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Coverage Pointers - Volume XVII, No. 5

Coverage Pointers

Volume XVII, No. 5
Friday, August 28, 2015

A Biweekly Electronic Newsletter
Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, NY 14202

Phone: 716-849-8900
Fax: 716-855-0874
www.hurwitzfine.com

© Hurwitz & Fine, P. C.
All rights reserved


As a public service, Hurwitz & Fine, is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York State appellate courts. The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise our editor Dan D. Kohane at [email protected] or call 716-849-8900. You will find back issues of Coverage Pointers here.


 

Dear Coverage Pointers Subscribers:

Do you have a situation?  We love situations.  We are, however, suffering from stock market whiplash.  That situation, we would prefer to avoid.

We’re celebrating my step-daughter Lorraine’s wedding to Ryan Maxwell over the Labor Day weekend. It’s exciting to see a young couple starting their journey together through life.

Happy Birthday to Audrey Seeley and our congratulations on her reappointment to a second term as Chair of the prestigious DRI Insurance Law Committee.

There is an Interesting case on the stacking of unlimited employer’s liability coverage with an umbrella policy in my column.  Quiet time in the courts.

DRI Insurance Law and Claim Conference:

DRI will present its Insurance Law and Claims Conference on October 28 at the Hilton Hartford.  The Conference was designed by DRI and top Hartford-area carriers to update insurance executives, in-house counsel, and outside counsel on crucial new authority impacting claims handling, coverage decisions, and extra-contractual exposure.  Watch this space for more info …

Attalawyers – It’s An Honor to Be Recognized by One’s Peers:

It’s “Recognition Season” and H&F is well represented with kudos by our peers:

The Upstate New York issue of Super Lawyers was just released and 25 of our lawyers (2/3rds) made the list, eight of whom were listed at Top 50 lawyers and five on the top 25 Women list.

Robert P. Fine                                                          Business Corporate
Lawrence C. Franco                                                Business Corporate
Dan D. Kohane (Top 50)                                       Insurance Coverage
Harry F. Mooney (Top 50)                                     Personal Injury Defense, Products
Ann E. Evanko (Top 50, Top 25 Women)            Employment & Labor
Paul J. Suozzi (Top 50)                                          Personal Injury Defense, General
Roger L. Ross                                                           Real Estate
Lawrence M. Ross                                                   Health Care
Michael F. Perley (Top 50)                                    Personal Injury Defense, General
Andrea Schillaci (Top 50, Top 25 Women)                     Business Litigation
Elizabeth A. Fitzpatrick – Metro NY edition                     Insurance Coverage
Edward C. Robinson                                             Estate Planning & Probate
Earl K. Cantwell                                                       Business Litigation
Jody E. Briandi (Top 50, Top 25 Women)            Personal Injury Defense, General
Audrey A. Seeley (Top 50, Top 25 Women)                    Insurance Coverage
David R. Adams                                                    Construction Litigation
Todd C. Bushway                                                  Personal Injury Defense, General
V. Christopher Potenza                                          Personal Injury Defense, General
Steven E. Peiper                                                      Insurance Coverage
Diane F. Bosse (Top 25 Women)                          Insurance Coverage
Margo M. Lagueras                                                  Insurance Coverage
Cassandra A Kazukenus (Rising Star)                           Insurance Coverage
Jenifer A. Ehman (Rising Star)                             Insurance Coverage
Marc A. Schultz (Rising Star)                                Personal Injury Defense, General
Patricia Fay (Rising Star)                                       Estate Planning & Probate

Hurwitz & Fine Attorneys Listed Among Best Lawyers in America:

