at Sycamore and Sobieski streets on the night of December 7^th on learning that the clergyman had said he would not allow him to conduct a funeral from his church because he was not a member.

Orlowski claims he was attacked without provocation when he demanded an explanation. Father Kuznik said he struck in self-defence when he believed the undertaker was about to attack him.

Ruffner’s Road Review:

Dear Readers,

I hope everyone had a great Christmas and New Year’s. It was nice to have some time off to relax and to spend time with family and friends for the holidays.

This week I have no new No-Fault decisions to report but do have one SUM case from Bronx County Supreme Court. The insurance company brought a motion to dismiss the SUM complaint of the plaintiff on the basis that the policy language required arbitration where there was a disagreement as to the amount owed under the SUM coverage. However, the court determined that the applicable Section of the Policy gave the insured the option, rather than a requirement, to arbitrate such dispute.

Kyle
Kyle A. Ruffner
kar@hurwitzfine.com

Follow Up to Previous Story – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
8 Jan 1925

PRIEST FINED
FOR BEATING
UNDERTAKER

Rev. Paul Kuznik penalized after conviction on assault charge,

Judge Patrick J. Keeler yesterday imposed a fine of $25 upon the Rev, Paul Kuznik, pastor of an Independent Polish Catholic church at Sycamore and Sobieski streets. He was convicted a week ago by a city court jury, which recommended leniency, for assaulting Anothy Orlowski, an undertaker at No. 173 Stanislaus street.

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

Cheers to 2025 and Happy New Year! Raise your hand if your resolutions have withstood the past two days? My goal this year is to spend more time in the kitchen for my family. Easy recipes for dads that don’t cook are welcome at my email address below. Send…help.

This edition, I have tackled a Coverage B case involving an interesting twist. Can an insured rewrite the underlying allegations in a Settlement Agreement in order to trigger a coverage obligation? You’ll just have to read and see. The answer may shock you (or not).

Until Next Time,

Ryan
Ryan P. Maxwell
rpm@hurwitzfine.com

Color Me Satisfied – 100 Years Ago:

Democrat and Chronicle
Rochester, New York
3 Jan 1925

WOMAN OFFICIAL
ENDS ARGUMENT
OVER HER GOWN

Albany, Jan. 2. – (By the Associated Press.) - Controversy over the color of the gown worn by Mrs. Florence E. S. Knapp on her first public appearance as secretary of state at the inauguration ceremonies yesterday was settled to-day when the new secretary informed a party of fifteen newspapermen that the dress was chiffon velvet of a peach hue.

Just a bit timid at receiving so large a group, Mrs. Knapp sent word that she would meet three of the men at a time, but the first three persuaded her to alter the ruling. As the other dozen marched into her office, the expected question was voiced:

“Mrs. Knapp, did you wear an orange or peach-colored gown yesterday and was it velvet or some other material?”

“It was peach-colored chiffon velvet,” the state’s first woman official replied with a laugh. “Please correct the impression that it was orange for I wouldn’t for the world have people believe I was so partial to Syracuse University as to wear its color at the inauguration.”

Her first impression of the state government, Mrs. Knapp added, was the spirit of good will and cooperation which was evidence yesterday and to-day.

“More Enjoyable than anything else in my experience yesterday,” she said, “aside from the sense of responsibility which I felt, was the fine spirit throughout the ceremonies – a splendid sense of cooperation, with no partisan lines drawn. I am sure that this will be a pleasant experience.”

Storm’s SIU:

Hi Team:

I hope you had a wonderful and memorable Christmas and Hanukkah with your family and friends. I did too.

One interesting case this week:

Complaint in 1^st-Party Property Litigation Dismissed Due Breach of the Two-Year Contractual Suit Limitation Condition Which Commenced on the Date the Water Leak First Occurred, Despite Allegations of Continuing Damage for Months. The Phrase “Direct Physical Loss or Damage” is Not Ambiguous.

Happy New Year! “You are never too old to set another goal or to dream a new dream” ~ C.S. Lewis.

Let’s Go Buffalo! We will talk again in two weeks…

Scott
Scott D. Storm
sds@hurwitzfine.com

Say What? – 100 Years Ago:

The Buffalo Times
Buffalo, New York
3 Jan 1925

Mute Wife Must Cease
Nagging Deaf Husband

CHICAGO, Ill., Jan. 3. – Judge Morgan in the court of domestic relations issued an order that Mrs. D. Reynolds, a deaf and dumb wide, cease nagging her husband, who is a deaf-mute. The judge also ordered the husband to appear before him in court every day until a job can be found for him.

Mrs. Reynolds has caused the arrest of her husband because he was out of work and was planning to go to New York if relatives would pay his transportation. In court the deaf-mute wife kept the air agitated with her silent talk on her fingers, but it was plain even to the uninitiated that she was saying things.

Mrs. Edward Ingersoll, a relative, with whom the Reynolds have been living, said the deaf-mute wide was in the habit of making a constant fuss because her husband was contributing nothing to the support of her or their two children. Their son, who is thirteen years old, is an exceptionally bright fellow who can both hear and talk. The other boy, ten years old, is a deaf-mute.

The court ordered Reynolds to forget about his proposed New York trip and promised to find employment for him.

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Happy New Year! Hope you had a good holiday and New Year’s.

This week’s case comes from the Missouri Supreme Court. The court considered whether an insurer could intervene in an underlying wrongful death action to seek a stay while litigating coverage questions.

See you in a fortnight,

Kate
Katherine A. Fleming
kaf@hurwitzfine.com

Fined for What? – 100 Years Ago:

The Buffalo News
Buffalo, New York
3 Jan 1925

TWO FINED FOR JITNEYING.

Vitor Vitello, 27 years old, 324 Seneca Street, was fined $50 by Judge Maul for having Ford roadster H-censes on his Ford coupe. He says he bought the car for $150.

Using his automobile for his cost Warren W. Putnam, 233 Virginia street, a $25 tax. Charles Battaglia, 162 Trenton Avenue, paid a similar fine for jitneying.

Gestwick’s Garden State Gazette:

Dear Readers:

I hope everyone enjoyed their celebrations. Among my gifts was a food dehydrator. I attempted my first batch of beef jerky over the break, which turned out tasty, but a bit tough. Any fellow jerky makers out there are invited to share tips and/or recipes to my email address below.

The case I have for you this week is one of pure logic and common sense. You don’t see that every day anymore, so I thought I’d report on it. Essentially, the insured’s brother was going through a divorce, so the insured was nice enough to put him up for a period of time while he got back on his feet. Eventually, the brother got his own place, but still borrowed the insured’s vehicle occasionally. The brother was injured in a car accident while using the insured auto. After the responsible party’s carrier tendered its liability limits, the brother made an underinsured motorist claim with the insured’s carrier. The carrier denied coverage on the ground that the brother was not a “resident relative,” and in the alternative, that the insured never notified the carrier of the addition of his brother to the household. The Court held that either the brother was not a resident relative, or he was but it was never reported to the carrier, and that either way, there was no coverage for the loss. Makes sense to me.

Have a good two weeks and Go Bills!

Evan
Evan D. Gestwick
edg@hurwitzfine.com

A Clear Slate – 100 Years Ago:

The Buffalo News
Buffalo, New York
3 Jan 1925

TWO CONFESS CRIMES
AND START YEAR RIGHT

CHICAGO, Jan 3. – A boy from San Francisco and a young man from Paterson, N.J., “started the News Year right” by confessing their misdeeds to police here.

Floyd Irvine, 18, of San Francisco, walked into police headquarters,

“I stole over $300 from a firm I was employed by in San Francisco,” he said. “I want to give myself up and get started right for the new year.”

He had hardly been placed in a cell when Prantice Hengelveld, 26, of Paterson, stumbled in.

“I’m wanted in Paterson for stealing an automobile,” he stammered. “I want to give myself up and get started right for the new year.”

He was given a cell adjoining Irvines.

O’Shea Rides the Circuits:

Hey Readers,

Happy New Year everyone -- I hope everyone enjoyed their celebrations.

This week I have a case from the Tenth Circuit regarding an insured’s attempt to circumvent the property damage portion of a builder’s risk policy. Essentially, the sole insured incurred no costs to repair a slab but still attempted to recoup repair costs as well as delay in construction costs.

Until Next Time,

Ryan
Ryan P. O’Shea
rpo@hurwitzfine.com

A “Blue” New Year – 100 Years Ago:

The Herald Statesman
Yonkers, New York
3 Jan 1925

PAINTING WASHINGTON BLUE

Residents of the District of Columbia have no ballot with which to defend themselves, so Senator Wesley L. Jones, of Washington State, has taken advantage of the situation to present a bill in Congress providing for the bluest sort of Sunday blue laws for the seat of the national government. Senator Jones is determined that District of Columbians shall neither work nor play on the Sabbath for his pet bill embraces both business and entertainment.

The population of the District of Columbia consists of private citizens, government employes and public officials. Against which group is the Jones bill aimed? Does Senator Jones propose to encroach upon the personal liberties of the private citizenry of the district without giving them a voice in the matter? Does he present the bill to discipline government employes at the capital, perhaps? Or would he imply that the President and the members of the Cabinet and of Congress are in need of Sunday restrictions? His purpose must rest between the latter two because, being a United States Senator, he must believe in representation in government and in the inalienable right of American citizens to govern themselves. If he does believe in forcing Sunday blue laws on the district he is not alone for the devout from far and near are said to have endorsed the bill.

Rob Reaches the Threshold:

Dear Readers,

Happy New Year! Similar to literally everyone else, I begin the new year with a resolution to (1) get in shape, and (2) eat better. This novel resolution is one I embark on with my twin brother, in order to maintain accountability. However, he runs marathons ... so I feel like this will be an uphill battle. Nevertheless, I hope to be able to report on my progress and results. Best of luck with your own respective resolutions!

To start 2025, we ease into our analysis of 5102(d) Serious Injury with a decision from the Second Department reminding plaintiffs of the importance of causal relationship opinions where there are expert reports claiming an injury is degenerative and preexisting in nature.

Hope you all enjoy the read.

Rob
Robert J. Caggiano
rjc@hurwitzfine.com

Lights, Camera, Divorce – 100 Years Ago:

Democrat and Chronicle
Rochester, New York
3 Jan 1925

Local

HUSBAND GRANTED DIVORCE FROM ROCHESTER WIFE.

Baltimore, Md., Jan 2. – (Special Dispatch to the Democrat and Chronicle) – Frederick P. Stieff, Jr., was granted an absolute divorce to-day from Mrs. Frances Helen Stieff, of Rochester, N.Y. by Judge Charles F. Stein in the Circuit Court here. Stieff told the court that his wife deserted him for a literary and dramatic career. He said that they were married in Detroit in December 1917, while he was in the army in the summer of 1921. He said Mrs. Stieff began to grow restless and declared that she wanted to follow a literary and dramatic career. On November 26^th Stieff said she packed her clothes and left for her home in Rochester, leaving her child Frances Helen Stieff, Jr., now eight years old in his care. The court awarded custody of the child to Stieff, Though Mrs. Steiff’s home in in Rochester Stieff said she spend a good deal of time in New York seeking success via the bright lights, Mrs., Stieff did not contest the suit nor did she demand custody of the child in he answer to Stieff’s charges which she filed several days after he entered suit for divorce she asserted she did not believe he voluntarily filed the sit and that he had made no effort to bring about a reconciliation.

LaBarbera’s Lower Court Library:

Dear Readers:

Hope everyone had a happy and healthy holiday season. Wishing everyone good luck as we enter another year.

This week I report on a Bronx County case, denying an insurer’s motion for summary judgment in its entirety. The court found that the arbitration provision was at the option of the insured, and not mandatory. Further, based on Hanover’s failure to notice the injured party for an EUO or IME, the court allowed the litigation to proceed.

Isabelle
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Sacco and Vanzetti were executed in 1927 – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
3 Jan 1925

CONVICTED MURDERER
IS ADJUDGED INSANE

Bridgewater, Mass., Jan 2 (A.P.) – Bartolomeo Vanzetti, convicted with Nicola Sacco of the murder of a paymaster and his guard in South Braintree, on April 15, 1920, was committed to the Bridgewater Hospital for the insane today. He had been adjudged insane by alienists who had him under observation since prison officials reported him acting strangely two weeks ago. The cases of Sacco and Vanzetti have attracted international attention as a result of radical demonstrations in their interest. Both still await sentence on the murder conviction.

Lexi’s Legislative Lowdown:

Dear Readers,

Happy New Year!

This week’s column addresses the recent veto of the “Grieving Families Act” by Governor Kathy Hochul.

Thanks for reading,

Lexi
Lexi R. Horton
lrh@hurwitzfine.com

[INSERT HEADLINE HERE] – 100 Years Ago:

The Buffalo News
Buffalo, New York
3 Jan 1925

DEAF, DUMB WIFE NAGGED
HIM, MUTE TELLS COURT

CHICAGO, Jan. 3. – Arraigned for non-support in the court of domestic relations today, Allison Reynolds, 56, a deaf mute, through an interpreter, accused his wife, Jennie, also a deaf mute of “continual nagging.”

His wife, he said, scolded him in the deaf and dumb sign language, because he did not make more money.

The judge continued the case, promising Reynolds a job and asking Mrs. Reynolds to be a little more lenient.

North of the Border:

Hard to believe that the calendar has turned over to 2025. But after a restful holiday spent with grandkids about, I’m ready to tackle January, which always seems to be the longest month of the year.

My column this week discusses an important trial level decision on material misrepresentation in the context of historical sexual abuse. Happy reading.

Heather
Heather A. Sanderson
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

If an Insurer and Insured Are Unaware of an Accident at the Time a Policy Is Retroactively Canceled, It Will Not Cover an Accident That Occurred Prior to Cancellation. Ignorance Is Bliss

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

No Labor Law 200 Claims Against Subcontractor, Even Though a Question of Fact Exists as to Whether It Created the Condition Causing the Loss; Indemnity Cross-Claims, However, Survive

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

Inconsistent Mailings Defeat Policy Cancellation

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

Court Denies Insurer’s Motion to Dismiss SUM Complaint, as Insured Had Option to Arbitrate Dispute but Was Not Required

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

No Coverage For Personal and Advertising Injury Absent Disparagement Claim in the Underlying Complaint

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

Complaint in 1^st Party Property Litigation Dismissed Due to Breach of the Two-Year Contractual Suit Limitation Condition Which Commenced on the Date the Water Leak First Occurred, Despite Allegations of Continuing Damage for Months. The Phrase “Direct Physical Loss or Damage” Is Not Ambiguous.

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

Insurer Able to Intervene in Underlying Wrongful Death Action to Seek Stay While Litigating Coverage Questions

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

Court Holds That Even if UIM Claimant Was a Resident Relative, Still No Coverage Due to the Failure to Notify the Insurer of the Change

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

Reversal and New Trial Awarded to Insurer Where Trial Court Erroneously Instructs Jury Where Evidence Showed That Insured Never Incurred Repair Costs for Property Damage

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

Second Department Affirms Order Dismissing Complaint Against Defendants Where Plaintiff Submissions in Opposition to Summary Judgment Were Insufficient to Raise a Triable Issue of Fact on Whether She Sustained a Serious Injury Within the Meaning of Insurance Law § 5102(d)

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Insurer Motion to Dismiss Denied, Based on Plain Language of Arbitration Provision

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

Governor Kathy Hochul Vetoes the Wrongful Death Expansion Legislation, Bills A9232B/S8485B

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Court Voids Liability Policies After Finding that Material Non-Disclosure of History of Sexual Abuse Amounts to Civil Fraud.

We wish you health and prosperity in the new year.

Dan

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut and New Jersey.

NEWSLETTER EDITOR
Dan D. Kohane
ddk@hurwitzfine.com

ASSOCIATE EDITOR
Agnes A. Wilewicz
aaw@hurwitzfine.com

COPY EDITOR
Evan D. Gestwick
edg@hurwitzfine.com

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
ddk@hurwitzfine.com

Steven E. Peiper, Co-Chair
sep@hurwitzfine.com

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Domenica D. Hart

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
sep@hurwitzfine.com

Michael F. Perley

Scott D. Storm

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
ddk@hurwitzfine.com

Ryan P. O’Shea
rpo@hurwitzfine.com

Kyle A. Ruffner
kar@hurwitzfine.com

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com

Topical Index

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Gestwick’s Garden State Gazette

Lexi’s Legislative Lowdown

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

12/24/24 New York Marine and Gen. Ins. Co. v Kookmin Best Ins. Co.
Appellate Division, First Department
If an Insurer and Insured Are Unaware of an Accident at the Time a Policy Is Retroactively Canceled, It Will Not Cover an Accident That Occurred Prior to Cancellation. Ignorance Is Bliss

The court properly granted Kookmin’s motion for summary judgment dismissing the complaint and denied plaintiffs' motion for summary judgment. It is undisputed that KBIC and its insured did not have notice of the accident forming the basis of the underlying action's negligence claim at the time that they agreed to retroactively cancel KBIC's insurance policy. The risk assumed by KBIC therefore never "fully matured into a responsibility" before KBIC and its insured retroactively cancelled their policy, so that cancellation was an effective ground to disclaim coverage to Decatur,

An insured and an insurer are, of course, free to agree upon the 'cancellation flat' of a binder before matured risk and, so long as the rights of no third party are affected . . . , there is no reason why an insured may not effectively cancel 'flat' even after the occurrence of an insurable accident". Contrary to plaintiffs' contention, the Court did not view the point at which a risk "matures" as being the same as the occurrence of an insurable accident. A retroactive cancellation of an insurance policy can be effective where neither the tenant nor the insurer's agent were aware of an accident that occurred the same day the cancellation was initiated.

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

12/20/24 Bacon, Jr. v. Shults Mgt. Group, Inc.
Appellate Division, Fourth Department
No Labor Law 200 Claims Against Subcontractor, Even Though a Question of Fact Exists as to Whether It Created the Condition Causing the Loss; Indemnity Crossclaims, However, Survive

Plaintiff sustained injury when he fell in the course of his employment at a construction site. The incident was allegedly caused when plaintiff tripped over an electrician’s pull string that had been tied to a doorknob. Defendant, Ahlstrom, served as the electrical subcontractor on the project. It moved to dismiss plaintiff’s claims sounding in Labor 241(6) and 200/common law negligence. It also moved to dismiss the crossclaims asserted by Kessel, the general contractor on the job site, which sought common law and contractual indemnification.

The Appellate Division ruled that Ahlstrom’s motion for summary judgment dismissing the Labor Law 241(6) and 200 claims, respectively. In reaching this determination, the court determined that Ahlstrom met its burden of demonstrating it did not have authority to supervise, direct, nor control the work of the plaintiff at the time of the incident.

Further, the court appears to hold that a subcontractor cannot be responsible under Labor Law 200 because it was not the owner or general contractor. Kessel argued that Ahlstrom, as the electrical contractor, created the condition upon which plaintiff fell (the electrician’s pull string), and, as such, it was responsible for the loss. The court, however, stated that under Labor Law 200 a subcontractor could not be held liable unless it controlled the plaintiff’s work and/or the area where the injury occurred. Neither, apparently, were true under the circumstances of this claim.

Ahlstrom’s motion dismissing the indemnity crossclaims, however, was denied. The court found that a question of fact existed as to whether Ahlstrom, in fact, created the defective condition. If it was negligent, it followed that common law and/or contractual indemnity obligations running in favor of Kessel may well follow.

As a final matter, the Court affirmed the trial court’s dismissal of Ahlstrom’s claim for spoliation. Apparently, the pull string was removed and discarded shortly after the incident. Here, because Ahlstrom was unable to demonstrate that Kessel’s foreman removed the string with a “culpable state of mind,” it followed that sanctions were inappropriate.

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

12/24/24 Napolitano v. Ace American Ins. Co.
Supreme Court of Connecticut
Inconsistent Mailings Defeat Policy Cancellation

The Supreme Court reversed the Appellate Court, reinstating summary judgment for the insured. While the carrier complied with the statutory requirements to cancel the insured’s workers compensation policy, such compliance did not supplant the insurer's common law obligations when cancelling an insurance policy. Because the insurer sent inconsistent and confusing mailings, the attempt to cancel the policy was ineffective.

The insurance company sent two separate notices to the plaintiff dated April 5, 2018, one was a noncooperation notice and the other a cancellation notice. The noncooperation notice stated failure to comply with audit requests would result in cancellation, while the cancellation notice stated the policy was cancelled effective April 25, 2018. The plaintiff was later told by his insurance agent that he was "compliant at this time." The insured, later, received a notice acknowledging receipt of tax documents but stating that other outstanding documents needed to be provided by April 21. The insured did not provide the documents, relying on the broker’s statement that the policy was in compliance.

On May 29, 2018, the plaintiff's employee was injured and made a worker’s compensation claim. Ace denied coverage, claiming the policy had been cancelled effective April 25, 2018. A hearing found that the injury was compensable, that coverage was appropriately cancelled in compliance with the applicable statute by delivering notice to the Commissioner, and the Second Injury Fund settled with the worker for $225,000.

This suit followed, with the insured claiming that Ace was obligated to defend and indemnify it for the worker’s compensation claim and sought other breach of contract and bad faith damages. The trial court found for the insured, but the Appellate Court reversed, finding that the carrier’s compliance with the statutory requirements for cancellation indeed cancelled the policy.

The Supreme Court reinstated the trial court’s holding. The Court found that although the insurer satisfactorily complied with the statutory scheme it failed to comply with its obligation at common law to provide an unambiguous and unequivocal intent to cancel. It is well settled, the Court noted, that notices cancelling insurance policies must be "construed in favor of the insured . . . [and] be definite and certain," and "[a]ny uncertainty as to the meaning of a notice from an insurer to its insured must be resolved against the insurer and in favor of the insured." [Citations omitted.]

The Appellate Court incorrectly limited its analysis to whether there was a definite and certain notice of cancellation under § 31-348 and then applied that circumscribed inquiry to determine the contractual obligations between the plaintiff and the defendant. the Appellate Court concluded that, because the chairperson of the commission received only the cancellation notice, the notice of cancellation was definite and certain. “We conclude, instead, that, when a court considers whether notice of cancellation made under a workers' compensation insurance policy was sufficiently definite and certain, it must consider all relevant communications between the parties, rather than limit its analysis to the notice received by the chairperson under § 31-348.”

Looking at the body of communications from the carrier to the insured, the Court concluded that they were not objectively definite and certain. As a result, the Court reinstated the decision of the trial court finding coverage for the insured.

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

12/23/24 Pedro Maldonado Martinez v. The Hanover Insurance Group
Supreme Court, Bronx County
Court Denies Insurer’s Motion to Dismiss SUM Complaint, as Insured Had Option to Arbitrate Dispute but Was Not Required

At the time of the subject motor vehicle accident, plaintiff was operating a vehicle owned by his employer, non-party United Building Maintenance Associates, and collided with a vehicle operated by Moussa Konita and owned by Sonkouna Djaguely, non-parties to this action. The plaintiff alleged he sustained a serious injury as a result of the accident.

The Djaguely vehicle was insured by State Farm with a $25,000/$50,000 policy limit and the United Vehicle was insured by defendant Hanover Insurance Company, which provided for $1,000,000 in supplementary uninsured/underinsured motorist coverage. The policy contained an arbitration clause which provided in relevant part in Section 11:

If any insured makes a claim under this SUM coverage and we do not agree that such insured is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured, or we do not agree as to the amount of payment that may be owing under this SUM coverage, then, at the option and upon written demand of such insured, the matter or matters upon which such insured and we do not agree shall be settled by arbitration [ . . . ], pursuant to procedures approved by the Superintendent of Financial Services for this purpose.
If the maximum amount of SUM coverage provided by this endorsement equals the amount of coverage required to be provided by New York Insurance Law section 3420(f)(1) and New York Vehicle and Traffic Law Article 6 or 8, then such disagreement shall be settled by such arbitration procedures upon written demand of either the insured or us" [Policy at 100, SUM Endorsement § 11 (emphasis added)].

State Farm tendered its policy limit of $25,000, which plaintiff accepted in settlement of his claims against Konita and Djaguely. However, plaintiff asserted that the value of his injuries far exceeded $25,000 and demanded judgment of $975,000. Defendant brought this motion to dismiss, arguing that the arbitration clause in the SUM endorsement is incorporated into the Policy and is part of the terms and conditions of coverage, by which plaintiff as an additional insured was bound, and further argued that the endorsement in the Policy cannot be deviated from because it is statutorily prescribed. Therefore, Defendant asserts plaintiff cannot bring this action because he did not satisfy a condition precedent to litigation. Plaintiff argued in opposition that arbitration is not mandatory according to the plain language of the SUM endorsement and arbitration clause, and, rather, may be selected "at the option" of the insured when the insured and insurer disagree on the value of the claim

The court emphasized it is the policy of this State to interfere as little as possible with the freedom of consenting parties in structuring their arbitration relationship, as “it is for the court in the first instance to determine whether parties have agreed to submit their disputes to arbitration and, if so, whether the disputes generally come within the scope of their arbitration agreement". It was undisputed that the language of the Policy here was clear and unambiguous and, as such, must be enforced according to the plain meaning of its terms. As such, the Court agreed with the reading of the arbitration clause advanced by plaintiff, which clearly gave the insured the "option" to demand arbitration, but did not mandate it.

By contrast, the mandatory arbitration language found in section 11(b) of the endorsement only applies where the amount of SUM coverage in the Policy equals the statutory minimum. However, as the Policy provided for $1,000,000 in SUM coverage, more than the statutory minimum, section 11(a), rather than section 11(b), of the endorsement applies. Thereunder, plaintiff, as an insured, may choose to arbitrate, but is not required to do so. Lastly, concerning whether plaintiff satisfied conditions precedent to litigation, the court held that the Policy required plaintiff to submit to an EUO or IME as defendant may reasonably require, however, the Defendant provided no proof that it ever noticed an EUO or IME, or that plaintiff failed to appear as required.

Accordingly, the court denied the Defendant’s motion to dismiss and directed that it file and serve an answer within 30 days.

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

12/18/24 Tzumi Elecs. LLC v. The Burlington Ins. Co.
United States Court of Appeals, Second Circuit
No Coverage For Personal and Advertising Injury Absent Disparagement Claim in the Underlying Complaint

Tzumi Electronics filed suit against its insurer, The Burlington Insurance Company. Tzumi sought a declaratory judgment that a commercial general liability policy required Burlington to defend and indemnify Tzumi in an underlying consumer class action lawsuit alleging that Tzumi misrepresented the charging capacity of certain power bank devices that it sold. Burlington denied coverage because the complaint against Tzumi did not allege “disparagement” of any of Tzumi’s competitors and, in any event, various exclusions in the policy applied to bar coverage.

Under the Burlington policy, personal and advertising injury was defined in relevant part to encompass claims “arising out of . . . publication, in any manner, of material that . . . disparages a person’s or organization’s goods, products or services.” Tzumi asserted that the complaint’s reference to Cal. Civil Code §1770(a)(8) was an assertion of disparagement, because that statute allows consumers to seek damages for “[d]isparag[ement] [of] the goods, services, or business of another by false or misleading representation of fact.” The Second Circuit disagreed.

Finding for Burlington, the Second Circuit found, quoting language from the District Court’s original decision, that the underlying complaint’s included merely a “passing citation to the entirety of the California false advertising statute, as part of a longer list of general citations to the consumer protection statutes of eleven states.” It did not reference §1770(a)(8) directly, and the factual allegations within the complaint did not otherwise support a claim under that Section. Specifically, the misrepresentations alleged “did not include any assertions that reflected on competitor products and thus cannot support a claim of disparagement.”

While Tzumi additionally argued that a Settlement agreement supported its interpretation of the allegations, the recitals relied upon, “on their face simply reflect[ed] the way Tzumi interpret[ed] the allegations,” without magically modifying the unambiguous allegations into a disparagement claim that was never made. As the District Court had found, Tzumi had merely “sought to transmogrify the actual allegations made in the Underlying Complaint into something resembling a covered disparagement claim.”

Maxwell’s Minute: As Coverage B cases go, this one had an interesting twist regarding the Settlement Agreement. The Court was unwilling to accept the insured’s self-serving “interpretation” of the allegations as something they were not. This reminds me of a growing trend in the additional insured context, where some additional insureds have been permitted to plead themselves into coverage by way of mere self-serving third-party allegations. The difference here is that while an additional insured’s third-party claims may be true (triggering coverage) or they may be not (eliminating coverage), the interpretation of the allegations by the insured in this case was well off the scent and completely out of left field.