Robert P. Fine                      Corporate Law, Health Care Law, Mergers & Acquisitions, Tax Law, Trusts & Estates
Lawrence C. Franco            Corporate Law, Tax Law, Trusts & Estates
Dan D. Kohane                    Commercial Litigation, Insurance Law, Litigation – Insurance
Harry F. Mooney                  Civil Rights Law, Commercial Litigation, Product Liability Litigation –Defendants, Professional Malpractice Law – Defendants
Ann E. Evanko                     Corporate Law, Employment Law – Management, Litigation Labor & Employment
Paul J. Suozzi                      Personal Injury Litigation – Defendants
Roger L. Ross                       Real Estate Law
Lawrence M. Ross               Corporate Law, Health Care Law, Tax Law
Michael F. Perley                 Litigation – Municipal, Personal Injury Litigation – Defendants
Diane K. Church                  Banking & Finance Law
Andrea Schillaci                  Product Liability Litigation – Defendants
Christopher J. Hurley          Banking & Finance Law
Edward C. Robinson           Elder Law
Audrey A. Seeley                 Insurance Law

Ann E. Evanko was identified with special distinction as a “Lawyer of the Year” in Employment Law and Edward C. Robinson was identified as a “Lawyer of the Year” in Elder Law. Lawyers listed as such have received particularly high ratings in these surveys by earning the highest level of recognition from their peers for their abilities, professionalism, and integrity in their specific area of law.

Presidential Trivia – And Who Doesn’t Love THAT?  Ask Tim:

I received a note friend Tim Dodge of IIABNY, Independent Insurance Agents & Brokers of New York, Inc. (author of the most delightful “Ask Tim” blog).  As we consider the candidacy of Jeb Bush, the son and brother of a President, we might wonder whether and when that might happen again.  Tim sent this note:

Since you’re a presidential history buff, I thought I’d share a completely trivial realization that hit me while washing the dishes last night. My oldest son (an attorney living in NYC, by the way) was born in December 1988, one month after the election of George H.W. Bush. This means that none of my three sons have seen, in their lifetimes, the election of a president who had sons.

Occupants of the White House for the last 22 years have only had daughters, a streak that will continue should Hillary Clinton win the 2016 election. In fact, it occurred to me that five of the last nine presidents were the fathers of daughters only – Lyndon Johnson, Richard Nixon, Bill Clinton, George W. Bush and Barack Obama. From 1974 to 1993, all of the presidents had sons and daughters (Ford, Carter, Reagan, George H.W. Bush.) The last president who was the father of only sons was Dwight Eisenhower, who succeeded another president whose sole child was a daughter – Harry Truman.

This information has absolutely no significance, but for some reason it struck me as interesting while I was washing dishes. 

Tim Dodge
Fitz’ Bits:
Dear Subscribers:

As we wind down summer and look to the fall, thoughts of back to school mean back to seminars and training.  I remind you of the NYSBA Law School for Insurance Professionals full day seminar, which will be held in Rochester on September 16th, New York City September 17th, Albany September 18th, and at Touro Law School on Long Island on September 24th.  If you’d like additional information, please feel free to contact me.

In October, I will be travelling to Universal, where I will be moderating a panel addressing cyber risks and cyber insurance with Betsy Woudenberg, CEO of IntelligenceArts, and Kelly Geary, SVP of Lemme.  Between reports that more than two million Americans have been victims of Medical Identity Theft, as recently reported in Forbes, to the most recent reports involving the hacking of the website, Ashley Madison, the topic certainly could not be more timely.  Thus far, the stories about the Ashley Madison hack have focused on who was responsible and of the fall-out to those whose personal information was exposed, but we can bet that somewhere down the line, the insurance issues will be addressed, as lawsuits are filed.

As noted in a recent article appearing in Insurance Business America, “The data breach affecting the notorious Ashley Madison dating site reveals the level of damage – both financial and reputational – that can be caused by cyber-crime and underlines the importance of a proper breach response plan.”  That same article notes that according to a survey from American International Group, 85% of corporate risk managers, executives and IT security decision-makers in the US say they are more concerned about cyber risk and the reputational fallout it can cause than they are about any other risk. I suggest this also highlights the importance of having in place the proper coverage to respond to the claims and to the costs companies experience in addressing the breach. Surely, there is more to come on this topic and other emerging risks.