The federal courts are better at parsing the additional insured issue at the moment, approaching third-party allegations of a purported additional insured with at least some skepticism, requiring more than mere conclusory assertions to check coverage boxes.

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

03/18/24 Pizza on 23^rd Corp. v. Liberty Mut. Ins. Co.
United States District Court, Southern District of New York
Complaint in 1^st Party Property Litigation Dismissed Due to Breach of the Two-Year Contractual Suit Limitation Condition Which Commenced on the Date the Water Leak First Occurred, Despite Allegations of Continuing Damage for Months. The Phrase “Direct Physical Loss or Damage” Is Not Ambiguous

Plaintiff alleges breach of contract and a bad faith coverage denial. Defendant’s motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) is granted.

Plaintiff sustained a water leak on July 1, 2020, causing damage to its business and personal property. On August 20, 2020, Defendant disclaimed coverage. Plaintiff alleges the water continued to damage the property at all times and including up to the time that it vacated the premises on May 12, 2021.

The Policy contains a contractual suit limitation condition:

Legal Action Against Us No one may bring a legal action against us under this insurance unless: a. There has been full compliance with all of the terms of this insurance; and b. The action is brought within 2 years after the date on which the direct physical loss or damage occurred.

The Complaint was filed on November 4, 2022. Plaintiff contends that the contractual limitation is ambiguous and must be construed in favor of the insured and that the time limitation should be calculated to accrue from May 12, 2021, not July 1, 2020.

The Plaintiff does not contend that the limitations provision is unenforceable. Instead, it argues that the policy language is ambiguous because the phrase, “direct physical loss or damage”, is not defined in the policy. After reviewing the law on ambiguity, the Court held that the phrase is not ambiguous. "A plain reading of ‘physical loss' connotes a destruction or elimination of property, whereas ‘physical damage' connotes tangible harm to property." [Citations omitted].

Plaintiff argued that the limitations provision is ambiguous as to when the limitations period begins to run. The Court said that “The Second Circuit has held, however, that a ‘policy requir[ing] any action to be brought ‘within two years after the date on which the direct physical loss or damage occurred’ contains ‘highly specific limitations language.’ Fabozzi v. Lexington Ins. Co., 601 F.3d 88, 92 (2d Cir. 2010)” [additional citations omitted]. "’Direct' and ‘physical' plainly modify both ‘loss' and ‘damage.' So, on its face, the provision unambiguously refers to a single date: the one on which the fire, storm, flood, or other physical event occurs." [Citation omitted].

The Complaint alleges that water began to leak into Plaintiff's business on July 1, 2020. The Court said that “In an obvious attempt to evade the policy's limitations provision, Plaintiff pleads that ‘the damage and/or loss resulting from the July 1, 2020, water leaks was continuous through May 12, 2021’…In so pleading, however, Plaintiff is merely acknowledging that the damage and loss results from a water leak that began on July 1, 2020”. Because "the [limitation] provision unambiguously refers to [the date]…on which the fire, or storm, or flood, or other physical event occurs" [citation omitted] the Policy's limitations period began to run on July 1, 2020”. The Court said that although there may have been continuing damage resulting from the water leak in the months that followed, the policy language "directly refer[s] to the physical event that gave rise to the claimed damages." Because the water leak causing the physical damage occurred on July 1, 2020, and the Complaint was not filed until November 4, 2022, Plaintiff's claims were time-barred under the policy.

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

12/23/24 McCrackin v. Mullen
Missouri Supreme Court
Insurer Able to Intervene in Underlying Wrongful Death Action to Seek Stay While Litigating Coverage Questions

The decedent was shot and killed outside a pool hall. The insurer, Safeco, issued a homeowners insurance policy to Mullen’s grandmother, with whom he allegedly lived at the time of the shooting. The policy was in effect at the time of the decedent’s death. The state indicted Mullen for first-degree murder and armed criminal action for his alleged involvement. Mullen pleaded guilty to first-degree involuntary manslaughter and armed criminal action. McCrackin filed a wrongful death action against Mullen and three others, alleging they lured the decedent from the pool hall to ambush him. Mullen never requested that Safeco defend him in the wrongful death action and hired separate counsel. McCrackin sent Safeco a letter identifying Mullen as an insured under the homeowners policy and offered to settle the wrongful death claim against Mullen in exchange for Safeco’s agreement to pay the total liability coverage limits. Safeco declined and stated there was no coverage for intentional acts. McCrackin then sought leave to file an amended petition alleging Mullen negligently failed to warn the decedent of the danger posed by his accomplice. Safeco again advised there was no coverage for intentional and criminal conduct.

Safeco filed a declaratory judgment action in federal district court seeking a declaration of no coverage and that it had no duty to defend or indemnify Mullen. McCrackin moved to stay the case pending resolution of the criminal case. Next, McCrackin sought leave to file a second amended complaint alleging counts of negligence by participating in a prank and failure to warn. The federal court sustained the motion to stay.

Safeco moved to intervene in the wrongful death action to stay proceedings until the resolution of the declaratory judgment action. The circuit court overruled Safeco’s motion to intervene, finding Safeco lacked the right to intervene. The circuit court entered a judgment against Mullen for the decedent’s wrongful death and awarded McCrackin $16.5 million in damages. Safeco appealed.

The Missouri Supreme Court considered whether Safeco met the requirements to intervene as a matter of right in the wrongful death action for the limited purpose of seeking a stay. Under the relevant precedent, an insurer with a coverage question could seek intervention in the underlying tort action for the sole purpose of seeking a stay of the tort proceedings while coverage questions were litigated in a separate declaratory judgment action. The applicable law provides that upon timely application, anyone shall be permitted to intervene in an action when the applicant claims an interest relating to the property or transaction that is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant’s ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties. Safeco contended it had an interest in the wrongful death action and was situated such that the disposition of the wrongful death action might as a practical matter impair or impede its ability to protect that interest as a potential defender of the claims against Mullen. McCrackin argued that the intervention-and-stay solution should not be followed, but the Court noted the procedures eliminate the risk of the insurer waiving control of the defense and preserves the insurer’s opportunity to defend against the tort action. McCrackin also argued that an insurance company does not have a direct interest in an underlying lawsuit between a claimant and a potential insured. However, the Court reasoned that Safeco stood to gain or lose from a judgment in the underlying action, and insurers have an interest in protecting their right to defend in the underlying action, creating the right to intervene to seek a stay while coverage questions are litigated. Since Safeco met the criteria for intervention, the Court held the circuit court erred in overruling the motion to intervene.

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

01/02/25 Wolyniec v. Giraldo et al.
New Jersey Appellate Division
Even if UIM Claimant Was a Resident Relative, Still No Coverage Due to the Failure to Notify the Insurer of the Change

Wolyniec was going through a divorce, and his brother was kind enough to put him up for about a month while he looked for somewhere else to live. Wolyniec moved in with his brother in January 2020. By February of that year, Wolyniec moved into an apartment of his own. Around the same time, he filed his 2020 tax returns, using his brother’s address. In July, after he had moved into his new apartment, Wolyniec was injured in a car accident in which he was driving his brother’s vehicle.

Giraldo was the driver of the car that injured Wolyniec. After Giraldo’s carrier paid Wolyniec its $25,000 liability limit, Wolyniec submitted a UIM claim with his brother’s auto carrier, Allstate. Listed on the Allstate policy were Wolyniec’s brother and his wife, and their respective vehicles. Their address (the one at which Wolyniec had stayed for about one month earlier in the year, and the one Wolyniec used on that year’s tax returns) was listed in the policy’s declarations.

The Allstate policy also provides coverage to “resident relatives,” defined as “a person who physically resides in [the insureds’] household with the intention to continue residence there.” The Allstate policy specifically requires that the insured notify Allstate whenever an operator becomes a resident of the insured’s household. Indeed, the Allstate policy includes a separate endorsement, titled “Duty to Report Policy Changes,” which provides that no coverage will be provided if any insured has made false statements, or concealed any material fact in connection with any claim for coverage.

Allstate denied coverage on the ground that Wolyniec was not a resident relative, since he did not reside at the address shown in the policy’s declarations on the date of the accident. In the alternative, Allstate’s denial letter explained that, if Wolyniec did meet the definition of a “resident relative,” coverage would be barred under the Duty to Report Policy Changes endorsement, since it was never reported that Wolyniec resided with the insureds.

The Court noted that either ground is dispositive of the claim—either Wolyniec was not a resident relative, and therefore did not qualify for coverage in the first instance, or he was a resident relative, and coverage was barred because the insureds never notified Allstate of this change.

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

12/23/24 Curtis Park Grp., LLC v. Allied World Specialty Ins. Co.
United States Court of Appeals, Tenth Circuit
Reversal and New Trial Awarded to Insurer Where Trial Court Erroneously Instructs Jury Where Evidence Showed That Insured Never Incurred Repair Costs for Property Damage

Curtis Park hired Milender White as the general contractor to construct mixed use buildings, four of which were to be supported by a single concrete slab, with parking beneath the slab. Milner White agreed to front the initial construction costs and potential repair costs. Curtis Park also had a right of non-reimbursement for the cost of repairing Milender White’s defective work from either negligence or failure to fulfill its contractual obligations.

Milender White subcontracted the slab construction to All Phase Concrete who subcontracted the rebar to Harris Rebar. Construction began in September 2016 and in December 2017 Curtis Park found excessive sagging the concrete. Curtis Park received an engineer’s report finding the slab’s construction was defective. Curtis Park then rejected the slab. Due to the parties’ agreement, Milender White fronted the repair cost. Prior to this, Curtis Park procured a builder’s risk policy from Allied World.

The policy’s only named insured was Curtis Park; and covered property damage defined as “direct physical loss or damage caused by a covered peril to 'buildings or structures' while in the course of construction, erection, or fabrication.” What it does not cover is “loss or damage consisting of, caused by, or resulting from an act, defect, error, or omission (negligent or not) relating to . . . design, specifications, construction, materials, or workmanship," but it does cover "damage caused by" "an act, defect, error, or omission" that "results in a covered peril."

In March 2019, Curtis Park filed a claim seeking recovery for the repair of the slab for hard costs (cost of repair) and soft costs (costs incurred by construction delay). Curtis Park never disclosed its engineer’s report regarding the cause of the sag. In August 2019, Allied World denied coverage finding defective construction caused the concrete to sag.

Later in December 2019, Curtis Park and Milender entered into a closeout agreement that they would pursue the claim against Allied World and would split the proceeds if successful. However, if the action were unsuccessful, then Curtis Park would still not have to reimburse Milender White.

In discovery, Allied World learned of the closeout agreement and the engineer’s report. Allied World moved to exclude all of Curtis Park’s hard cost evidence. The district court denied the motion and instructed the jury that even if subcontractors bore the cost of repair, Curtis Park could still recover. The jury found in favor of Curtis Park for its breach of contract and statutory bad faith claims. Allied World filed a motion for a new trial and renewed a motion for judgment as a matter of law. Both motions were denied, and Allied World appealed.

Looking at Colorado law, the court noted the general concept of policy interpretation; that plain unambiguous terms will not relieve a party from disadvantageous terms or give forced construction. Courts must look at the policy as a whole when interpreting the contract’s language. Also, Colorado employs the doctrine of reasonable expectations, meaning policies are read to the reasonable expectations of an ordinary purchasing the policy.

The Circuit Court found the policy did not provide coverage for the loss. Even setting aside the exclusion, other portions of the policy limited recovery. It noted a condition precedent to coverage was Curtis Park was to incur the costs and demonstrate that it, Curtis Park, was responsible for the costs. Indeed, Milender White and the respective subcontractors could not receive benefits under a policy which they are unnamed.

Looking at the policy dispositive terms; the court noted that Curtis Park must actually suffer a loss as a result of the damage. The policy also provided “Insurance under this coverage will not directly or indirectly benefit anyone having custody of [the named insured's] property.” Meaning, Curtis Park only, is the one who may receive the policy’s benefits. Other provisions also included that Curtis Park itself must actually pay for the repair under the Replacement Cost coverage.

In reading the policy as a whole, Curtis Park’s lack of any costs incurred and limiting language of the other provisions warranted reversal of the hard cost portion of the jury award. It also required a new trial on the soft cost portion of the claim due to the erroneous jury instructions given by the district court. It noted, Allied World’s affirmative defense of willful misrepresentation by withholding the engineer’s report could change the jury’s opinion. Also, the affirmative defense of the exclusion could bar the claim in its entirety had the jury been properly informed of the closeout agreement’s financial details.

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

12/24/24 Ramos v. Jahar, et al
Appellate Division, Second Department
Second Department Affirms Order Dismissing Complaint Against Defendants Where Plaintiff Submissions in Opposition to Summary Judgment Were Insufficient to Raise a Triable Issue of Fact on Whether She Sustained a Serious Injury Within the Meaning of Insurance Law § 5102(d)

This case stems from a personal injury action where a vehicle owned and operated by Plaintiff, Elizabeth Ramos, was rear-ended by a taxi owned by Defendant Malysh Taxi, Inc., operated by Defendant Mirza S. Jahar, on July 2, 2028, in New York City, New York. As a result, the Plaintiff alleged injuries to her low back, right shoulder, and right knee – which require arthroscopic surgical intervention. She further claimed these injuries qualified as serious under multiple categories of Insurance Law § 5102(d).

Following discovery, Defendants moved for summary judgment arguing the complaint should be dismissed as Plaintiff failed to sustain such a serious injury. In support of their motion, Defendants submitted deposition testimony of the Plaintiff, an orthopedic IME report, and a radiologist IME report. In opposition, Plaintiff submitted medical records from multiple treating providers. The trial justice for the Supreme Court, Kings County, granted Defendants’ motion for summary judgment dismissing the complaint on the ground that the Plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) causally related to the subject accident. Plaintiff appealed.

On appeal, the Second Department agreed with the lower court’s decision. Specifically, the Defendants’ met their prima facie burden that the alleged injuries were degenerative in nature and not caused by the subject accident based upon the opinions from their IME experts. However, in opposition, Plaintiff failed to raise a triable issue of fact. Notably, Plaintiff’s treating experts failed to address the findings from the Defendants’ IME radiologist who opined that the alleged injuries were degenerative in nature.

Accordingly, the Second Department affirmed, with costs, the Order of Supreme Court, Kings County, dismissing the complaint on the ground that the Plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

12/23/24 Martinez v. Hanover Ins. Group
New York State Supreme Court, Bronx County
Insurer Motion to Dismiss Denied, Based on Plain Language of Arbitration Provision

Plaintiff, Pedro Maldonado Martinez, sustained alleged bodily injuries in an automobile accident driving a car owned by his employer, United Building Maintenance Associates Inc. (“UBMA”). The UBMA automobile was insured by Hanover Insurance Group (“Hanover”). The Hanover policy provided for $1,000,000 in supplementary uninsured/underinsured motorist (“SUM”) coverage.

After Plaintiff recovered policy limits against the underlying tortfeasor, he sought additional SUM coverage from Hanover. Plaintiff filed suit, seeking $975,000 in SUM benefits from Hanover.

Hanover filed a pre-answer motion to dismiss the complaint, pursuant to CPLR §3211(a)(2). Hanover argued that the SUM endorsement, statutory proscribed by 11 NYCRR 60-2.3, had not been satisfied. Hanover alleges that because the Plaintiff has not submitted to an examination under oath, or an independent medical examination, it cannot maintain the lawsuit.

The arbitration clause within the Hanover policy provided that:

If any insured makes a claim under this SUM coverage and we do not agree that such insured is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured, or we do not agree as to the amount of payment that may be owing under this SUM coverage, then, at the option and upon written demand of such insured, the matter or matters upon which such insured and we do not agree shall be settled by arbitration [ . . . ], pursuant to procedures approved by the Superintendent of Financial Services for this purpose.
If the maximum amount of SUM coverage provided by this endorsement equals the amount of coverage required to be provided by New York Insurance Law section 3420(f)(1) and New York Vehicle and Traffic Law Article 6 or 8, then such disagreement shall be settled by such arbitration procedures upon written demand of either the insured or us.

In opposition, Plaintiff asserts that based on the plain language of the SUM endorsement, arbitration may be selected “at the option” of the insured in certain circumstances. Further, Plaintiff alleges that Hanover has not requested or noticed Plaintiff for either an examination under oath (“EUO”) or an independent medical examination (“IME”).

The court agreed with the reading of the arbitration clause set forth by Plaintiff. The court analyzed both Section 11(a) and Section 11(b) of the endorsement together. Section 11(a) provided that demanding arbitration was an “option” for the insured. However, it did not require a mandatory demand of arbitration upon disagreement. In juxtaposition, Section 11(b) mandates arbitration, but only in situations where the maximum amount of SUM coverage under the Hanover policy is equal to the New York statutory minimum.

Here, the Hanover policy provided SUM coverage for $1,000,000. This limit is higher than the statutory minimum. As such, Section 11(a) of the SUM endorsement applies to this claim. Plaintiff has the option to demand arbitration, as the insured, but is not obligated and required to do so.

The court additionally looked toward the plain language of the policy, which requires that Plaintiff submit to an EUO or IME as Hanover may “reasonably require.” Here, Hanover could not provide any proof that Plaintiff had been noticed for either an EUO or IME.

The court held that the Hanover policy did not require Plaintiff to appear for an IME or EUO prior to commencing suit if neither had been demanded. However, the court did note that Hanover may exercise the right to conduct either an EUO or IME during the pendency of the litigation.

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

12/23/24 Veto of the Grieving Families Act, A9232B
New York State Assembly
Governor Kathy Hochul Vetoes the Wrongful Death Expansion Legislation, Bills A9232B/S8485B

On December 21, 2024, Governor Kathy Hochul vetoes Assembly Bill A9232-B, the legislations third attempt to pass a version of the “Grieving Families Act.”

This legislation attempted to amend the estates, powers and trusts law, in relation to payment and distribution of damages in wrongful death actions. The bill sought to expand the available economic or pecuniary losses, including damages for grief and anguish, available to “surviving close family members.”

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

12/20/24 John Doe v. Roman Catholic Episcopal Corp. of St. John’s
Supreme Court of Newfoundland & Labrador (Trial Level)
Court Voids Liability Policies After Finding that Material Non-Disclosure of History of Sexual Abuse Amounts to Civil Fraud

Forty years ago, or so, the Roman Catholic Church held a respected position of authority and moral influence in Newfoundland. But in 1988 that started to unravel. In September of 1988, Fr. James Hickey plead guilty to 20 charges of sexual assault, gross indecency, and indecent sexual assault dating to 1982-1988. The charges involved the sexual abuse of teenage altar boys when Fr. Hickey was priest on the Burin Peninsula and in the St. John’s area. He spent five years in prison and died in 1992. Within months of Hickey’s guilty plea, a scandal erupted over allegations of widespread abuse of children at Mount Cashel Orphanage in Newfoundland. The ensuing firestorm of criminal and civil prosecutions has placed the Roman Catholic Episcopal Corporation of St. John’s (RCEC St. John’s) into creditor protection as it liquidates its assets to meet its liabilities. News reports state that it has raised about $44 million to meet approximately $104 million in liabilities

The Background

One of the first civil claims arising from the abuse committed by Hickey was filed against the RCEC St. John’s in 1989. That action was settled with notice to Guardian Insurance Company who insured RCEC St. John’s under a CGL policy from 1980-1982. That policy was renewed through to 1985. Guardian refused to defend and indemnify on the basis that the RCEC St. John’s knew about Hickey’s abuse when the original policy was issued and subsequently renewed and in view of the non-disclosure of a material fact, the policy was void. To support this point, Guardian cited a report of the Winter Commission that was struck to investigate the allegations of abuse. That report suggested several senior clergymen knew of Hickey’s abuses as early as 1975. Eventually, Guardian concluded that its evidence against RCEC St. John’s was insufficient, and in 1992 signed a consent order agreeing to extend the benefit of the policy to RCEC St. John’s in relation to the 1989 settlement.

Guardian continued covering settlements until 2009, when it became aware of new evidence — testimony from a victim, a seminarian and a priest — further suggesting senior clergy’s knowledge of abuse went back at least to the 1970s. Guardian refused to pay a 2009 abuse settlement in light of this new evidence. RCEC St. John’s sued Guardian for coverage and in 2011, the Newfoundland Supreme Court ruled in favour of RCEC SR. John’s. Guardian appealed and in 2013, the Newfoundland and Labrador Court of Appeal held that the earlier consent order pertained to the single settlement, and it was both unfair and unjust to hold that Guardian was forever bound by that order. RCEC St. John’s appealed to the Supreme Court of Canada who refused leave to appeal.

Trial Judgment

In view of the Court of Appeal ruling, the coverage issue was allowed to proceed to trial which took place over several non-continuous days in 2023 and 2024. On December 20, 2024, the Newfoundland and Labrador Supreme Court issued its judgment holding that each of the policies issued by Guardian Insurance in the 1980s are void due to material non-disclosure that amounted to civil fraud.

St. John’s was specifically aware of the sexual misconduct of James Hickey as well as other clergy members assigned to the Archdiocese of St. John's. Guardian argued that if these allegations were found to be true, RCEC did not disclose this knowledge and the associated risk to the insurer at the time of commencement of the policies. The failure to disclose its knowledge of sexual misconduct by clergy members to the insurer was a material non-disclosure that rose to the level of material misrepresentation/civil fraud and voided coverage for any claim of indemnity. For its part, RCEC St. John’s admitted in an Agreed Statement of Fact that it did not disclose its knowledge that certain of its clerics were alleged to have committed acts of sexual abuse prior to obtaining the Policy in October 1980, or when it renewed the Policy each year up to and including 1985.

Labor Law Pointers - Volume XIV, No. 2

Thu, 02 Jan 2025 13:48:34 +0000

Volume XIV, No. 2
Wednesday, January 1, 2025

Note from Marc A. Schulz:

Do you have a situation? We love situations. Give us a call, send an email, drop by; we truly enjoy solving complex Labor Law and risk transfer issues.

For my first cover note, I must give a shoutout to David’s fantasy football work team this year. Perhaps it was the absence of his son at the draft, or that one of our litigation associates drafted his team, but for the first time since I can remember, David’s team did not spend the entire season in last place! In fact, his team made the fantasy football playoffs this year, while my team, despite having a chance to qualify at the end, could not overcome week 14 byemageddon. Congratulations also to Kevin Zanner, who defended his championship and is the league’s second back-to-back champion.

For our first photo this year, we have a cable installer working on a tenant’s property. The landlord retained a property management company, who hired the cable installer. Assume the cable installer was electrocuted by exposed wiring and fell from a non-defective unsecured A-frame ladder, but the ladder remained upright. Plaintiff moved for partial summary judgment on liability, arguing the proximate cause of his accident was the owner’s and property manager’s failure to provide equipment (e.g., scaffolding) that would have enabled him to safely perform his job and prevent him from falling after being electrocuted. Defendants opposed and cross-moved for dismissal, arguing the ladder did not fail to provide proper protection since it remained upright and did not move, slip, shift, move or collapse during the fall. Who wins on motion practice?

The correct answer is neither party is entitled to summary judgment. Plaintiff’s motion should be denied because he did not show his injuries were caused by a statutory violation or his fall, as opposed to the electrical shock, that knocked him off the ladder. Defendants’ cross-motion should also be denied because questions of fact exist as to whether the ladder provided proper protection, whether defendants should have furnished additional safety devices and whether the allegedly inadequate ladder and/or lack of additional safety devices were the proximate causes of the accident.

In our next photo, assume our worker is tasked with painting a bathroom ceiling, but he improvises when the provided for ladder is too small to perform his work. He places the four-foot stepladder as shown below, loses his balance, and – well, let’s just say, he didn’t stick the landing. The defense argued the worker’s setup and placement of the stepladder was the sole proximate cause of the accident; does the worker have a § 240(1) case?

The sole proximate cause defense does not apply here, and the worker is entitled to summary judgment under § (1) because, despite that a stepladder being provided, none were appropriate for the injury-producing task. Remember that under § 240(1), an impractical safety device is as good as no device at all. Providing a safety device is only half the job; it must actually work for the task at hand.

Using that same photo, let’s now assume a worker fell from the stepladder and testified at his deposition that it was a six-foot A-frame stepladder. The deposition testimony from defendant’s representative was it was only a four-foot A-frame stepladder. Years after the accident, defendant’s expert examined a four-foot stepladder but was unsure if it was the same one as from the accident since that stepladder mysteriously vanished before the expert’s inspection. Can the defense prevent the worker from winning his summary judgment motion under § 240(1)?

Without the subject stepladder to pin the blame on, the defense is unable prove the existence and condition of the safety device. Under this scenario, courts will conclude that the worker’s description of his accident is uncontroverted, and the expert’s opinion is speculative since the stepladder inspected wasn’t definitely proven to be the one involved in the fall. The inability to verify the condition or even the existence of the correct stepladder leads to a win for the worker. This hypo emphasizes the importance of preserving evidence and early accident investigation, as we so often see that in the battle of “he said, ladder said,” only one party made it court.

We always remind you that we are available for a refresher or more advanced sessions on Labor Law and the ability to transfer risk. Should anyone need training for the new year or need a refresher, just let us know. We are available in person or via online seminar.

That’s it for this month. As always, please feel free to reach out to us with any questions Labor Law or Risk-Transfer related. We hope you learned something.

Happy New Year!

-Marc mas@hurwitzfine.com
-David dra@hurwitzfine.com

Hurwitz Fine P.C.
The Liberty Building
424 Main Street, Suite 1300
Buffalo, New York 14202
Phone: 716.849.8900
Fax: 716.855.0874

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Contact Jody Briandi at jeb@hurwitzfine.com to subscribe.

Products Liability Pointers: This monthly newsletter covers all areas of products liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact Chris Potenza at vcp@hurwitzfine.com to subscribe.

Vargas v 622 Third Ave. Co. LLC
December 12, 2024
Appellate Division, First Department

Plaintiff slipped on a puddle of water in a staircase at 622 Third Avenue's property. At the time of the accident, plaintiff was employed by JK Flooring and was at the property to install flooring as part of a renovation project. JT Magen was the general contractor for the project. Plaintiff testified that he was required to report to an employee of JT Magen, that such employee was aware of a wet condition in the staircase and had complained about it earlier in the day, and that the employee specifically instructed plaintiff to use that staircase without warning him of the dangerous condition, instead of other means of access to floors to which plaintiff needed to travel.

The trial court denied JT Magen's motion for summary judgment dismissing the Labor Law § 200 and common-law negligence claim against it, denied 622 Third Avenue's motion for summary judgment on its contractual indemnification claim against JK Flooring, denied JK Flooring’s motion for summary judgment dismissing all the contractual indemnification claims asserted against it, and granted AFR’s motion for summary judgment on its contractual indemnity claim against JK Flooring. The trial court also denied Interpublic Group’s and 622 Third Avenue’s motion to dismiss contractual indemnity claims against it, all the common-law indemnification and contribution claim against it, and the entirety of the second third-party complaint as against it and denied AFR's motion for summary judgment dismissing JK Flooring's and JT Magen's crossclaims against it.

Labor Law § 200 and Common-Law Negligence (EDA)
The First Department affirmed the trial court’s decision denying summary judgment to JT Magen to dismiss plaintiff's Labor Law § 200 and common-law negligence claims. It found a triable issue of fact as to whether JT Magen had, and exercised, control over the way plaintiff performed his work and could have avoided exposing plaintiff to the unsafe condition which led to his injury.

Indemnity Issues in Labor Law (AMC)
The First Department held that the trial court properly denied JT Magen’s motion s there was a negligence trigger in the indemnification provision, and the Court found questions of fact as to whether JT Magen was negligent and if that negligence caused plaintiff’s accident, it was not entitled to summary judgment dismissal of the contractual indemnification cases of action.

The Court affirmed the trial court’s decision to deny JK Flooring’s motion for summary judgment seeking to dismiss the contractual indemnification claims against it. The indemnification agreement provides that JK Flooring will indemnify the “owner, owners consultant, the building landlord, and their … employees, agents and representatives …” JK Flooring failed to establish that the parties seeking indemnity under the agreement do not fall within its terms, and that it was not negligent, or its negligence did not, at least in part, cause plaintiff’s injury.