Til next time,

Beth
Elizabeth A. Fitzpatrick
[email protected]

 

Presidential Timber:

Whenever I post my presidential biography reading list, as I did last issue, I’m delighted with the feedback, and the number of people who share my passion.  I am reading “The President’s Daughter” by Nan Britton. She was one of Warren G. Harding’s paramours before and during his shortened presidency and DNA testing just confirmed that she bore his daughter.

When the book was published about the late Republican President, bipartisanship ruled the day.  Rep. John Tillman, Dem, Ark, called the book, “the grossest attack ever launched against the living or dead,” in a speech before the House of Representatives.  “The book,” he said, appeared “suddenly like a blast from hell” and opined that he did not believe a woman wrote it, but instead “some fellow of the baser sort for the money in the enterprise.  The story is sordid and selfish and a woof of infamy”.

Gotta love that:  “woof of infamy”.

It was being sold in 1927 for a pretty penny:

The Salem News
Salem, Ohio
20 Aug 1927

THE
PRESIDENT’S DAUGHTER

By Nan Britton

A brutally frank and detailed story of the tragic love secret of President Harding.

Most astounding book ever published.

The mother’s true narrative of the circumstances surrounding Mr. Harding’s only child.

A little daughter now 7½ years old and hitherto unknown to the world.

$5 POST PAID

The book is currently available on Amazon for Kindle for $1.99.   First Edition is available for $75.  So, one had purchased the first edition for $5 in 1927 ($66.33 in today’s dollars) and sold it today for $75, there’d be a $9 profit.

Wilewicz’ Wide World of Coverage:

Dear Readers,

The summer is winding down, but the Federal Courts have shown no sign of slowing. Decisions have continued to come down, both in the coverage and in environmental cases. At least the weather is cooling down, making life more comfortable generally. I recently vacationed in Poland where it was an unnerving 98F with about 80% humidity. Though I shouldn’t admit it because I live in Buffalo, I welcomed coming back down to the 60s and 70s here.

This week, the Second Circuit addressed a reinsurance case where the two carriers were at odds about picking an arbitrator. In Odyssey v. Lloyd’s, the court disagreed with the lower District Court and directed the court to appoint an umpire. Where the parties are at a stalemate, it is up to the court to put an end to it. Next, from the Northern District, we bring you a case of a purported insurance expert, whose testimony was pared down by the court. In Binghamton v. AM Alternative, the court found that the expert did not have sufficient “niche” experience in sanitation-district policies to testify about them. Finally, from the environmental tort realm, the Northern District recently addressed the use of racial or ethnic characteristics in assessing damages. In G.M.M. v. Kimpson, the court issued a voluminous and extensively-research opinion on the subject. It held that race or ethnicity categorically cannot be used as a factor to reduce damages. It’s simply unconstitutional. The case is long, but it makes for an excellent read.

That’s it for this week. Enjoy the rest of the summer while it lasts. Winter is coming.

See you in a couple of weeks!

Agnes
Agnes A. Wilewicz
[email protected]

Dotting the Eyes – A Century Ago:
The New York Times
New York, New York
28 Aug 1915

BASES FULL WHEN
MILLER HITS HOMER

Dodgers Fall Before Heavy Batting
of Cardinals and Lose by 11 to 7 Score.

The bases were jammed when “Dots” Miller stepped up to the plate in the eighth inning at Ebbets Field yesterday.  It is the boyhood dream of every ballplayer to be able to slap out a home run on just such a propitious occasion.  Miller thought this would be a good time to realize his ambition.  He jarred the ball with a terrific rap, and it went to the wall in the far corner of left field.  Miller chased the three runs home ahead of him, and that settled Brooklyn’s chance for keeps.  The count was 11 to 7.

Brooklyn played a loose fielding game, and exposed several pitchers to the fury of the Cardinals’ bats.  Sherrod Smith was the third and last of the pitchers in the game, and he was slammed without regard.  Uncle Robbie kept him under the worst of the fire, for any one could plainly see that the Dodgers were badly beaten anyway.