The Court further held that 622 Third Avenue failed to establish its entitlement to summary judgment on its contractual indemnity claim against JK Flooring as it failed to establish that it was free from any negligence. Specifically, it failed to establish that it did not create a hazardous condition or lacked actual or constructive notice of the condition.

Harjo-Codd v Tishman Constr. Corp.
December 17, 2024
Appellate Division, First Department

Plaintiff rode in a bucket lift to affix plastic sheets to façade scaffolding at the fourth-floor level of a building leased by defendant museum, when the lift suddenly became snagged on the scaffolding before the bucket then popped free of the scaffolding, ejecting plaintiff in the process. Plaintiff wore a harness and lanyard that had a retractable, protective device that did not operate as designed to keep her inside the bucket. Plaintiff fell 20 feet down from the bucket before the lanyard arrested her fall, and she allegedly sustained gravity-related injuries. The trial court denied plaintiffs' motion for partial summary judgment on their Labor Law § 240(1) claim as premature.

Labor Law § 240(1) (MAS)
The First Department unanimously reversed the trial court’s decision and granted the motion. Plaintiffs’ proof established her entitlement to partial summary judgment under Labor Law § 240(1) because her accident arose from a gravity-related risk that defendants failed to adequately protect her from. Affidavits from plaintiff and her coworkers established the mechanism of the accident, and the affidavit from the construction manager’s representative acknowledged that the accident occurred in such manner, amount to an admission of such facts. While the incident reports prepared by the construction manager and subcontractors corroborated how the accident happened, they were not authenticated by the preparers of such reports and, thus, were not admissible. Nonetheless, even absence the incident reports, the Court held that plaintiffs’ proof established entitlement to summary judgment despite that discovery remained outstanding.

In opposition, the Court held that defendants failed to raise a triable issue of fact. Nor have they made an evidentiary showing that discovery may lead to evidence that would raise a triable issue to warrant denial of plaintiff’s motion

PRACTICE POINT: Summary judgment is awarded in cases such as this where plaintiff’s incident arose from a gravity-related risk against which defendants failed to adequately protect against. Pursuant to CPLR § 3212(f), summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant evidence, which defendant failed to do in this case.

Gkoumas v Lewis Constr. & Architectural Mill Work
December 31, 2024
Appellate Division, First Department

Plaintiff’s accident allegedly occurred when his ladder shifted, causing him to fall to the ground. However, he also submitted the transcript of his supervisor's deposition testimony that plaintiff called right after his accident, said that he cut his hand because his tool slipped, but did not say that he had fallen from a ladder. The trial court granted plaintiff's motion for summary judgment on the Labor Law § 240 (1) claim against Lewis Construction and Construction NYC.

Labor Law § 240(1) (MAS)
The First Department unanimously reversed the trial court’s decision and denied plaintiff’s motion. By submitting the transcript of his supervisor’s deposition testimony, the Court found that plaintiff effectively adopted it as accurate. Therefore, plaintiff called into question his own credibility regarding the way his accident occurred. Accordingly, plaintiff’s motion should have been denied without regard to the sufficiency of the opposition papers.

PRACTICE POINT: Where a plaintiff is the sole witness to an accident, an issue of fact may exist where he or she provides inconsistence accounts of the accident, his or her account of the accident is contradicted by other evidence, or his or her credibility is otherwise called into question with regard to the accident. Bonus points if you caught the inadmissible hearsay, which still may still be considered on summary judgment when it is not the only evidence in the record.

Jaimes-Gutierrez v 37 Raywood Dr., LLC
December 11, 2024
Appellate Division, Second Department

Plaintiff, an employee of nonparty Global Security, reported to 37 Raywood Drive to install an alarm and surveillance system on a townhouse construction project on which Be & Yo Realty, acted as general contractor. Plaintiff was installing the alarm and surveillance system at the premises, while standing on an attic ladder, when the ladder came off its hinges and otherwise collapsed, causing him to fall. He described the ladder as an attic, pull-down, hinged ladder. The trial court denied plaintiff's motion for summary judgment on the Labor Law §§ 240(1) and 241(6) claims and granted defendants' cross-motion for summary judgment dismissing the complaint.

Labor Law § 240(1) (MAS)
The Second Department reversed the trial court’s decision, finding that the pull-down attic stairs, in effect, operated as a safety device within the meaning of § 240(1), since it served as the functional equivalent of a ladder at the time of the accident. Plaintiff’s testimony that the pull-down attic stairs detached from the ceiling and fell as he was ascending them causing him to fall, demonstrated that defendants violated the statute, and this violation proximately caused his injuries. Similarly, given plaintiff’s testimony that the pull-down attic stairs fell as he was ascending them, the Court also held that defendants failed to demonstrate that the pull-down stairs provided proper protection.

PRACTICE POINT: This case highlights how critical it is when conducting depositions to know what testimony you need from each witness to prove your claim or defense. Here, plaintiff testified that he had to access the attic as part of his work, that the pull-down attic stairs could not be removed from their location, and that these stairs were the only way of accessing the attic, which were crucial facts in the court’s determination that the pull-down attic stairs essentially operated as a safety device under § 240(1).

Labor Law § 241(6) (TPW)
The Second Department also reversed the trial court’s decision, finding that Industrial Code (12 NYCRR) 23-1.21(b)(1), which requires that “[e]very ladder shall be capable of sustaining without breakage, dislodgement or loosening of any component at least four times the maximum load intended to be placed thereon” was violated.

Wright v Pennings
December 11, 2024
Appellate Division, Second Department

Plaintiff was injured when he was struck by an unsecured 20-foot extension ladder that fell when his coworker was installing wiring in a barn operated by defendant. Plaintiff's coworker placed the bottom of the ladder on a rubber mat that allegedly was covered in cow manure and hay, and began climbing the ladder, which resulted in the ladder falling and ultimately striking plaintiff on the head. At the time of the accident, plaintiff was performing electrical work at the ground level 15 to 20 feet away from his coworker.

The trial court denied plaintiff's motion for partial summary judgment on liability under Labor Law § 240(1) and granted defendant's motion for summary judgment dismissing the amended complaint.

Labor Law § 240(1) (MAS)
The Second Department reversed the trial court’s decision, granted plaintiff’s motion and denied defendant’s motion. Plaintiff’s evidence showed his coworker stepped on an unsecured ladder, the ladder slipped on a rubber mat covered in cow manure and hay, and the ladder fell forward, striking plaintiff’s head and causing injuries. The Court held the failure to properly place and secure the ladder amounted to a statutory violation, which proximately caused plaintiff’s injuries when the ladder “proved inadequate to shield [him] from harm directly flowing from the application of the force of gravity to an object or person” and the hazard presented here is the type contemplated for under the statute.

In opposition, the Court further held that defendant failed to raise a triable issue of fact. Contrary to defendants’ contention, the risk of injury was foreseeable because of the statutory violation, and the protections provided under the statute are not limited to injuries caused by falling objects that were being hoisted or secured. Moreover, the coworker’s improper placement of the ladder was not of such an extraordinary nature or so attenuated from a violation of § 240(1) as to sever the causal nexus between defendants’ statutory violation and plaintiff’s injuries.

PRACTICE POINT: To establish liability under § 240(1), a plaintiff must demonstrate both that the statute was violated (e.g., failing to properly place and secure the ladder) and that the violation was a proximate cause of his or her injuries. With respect to accidents involving ladders, liability will be imposed when, as here, the evidence shows that the subject ladder was inadequately secured and that the failure to secure the ladder was a substantial factor in causing plaintiff’s injuries.

Labor Law § 241(6) (TPW)
To prevail on a Labor Law § 241(6) claim based on a violation of Industrial Code 23-1.8(c)(1), plaintiff must establish that the job was a hard hat job and that the failure to wear a hard hat was a proximate cause of his or her injury. Here, the Second Department held that defendant failed to establish that the relevant work was not a hard hat job or that plaintiff’s lack of head protection played no role in the injuries he sustained when he was struck in the head by the ladder.

Industrial Code 23-1.21(b)(4)(ii) provides that “[a]ll ladder footings shall be firm. Slippery surfaces and insecure objects such as bricks and boxes shall not be used as ladder footings.” Here, the Court held that defendant failed to establish that the rubber mat covered with cow manure and hay was not a slippery surface for purposes of this regulation.

Labor Law § 200 and Common-Law Negligence (EDA)
The Second Department reversed the trial court’s decision, finding that defendant's conclusory statements in his affidavit that he did not recall having entered the barn on the day of the accident and that he was unaware of plaintiff's accident were insufficient to establish that he lacked actual or constructive notice of the alleged slippery condition.

Keen v Tishman Constr. Corp. of N.Y.
December 24, 2024
Appellate Division, Second Department

Plaintiff was injured in the course of her employment as a carpenter shop steward at a construction site owned by Meushar. Plaintiff testified that the bottom of an unsecured wooden "job-built" ladder she was ascending to access a concrete wall, which was 3½ to 4½ feet above the ground, slid away from the wall causing her to fall. Plaintiff's right leg became "tangled" in the ladder and hit her knee on either the ladder or the wall. The top portion of plaintiff's body landed on the concrete wall. The trial court granted plaintiff's motion for summary judgment on the Labor Law § 240(1) claim against Tishman, the general manager, and Meushar.

Labor Law § 240(1) (MAS)
The Second Department affirmed the trial court’s decision. In opposition to plaintiff’s showing of her entitlement to judgment as a matter of law regarding liability under § 240(1) against defendants, the Court found that defendants failed to raise a triable issue of fact. Contrary to defendants’ contention, the record does not reveal differing versions of the accident, one under which defendants would be liable and another under which they would not. While defendants properly contend that plaintiff waived any objection to the admissibility of certain incident report, those reports, at most, establish comparative negligence, which is not a defense to a Labor Law § 240(1) claim.

PRACTICE POINT: Where an accident is caused by a violation of the statute, plaintiff’s negligence does not furnish a defense. Thus, once plaintiff demonstrates the statute was violated and that the violation proximately caused his or her injuries, the burden shifts to defendant to defeat the motion only if there is a plausible view of the evidence – enough to raise a question of fact – that there was no statutory violation and plaintiff’s own acts or omissions were the sole proximate cause of the accident. In this case, defendant failed to meet that burden.

Brongo v Town of Greece
December 20, 2024
Appellate Division, Fourth Department

The Town of Greece (“the Town”) contracted with plaintiff’s employer to perform milling and asphalt work on the Town's road. As part of the project, plaintiff operated a water truck used to cool the mill's blades. Plaintiff drove to a fire hydrant located at the Town's Department of Public Works to fill his water tank. However, the hose attached to the hydrant was torn, frayed and lacked a coupler to connect the hose to the truck's fill port. Plaintiff attempted to use the hose to fill the truck through the top, but the force of the water through the hose caused it to whip around, knocking plaintiff off a ladder used to access the top of the truck and causing plaintiff injuries. The trial court granted the Town’s motion for summary judgment dismissing the amended complaint against it and denied the cross-motion of plaintiffs seeking leave to amend the bill of particulars.

Labor Law § 241(6) (TPW)
The Fourth Department affirmed the trial court’s decision as the Town met its initial burden with respect to the Labor Law § 241(6) claim and, in response, plaintiffs failed to raise a triable issue of fact as 12 NYCRR 23-9.2(a) was not applicable to the facts of this case.

Labor Law § 200 and Common-Law Negligence (EDA)
The Fourth Department reversed the trial court in dismissing the Labor Law § 200 and the common law negligence claims, finding that the Town failed to address plaintiffs' allegations in the amended complaint and bill of particulars regarding an unsafe premises condition and therefore, did not establish a prima facie case.

Bacon v Shults Mgt. Group, Inc.
December 20, 2024
Appellate Division, Fourth Department

Plaintiff was injured when he tripped on an electrician's pull string that had one end tied to a door handle at a construction site, with the other end left lying on the ground. The pull string had previously been used to hold the door open by having one end tied to the door handle and the other end tied to a post, but the door was closed at the time of plaintiff's accident. When plaintiff opened the door, the pull string cinched around one of his feet, causing him to fall. Ahlstrom was an electrical subcontractor on the construction project. The trial court denied Ahlstrom’s motion for summary judgment.

Labor Law § 241(6) (TPW)
The Fourth Department reversed the trial court’s decision and dismissed the § 241(6) claim against Ahlstrom as plaintiffs abandoned this claim by failing to oppose Ahlstrom’s motion and failing to address this claim on appeal. Kessel’s contention regarding this claim was raised for the first time on appeal; therefore, it was not properly before the Court.

Labor Law § 200 and Common-Law Negligence (EDA)
The Fourth Department reversed the trial court’s decision and dismissed the Labor Law § 200 and common law negligence claims, finding that Ahlstrom met its initial burden of establishing that it did not have any authority to supervise and control plaintiff's work or the safety of the area involved in the incident. In opposition to that motion, the Court held that plaintiffs and Kessel, the general contractor on the construction project, failed to raise a triable issue of fact. With respect to plaintiffs, they abandoned those causes of action against Ahlstrom by not opposing the dismissal of those claims and not addressing those causes of action on appeal (see Allington v Templeton Found., 167 AD3d 1437, 1439 [4th Dept 2018].

Indemnity Issues in Labor Law (AMC)
The Fourth Department held the trial court did not err in denying Ahlstrom’s motion seeking contractual indemnification as there was an issue of fact as to whether Ahlstrom created the alleged defective condition and was, therefore, negligent.

Verhoef v Dean
December 20, 2024
Appellate Division, Fourth Department

Plaintiff and his coworker were on the roof of the concession stand at defendant's commercial property replacing rubber flashing around plumbing ventilation pipes when plaintiff fell from the roof and landed on a concrete pad. It is undisputed that defendant did not supply plaintiff with any safety devices for the work on the roof. The trial court granted defendant’s cross-motion for summary judgment dismissing the Labor Law § 240(1) claim and denied plaintiff’s motion for partial summary judgment on that claim.

Labor Law § 240(1) (MAS)
The Fourth Department unanimously reversed the trial court’s decision, finding that plaintiffs established as a matter of law that the injury was caused by the lack of enumerated safety devices, the proper placement and operation of which would have prevented plaintiff from falling off the roof. Plaintiff also was engaged in repair work on the proof – a protected activity under 240(1) – and not simply routine maintenance of a component damaged by wear and tear. Plaintiff was performing roofing repair to ensure that the roof of the concession stand was no longer leaking – precisely the type of work that courts have long held to be protected under the statute.

Insofar as defendant asserts that the flashing plaintiff was repairing at the time of his fall was not actively leaking, such a contention is immaterial to whether plaintiff was performing a protected activity, as it would be inconsistent with the spirit of the Labor Law to isolate the moment of injury and ignore the general context of the work.

PRACTICE POINT: Delineating between routine maintenance and repairs is frequently a close, fact-driven issue and that distinction depends on whether the item being worked on was inoperable or malfunctioning prior to the state of the work and whether the work involved the replacement of components damaged by normal wear and tear. Here, the court found that the rubber flashing was malfunctioning and inoperable prior to replacement and that the work being performed by plaintiff at the time of the accident was necessary to restore the proper functioning of the roof. The rubber flashing was not merely a “component” of a ventilation system but was an integral part of a proper functioning roof.

New York Industrial Code Regulations (EDA)

Regulation § 23–1.25 (e) Fire protection.

(3) Whenever welding or flame-cutting operations are performed in the vicinity of any combustible material there shall be provided, within easy reach of the persons performing such work, at least one approved fire extinguisher or fire pail filled with an appropriate fire extinguishing agent.

Regulation § 23–1.25(e)(3) is likely sufficiently specific to support a Labor Law § 241(6) cause of action to the extent it requires that screening be installed between the welding or flame-cutting operations and such other persons.

There are no cases deciding on the applicability or specificity of Regulation § 23–1.25(e)(3) in the Appellate Divisions.

Hurwitz Fine P.C.

Buffalo
1300 Liberty Building, Buffalo, NY 14202
Phone: 716-849-8900, Fax: 716-855-0874

Long Island
575 Broadhollow Road, Melville, NY 11747
Phone: 631-465-0700, Fax: 631-465-0313

Albany
Phone: 518-641-0398

Additional Offices
Albion | Amherst | Hartford, CT |
Niagara Falls | Rochester

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York

www.hurwitzfine.com
© 2025, Hurwitz Fine P.C. All Rights Reserved

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

Premises Pointers - Volume VIII, No. 7

Thu, 13 Feb 2025 21:04:55 +0000

Volume VIII, No. 7
December 30, 2024
A Monthly Electronic Newsletter

NOTE FROM THE EDITOR:

While the end of 2024 is in full swing, our office has been busy with our annual holiday festivities—including our Adopt-a-Family Drive, holiday cookie exchange and ugly sweater day, and holiday party, bringing together all of our offices for an evening of celebration in Buffalo.

In legal news, New York Governor Kathy Hochul has vetoed the Grieving Families Act for the third time, legislation that would completely overhaul wrongful death claims in New York by permitting recovery for emotional damages and expanding the class of persons who can seek recovery for a fatality. Attorney Chris Potenza provides an update on the veto in our latest legal alert as well as to local media.

We are also thrilled to welcome three new attorneys to our Long Island and New Jersey offices:

Joseph P. Mendoza is Special Counsel in our Melville office. Joe focuses on New York State Labor Law, Premises Liability and Automobile Liability. Prior to joining the firm, Joe served as Senior Trial Attorney at the staff counsel offices of several major national and international insurance companies.
John “Jack” W. Danielsen is an Associate in our Melville office, and focuses on Premises Liability, Motor Vehicle Accidents and General Negligence Actions. Prior to joining Hurwitz Fine, Jack represented hospitals, nursing homes, and healthcare facilities in all stages of litigation involving claims of healthcare negligence and medical malpractice.
Domenica D. Hart is New Jersey Special Counsel in our Insurance Coverage practice group. She focuses her practice on insurance coverage analysis and litigation of both first-and third-party claims, and brings more than 20 years of insurance law experience.

Welcome, Joe, Jack and Domenica to our Litigation and Insurance Coverage Teams!

Wishing you and your families a Happy New Year!

-Jody

SPECIAL ALERT: NY Governor Vetoes Grieving Families Act for The Third Time
By: V. Christopher Potenza vcp@hurwitzfine.com

New York Governor Kathy Hochul, for the third straight year, has vetoed the Grieving Families Act, legislation that would completely overhaul wrongful death claims in New York by permitting recovery for emotional damages and expanding the class of persons who can seek recovery for a fatality.

New York currently provides that a wrongful death lawsuit can only be brought by a child, parent, spouse, or the personal representative for the estate of the decedent. Extended family members, such as siblings or cousins, do not have the right to bring a wrongful death lawsuit in New York unless they also have been named as the guardian or personal representative of the estate.

The damages that can be sought in New York are limited to the economic or pecuniary losses of the survivors resulting from the death, the medical and funeral costs related to the final injury or illness, and the value of parental guidance, nurturing, and care for surviving children. If the decedent sustained conscious pain and suffering prior to passing, an action can be brought to recover those damages as well. However, the current law does not allow recovery for pain and suffering, mental anguish, grief, sympathy, or loss of love or companionship for surviving family members.

A modest revision of the prior vetoed legislation was passed in both houses this year, which:

Proposed the statute of limitations to be three years from the date of the decedent’s death (current statute of limitations is two years, and prior version proposed expansion to three and a half years);
More narrowly defined “surviving close family members” who can potentially recover; and
Reduced the proposed retroactivity to causes of action that accrue on or after January 1, 2021 instead of July 1, 2018.

Under this year’s new proposed legislation, the definition of who may recover damages still included spouses and domestic partners, however the list of distributees was defined, as it is under current law.

Notably, this year’s proposed legislation continued to omit a cap on damages, nor did it carve out an exception for medical malpractice claims. The expansion of damages was the same as passed in the prior legislation, and while the legislature limited retroactivity, it did not eliminate it. As predicted, these modest revisions did not address the Governor’s prior concerns in any meaningful way.

While Governor Hochul called the legislation “well-intentioned,” she states that the bill would lead to higher costs and have a negative impact on the health care system. She indicated a willingness to have further conversations with lawmakers on this type of legislation.

Sponsors of the bill do not seem inclined to seek an override of the Governor’s veto, which requires a two-thirds vote of the Legislature.

Retail, Restaurant and Hospitality Happenings Around New York State and Beyond
By: Jody E. Briandi jeb@hurwitzfine.com

For the Federal Court practitioners, we have a couple of interesting cases this month, both demonstrating the importance of following the rules in Federal Court. The Maitland decision, issued by the Second Circuit Court of Appeals, affirmed the grant of summary judgment in part because on appeal, the plaintiff failed to address the reasoning of the District Court’s decision and instead inserted new arguments not made before the lower court. In Fuentes, the plaintiffs’ lawsuit was dismissed for failing to comply with numerous discovery and other orders issued by the Court, which was deemed a failure to prosecute.

12/20/24
Maitland v. Target Corporation
United States Court of Appeals, Second Circuit
The District Court’s decision granting the Defendant’s motion for summary judgment was affirmed on appeal (see below for a summary of that decision).

Erica Maitland, proceeding pro se, appeals from a judgment of the United States District Court for the Eastern District of New York granting summary judgment in favor of Target Corporation in Maitland's negligence action. The District Court's grant of summary judgment was reviewed de novo, construing the evidence in Maitland's favor. Since the plaintiff’s one-page appellate brief did not address the reasoning of the District Court's order dismissing her complaint, instead raising new jurisdictional and constitutional arguments that were not previously raised before the District Court, those arguments were forfeited those arguments and not considered on appeal. Accordingly, the District Court's summary judgment ruling was affirmed.

**CASE APPEALED FROM
9/26/23 Maitland v. Target Corporation
United States District Court, Eastern District of New York
Defendant’s motion for summary judgment was granted based on a lack of evidence proving Target had notice of the alleged dangerous condition and because the doctrine of res ipsa loquitor was found to not apply.

On December 22, 2016, Maitland, who uses a wheelchair, was shopping in the toy department of a Target store in Brooklyn, New York. A metal shelf fell onto Maitland's lap, hitting her leg and causing pain. Maitland did not see the shelf before it fell and could not provide details about its size, shape, or origin. Maitland filed a lawsuit against Target on September 23, 2019, in New York state court. Target removed the case to federal court based on diversity jurisdiction and eventually Target moved for summary judgment. The Court reasoned there was no evidence that Target created the hazardous condition, failed to show that Target had actual notice of any dangerous condition with the shelf and there was insufficient evidence to prove Target had constructive notice of a dangerous condition. The court found the doctrine of res ipsa loquitor inapplicable because plaintiff not prove Target had exclusive control of the shelf, the incident occurred in a public area where customers had access and there was no evidence ruling out other possible causes of the incident.

12/13/24 Fuentes v. CVS Albany, LLC
United States District Court, Eastern District of New York
Action that was removed from state court to federal court was ultimately dismissed due to plaintiffs’ failure to prosecute and comply with court’s orders.

Plaintiffs Maria and Jose Fuentes against CVS for negligence and loss of consortium. Maria Fuentes allegedly suffered injuries when struck by a "Covid Shield" at a CVS pharmacy in Farmingdale, New York, on December 8, 2021. The plaintiffs filed the lawsuit in New York state court on November 28, 2022, claiming the incident was caused by the defendants' negligence. The case was removed to federal court on January 22, 2024, based on diversity jurisdiction. The plaintiffs failed to respond to multiple discovery demands and court orders. The plaintiffs' attorneys withdrew from the case on May 3, 2024. The court issued several orders directing the plaintiffs to inform whether they would proceed pro se or retain new counsel, with warnings that failure to respond could result in dismissal. The plaintiffs did not respond to any of these orders. The court dismissed the case without prejudice for failure to prosecute reasoning that the case had been stalled for nearly nine months resulting in prejudice to the defendants. The court deemed dismissal without prejudice as an appropriate lesser sanction, given the plaintiffs' pro se status.

Homeowner Liability, Recreational Accidents, and Discovery Angles
By: Marc A. Schulz mas@hurwitzfine.com

Hello Subscribers,

This month’s edition brings us a case that involves withholding “confidential business” documents and a privilege log. Where a person or entity is required pursuant to a notice, subpoena or order to produce documents and some or all the documents are being withheld by a responding party, then notice must be given by the responding party, pursuant to CPLR 3122(b) to the party seeking the production of the documents that one or more such documents are being withheld. This notice must indicate the legal grounds for withholding each such document (e.g., attorney-client, attorney work product or trial preparation privilege) and must provide the following information as to each such document, unless the party withholding the document states that divulgence of such information would cause disclosure of the allegedly privileged information: (1) the type of document; (2) the general subject matter of the document; (3) the date of the document; and (4) such other information as is sufficient to identify the document for a subpoena duces tecum.

The burden of establishing any right to protection under an evidentiary privilege is on the party asserting it; the protection claim must be narrowly construed, and its application must be consistent with the purposes underlying immunity. The proponent claiming privilege must establish that the communication was confidential and that the privilege was not waived. The burden cannot be satisfied by counsel’s conclusory assertions of privilege; instead, competent evidence establishing the privilege must be set forth. A party’s response to a discovery demand that the documents requested are either confidential or irrelevant satisfies his or her obligation to set forth the reasons justifying withholding. However, a court is not required to accept a party’s characterization of material as privileged or confidential.

Because determining whether a particular document is protected by a privilege is largely a fact-specific process, most trial courts often require an in-camera review of the contested records. Please reach out if you’ve withheld documents or encountered objections to your privilege assertion and/or privilege log(s) and share your experience.

Until next issue, Merry Christmas, Happy New Year and go BILLS!

Marc

12/24/24 Davis v Conklin
Appellate Division, Second Department
Trial court should have vacated the waiver of plaintiff’s lost earnings claim and permitted plaintiff to reassert his lost earnings claim.

The trial court denied plaintiff’s motion to vacate prior orders of the same court stating that he was not pursuing a claim for lost earnings and that he had waived his claim for lost earnings. The Second Department reversed the trial court’s decision and held that the trial court should have granted plaintiff’s motion. In support of the motion, plaintiff and his former attorney asserted that plaintiff always intended to pursue the lost earnings claim. The Court also found that defendants failed to demonstrate that they would be prejudiced by the reassertion of that claim as defendants’ attorney was made aware of plaintiff’s intention to reassert his lost earnings claim, and the attorney questioned plaintiff at length about his employment history and alleged inability to work.

Plaintiff additionally provided an authorization for his employment records, and discovery the Court noted that discovery remains ongoing. Under the circumstances of this case, the trial court should have vacated the waiver of the lost earnings claim and permitted plaintiff to reassert his lost earnings claim.

12/24/24 Board of Mgrs. of the Philip House Condominium v 141 E. 88^th St., LLC
Appellate Division, First Department
Defendants failed to set forth a proper showing that all documents not disclosed were properly withheld as privileged and thus plaintiff was entitled to an in-camera review of those records.

The trial court denied plaintiff’s motion to compel defendants to produce outstanding discovery. The First Department reversed the trial court's decision to the extent of compelling production of documents designated as “business confidential” and remanded the case for an in-camera review to address plaintiff’s challenges to defendants’ remaining privilege assertions.

Defendants did not dispute that the documents designated on their privileges logs as “business confidential” were improperly withheld from production. Accordingly, the Court held that defendants must produce any documents withheld under that designation.

As to the documents withheld because of other privileges, the trial court, considering the sheer breadth of plaintiff’s document requests, properly denied plaintiff’s request for a “wholesale rejection” of defendants’ privilege assertions and an immediate and full production of all the withheld documents. Nevertheless, the Court found that plaintiff’s motion to compel raised valid questions about certain designations on defendants’ privilege logs, which listed more than 19,000 documents over 938 pages on entries, and defendants failed to oppose plaintiff’s motion with additional details sufficient to explain the basis for their privilege assertions. Therefore, the Court held that defendant has not made a proper showing that all the documents were properly withheld as privileged, and plaintiff is entitled to an in-camera review of those documents so that the trial court can address its challenges to the privilege assertions.

Are You Fall Real? Slip and Fall/Snow and Ice/Storm in Progress/Espinal
By: Ashley M. Cuneo amc@hurwitzfine.com

Hi Readers,

With the New Year approaching, I want to wish everyone a happy and safe New Year's Eve/Day; please be safe and smart on New Year's Eve.

2024 was a whirlwind of emotions for me, including purchasing my first home and getting a new puppy, who is certainly giving me a run for my money. Despite an eventful 2024, I already have a list a mile long of things I want to accomplish in 2025 and cannot wait to start checking them off! What is everyone’s top goal/resolution?

December 4, 2024 Martin v PCVST-DIL LLC
New York County, NY
Gaps in plaintiff’s case is insufficient to succeed on a motion for summary judgment

On December 18, 2014, plaintiff returned home from a holiday party. Plaintiff lived on the second floor, but accidently pressed the third floor button on the elevator. Once he reached the third floor, he proceeded to the stairwell to walk down one flight of stairs. He observed debris in the stairwell, due to construction that was being performed. Plaintiff stepped over the debris but stepped onto “some type of moisture” causing him to fall. The security guard responded to the third-floor after a report of an unconscious male. After inspecting the subject stairwell, the guard noted that there was no debris or moisture on the steps. Defendant moved for summary judgment.

Honorable Justice Goetz of the Supreme Court, County of New York held that although plaintiff’s inability to identify the cause of the fall is fatal to the case, defendant cannot point out gaps in the plaintiff’s case and must submit evidence concerning when the subject are was last cleaned and inspected prior to the accident to establish its burden of entitlement to summary judgment. Defendant failed to produce such evidence; thus, their motion was denied.

Read Past Editions of Products Liability Pointers

Hurwitz Fine P.C.

Buffalo
The Liberty Building, 424 Main Street, Suite 1300, Buffalo, NY 14202
Phone: 716-849-8900, Fax: 716-855-0874

Long Island
575 Broad Hollow Rd., Melville, NY 11747
Phone: 631-465-0700, Fax: 631-465-0313

Albany
518-641-0398

Additional Offices
Albion | Amherst | Connecticut | Niagara Falls | Rochester

Hurwitz Fine P.C. is a corporate and defense litigation law firm providing
legal services throughout the State of New York and Connecticut.

www.hurwitzfine.com
© 2024, Hurwitz Fine P.C. All Rights Reserved
In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

Product Liability Pointers Special Edition: NY Governor Vetoes Grieving Families Act for Third Time

Mon, 23 Dec 2024 19:05:56 +0000

Special Edition: NY Governor Vetoes Grieving Families Act for Third Time

Monday, December 23, 2024
A Monthly Electronic Newsletter

About Hurwitz Fine P.C. | Our Practice Areas | Products Liability Team | Contact Us

As a public service, Hurwitz Fine P.C. is pleased to present this e-newsletter providing summaries of and access to the latest products liability decisions from the New York State and Federal courts. The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers. In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

NOTE FROM THE EDITOR:

NY Governor Vetoes Grieving Families Act for Third Time

Proposed the statute of limitations to be three years from the date of the decedent’s death (current statute of limitations is two years, and prior version proposed expansion to three and a half years);
More narrowly defined “surviving close family members” who can potentially recover; and
Reduced the proposed retroactivity to causes of action that accrue on or after January 1, 2021 instead of July 1, 2018.

V. Christopher Potenza ■ Member
Hurwitz Fine P.C.
The Liberty Building
424 Main Street, Suite 1300 ■ Buffalo, NY 14202
tel (716) 849-8900 ■ cell (716) 523-8941 ■ fax (716) 855-0874
Email: vcp@hurwitzfine.com
HF Website: http://www.hurwitzfine.com

Forward

NEWSLETTER EDITORS
V. Christopher Potenza
vcp@hurwitzfine.com

WHAT PRODUCTS LIABILITY POINTERS COVERS

Hurwitz Fine P.C.

Buffalo
The Liberty Building, 424 Main Street, Suite 1300, Buffalo, NY 14202
Phone: 716-849-8900, Fax: 716-855-0874

Long Island
575 Broad Hollow Rd., Melville, NY 11747
Phone: 631-465-0700, Fax: 631-465-0313

Albany
518-641-0398

Additional Offices
Albion | Amherst | Connecticut | Niagara Falls | Rochester | Utica

Hurwitz Fine P.C. is a corporate and defense litigation law firm providing
legal services throughout the State of New York and Connecticut.

www.hurwitzfine.com
© 2024, Hurwitz Fine P.C. All Rights Reserved

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

Labor Law Pointers Special Holiday 2024 Edition: 'Twas the Night Before Construction'

Mon, 23 Dec 2024 15:09:01 +0000

Note from David R. Adams:

It’s that time of year again, where we send out our Holiday special edition. We, as usual, would first like to thank our many readers. This newsletter started when I would take every Labor Law case from each department and the Court of Appeals, summarize, and analyze it for my own use, keeping a running digest of these opinions. I sent the results of some cases to various clients, just to share the information and several wanted me to provide them as I created them. This became disorganized so I decided to just send the entire grouping at the end of each month. Those emails to a few friends then became a newsletter on November 2, 2011, when we started by a thorough review of the Wilinski v 334 East 92^nd Housing Development case from the Court of Appeals. The rest, as they say, is history. We have, over the years, had many contributors to Labor Law Pointers, and their work is greatly appreciated.

This year, I have had the privilege of announcing that Marc Schulz, a long time contributor and member of the Labor Law Team here at Hurwitz Fine is now the co-chair of the team, a well deserved designation. He was the first associate assigned to my team, and it was really just the two of us for the first few years. Our team now stretches across the state, with Myself, Marc Schulz, Eric Andrew and Tyler Eckert here in Buffalo; Tim Welch in Rochester; and Brian Mark, Joseph Mendoza, Patrice Melville, and Ashley Cuneo in our NYC Metro office; we cover the state with experienced Labor Law attorneys.

So, with that, we all wish you a Happy Holiday and our annual offering of “A Visit to the Construction Site” or “Twas the Night before Construction”. I hope you enjoy reading it as much as I enjoyed writing it.

Happy Holidays and best wishes to all for a healthy and happy New Year.

David

David R. Adams
Hurwitz Fine P.C.
The Liberty Building
424 Main Street, Suite 1300
Buffalo, New York 14202
Phone: 716.849.8900
Direct: 716.849.8916
Fax: 716.855.0874
Cell: 716.553.6901
Email: dra@hurwitzfine.com
HF Website: www.hurwitzfine.com

A Visit to the Construction Site
or
‘Twas the Night Before Construction

By David Adams

(with apologies to Clement Clark Moore)

‘Twas the night before Christmas and down at the site,
Not a tradesmen there was working, no one hanging a light;
The impalement protection hung by the shaft with great care,
Just in case an OSHA inspector decided to look over there.

The power tools were locked in the biggest gang box,
While the neighborhood kids pummeled windows with rocks;
The guard in his uniform and I in hard hat,
Had just opened a bottle from an old dusty vat;

When up on the third floor there arose such a sound,
That I flew up the ladder without touching the ground.
Away to the scaffold I ran looking spastic,
Jumped into the abatement area, and tore open the plastic.
The security light, on the beams of the just ‘rected structure,
Gave a look of great progress to this new joint venture,

When what through my tempered safety glasses did appear,
But a tipped over ladder and some broken veneer,
With a little old worker, looking injured and stiff,
I knew right away that he’d become a plaintiff.

More rapid than vultures the attorneys they came,
And they pushed and they shoved and called out his name,
“No I saw him first”, and “Who tipped that ladder”,
“Oh please just stand back, I will handle this matter!”

I filed pre-suit discovery on my way over here,
Said the one from the billboard, two phones to his ear.

As squirrels before racing trucks would flee,
When faced with an accident they giggled with glee.
So up to the scaffold the attorneys they flew,
With cards, blank retainers, and golden pens too.

And then in a twinkling I saw on the floor,
A harness, a lanyard, right there by the door.
As I stepped over closer and was looking around,
Plaintiff, he donned it, with a distinct clicking sound.

It was yellow and black with a sliding back ring,
And to keep you from falling, it was just the right thing;
So there, on the worksite, a safety device,
Appropriate and available, now isn’t that nice!

His leg how he held it, his arm it looked bad,
But the issue to my mind, what instruction he’d had.
Was he told to tie off, was he told not to climb,
Was he told to have the ladder be held every time?

He had a pleasant face with a small little slice,
It bled as he rubbed it, which he seemed to find nice.

He was looking around, from lawyer to lawyer,
Asking each one “Can I sue my employer?”
With a wink and a nod, the attorney he said,
There are ways and I know them, you have nothing to dread.

We have us that statute, it’ll make you quite wealthy,
It will fill up your bank book and make you feel healthy.
We lawyers of course live just on a third,
Taking anything else, would be quite absurd.

He spoke not a word but started his notes,
With theories of gravity and dreams of new boats,
The ladder has shifted, of that he was sure,
It gave him 240, without a detour.

Plaintiff sprang to his feet and grabbing a pen,
He signed the retainer from the nice billboard men.
And I heard him exclaim “Hey I fell from a height”,
Happy Christmas to all and to all a good night.

Hurwitz Fine P.C.

Buffalo
The Liberty Building, 424 Main Street, Suite 1300, Buffalo, NY 14202
Phone: 716-849-8900, Fax: 716-855-0874

Long Island
575 Broadhollow Road, Melville, NY 11747
Phone: 631-465-0700, Fax: 631-465-0313

Albany
Phone: 518-641-0398

Additional Offices
Albion | Amherst | Hartford, CT | Niagara Falls | Rochester | New Jersey

Hurwitz Fine P.C. is a full-service law firm providing legal services
throughout the State of New York

www.hurwitzfine.com
© 2024, Hurwitz Fine P.C. All Rights Reserved

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

Coverage Pointers - Volume XXVI No. 14

Fri, 20 Dec 2024 14:15:18 +0000

Volume XXVI, No. 14 (No. 687)
Friday, December 20, 2024
A Biweekly Electronic Newsletter

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at ddk@hurwitzfine.com or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.

Merry Christmas, Happy New Year. All good things for you and yours in the coming year. Health and happiness!

Writing an Effective NY Coverage Letter Program

Thanks to the many hundreds of attendees at our Writing an Effective NY Coverage Letter program on Friday the 13^th. The reviews have been outstanding. For those who want PowerPoint or access to the recording, let me know.

Thanks to my friends in Richmond, VA for a warm welcome last week. It was nice being with you.

The Annual Bad Faith Count

26 years, six months and 10 days (or 9690 days) since the last time a NY appellate court upheld a bad faith verdict against an insurer, first or third party.

The last time an appellate court in the State of New York held an insurer liable for bad faith, in any kind of insurance case, was Jun3 11, 1998. Each year we watch and count.

St. Nick’s Christmas Poem

For the past several years, in the issue just before Christmas, we include an insurance/Christmas poem I penned many years ago, with colleague elves. This year, I asked Perplexity AI to write one for you, and this is its offering:

'Twas the night before Christmas, all snug in his sleigh,
Santa checked his policies, ensuring they're okay.
For a jolly old elf with a world to explore,
He knew that insurance was something to adore.

His homeowner's coverage protected the North Pole,
Against blizzards and storms that might take their toll.
The workshop was covered for fire and theft,
Ensuring the toys would be safe if he left.

Liability insurance, he had quite a lot,
In case he should land on a roof that's too hot.
Or if Rudolph's red nose should cause someone fright,
Santa wouldn't be sued on that magical night.

Health insurance for elves was part of the plan,
To keep them all working as hard as they can.
Dental coverage too, for those sweet-toothed sprites,
Who nibble on cookies on long winter nights.

His sleigh was insured, comprehensive and collision,
In case of a crash or a faulty decision.
The reindeer had coverage, from antlers to hooves,
To fly them through chimneys and over the rooves.

Business interruption, a wise Santa knows,
Protects Christmas spirit if workshop doors close.
Cyber insurance guards his naughty-nice list,
From hackers who'd love to give that data a twist.

Workers' comp for the elves who might slip on the ice,
Or strain from toy-making (it's not always nice).
Product liability for all of those toys,
That might malfunction for good girls and boys.

Travel insurance for globe-trotting flight,
In case he's delayed on that one special night.
And life insurance, though immortal he seems,
To care for Mrs. Claus and all of her dreams.

So as Santa took flight on that Christmas Eve,
He felt quite secure, with no cause to grieve.
For whatever might happen on land, sea, or sky,
His coverage was thorough, no need to ask why.

With a wink and a nod, he rose out of sight,
"Merry Christmas to all, and to all a good night!"
His laughter rang out as he flew with good cheer,
Fully insured for another great year.

The Case Count: A Look Back at CP’s 2024 Activity:

We love producing this newsletter for our thousands of subscribers. It is the product of the dedication of our column editors and our biggest supporters, Donna Boice and Sarah McCandless. To publish this newsletter, we read and digest every New York and Connecticut appellate decision, opinions from the high courts and federal circuits throughout the country, and, with the help of Heather Sanderson, the courts in Canada as well. We try to digest and foresee trends and advise you, in advance, of what we see developing in the field.

We so appreciate your feedback when we receive it, knowing that our publication has a positive impact on your company or in your practice. In the last issue of each calendar year, we pause to look back on the previous 12 months’ activities. We were pleased to provide over 400 reviews and commentaries this year, and again, we want to thank our HF CP team for all they do for you. That’s 39 more reviews than last year.

This year I had 59 summaries, as compared to last year’s 61. An easy year for me. Special thanks to Lexi Horton for her help this year with the count:

Kohane’s Coverage Corner 59

Storm’s SIU 48

Peiper on Property (and Potpourri) 42

Lee’s Connecticut Chronicles 42

Ruffner’s Road Review 36

Barnas on Bad Faith 33

O’Shea Rides the Circuits 26

North of the Border 26

Louttit’s Legislative and Regulatory Roundup 26

Gestwick’s Garden State Gazette 25

Fleming’s Finest 25

LaBarbera’s Lower Court Library 25

Ryan’s Federal Reporter 24

Rob Reaches the Threshold 22

Lexi’s Legislative Lowdown 11

Goldberg’s Golden Nuggets 1

Total 471

Coverage Mediator

Give Me a Call – 716-849-8942

Coverage mediation is a thing! Subject matter expertise may be useful. What are the benefits of coverage mediation?

Time and Cost Efficiency

Mediation is generally much faster and more cost-effective than traditional litigation:
The process can typically be completed within weeks, compared to months or years for court cases.

It avoids expensive court fees, attorney costs, and other litigation-related expenses.

Control and Flexibility

Parties have more control over the outcome in mediation.
They can actively participate in crafting solutions tailored to their specific needs and circumstances.
There is flexibility to explore creative resolutions that may not be available through court proceedings.

Confidentiality

Mediation proceedings are typically confidential, which offer several benefits:
- Parties can discuss sensitive matters openly without fear of public disclosure.
- It avoids the publicity and public record associated with lawsuits and trials.

Relationship Preservation

The less adversarial nature of mediation can help maintain or improve relationships between parties.
It fosters open communication and collaboration.
This can be especially valuable in disputes involving ongoing business relationships.

Risk Mitigation

Mediation helps alleviate some of the risks associated with litigation.
It avoids precedent that may provide unfortunate results for parties – or for the industry – in the future.
It offers a compromise-based approach, reducing the "all-or-nothing" risk of a court decision.
Even if unsuccessful, the process can provide valuable insights into the strengths and weaknesses of each party's position.

Empowerment and Communication

Mediation empowers parties in ways that litigation often doesn't.
Clients have a more active role in the process and outcome.
It provides a forum for parties to tell their stories and feel heard.

While mediation isn't suitable for every situation, these advantages make it an attractive option for resolving many insurance coverage disputes efficiently and effectively.

Newsletters:

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at jeb@hurwitzfine.com to be added to the mailing list.
Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at dra@hurwitzfine.com to subscribe.
Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact V. Christopher Potenza at vcp@hurwitzfine.com to subscribe.
Medical & Nursing Home Liability Pointers: Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at emm@hurwitzfine.com to subscribe.

Flying Bikes – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
20 Dec 1924

A CHANCE

We used to think the bicycle that ran around on the ground, if propelled, was a wonder. Now we have word from Berlin that an inventor is perfecting an aerial bicycle. He hopes to “stock the world with the flying bike.”

The account does not say so, but presumably any child can use it. “The propeller of the plane is said to be operated with less effort than walking and to be as efficient as if inspired by an engine.”

Soon, perhaps, we shall be buying the aerial bicycle for Christmas to enable son and daughter to go out and catch snowbirds.

Peiper on Property (and Potpourri):

Happy Holidays to all!

Steve
Steven E. Peiper
sep@hurwitzfine.com

If Not There, Then Where? – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
20 Dec 1924

SALOONKEEPER FINED
FOR HARBORING DRUNKS

A fine of $25 was imposed yesterday by Judge Standard upon Valentine Horvath of No. 385 South Park avenue, charged with harboring drunks in his soft drink resort. Captain Thierfeldt and Detective Joseph Fitzgerald took three drunks from the place on Monday night. Each was fined $10 the following morning.

A certified copy of the conviction will be sent to the city clerk’s office and to Mayor Schwab with a view to revoking the man’s soft drink license.

Lee’s Connecticut Chronicles:

Dear Nutmeggers,

I am spending yet another week living out of a suitcase. But this time the destination was merely around the corner. Our renovation project reached the flooring stage. So, with the main level floors being replaced, sanded, stained, and coated with polyurethane there was no room in the house for man or beast. So, my wife, two of our kids, and the dog are taking a luxury vacation to our local Hilton Home 2 Suites, a brand-new hotel with all the comforts of home. Mocha, our dog, is the hit of the staff, as she explores all the nooks and crannies of the hotel. We’re hoping to be back home by the time you read this, but all our furniture has to remain in the garage for another week regardless, to protect the new floors. We keep reminding ourselves that this will all have been worth it….

This week we have an interesting case that limits the effect of the Soto decision (the case involving the Sandy Hook families against Remmington) to advertising, leaving undisturbed the long-standing rule that injured plaintiffs have no standing to bring claims against a defendant’s insurer. Oh, and we added a good risk transfer case just to remind you of the basics.

Until the next edition, keep keeping safe and Happy Holidays.

Lee
Lee S. Siegel
lss@hurwitzfine.com

The St, Lawrence Seaway Didn’t Open Until 1959 under President Eisenhower – 100 Years Ago:

The Buffalo News
Buffalo, New York
20 Dec 1924

A CHALLENGE TO THE STATE

The President appears to be firmly convinced that the Saint Lawrence seaway plan is commercially feasible. This is indicated in his communication to Speaker Gillett urging a congressional appropriation of $275,000 to complete the survey for the enterprise and to prepare estimates on the work.

It is not necessary to dwell on the fact that the proponents of the seaway project have for the two years represented that the plans as prepared by the engineers of the International Joint commission were complete and that the commission’s estimate of $252,000,000 stood as the final cost of the work. It appears now that these plans were merely preliminary and that the estimate was no more than a rough guess. At least it is something gained that we are done with this fiction of figures.

A significant thing in the President’s communication is that he talks in terms of the saving in cost.

Ruffner’s Road Review:

Dear Readers,

I have just one auto/no-fault case this week. After the plaintiff was injured while operating a tractor trailer in the course of his employment, he sought no-fault coverage from the insurer of the vehicle’s leasing company because his employer did not possess Workers’ Compensation coverage. However, the court granted the insurer’s motion for Summary Judgment dismissing the challenge to insurer’s denial. Even though the employer did not have Workers’ Compensation coverage, the plaintiff may have received payment from another source such as the Uninsured Employers’ Fund. Therefore, the plaintiff was required to seek Workers' Compensation benefits as the primary source of payment for his basic economic loss, and only thereafter could he seek payment of no-fault benefits.

I hope everyone has a great Christmas and New Year!

Go Bills,

Kyle
Kyle A. Ruffner
kar@hurwitzfine.com

It’ll Never Be Popular – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
20 Dec 1924

WILL TRY IT.

Out in California they are planning to start a professional basketball league. The indoor game has gained quite a hold on the Pacific coast. Now it is proposed to commercialize the sport out there. It is to be hoped that the move gets better popular support than professional basketball does up this way.

Ryan’s Federal Reporter:

Hello Loyal Subscribers:

Attended my youngest son’s holiday concert earlier this morning, Carols and Cocoa. The magic of song and dance is strong with that one and I would not have it any other way. Here’s to hoping I had enough of that magic to rub off on me to make it to New Years!

This edition, I have a quick summary of a SDNY case involving a motion to compel arbitration. When confronting an arbitration clause, it is important that you pay close attention to whose interests you are attempting to enforce.

Until next time,

Ryan
Ryan P. Maxwell
rpm@hurwitzfine.com

Intoxicated Fish– 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
20 Dec 1924

Whiskey Destroyed

George Yox and H.C. Bradford, deputy federal marshals, poured 100 cases of whiskey down the sewer in the presence of Milton C. Strebel, assistant federal attorney. The liquor was seized in Youngstown about a year ago and was ordered destroyed by Judge John R. Hazel.

Storm’s SIU:

Hi Team:

Merry Christmas and Happy Hanukkah!!!

Four interesting decisions in this edition:

Question of Fact Whether Insured Fabricated Repair Invoices Breaching Concealment or Fraud Condition in Light of Conflicting Testimony Creating a Credibility Issue for Determination by the Jury.
First-Party Property Claim Denial Upheld Due to the Insureds’ Failure to Submit Proof of Loss Form. Submission to an EUO did not Satisfy the POL Condition. Claims for Breach of the Implied Covenant of Good Faith and Fair Dealing, and Violation of New York's General Business Law Also Dismissed.
Insurer Did Not Meet its Burden to Show that it Prepared Redacted Portions of the Claim Notes in Anticipation of Litigation Rather Than in the Ordinary Course of Business. Therefore, the Work Product Doctrine Did Not Apply.
Declaratory Judgment Granted to Liability Insurer as the Property Did Not Constitute a “Residence Premises”. Sworn Deposition Testimony Trumps a Later Inconsistent Affidavit. The Insured Signed the Application and One Who Signs a Document is Presumed to Have Read and Understood its Contents Despite an Alleged Language Barrier.

I hope you have wonderful Holidays with your family and friends filled with many happy memories!

We will talk again in two weeks. Let’s Go Buffalo!

Scott
Scott D. Storm
sds@hurwitzfine.com

[INSERT HEADLINE HERE] – 100 Years Ago:

The Buffalo News
Buffalo, New York
20 Dec 1924

On Broadway 3 Years,
She Never Drank, Smoked

NEW YORK, Dec. 20. – Ula Sharon, 18-year-old musical comedy dancer, whose real name is Ula S. Robinson and who came from Kansas City to be a Broadway star, is to marry Carl Randall, her dancing partner.

In revealing the engagement today, Mrs. J. R. Robertson said her daughter, although on Broadway for three years, had never smoked a cigarette or drunk a drop of liquor.

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

The dog is overjoyed that the weather is finally getting cold and snowy. There is nothing he enjoys more than frolicking in the snow. Little does he know that we have a grand day out planned this weekend to his favorite state park (complete with snacks).

This week’s case from the Ohio Supreme Court considers whether the insurers of a paint company that marketed and sold lead paint are obligated to indemnify the paint company for payments made into an abatement fund to mitigate the hazards of lead paint. Long story short, the payments into the abatement fund are to provide prospective relief as opposed to compensation for past harm, so they do not constitute damages.

Happy Holidays!

Kate
Katherine A. Fleming
kaf@hurwitzfine.com

Where’s Santa? – 100 Years Ago:

Daily News
New York, New York
20 Dec 1924

KIDNAP HUNT ENDS
AS BOY, OUT TO FIND
SANTA, COMES BACK

Well, they did everything but turn out the national guard to find Nick DeMarinis – and then they didn’t find him.

He disappeared from his home at 328 East 11^th St., just after breakfast.

Nick is only 4; and his mother, Mrs. Rina Demarinis, knew he couldn’t go far away, and believed he must be kidnapped.

She screamed, and everybody on the east side began looking for him.

And then Nick came home. He’d been looking for Santa Claus all day and hadn’t found him. And his mother scolded him in two languages and said he was naughty. But you needn’t think she wasn’t glad to see him because of that.

Gestwick’s Garden State Gazette:

It’s been an eventful two weeks, with Holiday preparations and wedding planning. I have to keep this note short so I can run out with my fiancé to look at a possible wedding venue. This week, I have a case that discusses the difference between a worker’s compensation policy and an employer’s liability policy, and the circumstances in which neither may respond to a claim.

Happy Holidays to all!

Evan
Evan D. Gestwick
edg@hurwitzfine.com

How Much is Life Worth? – 100 Years Ago:

The Kentucky Post
Covington, Kentucky
20 Dec 1924

$3500 IN DEATH
IS ‘PITTANCE’

Marx So Decides, Refusing New Trial to Defendant.

WIDOW WINS JUDGEMENT

Judge Says He’d Have Given $10,000 in Case

“A verdict of $3500 in the death of a man 30 years old, whose expectancy of life is 30 more years, is a great outrage.”

This Statement was made by Judge Robert S. Marx in Superior Court Saturday when he overruled a motion of Attorney Charle E. Dornette for a new trial.

Dornette represented Clem. J. Meyer, chauffeur. Camp Denison, O., whose auto killed Harvey Anderson, 30, of 5008 Cushman St., Jan. 17, on Madison Rd. near the observatory.

Verdict is Pittance

“If the defendant is guilty of negligence in Killing Anderson the verdict is a mere pittance to the widow for the loss of her husband, father of four children,” Judge Marx said.

“After various costs and fees are paid the widow will have left about $1500, invested at 6 per cent, will give only $90 a year in place of a possibly $1000 earning of her husband.”

“The jury might have compromised the case. It is not right for a jury to decide cases that way. There was ample evidence, as I view it, to find for the plaintiff. It was shown that Meyers drove his auto 15 to 20 miles an hour for more than 50 feet, admitting he was blinded by headlights of another machine.

For Higher Judgement

“Had I decided the case I would have given at least a $10,000 verdict or found the defendant not guilty and given nothing.”

O’Shea Rides the Circuits:

Hey Readers,

After a break from last edition, I write this week regarding the invalidation of an assignment of an auto policy under Kansas law. By agreeing to comply with a nonclaim statute, the assignee terminated her standing to pursue a multi-million-dollar judgment against the auto insurer.

As the holidays come into full effect, I freshly laundered the Griswold jersey for Christmas Day. Some may dispute the following claim, but it is an objective fact, Christmas Vacation is the greatest holiday movie.

While it may not have the dancing or singing as other favorites nor elaborate traps set by a child, it does have the most relatable element of all. The coming together of family at this time of year, along with their specific idiosyncrasies.

Until Next Time

Ryan
Ryan P. O’Shea
rpo@hurwitzfine.com

Tears for Conviction – 100 Years Ago:

The Akron Beacon Journal
Akron, Ohio
20 Dec 1924

WOMEN JURORS WEEP

Break Down As Verdict Is Announced To Court
By Foreman Of Venire In Case

William Schuck, 530 Gridley Ave., indicted on a charge of murder in the first degree for the death of Alex Harkins, June 30, is guilty of manslaughter.

A jury of eight men and four women deliberated for nearly three hours Friday night and reported the verdict shortly after 9 o’clock to presiding Judge E. H. Boylan.

Attorney Floyd A. Roes, chief counsel for Schuck, had the jury polled. As the question, “Is this your verdict?” was asked of each juror the replay was, “It is.”

Believed In Acquittal

The defense had asked for an acquittal.

Assistant County Prosecutor Walter B. Wanamaker who conducted the case for the state, was satisfied with a conviction for manslaughter.

The court remanded Schuck back to jail to await sentence. It will probably be imposed Monday unless the defense files a motion for a new trial.

The penalty for manslaughter is imprisonment in the state penitentiary for not less than one or more than 20 years.

There was no scene when the verdict was announced, save for the weeping of Mrs. Minnie Musser, 2713 Kenmore Blvd., and Mrs. Elizabeth Ries, 74 S. Portage Path, two members of the jury. They had given way to tears during the summing up by the lawyers in the afternoon and were crying when the jury filed into the courtroom with the verdict.

Editor’s Note: This was a neighbor v. neighbor dispute that turned deadly. He was sentenced to 10-20 years in state prison.

Rob Reaches the Threshold:

Dear Readers,

As 2024 winds down, I find myself reflecting upon the year from a personal standpoint. I got married, moved into our first home, developed new relationships, gained evolving knowledge in new areas of law in my career, went to Augusta to see the Masters, witnessed another (heartbreaking) Yankees World Series run, and so much more. I hope you all have had a wonderful year to look back and reflect upon as well, and I want to extend my warmest wishes to you all for the upcoming Holidays.