Editor’s Note:  That was an inside-the-park grand slam home run. It was his only grand slam of his career.

How many of inside the park grand slams have there been?  Here’s a chart that answers that question, although a little dated. By the way, only 13 players have hit two grand slams in one game and only two have hit two grand slams in the same inning.

Miller earned the nickname "Dots" after Honus Wagner was asked by reporters in spring training, "Who is the new player?" Wagner responded "That's Miller", but due to his heavy accent, the reporter, Jack Lennox, heard "Dot's Miller". The name took a while to receive regular usage, as the Pittsburgh newspapers often carried stories of Jack Miller, the Pirates' infielder.

An poor Dots?  First, his baseball career was interrupted by World War I.  Then he died at age 36, eight years after his homer:

Altoona Tribune
Altoona, Pennsylvania
8 Sep 1923

“DOTS” MILLER DEAD.

SARANAC LAKE, N.Y., Sept. 7.—John B. (“Dots”) Miller, until recently manager of the San Francisco club of the Pacific Coast league and former major league star, died here last night of tuberculosis.  Miller left San Francisco several weeks ago and came east in the hope of recovering from his malady in the Adirondack Mountains.

Cassie’s Capital Connection:

Greetings from Albany!  Things remain quiet here in Albany.  Today feels like a fall day, and I’m not ready for the cool down.  Last week I was not able to find anything of interest to discuss, and this week I bring you one small item.  DFS once again extended the mediation program for Superstorm Sandy claims.

Also arising out of Superstorm Sandy, at least in part, Governor Cuomo announced construction approval for the Mesonet Early Warning Weather Detection System, and on August 17, 2015, Governor Cuomo presented “NY Responds”.  “NY Responds” is New York’s “comprehensive new approach for coordinating and strengthening the State’s emergency preparedness.”  A critical component of this program is the Mesonet system which is comprised of 125 sites throughout the state which feeds real-time data to the National Weather Service to enhance the emergency management response during severe weather events.  This program also provides each county with a service which will allow local governments to have one system for entering detailed incident specific information and local resource requests.  Per the press release, this will allow the State to direct additional resources more quickly and effectively to the areas which are being most severely impacted by weather events.  I’ll be curious to see if there is any tangible manner in which the State can identify the effectiveness of the program when it goes into effect and whether there are weather related disaster costs which are avoided as a result.

Cassie
Cassandra A. Kazukenus
[email protected]

Women Take Their Place In Labor – One Hundred Years Ago:

The Sun
New York, New York
28 Aug 1915

N.Y. LABOR MEN ELECT
FIRST WOMAN OFFICER

Miss Nellie Kelly Received
Unusual Honor From Federation

BUFFALO, Aug. 27.—The honor of being the first woman to hold office in the New York State Federation of Labor went to-day to Nellie Kelly of Syracuse.  She is eleventh vice-president of the Federation. This office was created especially by the fifty-second convention at its closing session in appreciation of the part women have played in its history.  There were forty women among the 345 delegates.

Miss Kelly is business agent of the United Garment Workers of Syracuse. She has been in the union since 1901 and this is the second convention she had attended.  When her election was announced the delegates cheered, and every one insisted upon shaking hands with “Nellie.”

HEWITT’S HIGHLIGHTS:
Dear Subscribers:

As we enter the last remaining days of summer, the courts have definitely slowed down. On Long Island, where I am, parents are preparing for the return of their children to school. For the first time in my memory, school on the Island is starting prior to Labor Day, so the summer feels shortened by a week even though Labor Day is late this year. Our household is quite busy at this time, as my wife is a teacher preparing her lessons for this year’s classes, my oldest son is going to first grade, and my youngest son is entering pre-school, having missed the cut off for Kindergarten by ten days due to his December birthday.