For an early Christmas gift, the Court of Appeals issued a decision that analyzes a question which splits jurisdictions in the state – specifically whether prejudgment interest should begin to accrue as of a finding of "liability" or upon a subsequent finding that a plaintiff sustained "serious injury" as defined by Insurance Law Section 5102(d). Unfortunately, the majority for the Court of Appeals punted for the time being, but a scathing dissent by the thin minority provides a powerful insight into how the Court may approach this issue in the future. Hope you all enjoy the read.

Merry Christmas and Happy Holidays,

Rob
Robert J. Caggiano
rjc@hurwitzfine.com

Fake Padre – 100 Years Ago:

The Akron Beacon Journal
Akron, Ohio
20 Dec 1924

“Ex-Priest” Admits He
Never Was Ordained

DAYTON, Dec. 20. – Rev. William C. Tanner, self-claimed “ex-priest,” has been sentenced to one year at the Dayton work farm on conviction of a charge of contributing to the delinquency of a minor child. Three 15-year-old boys accused Tanner of enticing them to his hotel room. Tanner admitted at the trial that he never had been ordained a Roman Catholic priest. He has been delivering anti-Catholic lectures throughout Ohio. It developed at the trial that Tanner’s advance agent served in a like capacity for Helen Jackson, self-claimed “ex-nun” lecturer.

LaBarbera’s Lower Court Library:

Dear Readers:

It is my first time hosting for the holidays this year. I am getting both antsy and excited for the guests to start arriving. It will be a dash to finish preparation before Saturday, but I am truly looking forward to it all. I am most excited to put together stockings, filled with trinkets and treats. Especially the stockings for the dogs. Hoping everybody has a happy and safe holiday season. It’s hard to believe we are entering into the New Year so soon…

This week I am reporting on a New York County decision denying an insurer’s motion to dismiss. After a disclaimer of coverage was issued in a first-party claim, the insured filed suit against its carrier. The insurer filed a motion to dismiss, stating that the policy terms establish a defense to the breach of contract and implied covenant of good faith claims, as a matter of law. However, the court denied the motion and stated that the insured had submitted evidence sufficient to establish that there was, at least, a question regarding whether the property was “vacant or unoccupied” at the time of the fire, sufficient to defeat a motion to dismiss.

See you in 2025!

Isabelle
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Poisoned Mind, Poisoned Wife – 100 Years Ago:

Daily News
New York, New York
20 Dec 1924

DAUGHTER CALLS
HIGHT VICTIM OF
DISORDERED MIND

Mt. Vernon, Ill., Dec. 19. – Hildred Hight, sweet faced 17-year-old daughter of Lawrence M. Hight, former Methodists minister, here today in took the stand the insanity defense of her father who is said to have killed her mother with poison.

She gave testimony to which alienists will base their conclusions that the former clergyman is suffering from a disorder of the mind described as a sort of presenile dementia.

The girl said her father had a great penchant for exaggeration, that he argued whether he was right or wrong: that he sometimes didn’t appear to know what he was doing; that he has queer hallucinations.

“Father,” she said, “had the flue when we lived down at Thebes, Ill., four years ago. He has always had terrible headaches since then and always carried aspirin around with him. After he got well from the flu he cried out and grabbed his head one day. He has been doing that since very often.”

Two boyhood friends of the preacher testified how he had fallen on his head a number of times during his school days.

The defense of Mrs. Elsie Sweetin, who is on trial with Hight for the poisoning of her husband, Wilford, closed late yesterday.

Lexi’s Legislative Lowdown:

Dear Readers,

I hope everyone is enjoying the holiday season. I am looking forward to getting to see much of my extended family in the next couple of weeks. Luckily my grandma is hosting this time, so I am off the hook!

This week’s column addresses the new Workers’ Compensation legislation signed by Governor Kathy Hochul on December 6, 2024. It will allow for Workers' Compensation claims for mental injuries that are premised upon extraordinary work-related stress.

Thanks for reading,

Lexi
Lexi R. Horton
lrh@hurwitzfine.com

Two Wives are Better than … – 100 Years Ago:

Brooklyn Eagle
Brooklyn, New York
20 Dec 1924

CONVICTED OF BIGAMY.
SENTENCE IS SUSPENDED

Mineola, L. I., Dec. 20 – Charged with bigamy, Martin Thorn of Hempstead, a chauffeur employed by Dr. Roy D. Grimmer, was arraigned before Supreme Court Justice James C. Van Siclen yesterday and was given a year in jail. Sentence was suspended, however, pending his good behavior.

Thorn comes from Ireland and when he came to this country he left a wife on the old sod. He evidently forgot that, because he took unto himself another after he came to this country but declares that he never lived with her.

North of the Border:

"... Better Watch Out, Better not Cry, Santa Claus may be delivering a coverage dispute to an insurer near you ..."

Many of our offices will be closed between Christmas and New Year’s. It is a time to slow down and reflect – or catch up!

Experience shows that the holiday season may turn out to be a gift that keeps on giving, as it may generate coverage disputes in the New Year. Not to put a damper on the season's festivities but:

Just because Mom invites you over for the Christmas turkey and stuffing doesn't mean you are member of her household (and therefore an unnamed insured under her homeowners' policy): Sequeira v. Sequeira, 1995 Cani 1222 (BC SC).
In fact, even the decision of your 20-something to come home from school for the Christmas holidays can give rise to a coverage dispute: Personal Insurance Company v. Allstate Insurance Company, 2009 Cani 64827 (ON SC), as to whether the student who was attending school on a scholarship was a dependent of his parents and therefore entitled to accident benefits under their auto policy.
Care must be taken, even while Christmas shopping, as just going to the Mall can generate a coverage dispute: Jakubik v. Liberty Mutual Insurance Company, 2001 ABAC 836 (A claim for a stolen purse, Christmas gifts and the van that housed the purse and gifts was allowed as the insurer was unable to prove firstly that the insured never actually paid for the van from its former owner and secondly that the insured was a party to a plan to strip and damage the van, to ensure recovery of the full value for the van via the insurance proceeds.)
If you do suffer loss or injury over the Christmas break, give notice without delay, because the festive holidays won't excuse a failure to give timely notice under a claims-made policy: Stuart v. Hutchins et al.; American Home Assurance Company et al., third parties, 1998 Cani 7163 (ON CA).
Even while drinking your eggnog, it is always key to keep priorities in mind. Who will have the duty to defend when the company Christmas Party held at the Boss’ home gets out of hand? The homeowner's insurer of the residence where it happened or the GL insurer of the business who paid for the party? In keeping with the belief that it is better to give than to receive, the answer is probably both! Doucet v State Farm Fire and Casualty Company, 2017 ONSC 1222 (Cani).
While watching your Yule log burn, coverage issues should never be far from your mind. What is the peril of ‘fire’ and when does ‘self-ignition’ occur? A shipment of Christmas tree wreaths was extensively damaged while being transported from Nova Scotia to New England in the trailer in November 1985. When the driver opened the trailer door at the destination, there was a gust of warm air which blew the door open. There was no evidence of actual smoke or fire in the trailer. Many of the wreaths were described as "dead brown" while others were partially affected. The trial judge and the Nova Scotia Court of Appeal both held that heat alone is not fire: Where there is no smoke, charring, or flame there is no fire and therefore no ignition: Duncanson v. Continental Insurance Co. (1990), 96 N.S.R. (2d) 159 (CA).
When is a Christmas tree not a Christmas tree? When it is a riser, splitting the flow of propane from a propane tank farm to outbuildings and living quarters at a work camp: Slocan Forest Products Ltd. v. Trapper Enterprises Ltd. and Daryl H. Zimmerman, 2011 BCCA 351; when it is an assembly of valves, spools, pressure gauges and chokes fitted to the wellhead of a completed well to control production: Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co., 1969 Cani 716 (AB CA).
Even when the holiday passes, the danger of a Christmas coverage dispute is not over. Did the kids receive a snowmobile under the tree (or, at least in the driveway)? No, while Mom and Dad had bought it at Christmas for the kids to use, they retained ownership, compelling their insurer to defend and indemnify against its negligent use and operation by their children: Cleworth v. Zaccaria, 1987 Cani 2686 (BC CA).

Best Wishes and Happy Holidays to all!

Heather
Heather A. Sanderson
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

One of the First Cases Deciding that an Insured Failed to Disprove Prejudice after Notice was Delayed Over Two Years
Either a Party is an Insured, or it is Not. In this Case, it is Not

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Number of Families Misrepresentation Supports Carrier Rescission
Total Loss Does Not Automatically Bar Application of Co-Insurance Type Penalties
Reciprocal Insurer Could Not Avoid Assessments to Statutorily Created Defendant Simply Because it did Not Issue Homeowners Policies

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

Underlying Plaintiff Lacks Standing for CUTPA/CUIPA Claim Against Insurer
Grange’s Technical Defenses to AI Coverage Quashed by Court

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

Plaintiff Was Required to Seek Workers’ Compensation Benefits for Basic Economic Loss Prior to Pursuing his No-Fault Claim

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

Court Grants Carrier’s Motion to Compel Arbitration Of Claim For Additional Insured Coverage

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

Question of Fact Whether Insured Fabricated Repair Invoices Breaching Concealment or Fraud Condition in Light of Conflicting Testimony Creating a Credibility Issue for Determination by the Jury
First-Party Property Claim Denial Upheld Due to the Insureds’ Failure to Submit Proof of Loss Form. Submission to an EUO did not Satisfy the POL Condition. Claims for Breach of the Implied Covenant of Good Faith and Fair Dealing, and Violation of New York's General Business Law Also Dismissed
Insurer Did Not Meet its Burden to Show that it Prepared Redacted Portions of the Claim Notes in Anticipation of Litigation Rather Than in the Ordinary Course of Business. Therefore, the Work Product Doctrine Did Not Apply
Declaratory Judgment Granted to Liability Insurer as the Property Did Not Constitute a “Residence Premises”. Sworn Deposition Testimony Trumps a Later Inconsistent Affidavit. The Insured Signed the Application and One Who Signs a Document is Presumed to Have Read and Understood its Contents Despite an Alleged Language Barrier

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

Insurers of Paint Company That Marketed and Sold Lead Paint Not Obligated to Indemnify Paint Company for Payments Made into Abatement Fund to Mitigate Hazards of Lead Paint

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

Supreme Court Holds Employee’s Injury is Covered Under Neither Worker’s Compensation Policy Nor Employer’s Liability Policy

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

Lack of Consideration Invalidates Assignment of Policy Rights, Thus Barring Standing to Recover Multi-Million Dollar “Judgment”

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

Majority for the Court of Appeals Refuses to Answer the Certified Question of Whether Prejudgment Interest Accrues When There is a Finding of Liability or When There is a Finding of Serious Injury as Defined by Insurance Law § 5102(d) After Determining This Question Was Not Properly Preserved Before the Trial Court

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Motion to Dismiss Denied, as Court Held that Policy Terms did Not Establish Entitlement to Relief under CPLR §3211(a)(1) or (7)

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

Legislation to Allow New Yorkers to Apply for Workers’ Compensation for Extraordinary Work-Related Stress

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Absent Exceptional Circumstances, the Duty of a Liability Insurer to Defend is to be Determined in Proceedings Separate and Apart from the Underlying Action

Merry Christmas and Happy New Year. See you in 2025.

Dan

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut and New Jersey.

NEWSLETTER EDITOR
Dan D. Kohane
ddk@hurwitzfine.com

ASSOCIATE EDITOR
Agnes A. Wilewicz
aaw@hurwitzfine.com

COPY EDITOR
Evan D. Gestwick
edg@hurwitzfine.com

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
ddk@hurwitzfine.com

Steven E. Peiper, Co-Chair
sep@hurwitzfine.com

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Domenica D. Hart

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
sep@hurwitzfine.com

Michael F. Perley

Scott D. Storm

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
ddk@hurwitzfine.com

Ryan P. O’Shea
rpo@hurwitzfine.com

Kyle A. Ruffner
kar@hurwitzfine.com

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com

Topical Index

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Gestwick’s Garden State Gazette

Lexi’s Legislative Lowdown

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

12/12/24 244 Madison Realty Corp. v. Utica First Insurance Company
Appellate Division, First Department
One of the First Cases Deciding that an Insured Failed to Disprove Prejudice after Notice was Delayed Over Two Years

Utica First’s (“UFIC”) commercial general liability policy was issued to nonparty Pirgos Food Corp., which leased space from plaintiffs 244 Madison Realty Corp. and Maxwell-Kates, Inc. and employed the plaintiff in the underlying action. The UFIC policy required an insured to "promptly give notice" to defendant once it became aware of any fact indicating that there might be a claim against it.

The insureds did not give defendant notice of the underlying personal injury claim against 244 Madison Realty Corp. and Maxwell-Kates for nearly two and a half years after the personal injury action was commenced, irrespective of any excusable delay. As a result, plaintiffs had the burden of showing that defendant was not prejudiced by the delay (see Insurance Law § 3420[c][2][A][ii]).

The insureds failed to sustain their burden. The court rejected plaintiffs' argument that defendant's June 2017 letter disclaiming coverage did not explain in sufficient detail how defendant suffered actual prejudice from the delay. Under the facts presented here, where plaintiffs failed to timely give notice of a claim, the burden rests on plaintiffs to show a lack of prejudice, not on defendant to show that the prejudice exists (id.). In any event, defendant did sufficiently show that it was prejudiced by the two-and-a-half-year delay, as the delay prevented defendant from examining site conditions near the time of the incident or interviewing witnesses while their memories were still fresh.

Similarly, the court rejected the argument that the insurer was not prejudiced because it participated in the underlying litigation. UFIC participated in the litigation to address contractual and common-law indemnification and contribution claims, not the tort issues raised in the personal injury action.

We also reject plaintiffs' argument that defendant waived its policy defenses because it did not disclaim with the requisite specificity. Even if the June 2017 disclaimer letter failed to acknowledge that 244 Madison and Maxwell-Kates, Inc. were additional insureds under defendant's policy, the letter correctly and unambiguously disclaimed coverage based on plaintiffs' delay in informing defendant of the claim. As a result, the disclaimer properly barred coverage.

12/10/24 New Sower Christian Church, Inc., v. Wesco Insurance Co.
Appellate Division, First Department
Either a Party is an Insured, or it is Not. In this Case, it is Not

A party that is not named an insured or additional insured on the face of the policy is not entitled to while plaintiff argues that Wesco should be estopped from rescinding the Wesco policy on the basis of reformation, "[a] claim for reformation of a written agreement must be grounded upon either mutual mistake or fraudulently induced unilateral mistake". Based on the undertaking agreement between the parties, defendant Cabrera Realty Corp.'s identification as the sole insured on the Wesco policies after the sale was no mistake, but rather, the parties' conscious choice.

Even where the nature of the risk the insurer intended to cover remains unchanged by the conveyance, courts have found that a third party is not entitled to coverage, unless the insurer, before the loss, consented to the policy's assignment In this case, there was never an agreed-to transfer pursuant to the no-transfer clause of the Wesco policy. The fact that plaintiff has an insurable interest in the premises does not entitle it to coverage under the Wesco policies but rather merely entitled it to procure its own coverage.

Since plaintiff is not the named insured on the subject policy, the arguments made as to rescission, unjust enrichment, and estoppel are unavailing.

Editor’s Note: Attaboy Max.

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Property

12/18/24 Estiverne v. MIC Gen. Ins. Corp.
Appellate Division, Second Department
Number of Families Misrepresentation Supports Carrier Rescission

Plaintiff applied for coverage from MIC. In the application, plaintiff represented the insured dwelling was a two-family property. In fact, it was a three-family dwelling.

The premises were damaged by fire, and the misrepresentation of the number of families was discovered during the subsequent investigation. At which time, MIC issued a complete rescission of the of the policy based upon the materiality of the misrepresentation made in the underwriting process. Here, MIC was able to show materiality because it would not have issued the same policy had an accurate number of families been disclosed.

In affirming the rescission, the Second Department noted that even if the application was submitted without plaintiff’s “actual or apparent authority” she ratified the representation when she accepted the policy written for a two-family dwelling only.

12/12/24 Moshe v. Church Mutual Ins. Co.
Appellate Division, Third Department
Total Loss Does Not Automatically Bar Application of Co-Insurance Type Penalties

Plaintiff was engaged in the construction of a new elementary school, and as part of its duties, secured a $2.7 million builders risk policy with Church. Approximately six months later, plaintiff recognized that it needed to increase the limits of the policy to $3.5 million. To do this, it allegedly requested the increase from its broker, Fairmont.

We are advised that Fairmont allegedly sent an email requesting the expanded policy limit. It is disputed whether Church actually received the request, but it is undisputed that no one from Church ever agreed to raise the limits requested by plaintiff. It is further undisputed that Church both mailed, and emailed, copies of the policy to Fairmont well in advance of the loss, and that the policies unambiguously provided a limit of $2.7 million.

Importantly, the policies contained a “Need for Adequate Insurance” (“NFAI”) clause which operated akin to a co-insurance clause. Specifically, the NFAI provided a mathematical formula through which the adjusted loss was run. The result of that equation, then, set what the insurer was obligated to pay. If the policy limit was less than the total claimed loss, it followed that the NFAI clause would trigger and limit the amount of coverage available.

Plaintiff did not dispute that the NFAI clause existed, nor did he dispute that the NFAI clause was appropriately calculated by Church’s overseeing claims professional. Plaintiff’s argument was that the NFAI clause operated like a co-insurance clause, and like co-insurance it should be inapplicable where, as here, there was a total loss of the insured structure.

Interestingly, the Appellate Division agreed that the NFAI clause worked and operated like a more traditional co-insurance clause. The court, however, rejected the argument that a total loss precluded the application of the clause. The court noted that under a traditional co-insurance clause, a total loss usually mooted the impact of the clause and, as such, it was not applied because doing so would be pointless. Or, as the Third Department described, you would not apply a co-insurance penalty when to do so would still result in a payout calculation that exceeded the applicable policy limit. Here, of course, the NFAI calculation did not result in a loss in excess of the policy, but rather approximately a 25% reduction in the amount of coverage available.

As a final point, the court rejected plaintiff’s arguments that it reasonably relied upon the fact that its request for increased limits was processed by the broker. The court noted that plaintiff was in possession of the policy well in advance of the loss, and thus was on notice of the limits of coverage. This is the case whether plaintiff actually reviewed the policies or not.

Potpourri

12/11/24 New York Schools Ins. Foundation, Inc. v. New York Prop. Ins. Underwriting Association
Appellate Division, Second Department
Reciprocal Insurer Could Not Avoid Assessments to Statutorily Created Defendant Simply Because it did Not Issue Homeowners Policies

Plaintiff operates as a reciprocal insurer under Insurance 5402. Under Section 5402, parties seeking to operate as a reciprocal must be a member of the New York Property Insurance Underwriting Association. This, as detailed in the opinion, required all members to pay assessments to maintain active membership.

Plaintiff argued that it was not compelled to be a member of the Underwriting Association because it did not issue homeowners policies. Its argument is based on the language of the statute which provides “consisting of all insurers authorized to write and engaged in writing within this state, on a direct basis, fire and extended coverage, including insurers covering such perils in homeowners and commercial multiple peril package policies.” The Underwriting Association disagreed with plaintiff’s interpretation and argued that while carriers issuing homeowners policies are included within the scope of the Section, it did not exclude those carriers who did not issue such policies. As such, the counter-claimed for a declaration that plaintiff was a member of the Underwriting Association and that it owed the now past due assessment.

The Appellate Division, Second Department, agreed with the defendant Underwriting Association. It noted that the language of Section 5402 does not exclude anyone, and certainly not carriers who elect not to issue homeowners policies. Indeed, there is nothing in the section which compels members to issue such policies. Accordingly, the defendant’s application was granted, plaintiff was deemed to be a member of the Underwriting Association, and plaintiff was further directed to issue payment for the delayed assessments.

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

12/10/24 Johnson v. Farmers
Superior Court of Connecticut, New Haven
Underlying Plaintiff Lacks Standing for CUTPA/CUIPA Claim Against Insurer

The Superior Court granted Farmer’s motion for summary judgment against Johnson, finding that Johnson lacked standing to sue Farmers. Johnson originally was an underlying plaintiff, suing Farmer’s insured for a 2019 motor vehicle accident. In 2020, Johnson made a $1.25 million offer of judgment that was rejected. In 2022, however, the case settled for $1.25 million.

One would think that this would be the end of the dispute, but not so. Johnson brought this action against Farmers, seeking statutory bad faith damages for the two-year delay in reaching the settlement, chiefly about $150,000 incurred in obtaining a prejudgment remedy and additional attorney’s fees. Johnson argued that Farmers acted in violation of CUTPA/CUIPA by making low ball offers, putting its insureds’ assets at risk, causing plaintiff to take further litigation action, and Farmer’s negotiation tactics represent a trend by it and other insurance companies where they have failed to make fair and reasonable offers during negotiations.

Johnson argued that under the Sandy Hook ruling, in Soto v. Bushmaster, that direct privity was no longer a requirement for standing to bring a CUTPA/CUIPA claim. The court did not see it that way, agreeing with Farmers that the law remained unchanged. In Carford v. Empire, the Connecticut Supreme Court held that a third-party plaintiff has no standing against the defendant’s insurer (absent either privity of contract or a judgment or assignment). The court determined that Soto addressed claims of unfair trade practices in advertising which was not at issue in the present case and did nothing to abrogate the privity requirement in the insurance dispute context.

12/16/24 A-Quick Pick Crane Service, Inc. v. Grange Mutual Casualty Co.
United States District Court, D. Connecticut
Grange’s Technical Defenses to AI Coverage Quashed by Court

The court found that Grange owed additional insured coverage to the plaintiff, AQP, for a crane accident. Luis Meza was injured by a crane while working on an apartment construction project in Norwalk. The project’s general contractor was US Framing, which leased a crane from AQP and in a separate agreement leased a crane operator from AQP.

Because of delays elsewhere, the crane identified in the agreement was not available and a crane of the same type but bearing a different serial number was delivered. In addition, the contract called for a four-month rental, however, the rental agreement was extended verbally for two additional months during which the accident occurred.

AQP tendered the claim to Grange as an additional insured under the US Framing policy. Grange denied coverage, arguing that the Short Term Crane Agreement (for the operator) did not satisfy the policy’s automatic additional insured provision for Leasor of Leased Equipment. It further argued that the accident occurred after the original four-month rental period and that the oral extensions violated the agreement and therefore did not afford coverage. Ironshore, AQP’s CGL carrier, afforded a defense and settled the underlying case. Ironshore was a co-plaintiff on an equitable subrogation basis.

The court found that the Crane Lease Agreement clearly satisfied Grange’s automatic additional insured endorsement. The Endorsement provided:

XI. Additional Insured – Lessor of Leased Equipment – Automatic Status When Required In Written Lease Agreement With You

A. SECTION II – WHO IS AN INSURED is amended to include as an additional insured any person or organization from whom you lease equipment when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an insured only with respect to liability for “bodily injury”, “property damage”, or “personal and advertising injury” caused, in whole or in part, by your maintenance, operation or use of equipment leased to you by such person or organization. A person's or organization's status as an additional insured under this provision XI. ends when their contract or agreement with you for such leased equipment ends.

Additional Insureds under the Grange Policy, the court wrote, include “any person or organization from whom you”—the Named Insured—“lease equipment when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy.” The Lease did so. It required US Framing, the Named Insured, to name AQP as an additional insured on a primary basis. The court declined to only look to the Crane Agreement as opposed to the Lease Agreement.

The lease preceded the Crane Agreement, and the court concluded, the Crane Agreement does not modify or replace the insurance terms of the Lease Agreement. “The Crane Agreement is a different kind of contract than the Lease. It identifies the crane's lessee, the job site location, the crane operator, and the crane operator's hours. See Crane Agreement, Doc. No. 49-7 at 2. The Crane Agreement and the Lease overlap insofar as they both contain provisions identifying the crane(s), indemnification provisions, and merger clauses.”

The court also rejected Grange’s argument that that Lease was not fulfilled because a different piece of equipment was delivered than identified in the Lease. “That argument is unavailing. To become an Automatic Additional Insured under the Grange Policy, AQP must (a) enter into a contract with US Framing that requires AQP to be added as an additional insured, (b) lease equipment to US Framing, and (c) lease the equipment to US Framing while its lease of that equipment was in effect. AQP has met those three requirements…..Despite the cranes’ different years and serial numbers, AQP leased a crane to US Framing during the Lease's contractual period.”

Next, the court rejected Grange’s argument that that accident did not happen during the term of the Lease because it could only be extended by written agreement. The Lease provided that it could not be modified, except in writing. The court reasoned that the Lease was extended either orally or by conduct but that did not operate to modify the Lease. Therefore, the Lease was still in place on the date of loss.

As a result, the court held that AQP was an additional insured under the Grange policy and that Grange was obligated to reimburse Ironshore for its defense and indemnity of the insured. [AQP’s claim for breach of the covenant of good faith and fair dealing easily denied.]

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

12/12/24 Gary Quick v. State Farm Mut. Auto Ins. Co.
Appellate Division, Third Department
Plaintiff Was Required to Seek Workers’ Compensation Benefits for Basic Economic Loss Prior to Pursuing his No-Fault Claim

The plaintiff was operating a tractor trailer, which had been leased from a company insured by the defendant State Farm, in the course of his employment when he was injured. Plaintiff applied for no-fault benefits through the insurer and stated on his application that although he was eligible for workers’ compensation, his employer did not have worker's compensation insurance. State Farm notified plaintiff that, due to the question of whether he was eligible for workers’ compensation coverage, it was denying coverage for his no-fault claim. State Farm advised the plaintiff to provide verification if his workers’ compensation claim was denied so it could consider his no-fault claim.

Plaintiff commenced this action challenging the denial, arguing he was an independent contractor, and his employer had no workers’ compensation insurance. Plaintiff sought recovery of lost wages, medical expenses and other economic losses arising from the accident. State Farm moved for Summary Judgment dismissing the complaint on the basis that plaintiff was required to seek workers’ compensation benefits before seeking no-fault coverage. The Supreme Court granted the insurers motion, holding the action was improper because plaintiff failed to first seek benefits through the Uninsured Employer’s fund.

As a general rule, when an employee is injured in the course of his or her employment, his or her sole remedy against the employer lies in his or her entitlement to a recovery under the Workers' Compensation Law. Where an employer fails to secure such coverage, an injured employee can simultaneously pursue a personal injury action. Here, the parties did not contest that plaintiff's employer did not have workers' compensation coverage at the time plaintiff sustained his injuries, and, therefore, plaintiff was able to commence a plenary action against his employer. Plaintiff commenced a separate personal injury action that settled, with his recovery limited pursuant to Insurance Law Section 5104, which precludes recovery for basic economic loss for personal injuries arising out of negligence in the use or operation of a motor vehicle. Therefore, plaintiff sought no-fault coverage to recover basic economic loss.

Pursuant to the No-Fault Law, automobile insurers must provide up to $50,000 of coverage for an insured's basic economic loss. (Insurance Law § 5102 [a]). However, because no-fault benefits and workers' compensation benefits are meant to cover the same types of loss, payments to reimburse a person for basic economic loss for personal injury arising out of the use or operation of a motor vehicle may be reduced by the amount recoverable under workers' compensation benefits. Workers’ compensation is primary, and an injured party may not elect between workers' compensation benefits and no-fault benefits even when the employer has failed to provide workers' compensation coverage, because the Uninsured Employers' Fund steps into the shoes of the carrier by acting as a surety. Therefore, the court determined that the fact that plaintiff's employer did not possess workers' compensation coverage at the time of the accident did not render him ineligible for Workers' Compensation benefits. Rather, it changed the potential source of payment. As such, plaintiff was required to seek workers' compensation benefits as the primary source of payment for his basic economic loss, and only then could he seek payment of no-fault benefits with his recovery correspondingly reduced by what he received through workers' compensation.

Accordingly, the Appellate Court Upheld the Supreme Court’s decision granting the insurer’s motion for summary judgment dismissing the plaintiff’s complaint.