The main decision of interest in this column is one we have not yet highlighted before as it involves a challenge to an arbitration award. Challenges to determinations of an arbitrator rarely succeed in the setting of a voluntary arbitration. The standard is still difficult but slightly easier in this particular type of case where the arbitration was compulsory. However, the standard is that the award must have evidentiary support and cannot be arbitrary and capricious, which generally will be met if the arbitrator had any basis in the evidence for their award. In this case, the court found evidence in the record that the claimant suffered reduced range of motion. Also, all of the medical records agreed the accident was the cause of the injuries. Therefore, the arbitration award was upheld.

Until next time,

Rob
Robert Hewitt

[email protected]

Black Lives Mattered to Some 100 Years Ago:

The Sun
New York, New York
28 Aug 1915

A Prominent Atlantan Rescues
Two From a Crowd

ATLANTA, Ga., Aug. 27.—As the result of trouble in Forsyth County and in the neighboring territory between whites and blacks all negroes have been barred from entering the county.  This was brought out clearly to-day by the experience of Hudson Moore, a prominent Atlantan, who went to Cummings, that county, on legal business and took along with him a Negro nurse and a Negro chauffeur.

While he was in the court house he heard commotion outside and rushing out he found a crowd of several hundred gathered around the two Negroes, threatening them with violence if they did not leave the county at once.

Mr. Moore at once intervened and after talking to the crowd, pushed the two Negroes into his automobile and rushed them out of the county, a distance of some fifteen miles, where he left them while he returned to complete his business.

Peiper’s Predictions:

We start off this week by offering our congratulations, and hearty admiration to long time CP staffer Audrey Seeley.  With only a few feet between our offices, I have seen firsthand how much dedication she puts into DRI’s continued efforts to expand, adapt and improve.  She has done a tremendous job, and has more than earned a second term.  For those of us involved in DRI, or the insurance industry as a whole, we are very well served by Audrey’s efforts.  Cheers to her.

We invite you to take a moment to review the Third Department’s interesting decision on Article 16, and whether a defendant can seek its protections when the other tortfeasor is New York State.  In a very interesting decision, the Court is required to develop a rule to remedy the archaic system of preventing an aggrieved party from suing the State in Supreme Court.  We also review an interesting indemnity decision addressing an employer’s indemnity obligations under a commercial lease when one of its employees is injured.  It involves acts or omissions language, yet the employer has no obligation to indemnify.  Let the debate between indemnity and insurance continue to rage on.

Finally, we passed on an interesting Labor Law decision addressing the single family home exception.  No doubt the Labor Law Pointers crew will bring you an insightful review in a few short days.  If you still don’t get Labor Law Pointers, send David Adams an email at [email protected].  It’s worth checking out.

That’s it for now.  Enjoy Labor Day.

Steve
Steven E. Peiper
[email protected]

 

Death by Vegetable – A Century Ago (and I thought it was only kale that could kill you):
                       
Middletown Times-Press
Middletown, New York
28 Aug 1915

Carrot Kills a Little Boy

New York, Aug. 28.—David Findling, three years old, of Coney Island, died with the small end of a carrot lodged in his windpipe.  His mother had given the carrot to him to play with.

Summer Doldrums:

The appellate courts are virtually silenced through Labor Day and slightly beyond.  While this issue contains a smattering of decisions, we can expect the floodgates to reopen towards the end of September.

 

Quick Settlement – a Century Ago:

Middletown Times-Press
Middletown, New York
28 Aug 1915

THIS AUTOIST IS
QUICK TO SETTLE

Thursday afternoon, while Arthur West was running his car up East Main Street, conveying a company of friends, a big car suddenly shot up William Street, striking Mr. West’s car.  The collision resulted in some damage to the car, but no one was injured, and the owner of the big car, who was from Gloucester, N. J., settled the damage on the spot.  It is said that he was the one at fault, as he turned to the left when he struck East Main, and should have gone to the right.