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

12/17/24 The Ohio Sec. Ins. Co. v. Kinsale Ins. Co.
United States District Court, S.D. New York
Court Grants Carrier’s Motion to Compel Arbitration Of Claim For Additional Insured Coverage

The Ohio Security Insurance Company (“Ohio Security”) sued Kinsale Insurance Company, seeking additional insured coverage for Ohio Security's insureds, Equinox Hudson Yards, Inc., Equinox Holdings Inc., Ery Tenant LLC c/o The Related, Ery North Tower RHC Tenant LLC, Eclipse Development Inc., and The Related Companies, L.P. (collectively the “Equinox Entities”), in connection with a personal injury lawsuit brought against the Equinox Entities and Defendant Black Bull Builders LLC (“Black Bull”). Kinsale denied any obligation to defend or indemnify either Black Bull or the Equinox Entities under the Kinsale Policy.

Before reaching that issue, however, Kinsale moved to compel arbitration of Ohio Security's claims and Black Bull's crossclaims based on an arbitration provision in the Kinsale Policy. Ohio Security argued that it is not bound to the terms of the arbitration provision because it is not a signatory to the Kinsale Policy and also that its claims are not within the scope of the provision.

The Court compelled arbitration. In seeking relief, Ohio Security necessarily invoked the Kinsale Policy—and its terms. Its entitlement to declaratory judgment depends entirely on the scope of the Kinsale Policy's coverage provisions and whether the Equinox Entities qualify as “additional insureds”. Courts frequently found non signatories to arbitration provisions in insurance policies to be bound by the provisions where the non-signatories sought declarations that their insureds were “additional insureds” under those policies and thereby entitled to coverage.

While Ohio Security also sought equitable subrogation, that claim too fell under the arbitration provision of the Kinsale Policy. Despite attempting to reframe its claim as one for equitable contribution, Ohio Security explicitly and unambiguously asserted that “consistent with the equitable subrogation right afforded to [it] under New York law, [it] is subrogated to the rights of the [Equinox Entities], and further that it is “entitled to reimbursement of all defense fees.” Ohio Security's equitable subrogation claim did not seek a proportional reimbursement of defense fees as would be consistent with a theory of contribution, such that the Court declined to characterize the claim as such.

Maxwell’s Minute: The Court does cite two cases for the idea that a contribution claim by an insurer to enforce its independent rights outside of the contract may be different. Danaher Corp. v. Travelers Indemnity Co., 10-cv-121 (JPO), 2014 WL 7008938, at *8-9 (S.D.N.Y. Dec. 12, 2014); Certain Underwriters at Llyod's, London v. Allied Professionals Insurance Company, 22-cv-14 (WMS) (HKS), 2023 WL 4449570, at *4-6 (W.D.N.Y. July 11, 2023). The outcome of this case may very well have been different had Ohio Security sought equitable contribution expressly in the complaint in order to enforce its own interest in contribution, rather than equitable subrogation in order to stand in the shoes of its insured, as a party in privity with the other carrier.

An important distinction.

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

11/15/24 Goldstein v. Amguard Ins.
United States District Court, E.D. New York
Question of Fact Whether Insured Fabricated Repair Invoices Breaching Concealment or Fraud Condition in Light of Conflicting Testimony Creating a Credibility Issue for Determination by the Jury

[Abridged] Goldstein brings this breach of contract action against AmGUARD seeking coverage under a policy for losses related to a flood that damaged Plaintiff's home. Before the Court is Defendant's motion for summary judgment, seeking to dismiss the complaint in its entirety, and for summary judgment in favor of Defendant on its Counterclaims against Plaintiff on the theory that Plaintiff vitiated coverage by violating the concealment or fraud provision of the policy. For the reasons set forth below, Defendant's motion is denied in its entirety.

Plaintiff resides in a home in Brooklyn for which AmGUARD issued Homeowner's Insurance Policy which was effective when Plaintiff's personal and physical property were destroyed by a flood. Plaintiff hired non-party Medina Contractors LLC to perform repairs on the Premises. Jonathan Medina testified that he was paid for work performed at the property.

Defendant has paid Plaintiff insurance proceeds totaling $51,751.50 for his claim. However, Plaintiff asserts that Defendant owes additional monies, giving rise to this lawsuit.

Plaintiff's insurance policy contains a provision prohibiting concealment or fraud. Defendant explains that it denied coverage because, it says, Plaintiff submitted fraudulent construction invoices in support of his damages claims and provided false testimony regarding these invoices and the work performed.

The first invoice Plaintiff provided was a text-searchable PDF titled "Invoice for Mottel Goldstein" for $60,000.00, created by Medina Contractors, who identified the Premises' address, included a job description, and was on "Medina Contractors LLC" and "Johnathan Medina" letterhead.

Plaintiff produced a second invoice titled "Invoice for Mottel Goldstein" for $15,000. During his deposition, Plaintiff stated that the $15,000 Invoice was provided by Medina Contractors as an estimate for the additional repair work that needed to be completed at the Premises; was disclosed as a text-searchable PDF; identified the Premises address; was provided on "Medina Contractors LLC" and "Johnathan Medina" letterhead; included a section titled "Job Description;" was created by Medina Contractors; and that the items listed under Job Description were not completed on the subject premises.

Mr. Medina testified he did not recall Medina Contractors creating any documents related to construction work at the Premises. Mr. Medina also testified that he nor anyone else from Medina Contractors created the $60,000 Invoice. However, Plaintiff points out that Mr. Medina's testimony was inconsistent.

Plaintiff stated (1) he did not know who created the $60,000 Invoice, (2) he did not create it, and (3) that Medina Contractors created it. Plaintiff testified he received the $60,000 Invoice from Medina Contractors. However, Defendant says Mr. Medina testified that he never provided Plaintiff with an estimate for additional future work to the floors, which would include the $15,000 Invoice. Plaintiff again "admits" this testimony occurred but notes that Mr. Medina contradicted himself many times during his deposition. Medina stated in his deposition that he never saw the $15,000 Invoice prior to the deposition, that he did not prepare the $15,000 Invoice, and that no one else on behalf of Medina Contractors prepared it.

Plaintiff has not asserted that Medina Contractors definitively created the $15,000 Invoice — rather, Plaintiff stated in his deposition "I assume so" when asked twice about whether Medina Contractors created the $15,000 invoice, and that he did not create it himself Additionally, Plaintiff admits Mr. Medina testified that he never provided Plaintiff with an estimate for additional work. Notably Mr. Medina testified that he did not remember if Medina Contractors prepared estimates for the work. Conversely, Plaintiff testified that Medina Contractors prepared estimates for the repair work.

Defendant says Mr. Medina testified that neither he nor Medina Contractors performed four of the line items in the $60,000 Invoice: "Doors," "New Vanity," "Wiring," or "Outlets." However, Plaintiff asserts that Medina Contractors did in fact perform such repair work including "the painting, molding, doors, the floors, base molding, everything that ... was necessary to be done that [was] caused by the water overflow."

Plaintiff's testimony directly contradicts Mr. Medina's. Plaintiff testified that each of the line items (vanity, wiring, outlet, and doors) in the $60,000 Invoice were completed (presumably by Medina Contractors. Plaintiff notes that Mr. Medina did not remember the answer to many questions and contradicted himself repeatedly during his deposition such that his testimony cannot be trusted or used as the basis for Defendant's Motion.

Defendant asserts that it is entitled to summary judgment because Plaintiff violated the insurance policy provision prohibiting concealment or fraud. Defendant contends Plaintiff intentionally concealed or misrepresented material facts or circumstances by presenting two invoices, one for $60,000 and another for $15,000, as proof of damages. Defendant asserts the Invoices were not prepared by Medina Contractors, which Plaintiff knew or should have known before exchanging them with Defendant in discovery. Defendant further contends that Plaintiff lied under oath by claiming in his deposition the Invoices were created by Medina Contractors. Thus, Defendant asserts that Plaintiff engaged in fraudulent conduct therefore voiding insurance coverage.

Under New York law, an insurance contract is void on the basis of fraud if the insurer can show (1) "the insured willfully made a false and material statement under oath" and (2) did so "with the intent to defraud the insurer." A fraudulent proof of loss, such as a written misrepresentation, will undercut recovery of insurance proceeds so long as the misrepresentation was both material and willful. Fraud must "be proven by clear and convincing evidence to ensure that unintentional false statements do not form the basis for vitiating coverage."

First, Defendant has failed to establish that there is no genuine question as to whether the Invoices were, in fact, fraudulent. Defendant relies solely on Mr. Medina's testimony asserting that he, nor anyone at Medina Contractors, created the Invoices. At numerous points in his deposition, Mr. Medina stated that he did not remember various aspects of the job and did not recall communications related to the work performed or the creation of the Invoices.

The record clearly shows there is a genuine dispute as to the falsity of the invoices. As discussed above, Plaintiff has claimed in his deposition that he did not create the $60,000 invoice, does not know who did, and believes Medina Contractors created it. Notwithstanding the high bar for proving insurance fraud under New York law, whether the invoices were falsified clearly turns on the credibility of both Mr. Medina and the Plaintiff. Credibility is, as in almost all cases, an issue for the trier of fact.

Defendant's argument that, because Mr. Medina's first name — "Jonathan" — was misspelled on both the Invoices and a check signed by Plaintiff, Plaintiff must have fraudulently created the invoices, is unavailing. This Court will not grant summary judgment without conclusive evidence as to the falsity of the statements at issue.

Further, there remain genuine questions of fact whether Mr. Medina had any email or text communications with Plaintiff, whether Plaintiff created the Invoices submitted by Plaintiff in discovery, and therefore whether the Invoices are fraudulent. In his deposition testimony, Plaintiff claimed he did not recall how he received the Invoices, and that Mr. Medina had forwarded Plaintiff text messages and emails in the past. The parties go back and forth in their motion papers over what communications Plaintiff proffered or should have proffered during discovery. Clearly, there remains a question of fact about what communications occurred between Plaintiff and Mr. Medina. Furthermore, Defendant's insistence that the searchable PDF demonstrates Plaintiff fraudulently created the Invoices, without more, is not conclusive evidence warranting summary judgment in its favor.

Second, AmGUARD has not established that there is no genuine issue of fact as to whether, as it argues, Plaintiff misrepresented that Medina Contractors completed all of the work set forth in the $60,000 Invoice, specifically four line items: "Doors," "New Vanity," "Wiring," or "Outlets." Defendant asserts that Mr. Medina testified that he and his company did not perform any of the line items: that he did not work on the "doors," "vanity," and "outlets." However, Defendant misrepresents Mr. Medina's deposition testimony as it relates to "wiring." Medina did not claim that he did not work on the "wiring", he "stated that he did not remember removing or installing any wiring at the Premises."

Furthermore, Defendant mischaracterizes Mr. Medina's testimony by claiming he testified the company also did not perform any of the line items on the $60,000 invoice. Defendant's line of questioning asked "Did you remove or install" the four line-items. Nowhere in the deposition transcript does Medina or defense counsel clarify whether anyone else from Medina Contractors performed the line-item tasks. Therefore, Defendant has not met its burden. Even if Plaintiff's statements were in fact misstatements, a material misstatement cannot provide the basis to void a contract unless it was made with the intent to defraud. While AmGUARD points to inconsistencies in Plaintiff's testimony, again, this is a question of credibility that is proper for a jury to decide. Therefore, there remains a material question of fact whether Plaintiff misstated the repairs performed on his property.

Finally, AmGUARD has not presented evidence that any of Plaintiff's purported misstatements were made with the intent of defrauding. A fact finder, with the opportunity to judge the witnesses' credibility in person, must determine the authenticity of the invoices, and, by extension, the truth of Plaintiff's and Mr. Medina's statements under oath.

02/21/24 Pager v. Chubb Grp. of Ins. Companies
United States District Court, E.D. New York
First-Party Property Claim Denial Upheld Due to the Insureds’ Failure to Submit Proof of Loss Form. Submission to an EUO did not Satisfy the POL Condition. Claims for Breach of the Implied Covenant of Good Faith and Fair Dealing, and Violation of New York's General Business Law Also Dismissed

[Abridged] Insureds brought action in state court against property insurer alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of New York's General Business Law, arising from insurers purportedly denying coverage for their dock and gangway, which mysteriously vanished from their property. Chubb moved for summary judgment.

The court held that: Chubb was not liable to insureds for breach of insurance contract under New York law; claim for breach of the implied covenant of good faith and fair dealing was dismissed as redundant; and Chubb was not liable for violation of New York's General Business Law.

The plaintiffs had a Policy with GNIC. The Policy covered, among other things, the plaintiff's property in Brooklyn, New York.

On April 29, 2021, the plaintiffs discovered that their gangway and floating dock, which they had seen earlier that week, had inexplicably disappeared. The property was equipped with security cameras, but unfortunately the cameras that were trained on the dock were not functioning on that date, although they were working two days before the loss.

Six days later, the plaintiffs reported the loss to GNIC. On June 24, 2021, GNIC sent a letter with a proof of loss form via certified mail to the plaintiffs' home address, directing the plaintiffs to complete and return the proof of loss form and to submit to examinations under oath. The return receipt reflects that the letter was delivered to the plaintiffs' address on June 30, 2021. Although the plaintiffs did not sign the receipt, the postal worker did, which signified that the letter had been delivered. The plaintiffs claim that they never received the letter.

After multiple postponements, the plaintiffs eventually participated in separate examinations under oath; during those examinations, GNIC showed each plaintiff the demand letter from June 24, 2021. GNIC explained that the plaintiffs could have "cured their prior defaults" if they had submitted the sworn proof of loss by the "extended or enlarged" deadlines. Although GNIC advised the plaintiffs that they could not process the claim without the proof of loss form, the plaintiffs never provided a signed and sworn proof of loss. In a May 9, 2022, letter to the plaintiffs, GNIC denied their claim because they did not establish a covered loss, complete a sworn proof of loss form, or produce the documents that GNIC requested.

The plaintiffs brought this lawsuit on September 7, 2021—about eight months before GNIC completed its investigation into the loss and denied the insurance claim in May 2022. Even though the claim had not yet been denied, the plaintiffs alleged that the defendants breached the insurance contract because they refused to reimburse them for the loss, unreasonably denied the insurance claim, and acted in bad faith.

GNIC moved for summary judgment arguing that it is entitled to judgment as a matter of law because it did not breach the insurance agreement. GNIC says that the plaintiffs did not comply with the Policy condition requiring a signed and sworn proof of loss and did not establish they suffered a covered loss in the first instance. GNIC also maintains that it had a reasonable basis to deny the insurance claim. It argues that the plaintiff's bad faith claim is duplicative of the claim for breach of contract. Finally, GNIC argues that the New York General Business Law § 349 claim fails as a matter of law because GNIC did not engage in a deceptive business practice.

The Court held that the plaintiffs did not comply with the Policy's unambiguous requirement that they submit a sworn proof of loss, which is an absolute bar to recovery. In addition, their bad faith claim is duplicative and must be dismissed. Finally, to the extent that the plaintiffs mean to bring a claim under New York General Business Law § 349, it is dismissed.

The Policy is explicit that the party claiming a loss must file a proof of loss. The plaintiffs do not deny that the policy required them to submit a signed and sworn proof of loss, and they concede that they never submitted one. Rather, they claim that they fulfilled the proof of loss requirement by complying with a different requirement—that they be examined under oath. The plaintiffs say that their agreement to be examined the under oath fulfills the "conditions precedent to the lawsuit" because "[t]here is absolutely no indication in the policy that an examination' under oath" or "a signed description of the circumstances" are "different from a `signed, sworn proof of loss', or that these are two different and separate requirements within the policy." The plain language of the Policy unequivocally refutes this claim.

A review of the Policy demonstrates that the examination under oath provision and the proof of loss provision are "different and separate requirements." Aside from the clear language of the policy, the provisions are separated in the Policy document; each has its own heading, in bold font. Any conceivable doubt the plaintiffs could have harbored about these requirements was cleared up at their examinations under oath, when GNIC showed each plaintiff the letter that directed them to submit proof of loss statements. At no time, however, did the plaintiffs—one of whom is a lawyer—fulfill their contractual obligation to submit a sworn proof of loss statement.

There is, moreover, nothing unusual or unique about requiring an insured to submit a signed and sworn proof of loss. On the contrary, the proof of loss requirement is a routine provision in insurance contracts. The Court of Appeals of New York has interpreted New York Insurance Law as requiring strict compliance by an insured with an insurer's request for proofs of loss. The plaintiffs' participation in examinations under oath thus does not fulfill the separate and additional requirement to provide a signed and sworn proof of loss.

The plaintiffs also argue that GNIC "cannot show" that it mailed the proof of loss form to the plaintiffs or that the plaintiffs received it, and that the "record raises triable questions of fact as to whether a proof of loss form was actually submitted or mailed to plaintiff." This, too, is meritless. "Proof of an office procedure followed in the regular course of business which establishes that a notice was properly addressed and mailed gives rise to a rebuttable presumption that the notice was actually received by the person to whom it was addressed." A party cannot rebut the presumption merely by claiming that he did not receive the mailing, as the plaintiffs do here. "There must be—in addition to denial of receipt—some proof that the regular office practice was not followed or was carelessly executed so the presumption that notice was mailed becomes unreasonable."

GNIC sent the letter demanding a sworn proof of loss to the plaintiffs' address by certified mail, and a postal worker recorded that the letter was received on June 30, 2021. The attorney who drafted and sent the letter affirmed in an affidavit that he followed his regular office procedures and mailed the request for the Proof of Loss statement, blank Proof of Loss forms for the statement, as well as the certified mail label. Of course, the plaintiffs were aware from the examinations under oath that they needed to complete and submit the sworn proof of loss forms.

In short, the plaintiffs did not comply with the Policy's unequivocal proof of loss requirement, a material fact about which there is no dispute. The evidence establishes that GNIC sent the forms to the plaintiffs by certified mail, that the forms were received, that GNIC repeatedly advised the plaintiffs of the requirement, and that the plaintiffs never submitted the sworn proof of loss forms.

The plaintiff's claim for breach of the implied covenant of good faith and fair dealing is also dismissed, as it is redundant as the conduct allegedly violating the implied covenant is also the predicate for breach of covenant of an express provision of the underlying contract. Here, the plaintiffs make the same allegations in the breach of the implied covenant of good faith claim and the contract claim.

GNIC is also entitled to summary judgment on the New York General Business Law § 349 claim. A plaintiff claiming a violation of GBL § 349 must prove (1) that the defendant's acts were "consumer oriented," (2) that the acts or practices were "misleading in a material way," and (3) that the plaintiff "suffered an injury as a result." The plaintiffs make no such showing. They have alleged generally that the defendants acted "knowingly and as part of a general business practice" when it denied their insurance claim, but their response to the defendant's motion does not cite anything in the record to support this claim. GNIC is therefore also entitled to summary judgment on this claim.

12/11/24 Long v. Progressive Advanced Ins. Co.
United States District Court, E.D. Pennsylvania
Insurer Did Not Meet its Burden to Show that it Prepared Redacted Portions of the Claim Notes in Anticipation of Litigation Rather Than in the Ordinary Course of Business. Therefore, the Work Product Doctrine Did Not Apply

[Abridged] Insurance companies evaluate claims as part of their business, and their claims evaluations often result in demands from policyholders and then litigation. In discovery, that reality poses a challenge: litigants (and then judges) must decide when an insurance company created a claim evaluation document in the course of its business and when it did so in anticipation of litigation. The first category of documents is discoverable, but the latter is work product that Federal Rule of Civil Procedure 26(b) protects.

In this case, Progressive Advanced Insurance Company asserts work product protection for claims documents that it created after receiving a demand letter from a lawyer representing Long. After reviewing the record and the documents at issue in camera, the court concludes that Progressive has not demonstrated that work product protection applies because the documents reflect claims handling, not litigation analysis.

Ms. Long was in a car accident. She made a claim for UIM benefits from Progressive. On December 1, 2023, Ms. Long's lawyer sent a demand package to Progressive, demanding that Progressive tender its policy limits if it wanted to avoid litigation. As of then, Progressive had not yet evaluated Ms. Long's claim. It did so on December 4, 2023, but it redacted information from its claims notes on work product grounds. Its redactions cover both the overall valuation that it attached to Ms. Long's claim and its analysis of specific elements of her claim.

Ms. Long made multiple efforts to obtain that information. In response to this latest motion, the court ordered Progressive to submit unredacted versions of the claims notes for in camera review.

The work product doctrine, which Federal Rule of Civil Procedure 26(b)(3) codifies, shields materials prepared in anticipation of litigation from discovery, unless certain exceptions apply. Work product immunity shelters an attorney's mental processes, providing a privileged area to analyze and prepare his client's case. The party claiming work product protection "bears the burden of showing that the materials in question were prepared in the course of preparation for possible litigation." Because insurance companies evaluate claims made by their insureds in the ordinary course of their business, "discovery disputes involving an insurance company's claims file often present problems for the parties."

Progressive has not carried its burden to show that it created the redacted claims entries in anticipation of litigation. Insurers have a duty to investigate, evaluate, and decide on claims that insureds make. Progressive had not fulfilled that duty when it created the redacted claims notes. Thus, while the litigation demand that Ms. Long's counsel sent Progressive might have prompted it to conduct the evaluation (or conduct it faster), it had a separate, business-related obligation to conduct that evaluation.

Progressive also has not identified any other facts that might swing its evaluation into the "anticipation of litigation" category. The demand letter did not demand more than Progressive had offered, it did not demand more than the policy limits or threaten a bad faith claim, and Progressive had not yet hired outside counsel. Without any other fact to suggest that the evaluation was done in anticipation of litigation, Progressive has not carried its burden.

The fact that Progressive had not yet evaluated Ms. Long's claim sets this case apart from many of the cases that Progressive cites. In Barnard, Cicon, and Parisi, the insurers had already evaluated the claims and communicated their positions to the insureds before any demand letters arrived. In that circumstance, the insurer has fulfilled its obligation, and any revisitation of the claim analysis ties more to the litigation demand than a business need.

Progressive's argument to the contrary boils down to the fact that it received a demand letter from Ms. Long's counsel before it created the documents at issue. But there's no per se rule that every document that an insurance company creates after receiving a demand letter constitutes work product. A demand letter, even one with a high settlement demand, does not absolve an insurance company of the duty to evaluate a claim. Thus, when an insurance company continues its evaluation of a claim after receiving a demand letter, work product protection does not attach to the documents reflecting that evaluation. Progressive has not suggested that the evaluation that it conducted differed in scope or character from the evaluation that it would have conducted if it received a claim from Ms. Long but no demand letter.

11/15/24 Mountain Valley Indemnity v. Coen
Supreme Court, New York County
Declaratory Judgment Granted to Liability Insurer as the Property Did Not Constitute a “Residence Premises”. Sworn Deposition Testimony Trumps a Later Inconsistent Affidavit. The Insured Signed the Application and One Who Signs a Document is Presumed to Have Read and Understood its Contents Despite an Alleged Language Barrier

[Abridged] Plaintiff's motion for summary judgment is granted and defendant Moira’s cross motion denied.

Plaintiff seeks a declaration of no coverage for its policy holder, defendant Coen, for injuries claimed by defendant Moreira in an action captioned Moreira v. Coen (the "underlying action"). The policy provides coverage for bodily injury, except where such injury, among other things, arises out of a business engaged in by the insured, the rental of any premises owned by the insured, rented to an insured, or rented to others by an insured, other than the "insured location". As relevant herein, "insured location" is defined as the "residence premises," which in turn is defined as the premises where the insured resides and is identified in the declarations, including a two-family dwelling where the insured resides in one of the units. The residence premises defined in the policy is located at 64 West 13th Street, Huntington Station, New York 11750 (the "underlying premises").

Moreira commenced the underlying action against Coen after slipping and falling at the underlying premises. During its investigation of the claim, plaintiff interviewed Coen, who stated that at the time of the accident she was not living at the underlying premises but had moved. Plaintiff then disclaimed coverage on the grounds that the underlying premises was no longer the residence premises and was not otherwise an insured location under the policy. Coen later testified in the underlying action in 2023 that she had moved away from the underlying premises at least five years previously and had not moved back in. An interpreter was present at the deposition. Plaintiff now seeks summary judgment declaring that it is not obligated to defend or indemnify plaintiff in the underlying action.

Here, plaintiff has established prima facie entitlement to summary judgment by submission of the policy and Coen's statement regarding her residence. Plaintiff is entitled to a default judgment against Moreira on the same grounds, as Moreira appeared by counsel but never filed an answer to the complaint or sought an extension of her time to do so.

Coen asserts that she speaks little English and did not understand the questions being put to her. Assuming this is true, Coen later testified that she no longer resided at the underlying premises under oath, at a deposition where an interpreter was present, the transcript of which she reviewed and signed. To the extent her affidavit conflicts with her testimony, a later filed affidavit cannot be used to contradict sworn testimony given at a deposition.

Coen also testifies that she has never understood or had explained to her the provisions of the policy. Coen's papers are not clear as what import this should have, but the court assumes that perhaps she means to argue that she did not know that if she moved away from the underlying premises, she would lose coverage. Nevertheless, she does not deny that she is the insured, and therefore when obtaining the policy signed an application. Indeed, she also renewed the policy more than once, as evidenced by the renewal certificate included with the policy documents.

It is an axiom of the law that one who signs a document is presumed to have read and understood its contents. As the Court of Appeals has explained:

Ordinarily, the signer of a deed or other instrument, expressive of a jural act, is conclusively bound thereby. That his mind never gave assent to the terms expressed is not material. If the signer could read the instrument, not to have read it was gross negligence; if he could not read it, not to procure it to be read was equally negligent; in either case the writing binds him.

Coen cannot now claim ignorance of the policy when she has not sought to have it provided to her in a language that she can read fluently. Coen also does not provide any authority for the position that it was plaintiff's responsibility to discover her need for translation and provide translated copies of the policy and related documents.

Coen's argument that discovery is necessary to defend the motion is unavailing; she does not establish that facts "essential to justify opposition may exist but cannot [now] be stated."

Moreira's cross-motion to dismiss the complaint against her is denied. Moreira argues that she is not a proper party. Cases she relies on do not bar an insurer from seeking to determine its coverage obligations while the underlying action proceeds. As Moreira makes no other arguments, the cross-motion must be denied.

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

12/10/24 Sherwin-Williams Co. v. Certain Underwriters at Lloyd’s London
Ohio Supreme Court
Insurers of Paint Company That Marketed and Sold Lead Paint Not Obligated to Indemnify Paint Company for Payments Made into Abatement Fund to Mitigate Hazards of Lead Paint

Santa Clara County, California sued Sherwin-Williams and other paint companies for strict liability, negligence, fraud and concealment, unjust enrichment, indemnity, and unfair business practices related to the companies’ role in selling and promoting the use of lead-based paint. Other California governmental entities joined in the suit, and the lawsuit ultimately moved forward on only a public nuisance claim on behalf of the People of the State of California. The complaint alleged that as a direct and proximate result of the paint companies’ conduct, large numbers of people, and particularly children, have been exposed, are being exposed, and/or will be exposed to lead, affecting their health, safety, and welfare. The California trial court held that Sherwin-Williams and two other paint companies had created a public nuisance, and it ordered the companies to pay jointly and severally $1.15 billion into an abatement fund to be administered by the State of California. According to the court’s order, the plan would last for four years, and any remaining funds would be returned to the paint companies.

The paint companies appealed to the California Sixth District Court of Appeal. That court affirmed the lower court’s conclusion that the paint companies had created a public nuisance by their promotion of lead-based paint. But the appellate court held that causation had not been established with respect to houses built after 1950, so it remanded the case to recalculate the amount of the abatement fund to limit it to the amount necessary to cover the cost of remediating pre-1951 homes. The California Supreme Court denied the paint companies’ petitions for review of the court of appeal’s decision. On remand, the Santa Clara County Superior Court reduced the amount to be paid into the abatement fund to $409 million. Ultimately, in 2019, the parties to the California lawsuit came to a settlement by which each of the paint companies would pay $101,666,667 into the abatement fund.

In Ohio, Sherwin-Williams filed a lawsuit in the Cuyahoga County Court of Common Pleas seeking, among other things, a declaration of the coverage obligations of its insurers with respect to a similar public-nuisance lawsuit pending in Rhode Island. The Rhode Island Supreme Court entered judgment in favor of Sherwin-Williams in that lawsuit, and Sherwin-Williams and all of the defendants jointly moved to stay the Cuyahoga County lawsuit. The trial court ordered a stay. After the California Supreme Court and United States Supreme Court refused to hear Sherwin-Williams’s appeal in the California lawsuit and after the Santa Clara County Superior Court entered its order reducing the total amount to be paid to the abatement fund to $409 million, Sherwin-Williams moved to lift the stay in January 2019.

Sherwin-Williams then filed an amended complaint against “Certain Underwriters at Lloyd’s, London, Certain London Market Companies, and Certain Domestic Insurers”, seeking indemnification for the California lawsuit and any other similar lead-paint claims. Nearly all of the insurers joined a motion for summary judgment arguing that they were not required to indemnify Sherwin-Williams under the terms of their various insurance policies. the insurers argued the polices did not provide coverage for harm that was expected or intended (Sherwin-Williams intentionally promoted its paint), the policies only provided coverage for damages and expenses, and the policies only covered damages “for,” “because of,” or “on account of” “property damage” or “bodily injury.” The common pleas court granted summary judgment to the insurers based on the language used by the California appellate court that an abatement order is an equitable remedy to eliminate the hazard causing prospective harm as opposed to the legal remedy of damages to compensate for prior harm. As a result, the common pleas court concluded there were no damages for reimbursement under the policies.

Sherwin-Williams appealed to the Eighth District Court of Appeals, which reversed the trial court’s judgment. The Eighth District reasoned that the abatement fund was monies to be paid to the government to compensate for money depleted by efforts to remediate the contamination of houses and buildings. The Eighth District also concluded that the trial court had correctly determined that coverage was not excluded because of any “intentional and expected acts” of Sherwin-Williams or because the liability was not imposed “because of” bodily injury or property damage.

The insurers filed a motion for reconsideration and reconsideration. The Eighth District denied the motion. The insurers’ appealed, and the Ohio Supreme Court accepted jurisdiction over three propositions of law. Since the ultimate question was resolved by one of the propositions, the court focused on whether the payment to the abatement fund constituted damages under the policies. The policies did not define damages. The insurers argued that the abatement fund was not to compensate for loss or injury but rather, to provide prospective relief. In Sherwin-Williams’s view, the abatement fund was established to compensate for a past harm—the presence of lead paint in residences built before 1951. The Ohio Supreme Court agreed with the insurers, concluding that because the abatement-fund payment was ordered to prevent future harm to children’s health from lead paint, the payment to the fund did not constitute “damages” under the insurance contracts.

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

12/12/24 Rodriguez v. Shelbourne Spring, LLC
Supreme Court of New Jersey
Supreme Court Holds Employee’s Injury is Covered Under Neither Worker’s Compensation Policy Nor Employer’s Liability Policy

SIR was hired as the electrical contractor for a project. Rodriguez, an employee of SIR, was injured on the job when he opened an electrical panel on a breaker. Rodriguez initially brought only a worker’s compensation claim. After the worker’s compensation claim was accepted by SIR, Rodriguez, apparently unsatisfied with his benefits level, filed a bodily injury claim against SIR. The bodily injury suit alleges negligence, gross negligence, reckless, and intentional conduct on the part of SIR.

The Supreme Court began its analysis by noting the significance of the variety of allegations at play, explaining that, as a general matter, an employee cannot sustain a claim against his or her own employer; instead, such claims are paid by the employer’s worker’s compensation policy. This rule is known as the “exclusivity rule.” However, where the employer intentionally causes the employee’s injuries, the employee may sustain a claim against the employer irrespective of this rule. This is known as the “Laidlow exception.” As the Court noted, to be said to have caused the employee’s injuries “intentionally,” the employer must have: (1) been substantially certain that the injury would occur; and (2) have deviated significantly from standard industry practice.

SIR was insured by Hartford Underwriters under a policy providing both worker’s compensation insurance and employer’s liability coverage. The Supreme Court noted the fundamental distinction between these two distinct types of coverage: worker’s compensation answers to claims of negligence, gross negligence, and even recklessness, whereas employer’s liability insurance answers to claims eligible to be brought directly against the employer despite the provisions of the worker’s compensation law. Stated differently, worker’s compensation insurance responds to claims that cannot be brought directly against the employer, while employer’s liability insurance responds to claims that are subject to the Laidlow exception.

The question certified to the Supreme Court was whether Hartford had a duty to defend SIR under either the worker’s compensation or the employer’s liability portions of its policy. The insuring agreement of the worker’s compensation part provided that Harford would pay “benefits required of [SIR] by the worker’s compensation law.” The Court noted that monetary damages for negligence, gross negligence, and recklessness do not fall within the purview of damages required under the worker’s compensation law, which only requires payment of medical benefits, death benefits, temporary disability benefits, and permanent total or partial benefits, without regard to fault. Any damages that could be awarded in response to a negligence claim, the Court reasoned, are not “benefits” within the context of the worker’s compensation law, and thus are not covered in the first instance under the worker’s compensation part of the policy.

The Court then turned to the employer’s liability part of the policy, whose insuring agreement provided that Hartford would pay for “bodily injury by accident” or “bodily injury by disease.” This part of the policy contained an exclusion, however, for any obligation imposed on SIR by the worker’s compensation law (i.e., the employer’s liability policy does not cover SIR’s obligation to pay the above-described benefits). Also excluded from employer’s liability coverage was “bodily injury intentionally caused or aggravated by [SIR].” An endorsement to the policy further provided that Hartford does not cover any and all intentional wrongs, including but not limited to bodily injury caused or aggravated by an intentional wrong committed by SIR or its employees, or bodily injury resulting from an act or omission by SIR or its employees which is substantially certain to result in injury.

The Court held that Rodriguez’s claims sounding in negligence, gross negligence, recklessness theories were excluded by the exclusion for benefits payable under the worker’s compensation law. The Court further held that the intentional conduct was excluded under the intentional acts exclusion and supplementary endorsement. In other words, the intentional acts exclusion barred coverage for the Laidlow claims, while the worker’s compensation exclusion barred coverage for the non-Laidlow claims.

Editor’s Note: The Court cited a few cases involving broader policies, in which the insurer’s duty to defend under the employer’s liability policy was not necessarily excluded vis-à-vis the intentional acts exclusion.

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

12/13/24 Bertels v. Farm Bureau Prop. & Cas. Ins. Co.
United States Court of Appeals, Tenth Circuit
Lack of Consideration Invalidates Assignment of Policy Rights, Thus Barring Standing to Recover Multi-Million Dollar “Judgment”

Autumn Bertles sustained severe injuries when a car driven by her grandmother, Elizabeth Bertles, collided with Denver Barr. Elizabeth and Mr. Barr were killed in the accident. Several years passed and Autumn eventually filed suit against her grandmother’s Estate. The Estate and Autumn entered an agreement.

The agreement provided: (i) Autumn’s claims would be brought before a judge in a “trial” that would consist of reports and affidavits submitted by Autumn without cross-examination or counter-evidence from the Estate; (ii) the Estate would assign any claims it possessed with Elizabeth’s auto insurer to Autumn; (iii) Autumn would not attempt to collect from the Estate’s assets if judgment was entered in her favor; and (iv) Autumn would pay the Estate’s litigation expenses.

Autumn received a $15.75 million judgment at “trial.” She then pursued Farm Bureau, Elizabeth’s insurer, to collect the judgment. Autumn’s case was dismissed by the district court for lack of standing because she provided no consideration for the assignment. The Tenth Circuit affirmed the dismissal.

The sole issue being standing, the Court of Appeals looked to whether the assignment was valid. Since the assignment was through contract, the court applied Kansas law, which requires consideration to be enforceable. In Kansas, non-prosecution of or non-defense of an action, or to abstain from an act to which one is not legally bound to perform can be sufficient consideration. Except if the claim or defense is obviously invalid, worthless, or frivolous.

Farm Bureau argued the agreement lacked consideration because Autumn promised not to do something she was already legally bound not to do, executing judgment against the Estate and payment of the Estate’s legal expenses. The court looked at Kansas’s nonclaim statute. Nonclaim statutes are laws that allow estates to be settled promptly by barring untimely and tardy claims.

Found in K.S.A §59-2239, the Kansas nonclaim statute contained two statute of limitations. The first states that all demands against an estate must be filed within four months after publication of the notice to creditors of probate proceedings ( or 30 days after notice to a known or reasonably ascertainable creditor). The second limits actions for all unsecured claims to within six months of the decedent’s death. §59-2239(1).

The accident occurred in 2010. Autumn filed an action in 2011 against Mr. Barr’s estate, Ford Motor Company, and Elizabeth. Autumn settled with Ford and Mr. Barr for the 2012 action, but not Elizabeth. In August 2014, a petition was filed to open a probate estate for Elizabeth, a month later Autumn filed a state action against the Estate.

So, Autumn failed to timely file a claim under §59-2239(1) because the Estate did not open until August 2014, much after Elizabeth’s death in 2010 and Autumn filed her claim in September 2014.

K.S.A. §59-2239(2) provides a limited exception to the timeliness requirements. A tort claim is considered timely if filed within the state’s statute of limitations. However, this exception contains two strings. First, recovery cannot affect the distribution of the Estate’s assets; and second, all court costs are to be paid for by the claimant/petitioner. Thus, subsection 2 excepts timely tort claims to recover insurance proceeds only, without cost to the Estate.

Autumn agreed to not recover the judgment form the Estate’s assets and to pay for the Estate’s legal expenses. Thus, she agreed to refrain from doing an already prohibited act, as well as complying with the legal obligation of paying the Estate’s litigation costs. Therefore, the assignment was invalid because she provided no consideration under Kansas law.

The court rejected Autumn’s tolling argument, finding the Kansas Supreme Court would not toll Autumn’s claim due to the strict protections for estates; waived a plain-error review regarding interpretation of the Consitution’s due process and equal protection arms; and the illusory promise doctrine amongst other arguments.

One notable argument was estoppel, which asserted that since Farm Bureau assigned Elizabeth defense counsel for the “trial”, and negotiated the agreement, Farm Bureau was estopped from invalidating the contract. Kansas noted that the mere fact an insurance company assigns defense counsel does not make that attorney the insurer’s agent. Instead, that attorney’s duty is to protect the interests of the insured and thus, may act against the insurer’s interest in protecting the rights of the insured.

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

12/17/24 Sabine v. State of New York
Court of Appeals
Majority for the Court of Appeals Refuses to Answer the Certified Question of Whether Prejudgment Interest Accrues When There is a Finding of Liability or When There is a Finding of Serious Injury as Defined by Insurance Law § 5102(d) After Determining This Question Was Not Properly Preserved Before the Trial Court

This case stems from a personal injury action where the Claimant, Michael Sabine, sued Defendant, State of New York, in the Court of Claims, after he was involved in a motor vehicle collision with a State employee. At the trial level, the case was bifurcated. On September 26, 2018, the Court of Claims granted partial summary judgment on “liability” to the Claimant. Then on October 27, 2021, following a bench trial, it was found that Claimant did have a “serious injury” as defined by Insurance Law § 5102(d) and awarded $550,000 in damages. Judgment was entered awarding these damages, along with prejudgment interest calculated from the date of the October 27, 2021, decision.

Claimant appealed the portion of the Judgment as it pertained to when the prejudgment interest was to be calculated. Specifically, Claimant argued that the interest should have begun to run from the date the Court of Claims held Defendant “liable” rather than the subsequent finding of “serious injury”.

At the Appellate Division level, the Fourth Department unanimously affirmed, citing that it was bound to follow existing case law in the Fourth Department which holds that a finding of “liability” requires a finding of “serious injury”. However, the Fourth Department divided on the issue of preservation – with two justices concluding that the issue being appealed was unpreserved at the trial court level. The three-justice majority concluded that the issue was preserved, and even assuming, arguendo, that it was not, a rare exception applies that allows the court to review the question regardless. Stemming from a prior Court of Appeals case [Telaro v. Telaro, 25 NY2d 433 (1969)], this rare exception applies only where an unpreserved argument could not have been avoided through “factual showings or legal countersteps” in the trial court.

Upon further appeal, the Court of Appeals, in a 4-3 split decision, affirmed, without costs, the Appellate Division’s Order – and notably did not answer the certified question as unnecessary. At the onset, the Court highlighted that, unlike the Appellate Division, it lacks the jurisdiction to review unpreserved issues in the interest of justice. Accordingly, the Court maintains a duty to determine whether an issue has been properly preserved below, regardless of whether a party has even raised a preservation argument (notably, the Defendant did not here).

This preservation argument analysis led the Court to determine that Claimant failed to properly preserve the issue at which point should prejudgment interest begin to accrue at the Court of Claims level. Interestingly, the Court stated that the Claimant was free to engage motion practice under CPLR § 5015 [seek to vacate an order] or § 5019 [seek to correct or amend an order] at the trial level, which would have allowed for proper preservation of this issue but failed to do so. Lastly, the majority explicitly disagreed that the exception to the Court’s preservation rule under Telaro applies here. Specifically, that such exception, which has not been used by the Court in the past 40 years, is inapplicable here in light of the aforementioned legal “countersteps” which were available to the Claimant.

Accordingly, the four-justice majority affirmed the lower Order, explicitly without providing an answer to the certified question.

In contrast, Judge Rivera penned a lengthy dissent wherein he concluded that he would reverse and remit to the Court of Appeals so that interest may be calculated from the date the Court of Claims determined Defendant was “liable”. Chief Judge Wilson concurred in full with this dissent, and Judge Troutman concurred with the dissent in all but one particular point (wherein Judge Rivera discussed the majority’s ruling on preservation).

Specifically, Judge Rivera began his dissent by engaging in a summary of the procedural history of the underlying case and a detailed analysis of New York’s No Fault Law, codified as Article 51 of the Insurance Law. In doing so, Judge Rivera highlighted the clear split in the Appellate Division on the definition of “liability” as it pertains to the No Fault Law.

In the Second and Third Department of the Appellate Division, case law has expressly concluded that a finding of “serious injury” under Article 51 is a question of damages, not “liability” for the purposes of calculating prejudgment interest. In contrast, the Fourth Department has held that a defendant is not liable for noneconomic loss under Insurance Law § 5104(a) unless the claimant proves that he sustained a serious injury – thus the term “liability” in motor vehicle cases in the Fourt Department encompasses both a finding of negligence and serious injury. Judge Rivera’s dissenting opinion states that this outlier view of the Fourth Department is contrary to the framework of Article 51.

He next engaged in an analysis of CPLR § 5002, which codifies the process for a plaintiff to recover pre-final judgment interest – expressing that the process becomes convoluted in matters such as personal injury actions where a bifurcation process is encouraged. This analysis led to the dissent’s conclusion that in an automobile accident where a claimant establishes, through a bifurcated process, that first a defendant was liable for the underlying tort and thereafter establishes they have sustained a serious injury under Insurance Law § 5102(d), that claimant is entitled to prejudgment interest under § 5002 from the date “liability” is determined.

The remaining portion of Judge Rivera’s dissenting opinion focused upon the preservation issues. First, he concluded that there is no preservation bar to resolving the certified question. He detailed how the Claimant timely appealed the final judgment from the Court of Claims wherein prejudgment interest was awarded. In that final judgment, the Court of Claims was bound by the aforementioned established case law precedent in the Fourth Department in its calculations. Accordingly, the Claimant’s first opportunity to present his argument for modification of the judgment would be on his appeal to the Fourth Department, which is the court that established the binding precedent.

Judge Rivera next disagreed with the majority’s decision to not answer the certified question based on the preservation determination, arguing that such a holding fails to further the goals of the Court’s preservation doctrine – which is a doctrine of the Court’s own making which can be drawn as narrowly as it wishes. Notably, this is the only part of Judge Rivera’s dissenting opinion which Judge Troutman did not concur.

The remaining portions of the dissent (1) states that the proffered remedy by the Court’s majority – namely instructing Claimant to have filed motions at the trial level under §§ 5015 or 5019 – was incorrect, and (2) that the rare exception to the Court’s preservation rules was applicable here, as the Appellate Division held.

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

11/22/24 120 Main Hotel LLC v. Sompo Am. Ins. Co.
New York State Supreme Court, County of New York
Motion to Dismiss Denied, as Court Held that Policy Terms did Not Establish Entitlement to Relief under CPLR §3211(a)(1) or (7)

Plaintiff 120 Main Hotel LLC (“120 Main”) owned a property at 120 East Main Street, Rochester, New York (the “Property”). 120 Main purchased a property insurance policy from Sompo America Insurance Company (“Sompo”) providing coverage for the Property. In November 2022, a fire broke out at the Property, resulting in substantial damage to real and personal property. 120 Main submitted a claim, which was denied based on 120 Main’s failure to comply with certain conditions to coverage. Sompo stated that at the time of the fire, the Property was “vacant,” “unoccupied,” and caused by “vandalism and malicious mischief.”

After the denial of coverage, Plaintiff filed a lawsuit against Sompo, asserting causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing. After receiving notice of the suit, Sompo filed a motion to dismiss pursuant to CPLR § 3211(a)(1) and (7). In support of the motion, Sompo argues that the terms of the insurance policy conclusively establish that the denial of coverage was appropriate, as a matter of law.

The court first addresses that under New York law, when considering a motion to dismiss, pleadings are liberally construed, and all allegations contained in the pleading are accepted as true. Under CPLR §3211(a)(1), a complaint will be dismissed if the moving party asserts a defense founded upon documentary evidence, which conclusively establishes a defense to the claims asserted as a matter of law. Under CPLR § 3211(a)(7) the sole criterion is whether the pleading states a cause of action within the four corners of the complaint.

First, the Court looks to the Sompo policy to determine whether the Property was considered “vacant” or “unoccupied” at the time of the fire. The Sompo policy provides that a property is considered “vacant or unoccupied” when it “does not contain adequate covered property to conduct customary business operations.”

Sompo argues that the presence of adequate covered property is necessary, but not by itself sufficient for the purposes of determining occupancy and non-vacancy. Sompo alleges that “vacant or unoccupied” should be interpreted to be defined under a colloquial understanding of the terms.

However, the Court reasoned that the terms “vacant” or “unoccupied” were defined nowhere in the policy, besides the aforementioned phrase. As such, because the Plaintiff is entitled to a favorable inference that, the Court found that under the Sompo policy, for the purposes of the motion to dismiss, a property was vacant or unoccupied, when it “does not contain adequate covered property to conduct customary business operations.”

With the defined phrase in mind, the court looks at the evidence submitted to determine whether there was adequate covered property present at the time of the fire to prevent the building from being deemed “vacant or unoccupied,” as defined under the Sompo policy. Plaintiff submitted sworn affidavits stating that there was adequate covered property at the time of the fire to conduct customary business operations. The court identified that Sompo’s evidence submitted in support does not utterly refute the contention that the Property was not vacant at the time of the fire.

As such, the court held that there are disputed issues of fact surrounding the state of the building at the time of the fire, the presence of covered property, and whether Plaintiff had engaged in customary business operations prior to the fire.

Based on the dispute, the court denied Sompo’s motion to dismiss.

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

07/29/24 New York Bills S6635/A5745
Legislation to Allow New Yorkers to Apply for Workers’ Compensation for Extraordinary Work-Related Stress

On December 6, 2024, Governor Kathy Hochul signed Legislation S6635/A5745 to support individuals who face job-related mental health crises. This allows workers to file workers’ compensation for specific types of mental injury when faced with extraordinary work-related stress. This will include investing $1 billion to transform the continuum of care.

Governor Hochul said “The mental health crisis our country has experienced since the COVID-19 pandemic is unprecedented, and we need to do everything in our power to lend a hand to those in need. I'll never stop fighting for the working people of New York.” (NYS Press Release)

Workers Compensation law previously limited mental injury claims to certain emergency service workers (police, firefighters, etc.) A5745 will amend workers compensation law to allow claims for mental injury by any worker in New York State who has experienced extraordinary work-related stress.

S6635 provides that a workers compensation board may not disallow a claim based upon a factual finding that the stress was not greater than that which usually occurs in the normal work environment.

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

11/05/24 Fares Construction Limited v. Lead Structural Formwork Limited
Nova Scotia Supreme Court
Absent Exceptional Circumstances, the Duty of a Liability Insurer to Defend is to be Determined in Proceedings Separate and Apart from the Underlying Action

As six Atlantic hurricanes having made landfall since Hurricane Dorian in September 2019, including Fiona in 2022, it seems hard to remember the impact that Dorian had on the Bahamas, the Eastern of Seaboard of the United States and Atlantic Canada. However, few who were living in Atlantic Canada that September will forget Dorian as it was the most destructive storm to hit the region to that point since Hurricane Juan 16 years earlier.

Dorian brought widespread heavy rain, pounding surf, damaging storm surge and severe winds to Nova Scotia, Prince Edward Island, Newfoundland and parts of New Brunswick.

452 Brenton Street ("Brenton Suites"), a 170-unit condo complex in downtown Halifax was under construction on September 7, 2019, when Hurricane Dorian hit. The tower crane used on the project collapsed in spectacular fashion. A news video of the collapse went viral. Unbelievably, there were no deaths and no injuries. However, the property damage was significant.

It took many weeks to remove the fallen crane which damaged the project under construction amongst other properties. The removal effort shut down the project, for several weeks, displaced residents in the area and resulted in the intermittent partial and full closure of several surrounding streets impacting businesses in the area.

Four separate actions were commenced in the Nova Scotia Supreme Court. The principal defendants were the project owner, W. M. Fares Family Incorporated (“Fares”); the general contractor Lead Structural Formwork Ltd. (“Lead”); Lead’s sub-contractor/consultant Forgeron Engineering Limited (“Forgeron”) who Lead says was tasked with inspecting and certifying the crane installation; and APA Inc. Experts Conseils/Consultants a consulting engineering firm retained by Lead to assist in designing a concrete base upon which the tower crane was installed.

Fares was the named insured under a builders risk / course of construction policy issued by Sovereign General Insurance Company. APA and Forgeron did not know this policy existed until Fares produced it in March of 2023.

APA Inc. Experts Conseils/Consultants ("APA") and Forgeron Engineering Limited ("Forgeron") brought motions (called applications in other provinces) to amend existing third-party proceedings to add Sovereign as a third party. Forgeron and APA alleged that each of them are unnamed insureds under the policy and that Sovereign is obligated to defend and indemnify both of them. Both argued that Sovereign is a necessary party to the proceedings.

Sovereign opposed the applications stating:

There is no coverage for APA nor Forgeron as they are not insured under the Policy.
If they are insured, Sovereign says that the APA and Forgeron claims against it for indemnity are premature and should only be brought and determined after an agreed settlement or judgment is obtained in the proceedings.
The issue of the duty to defend should be heard and determined in a separate proceeding;
The policy prevented any such joinder in the following ‘no-action clause:

The issue in this particular set of applications was whether Sovereign can be joined as a party to the tort and contract claims. In reasons released November 5, 2024, the Nova Scotia Supreme Court application judge refused the application to join Sovereign as a party to one or more of the legal proceedings.

Given how the arguments were structured, it is fair to infer that the policy under discussion in this case offered comprehensive protection against the risks associated with the construction project. It seems that this policy included two important but separate coverages: builder’s risk coverage that provided property insurance for the building under construction and wrap-up liability. Both coverages are non-standard meaning that their content is not regulated by the Provincial Superintendents of Insurance. Usually, the wrap-up coverage provides comprehensive liability coverage for all parties involved in a construction project, including owners, general contractors, subcontractors, and sometimes architects and engineers. It covers third-party bodily injury and property damage claims arising from the construction.

The application judge in this case held that as there is no settlement or judgment in the proceedings, Sovereign has no obligation to indemnify its putative insureds and therefore the allegation that Sovereign has that obligation is premature.

As for the alleged obligation to defend, the application judge held that APA and Forgeron were free to bring a separate proceeding to determine if Sovereign was obligated to defend them in the actions arising from the crane collapse as that is “proper procedure to determine the obligation to defend”. A duty to defend proceeding is, according to this judgment, independent of the tort and contract actions underway in this case. Such an application involves an entirely separate contractual dispute claiming that, pursuant to the Policy, Sovereign owes APA and Forgeron the costs of defence and has breached the Policy by not paying those costs.

Nonetheless, the judge pointed out that the Court has the discretion or authority to add Sovereign as a third party, but that authority ought not to be exercised in this case as there is no evidence or likelihood that costs and time would be saved through such a joinder.

The application judge’s reasoning seems to be the correct decision in this case. However, in other situations, an insurer relying on a coverage issue, such as a breach of condition, may wish to be involved in the underlying contract and tort claim in its own name in order to prove the breach and the degree of prejudice that arises from the breach. This decision suggests that in the right case, which might be possible, but this is not ‘the right’ case.

The application judge then moved on to consider whether APA and Forgeron could amend their pleadings to allege that the general contractor, Lead, is barred from bringing an action against them in view of the immunity cast upon those insured under a builders risk policy. This part of the judgment is confusing to those who are not party to the litigation. There is no discussion as to whether the contracts between Lead, APA and Forgeron required Lead to insure for the benefit of APA and Forgeron setting up tort immunity claims. Further there is no indication that the project owner, Fares, claimed on the builders risk policy. Despite these omissions the application judge held that the terms of the policy “… do not provide a sustainable defence to the legal claims alleged against APA and Forgeron.”

With that, the applications brought by Forgeron and APA were dismissed with costs to be assessed, payable by each of them to the opposing parties, including Sovereign.

Coverage Pointers - Volume XXVI No. 13

Fri, 06 Dec 2024 14:29:14 +0000

Volume XXVI, No. 13 (No. 686)
Friday, December 6, 2024
A Biweekly Electronic Newsletter

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at ddk@hurwitzfine.com or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations. Our newsletter is, as always, attached.

Greetings from NYC and the annual DRI Insurance Conference & Practice Symposium, joined here by my colleagues and editors, Steve Peiper, Lee Siegel and our Canadian correspondent, Heather Sanderson. So, excuse the brevity of this cover note. For CP subscribers present at this conference, do stop by and say hello, if I haven’t seen you yet. There may be a few of you who I won’t recognize by sight, but I would love to meet you.

End of the year rush is on, with mediations, conferences and all kinds of efforts to close files. No rest for the weary or wicked.

Domenica Hart Joins the HF Coverage Team

We are so delighted to welcome to Domenica Hart to the Hurwitz Fine Coverage Team.

She brings both in-house and private practice experience to further strengthen our team.

Domenica earned her J.D. at Elisabeth Haub School of Law at Pace University, graduating Cum Laude. While attending law school, Domenica was a member of and an editor of Pace’s International Law Review. She received the honor of being published in the law review, advancing over many talented co-members. After law school, she served as a judicial law clerk for the Honorable Brian R. Martinotti, while on the bench in both The Chancery Division: Family Part, and the Law Division: Civil Part, at the Superior Court of New Jersey: Bergen County.

Licensed in New Jersey, New York and Connecticut, with a past focus on New Jersey practice, Domenica has nine years of experience as an Insurance Defense Litigator, both as an associate with panel counsel and as a staff attorney for an insurance carrier. After such experience, Domenica spent 12 years working for two carriers as Coverage and Claims Counsel, handling both first-party and third-party claims. Most recently, at Westen World Insurance Company/AIG, Domenica focused on Commercial General Liability and Auto Dealers Coverage.

Domenica lives in Westwood, New Jersey (Bergen County). She is dog mom to Charlie, a three-year-old Dachshund Terrier mix with an equal dose of sweetness and naughtiness. She has been a long-term volunteer with Habitat for Humanity of Bergen County. She serves as a board member of its working board. She is also the chairwoman of Habitat Bergen’s Family Selection Committee, tasked with the role of finding and vetting families for Habitat-built affordable housing. Domenica enjoys traveling with her boyfriend and friends, hosting game nights, going to Broadway musicals, plays and concerts and spending time with her family.

Farage Generates Reviews

We report on an Interesting first party case from the Court of Appeals reported in this issue. See Scott Storm’s cover note, below and his column in the attached issue, along with a special guest commentary from one of the lawyers involved, Howard Kronberg. Steve Peiper also gives you his spin in his column.