Headlines in Today’s Issue, Attached:          

KOHANE’S COVERAGE CORNER
Dan D. Kohane

[email protected]

  • Since Workers Comp/Employers Liability Policy is Unlimited, Umbrella Policy Over It Never Reached

 

HEWITT’s HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW
Robert E.B. Hewitt III
[email protected]

  • Court of Appeals Affirms Decision of Appellate Division Which Held Plaintiff’s Expert Must Address Evidence in Medical Records That Plaintiff’s Injuries Are Pre-Existing and Degenerative to Raise Issue of Fact
  • Appellate Division Upheld an Arbitrator’s Award Which Found a Serious Injury Where There Was Ample Evidence in The Record for the Arbitrator’s Decision Including Range of Motion Testing Which Found Post Accident Limitations
  • Plaintiff Successfully Raised an Issue of Fact Despite Defendant Meeting Their Prima Facie Burden

 

MARGO’S MUSINGS ON NO FAULT
Margo M. Lagueras
[email protected]

  • On hiatus for a bit.

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

  • Question of Fact on Whether a Purchase Order Sufficiently Incorporated a Form Containing a Contractual Indemnity Obligation
  • Employer Not Required to Indemnify Owner Under Lease Agreement Where the Loss Did Not Arise out of its “Acts or Omissions”
  • Defendant Permitted to Make Article 16 Apportionment Claims against the State, even though Plaintiff could not Name State as Defendant in the State Court

 

FITZ’S BITS
Elizabeth A. Fitzpatrick
[email protected]

  • Driving daughter to first year in college, sniff.

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz
[email protected]

New York Federal - Coverage

  • Second Circuit Holds That District Courts Have Authority And Obligation To Appoint Arbitration Umpire Pursuant To The Federal Arbitration Act, Where Parties Are At A Deadlock In Choosing One Themselves
  • Insurance Expert Must Be Sufficiently Experienced In Order To Testify At Trial On “Niche” Industry Issues, Says The Northern District

 

New York Federal - Environmental

  • Ethnicity Cannot Be Used As A Criteria For Reducing Tort Damages, Says Eastern District In Lead Paint Exposure Case

 

CASSIE’S CAPITAL CONNECTION
Cassandra A. Kazukenus
[email protected]

  • Emergency Regulation To Unfair Claims Settlement Practices and Claim Cost Control Measures

 

KEEPING THE FAITH WITH JEN’S GEMS
Jennifer A. Ehman
[email protected]

  • On vacation – who permitted that?

 

EARL’S PEARLS
Earl K. Cantwell

[email protected]

  • Court Finds Limits to Arbitration of Fire Loss Claim

 

Our very best for the Labor Day weekend.
Dan D. Kohane
Hurwitz & Fine, P.C
.
1300 Liberty Building
Buffalo, NY 14202    

Office:            716.849.8942
Mobile:           716.445.2258
Fax:                716.855.0874
E-Mail:            [email protected]
Website:         www.hurwitzfine.com
Twitter:           @kohane
LinkedIn:       www.linkedin.com/in/kohane

 

 


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

NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

ASSOCIATE EDITOR
Audrey A. Seeley
[email protected]

ASSISTANT EDITOR
Jennifer A. Ehman
[email protected]

INSURANCE COVERAGE TEAM
Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley
Elizabeth A. Fitzpatrick
Audrey A. Seeley
Steven E. Peiper
Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman
Taylor F. Gabryel
Agnieszka A. Wilewicz
Diane F. Bosse
Joel R. Appelbaum

FIRE, FIRST-PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]

Elizabeth A. Fitzpatrick
Cassandra Kazukenus

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader
[email protected]


Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

Taylor F. Gabryel

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]

 Elizabeth A. Fitzpatrick
Diane F. Bosse

Topical Index

Kohane’s Coverage Corner
Hewitt’s Highlights on Serious Injury
Margo’s Musings on No Fault
Peiper on Property and Potpourri
Fitz’ Bits
Wilewicz’s Wide World of Coverage
Cassie’s Capital Connection
Keeping the Faith with Jen’s Gems
Earl’s Pearls


KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

08/19/15       Tully Construction Co., Inc. v. Illinois National Insurance Co.
Appellate Division, Second Department
Since Workers Comp/Employers Liability Policy is Unlimited, Umbrella Policy Over It Never Reached
Tully Construction Co., Inc. (“Tully”), is a construction company that obtained insurance policies, including a Workers Compensation and Employers Liability policy (“WC/EL policy”), from Zurich and a an umbrella policy from Illinois National. The excess policy required Tully to exhaust all insurance available before the excess coverage provided by the umbrella policy would be triggered.