Writing an Effective New York Coverage Letter Zoom Program
December 13^th at noon, Eastern
Only about 10 openings left

Our December 13, 2024, Zoom program on Writing an Effective New York Coverage Letter is a virtual sellout, we have over 990 registered and we max out at 1,000 virtual seats. We announced the program in the previous issue of CP, four weeks ago. If you haven’t signed up, we can take a few more reservations, but then we will move to a wait list. If there are companies that want to gather folks in a conference room, they will get a preference. Of course, if there are insurers or law firms that have signed up individual registrants and now tell me that they can combine into a conference room, I’d be appreciative. That will allow others to attend. Let me know your pleasure at ddk@huwritzfine.com.

Coverage Mediator

Give Me a Call – 716-849-8942

Coverage mediation is a thing! Subject matter expertise may be useful. What are the benefits of coverage mediation?

Time and Cost Efficiency

Mediation is generally much faster and more cost-effective than traditional litigation:

The process can typically be completed within weeks, compared to months or years for court cases.
It avoids expensive court fees, attorney costs, and other litigation-related expenses.

Control and Flexibility

Parties have more control over the outcome in mediation.
They can actively participate in crafting solutions tailored to their specific needs and circumstances.
There is flexibility to explore creative resolutions that may not be available through court proceedings.

Confidentiality

Mediation proceedings are typically confidential, which offers several benefits:
- Parties can discuss sensitive matters openly without fear of public disclosure.
- It avoids the publicity and public record associated with lawsuits and trials.

Relationship Preservation

The less adversarial nature of mediation can help maintain or improve relationships between parties.
It fosters open communication and collaboration.
This can be especially valuable in disputes involving ongoing business relationships.

Risk Mitigation

Mediation helps alleviate some of the risks associated with litigation.
It avoids precedent that may provide unfortunate results for parties – or for the industry – in the future.
It offers a compromise-based approach, reducing the "all-or-nothing" risk of a court decision.
Even if unsuccessful, the process can provide valuable insights into the strengths and weaknesses of each party's position.

Empowerment and Communication

Mediation empowers parties in ways that litigation often doesn't.
Clients have a more active role in the process and outcome.
It provides a forum for parties to tell their stories and feel heard4.

While mediation isn't suitable for every situation, these advantages make it an attractive option for resolving many insurance coverage disputes efficiently and effectively.

Newsletters:

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at jeb@hurwitzfine.com to be added to the mailing list.
Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at dra@hurwitzfine.com to subscribe.
Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact V. Christopher Potenza at vcp@hurwitzfine.com to subscribe.
Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at emm@hurwitzfine.com to subscribe.

Son Bruised in Football Game, Parent Sues School – 100 Years Ago:

Times Herald
Olean, New York
6 Dec 1924

SUES ACADEMY BECAUSE
SON WAS ALLOWED TO PLAY
FOOTBALL AGAINST WISHES

KANSAS CITY, Mo., Dec. – Alleging that her son, Wendall, 16, was permitted to take part in a football game in 1922, against her expressed wishes, Mrs. Pearl V. Hatch has instituted suit against the Kansas City Military academy, Oswego, Kansas, and Clyde R. Terry, former superintendent of the Institution for $5,000 damages.

Mrs. Hatch asserted in her petition that the boy suffered bruises and sprains in the game. She declared that when he entered the military academy she directed the school authorities not to permit him to take part in any violent exercises, as Wendall was frail.

Peiper on Property (and Potpourri):

Greetings from NYC where we return to the warm embrace of DRI’s annual Insurance Coverage and Practice Symposium. Although I trust others have a bit longer history (you know who you are), this year marks my 15^th consecutive (not counting COVID disruptions) trip. This conference stands out among its peers because of the practical and substantive topics that are presented. Kudos to all of the presenters, and this year’s Program Chair Illan Olman and the Vice-Chair Courtney Britt. We know first-hand how much time and effort goes into developing the programs and appreciate the sacrifice.

I do note, unfortunately, I missed a few morning sessions due to a first for me. My plane, which I promptly boarded at 5:45 a.m. this morning, did not take off because it (along with others on the tarmac) became temporarily stuck in the snow. The snow removal crews at BNIA are among the very best at what they do, but even they were overwhelmed (if only temporarily) by today’s issues. We did arrive safely, and for that I am quite grateful. Plus, I was gifted a story for today’s cover note for which I am equally grateful.

That’s it for now. See you again in two weeks.

Steve
Steven E. Peiper
sep@hurwitzfine.com

Prisoner’s Hair an Issue? – 100 Years Ago:

Buffalo Post
Buffalo, New York
6 Dec 1924

ALLEGED POISONER TO
WEAR BOB AT TRIAL

MOUNT VERNON, Ill., Dec. 6. (A.P.) - At the resumption Monday of the trial of Lawerence M Hight, deposed clergyman, and Mrs. Elsie Sweetin, for the poisoning of Mrs. Anna Hight and Wilford Sweetin, Mrs. Sweetin probably will satisfy a long felt wish and appear with bobbed hair, with permission to leave the Nashville jail today, she planned to visit a hairdresser.

Objections of her father-in-law, C.C. Sweetin, had prevented her acquiring a bob, Mrs. Sweetin told her attorney, but she said she no longer would respect his wish.

Lee’s Connecticut Chronicles:

Dear Nutmeggers:

On the road, again, really. I know it’s hard to believe. Yesterday was a nice trip from New Haven, Connecticut, across the Sound on the Ferry, out to a very nice appearance in Suffolk Supreme in Riverhead. Then I made a “surprise drop-in” at our Long Island office, before slogging through the traffic to get to Manhattan for the DRI Insurance Conference. If you’re here, well, you’re probably home by now reading this, but stop by and say “Hi” to me, Dan, and Steve.

Back to some well needed CLE credits. My registration is up next month.

Keep keeping safe.

Lee
Lee S. Siegel
lss@hurwitzfine.com

“Marry Me. Marry me.” “I can’t, you’re penniless”. “So what, the Czar of Russia was Nicholas”– 100 Years Ago:

The Buffalo Times
Buffalo, New York
6 Dec 1924

Judge Approves Refusal
Of Girl, 16, to Wed Man, 48

NEW YORK, Dec. 6. – “Here, take back your ring, I’ll die before I marry you, I love only Tommy.”

Antoinette Percoco, 16, and as vivid as an Autumn rose, jerked an engagement ring off her finger and flung it at Salvatore Dirgillio, 48, in the New Brighton, S.L., Police Court.

Friendly hand restrained her from tearing off the wedding gown which the matured Dirgillio had given her.

Magistrate William Croak, who had just been told by the girl’s mother that Antoinette was “incorrigible” because she wouldn’t marry the man of her mother’s choice, ruled:

“Case dismissed. She should have a right to choose her own husband.” A smile flashed over Antoinette’s olive features. Then she and Thomas Reno, 19, of Port Richmond, hand in hand, tripped out of court. They plan to marry.

Ruffner’s Road Review:

Dear Readers,

I hope everyone had a great Thanksgiving, enjoyed some good food, and got to spend some time with friends and family. Of course, it was nice to have the weekend conclude with another strong Bills victory on Sunday Night Football.

I have two cases for this week: in the first case, the court held that the insurer met its burden of proof entitling it to summary judgment, setting forth evidentiary facts to establish that the claimants violated a condition precedent to coverage by failing to appear for their duly noticed examinations under oath. Next, in Santos v. Fiktus, the Appellate court reversed the Supreme Court’s ruling, which had granted the defendants' summary judgment motion and dismissed the complaint insofar as it alleged that the plaintiff sustained serious injuries under the 90/180-day category of Insurance Law § 5102(d).

Kyle
Kyle A. Ruffner
kar@hurwitzfine.com

Harsh Fines for Drunk Drivers – 100 Years Ago:

The Buffalo Times
Buffalo, New York
6 Dec 1924

Tipsy Autoists
Punished Hard

GENESEO, Dec. 6. – Three of the prisoners who were indicted by the last grand jury and pleaded guilty were arraigned before Judge Lockwood R. Doty Thursday afternoon for sentence.

Roscoe Congdon of Rochester, who was charged with driving an automobile while intoxicated, was sentenced to ten days in the county jail and fined $100.

Fred Mott, who pleaded guilty to harboring an inmate from the Craig colony at Sonyea, received a suspended sentence on his promise to cease making his home a gathering place for Colony inmates.

Burt Lee, who pleaded guilty to a charge of driving an automobile while intoxicated, was sentenced to serve ten days in the county jail and to pay a fine of $100. Lee’s home is in Rochester and he was arrested some time ago by Officer Snyder of this village, while driving an automobile between this village and Warsaw. He claimed that he was drugged not intoxicated.

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

While Northtowners in Western New York (myself included) avoided snow fall last weekend that many of you probably saw on Sunday Night Football during the Bills game, our luck ran out last night. I was caught unprepared this morning and while my snowblower got the morning off, my shovel (and myself) did not. Mistakes were made.

This edition, my column outlines a recent Southern District of New York decision finding that the existence of a choice of law provision in a policy says what it means and means what it says, even if regulators in the state of Louisiana say otherwise.

Until next time,

Ryan
Ryan P. Maxwell
rpm@hurwitzfine.com

Huge Verdicts? – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
6 Dec 1924

BIG DAMAGE VERDICT

Woman gets $25,000 award for Black Diamond Wreck

A jury in federal court yesterday returned a sealed verdict allowing damages of $25,000 to Barbara Ciechowski of Chicago against the Lehigh Valley railroad for injuries received in the wreck of the Black Diamond Express at Le Roy on May 13, 1922. Hamilton Ward represented the woman.

There are about fifteen similar cases pending against the railroad. Action brought by the Rev. John Humphrey of Chicago resulted in a $3,000 verdict in an Illinois court.

Storm’s SIU:

Hi team:

I have a very interesting Court of Appeals decision for you this edition, Farage v. Associated Ins. Mgt. Corp.

Insurer’s Motion to Dismiss Granted Precluding Replacement Cost Coverage Benefits Where Repair/Replacement Was Not Completed Within the 2-Year Contractual Suit Limitation Period Even Though the Policy Contained a Loss Settlement Condition Requiring Repair/Replacement Within a Reasonable Period of Time.

The case follows on the heels of and must be read with an understanding of the Court of Appeals decision in Executive Plaza v. Peerless Ins. Co., 22 N.Y.3d 511 (2014), which pertains to the recovery of replacement cost coverage benefits.

Encourage courts to read Executive Plaza thoroughly as it is being misinterpreted to the disadvantage of insurers. The holding of Executive Plaza is being misread beyond its intent and context to mean that in all cases, regardless of the policy language, an insured has a reasonable amount of time to complete repairs/replacement in order to recover repair/replacement cost benefits. That is absolutely not what the Court of Appeals said in that case.

Executive Plaza involves a commercial policy which contained two separate time limitations: 1) a two-year limitation to commence suit on the policy, running from the date of the fire; and 2) a loss payment provision saying the insured may recover the cost of replacing damaged property but only if completed within a “reasonable” period of time.

The insurer read the two conditions harmoniously to require the insured to repair or replace the damaged property within a reasonable amount of time but in no event any longer than two years from the date of the fire. However, the insured alleged an ambiguity.

I believe the insurer appropriately read the two provisions harmoniously: "Additionally, in interpreting such provision, the contract must be read as a whole to determine what the parties must have reasonably intended by its terms [citations omitted]". Loblaw, Inc. v. Employers' Liab. Assur. Corp., Ltd., 85 A.D.2d 880, 881 (4th Dept. 1981), affd., 57 N.Y.2d 872 (1982). "Wherever possible, operation, effect and meaning must be given to every sentence, clause and word of an insurance policy, with reasonable effort made to harmonize and give effect to all parts of the contract [citation omitted]." Facet Indus., Inc. v. Wright, 95 A.D.2d 262, 264 (1st Dept. 1983). "‘[W]here two seemingly conflicting contract provisions reasonably can be reconciled, a court is required to do so and to give both effect [citation omitted]’". Long Island Lighting Co. v. Allianz Underwriters Ins. Co., 301 A.D.2d 23, 30 (1st Dept. 2002).

The insurer in Executive Plaza rendered payment for the actual cash value of the property damage, and the insured indicated it would be seeking additional payments for replacement cost coverage. Repairs were completed more than two years after the loss, at which point the insured brought an action demanding payment for replacement costs under the policy. The court found in favor of the insured under the unique facts and policy language presented in that case.

This was a federal case in which the following question was certified to the Court of Appeals by the Second Circuit:

If a fire insurance policy contains:

(1) a provision allowing reimbursement of replacement costs only after the property was replaced and requiring the property to be replaced "as soon as reasonably possible after the loss"; and

(2) a provision requiring an insured to bring suit within two years after the loss;

"is an insured covered for replacement costs if the insured property cannot reasonably be replaced within two years?"

The Court of Appeals accepted certification and answered the question "yes".

That decision only applies to policies requiring both:

that the property be replaced “as soon as reasonably possible after the loss”; and
suit be commenced within two years of the date of the loss.

It does not mandate that a specific time limitation in a policy in which repair or replacement must occur to recover replacement costs benefits is to be disregarded and substituted with the language “a reasonable period of time”.

The Court of Appeals’ analysis and everything said in the Executive Plaza decision must be read in the light of its effort to interpret those two allegedly conflicting provisions, which is said to have created ambiguity in that case. Indeed, the Court said, “there is nothing inherently unreasonable about a two-year period of limitation.”

The Executive Plaza court held it was not fair to the insured to impose a two-year suit limitation when the replacement cost benefits provisions allowed for repair/replacement within a “reasonable” amount of time.

Again, the holding in Executive Plaza does not apply to every replacement cost coverage claim. It is limited to those policies which contain a two-year contractual suit limitation condition and a loss settlement condition which states that repair/replacement must be made within a “reasonable” period of time.

Tell your friends, family members, adversaries and judges -- shout it from the roof tops. Executive Plaza is being misconstrued and overapplied!

Good discussion. Let’s talk again in two weeks. Go Bills!

Scott
Scott D. Storm
sds@hurwitzfine.com

Nobody Ever Invited Me to One of These – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
6 Dec 1924

PARK OWNERS WAR
ON PETTING PARTIES

Chicago, Ill., Dec. 5 (A.P.). – Amusement park owners in convention here have declared war on petting parties. J. H. Smith of Cleveland, declared “that no more shall the village vamp and the roadhouse shiek and the gangs of rowdies and the group of flighty girls indulge in rowdyism in the amusement park. The petting parties and necking must stop.”

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

This week’s case from the Kansas Supreme Court is more of a fun procedural read involving a tortfeasor’s assignment of rights to sue their insurer for bad faith. The tortfeasor insured struck and killed the plaintiff’s husband while he was cycling. The tortfeasor insured assigned their rights to sue their insurer for bad faith in allegedly failing to defend and settle in the wrongful death action, and the insurer argued that there was no subject matter jurisdiction for the plaintiff to then assert the bad faith claim in a garnishment action against it. On appeal, the Court determined that the argument was not actually about subject matter jurisdiction, and the insurer was attempting to raise legal defenses for the first time on appeal. I enjoyed reading the opinion and hope you do as well.

See you in a fortnight,

Kate
Katherine A. Fleming
kaf@hurwitzfine.com

Women Populate the Lobbies – 100 Years Ago:

The Herald Statesman
Yonkers, New York
6 Dec 1924

WOMEN LOBBYISTS NOW
NUMEROUS IN CAPITAL

Washington, Dec. 5. – Women lobbyists will be more active in politics during the present and coming sessions of Congress than they ever have been before, a poll of the various women of organizations engaged in political activities showed today.

According to officials of several of the organizations which have headquarters in the National Capital – and there are more than a score of them – there are a dozen bills they believe that will benefit the women of the nation in particular and they are determined to have them enacted.

Among them are:

Child labor amendment to the Constitution

Establishment of a Federal Department of Education

Entry into the World Court.

Uniform marriage and divorce law.

Appropriation of funds for reestablishment of the interdepartmental social hygiene board.

Fess vocational home economic bill.

Fess-capper bill for compulsory physical education in public schools.

Granting of suffrage to residents of the District of Columbia

Laws permitting women to serve on juries in States where no such laws now exist.

First in importance, according to Mrs. Arthur C. Watkins, secretary of the Women’s Joint Congressional Committee, known better, perhaps, as the “Woman’s Lobby,” is the child labor amendment. This act has passed both branches of Congress and ratification by the several States in now awaited.

Gestwick’s Garden State Gazette:

Dear Readers:

What a Bills game. The shovel pass from Amari Cooper to Josh Allen was a play for the ages. Congratulations to those of you who have Josh Allen on your fantasy teams. I hear he was credited with both a passing touchdown and a receiving touchdown on that single play. What’s more, he also had a rushing touchdown at a different point in the game, becoming the first quarterback in NFL history to have a passing touchdown, receiving touchdown, and rushing touchdown in the same game. Josh Allen is (rightly) atop our Christmas tree:

I have another COVID-19 case for you this week. In this one, the insured alleged in its pleadings that surfaces that become infected with COVID-19 molecules are fundamentally altered, as they turn into “vectors for disease.” The carrier moved to dismiss on the pleadings, arguing that the insured’s claim arose out of the governmental shutdown orders, and not any direct physical loss to property. Read on to find out the result.

See you in two weeks.

Evan
Evan D. Gestwick
edg@hurwitzfine.com

Equal Pay for Men and Women Teachers? Nah – 100 Years Ago:

The Buffalo Times
Buffalo, New York
6 Dec. 1924

Buffalo Teachers Oppose
Equal Pay Law Repeal

Buffalo school forces may be expected to carry their opposition to any repeal of the state equal pay law for men and women teachers to legislative floors, and probably will be supported by Rochester and Syracuse school forces. It was admitted locally that the opposition of these three cities to the repeal would not be treated lightly by the legislature.

The repeal of the equal pay law was demanded in a resolution adopted yesterday at the fifth annual meeting of associated school boards and trustees of New York State.

Vigorously Defend Law.

The school boards of Buffalo and Rochester, where the equal pay principle was in effect before the law was passed, put up a vigorous defense of the law during the debate, but when it came to voting, declined to vote either way. Syracuse voted against the repeal.

The Bufalo board of education was represented at the meeting by Mrs. William F. Felton, chairman of the board, and by James Storer, secretary of the board. Superintendent E.C. Hartwell was also present.

School board members who were not present are awaiting the arrival of the Buffalo delegation to obtain first-hand information of what took place at the meeting, and will plan their future action accordingly.

The question was raised whether repeal of the equal pay law would result in a slash in the compensation received by Buffalo teachers. It is thought that the legislature might feel called upon to reduce the amount of money appropriated for teachers’ salaries.

30 Boards Failed to Vote.

The proposal to recommend repeal of the law, after three hours fierce debate, was carried on a roll call of education boards, with 26 voting in favor of the repeal, six against it, and about 30 not voting at all.

The most arduous advocates of the law were women delegates although there was a number of men who also supported it. When it came to voting, a number of women changed over and voted for the repeal.

The law was characterized as “unfair, unreasonable and substantially impossible” because it is a mandatory law for the entire state and does not cover conditions which might come up in different localities by J. Ward Russell of Glens Falls, president of the association, who surrendered the chair to take the floor in favor of the proposal to repeal the law.

O’Shea Rides the Circuits:

Hey Readers,

The gem of Genesee County avoided significant snowfall this past weekend, however, as I write that is no longer the case. With the first true snow in the books, the holiday season has officially started. That includes a gluttony of holiday movies upon which I am subjected to watch by my wife. Admittedly, I do enjoy some.

No write up this week as I defer to my erudite colleagues. However, expect a few cases in the next edition for a holiday treat.

Until Next Time,

Ryan
Ryan P. O’Shea
rpo@hurwitzfine.com

Hydrants Surviving Errant Motorists – 100 Years Ago:

Press and Sun-Bulletin
Binghamton, New York
6 Dec 1924

AUTOMOBILE DRIVERS
GET MORE CAREFUL
IN HITTING HYDRANTS

A decrease in the number of careless automobile drivers is indicated by the falling off in the number of fire hydrants broken this year.

So far this year 17 hydrants have been broken, six of the accidents occurring in the last two months.

For the same period in 1922 23 hydrants were damaged and in 1923 27 hydrants. In all cases where the driver of the machine could be discovered an effort was made to collect the cost of repairs. In cases where the hydrant was completely smashed, it costs between $60 and $75 to replace it.

Rob Reaches the Threshold:

Dear Readers,

I hope you all had a wonderful Thanksgiving holiday. As we are now in December, mother nature has reminded us in the WNY area that we, in fact, live in WNY. After a very tame climate for November, the area has been walloped with a few snowstorms over the last week. This proud new homeowner spent almost two hours shoveling snow this morning (might be time to become a snowbird already).

For this installment, we review a rare Third Department case with some really nice analysis, wherein both parties' submissions are analyzed, and multiple categories of the Insurance Law Section 5102(d) are discussed.

I hope you all enjoy the read.

Rob
Robert J. Caggiano
rjc@hurwitzfine.com

Hair Raising Teachers Flourish – 100 Years Ago:

Times Herald
Olean, New York
6 Dec 1924

Oswego Orders
Teachers to Allow
Their Hair to Grow

Oswego, N.Y. Dec. 7 – All teachers in the public schools with bobbed hair must let it grow.

That’s the decree promulgated today by Superintendent Frederick Leighton following a council of war by the Board of Education. A formal resolution to that effect was not adopted, but it was the sense of the superintendent and the members of the department that something of that kind should be adopted.

About 50 per cent of the teachers particularly the younger ones, have bobbed hair and the amount of “fixing: that it requires in class taking up time that might be put to better use was commented upon.

LaBarbera’s Lower Court Library:

Dear Readers:

Last winter I was a little disappointed in the lack of Lake Effect snow I experienced after moving into a little town south of Buffalo. This year, I can tell already I will not be disappointed. A few hours after Thanksgiving, it was a winter wonderland. It was the puppy’s first time enjoying the snow. The snow stood higher than her, but she was not deterred. As she ran laps in our backyard, she ate the snow she was kicking up from underneath her.

This week I have a Kings County decision, discussing the duty to defend an additional insured, irrespective of the eventual outcome of the underlying action.

Until next time…

Isabelle
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Number, Please – 100 Years Ago:

Times Herald
Olean, New York
6 Dec 1924

DIAL TELEPHONES

The news that the New York Telephone Company will install in its new building in Olean apparatus permitting the installation of dial telephones in offices and homes in the city is something that will cause great satisfaction to those who have had experience with the dial system.

Briefly, in the new system the exchange operator is eliminated. On the base of one’s telephone is a dial with a pointer. On the dials are printed numbers from 0 to 9. Should a party wish Number 368, for instance, he would turn the pointer successively to the numbers 3, 6 and 8 on the dial, take off the receiver – and the connection is made automatically, and he finds he has the party he wants on the line!

Lexi’s Legislative Lowdown:

Dear Readers,

I hope everyone enjoyed the holiday. I successfully hosted my family for Thanksgiving last week, and I am looking forward to hosting more family events in the future!

This week’s column addresses one of the many bills signed by Governor Kathy Hochul in November. A full list of the bills passed can be found here: 2024 Signed Bills.

Thanks for reading,

Lexi
Lexi R. Horton
lrh@hurwitzfine.com

Advice for the Lovelorn – 100 Years Ago:

The Brooklyn Daily Times
Brooklyn, New York
6 Dec 1924

Hates School, Likes Boys

Dear Miss Chester:

I read your columns every night and see that your answers are very good in helping many girls, so I take the liberty to put a perplexing question to you.

I am a girl of 16 and very much in love with boys and enjoyment. I am in my second grade in high school and find time to prepare my lessons, but still have a little time at evening for enjoyment and the boys.

My parents are very much against this and do not wish me to be out after 10 o’clock, which I consider very early. They do not want me to be out with boys, for they consider me too young. My girl friends are all between 16 and 17. They all attend business. I lately have had a hatred for school, but will gladly continue to go and prepare my lessons if you could tell me how I could induce my parents to allow me out late on Sunday nights, if not on week days.

They will not allow me to leave school so I must continue, but please tell me how I can induce them to let me go out with boys and allow me to stay out later.

A Love-Sick Girl

Why Not Compromise?

My Dear Love-Sick Girl:

Perhaps your parents know you better even than you know yourself. I think that they are quite right in seeing that you stay in school and that you do not make a practice of evening parties. But, after all, I do think they might allow you to have a party at least one evening a week, at a time when you are not occupied with your homework. I think, too that they might compromise on 11 o’clock instead of 10, but how to induce them to do this is really your own problem to solve. Perhaps if you are very sweet about it and promise to be in on time, to study hard and not to be so “very much in love with boys and enjoyment” they may capitulate.

Susan Chester

Editor’s Note: From May 1924 through 1937, Susan Chester answered letters from girls and women about love and romance issues for the Brooklyn Daily Times and the Brooklyn Eagle.

North of the Border:

This week’s edition finds me in New York City at DRI’s 2024 Insurance Coverage and Practice Symposium. Wonderful to be with longstanding friends and meeting new ones, who do what I do. The food, noise, lights and crowds mean that New York is like no other place in the world. It has to be experienced. But, after three days, I know that I will be ready to head back to the great white north. Until next time.

Heather
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

Failure to Secure Proper AI Coverage Leads to Damage Claim Where Purported AI Has to Dig Into Its Own Pocket
Primary Carrier Cannot End its Duty to Defend by Offering Policy Limits

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Failure to Demonstrate Diligent Efforts to Repair Covered Loss Within Two Years Will Not Overcome Untimely Lawsuit

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

Proximate Cause Defense Against Good Samaritan Denied

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
kar@hurwitzfine.com

Insurer Entitled to Summary Judgment Due to Claimants Violation of Condition Precedent to Coverage
Appellate Reverses Supreme Court Decision that the Plaintiff Did Not Sustain Serious Injuries Under Insurance Law § 5102(d)

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
rpm@hurwitzfine.com

A Choice of Law Provision in an Insurance Policy Trumps Statute Voiding Such Clauses in Insured’s Home State

STORM’S SIU
Scott D. Storm
sds@hurwitzfine.com

Insurer’s Motion to Dismiss Granted Precluding Replacement Cost Coverage Benefits Where Repair/Replacement Was Not Completed Within the 2-Year Contractual Suit Limitation Period Even Though the Policy Contained a Loss Settlement Condition Requiring Repair/Replacement Within a Reasonable Period of Time

FLEMING’S FINEST
Katherine A. Fleming
kaf@hurwitzfine.com

Subject Matter Jurisdiction is Not the Same as Whether a Party is Entitled to the Relief Sought as a Matter of Law

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
edg@hurwitzfine.com

Even if COVID Molecules Actually Adhere to Surfaces, Still No Coverage Because There is Still No Direct Physical Loss

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
rpo@hurwitzfine.com

Nothing this week see you in two . . .

ROB REACHES the THRESHOLD
Robert J. Caggiano
rjc@hurwitzfine.com

Third Department Unanimously Modifies Grant of Defendants’ Summary Judgment Motion Fully Dismissing Complaint to the Extent Plaintiff’s Serious Injury Claim Under Only the ‘90/180’ Category of Insurance Law §5102(d) Now Survives

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
ihl@hurwitzfine.com

Court Found Tenant Satisfied Obligations under the Lease, While Tenant’s Insurer Breached Obligation to Defend Landlord and Agent, Pursuant to Additional Insured Endorsement of the Policy

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
lrh@hurwitzfine.com

Legislation that Requires Installation of Smoke Detectors in Common Places of Multiple Dwellings

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
hasanderson@sanderson-law.com

The Duty to Defend Will Only be Nullified by an Exclusion, That When Read Narrowly, Applies to the Alleged Act or Mechanism That Produced the Otherwise Covered Injury or Damage.

All the best. Stay safe.

Dan

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut and New Jersey.

NEWSLETTER EDITOR
Dan D. Kohane
ddk@hurwitzfine.com

ASSOCIATE EDITOR
Agnes A. Wilewicz
aaw@hurwitzfine.com

COPY EDITOR
Evan D. Gestwick
edg@hurwitzfine.com

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
ddk@hurwitzfine.com

Steven E. Peiper, Co-Chair
sep@hurwitzfine.com

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Domenica D. Hart

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
sep@hurwitzfine.com

Michael F. Perley

Scott D. Storm

Brian D. Barnas

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
ddk@hurwitzfine.com

Ryan P. O’Shea
rpo@hurwitzfine.com

Kyle A. Ruffner
kar@hurwitzfine.com

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com

Topical Index

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Gestwick’s Garden State Gazette

Lexi’s Legislative Lowdown