The umbrella policy also explicitly stated that, despite the listing of any limits of underlying insurance in the Schedule of Underlying Insurance, if the actual insurance available to Tully exceeded the amounts listed in the schedule, the umbrella policy would not be triggered until those greater amounts were met and exceeded. In the underlying actions, the parties settled for $9,000,000. Zurich paid $6,500,000, and Illinois paid $2,500,000.

The plaintiffs brought this action for a declaration, inter alia, that Illinois is required to indemnify Tully in the underlying actions. Illinois counterclaimed, among other things, for a declaration that it had no obligation under the umbrella policy to indemnify Tully in the underlying actions and, thus, it was not required to indemnify the plaintiffs for the settlement amount which exceeded the limits of the underlying insurance policies obtained by Tully from Zurich.

The WCEL policy contained a New York Limit of Liability Endorsement which provided that in cases of bodily injury to an employee arising out of and in the course of employment that is subject to and is compensable under the Workers' Compensation Law, Zurich could not limit its liability and, as such, the policy was unlimited in those cases.  In light of the unlimited nature of the WCEL policy, the Supreme Court properly concluded that the limits of the underlying insurance policies were never met and, as such, the excess coverage provided by the umbrella policy was never reached.

HEWITT’s HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW
Robert E.B. Hewitt III
[email protected]hurwitzfine.com

08/27/15       Rivera v. Fernandez & Ulloa Auto Group
Court of Appeals
Court of Appeals Affirms Decision of Appellate Division Which Held Plaintiff’s Expert Must Address Evidence in Medical Records That Plaintiff’s Injuries Are Pre-Existing and Degenerative to Raise Issue of Fact
The Court of Appeals affirmed the decision of the Appellate Division. The decision of the appellate court, which was discussed in this column in our December 19, 2014 edition, affirming summary judgment was not unanimous and therefore there was an automatic right to an appeal of the decision to the Court of Appeals. The Court of Appeals determined that  Appellate Division correctly concluded that plaintiff failed to raise a triable issue of fact as to whether he suffered a serious injury within the meaning of Insurance Law § 5012(d) as a result of the underlying motor vehicle accident.  The Court of Appeals does not go into any detail. However, as a reminder, as discussed in the Appellate Division decision, that court noted that Defendants’ expert radiologist and orthopedist opined that Plaintiff had a chronic condition and suffered no injury causally related to the accident. The orthopedist found that Plaintiff’s left knee showed no signs of abnormality and had the same range of motion as the uninjured right knee. Plaintiff’s own medical records including an MRI which mentioned degenerative injuries but no definitive MRI evidence for a tear. Plaintiff’s treating orthopedist did not contest this note.

Plaintiff failed to raise a triable issue of fact in opposition because his orthopedist’s opinion that he suffered an knee injury secondary to the car accident failed to address or contest the opinion of defendants’ medical experts that the condition was chronic and failed to address the finding of degenerative changes in the MRI report in Plaintiff’s own medical records.

 

08/26/15                 Matter of NYC Transit Authority v. Elke
Appellate Division, Second Department
Appellate Division Upheld an Arbitrator’s Award Which Found a Serious Injury Where There Was Ample Evidence in The Record for the Arbitrator’s Decision Including Range of Motion Testing Which Found Post Accident Limitations
This column has not yet dealt with arbitrations but this case was a proceeding pursuant to CPLR article 75 to vacate an arbitration award by the New York City Transit Authority. Although a determination in a consensual arbitration by an arbitrator is normally very hard to overturn in court because the party’s picked their forum, in a compulsory arbitration setting, the courts give closer judicial scrutiny to the arbitrator’s determination, as was the case here. However, typically the arbitrator’s determination is still upheld, even with the closer look and here the Appellate Division affirmed the decision of the lower court not to vacate the arbitrator’s decision. The standard is the award must have evidentiary support and cannot be arbitrary and capricious. Where there is ample evidence in the record upon which the arbitrator could have rationally based the award, the award should not be vacated.

In this case, the Court found that there was there was ample evidence in the record upon which the arbitrator could rationally base his conclusion that claimant sustained a serious injury under the significant limitation of use category of Insurance Law § 5102(d) as a result of the subject. Among other things, Claimant submitted the affirmed medical report of a neurologist who measured the range of motion of the cervical region of her spine approximately seven months after the accident, and found significant limitations with respect to flexion, extension, and both left and right lateral flexion. Moreover, several doctors, including the appellant's own experts, affirmed that the subject accident was the cause of Claimant’s injuries.  Additionally, the Court held that the arbitrator's decision to award Claimant $25,000 was supported by ample evidence in the record. Trying to overturn an arbitration award will always be an uphill battle.

08/19/15                 Maimone v. Lutrario
Appellate Division, Second Department
Plaintiff Successfully Raised an Issue of Fact Despite Defendant Meeting Their Prima Facie Burden
Another one of the Appellate Division’s decisions which lack specifics. The Appellate Division reversed the lower court’s granting of defendant’s motion for summary judgment. The defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.  The defendants submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine did not constitute serious injuries under the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d). In opposition, however, the plaintiff raised triable issues of fact as to whether he sustained serious injuries to the cervical and lumbar regions of his spine. Therefore, the Appellate Division found the Supreme Court should have denied the defendants' motion for summary judgment dismissing the complaint.

MARGO’S MUSINGS ON NO FAULT

Margo M. Lagueras
[email protected]

On hiatus for a bit

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

08/19/15       Assevero v Hamilton & Church Props., LLC
Appellate Division, Second Department
Question of Fact on Whether a Purchase Order Sufficiently Incorporated a Form Containing a Contractual Indemnity Obligation
The instant case is a very interesting Labor Law § 240(1) read regarding, among other things, the single family home exception.  We are loath to scoop our friends at Labor Law Pointers, and instead suggest you check out their write up of this decision on September 2nd.

We have no concerns, however, about addressing the indemnity portion of the decision.

Plaintiff fell at a jobsite owned by Hamilton.  When Hamilton was sued as a defendant, Hamilton, in turn, commenced a lawsuit against Castle therein seeking common law and contractual indemnity.

The Appellate Division affirmed the Trial Court’s denial of Hamilton’s motion.  Relief was inappropriate where the purchase order that Hamilton entered into with Castle contained a reference to AIA-401.  Thus, while the purchase order did not contain an indemnity provision, the parties acknowledged that AIA-401 did, in fact, contain such a requirement.  As such, on the Record before the Court, a question of fact existed as to whether the parties intended to be bound by the terms (particularly the indemnity provision) of AIA-401.

08/19/15       Raven v Universal Strapping Corp.
Appellate Division, Second Department
Employer Not Required to Indemnify Owner Under Lease Agreement Where the Loss Did Not Arise out of its “Acts or Omissions”
Plaintiff allegedly sustained injury when he slipped and fell on ice in a common area at a building owned, controlled and maintained by Atlantic.  As a result, the instant lawsuit was started against Atlantic, and a tenant Universal.  Plaintiff’s employer, Marilena, was also a tenant at the building.  Universal and Atlantic filed a third-party action seeking both common law and contractual indemnification against Marilena pursuant to the lease agreement.

Marilena moved for summary judgment dismissing the third-party claims on the basis that the loss did not occur as a result of its fault.  As the loss did not arise out of any act or omission of the Marilena, nor did the incident occur in or about the demised premises rented by Marilena, the Court dismissed the indemnity claims of both Atlantic and Universal.

In addition, the Court dismissed the claims that Marilena failed to procure insurance.  Here, Marilena established that it purchased the insurance called for by the lease agreement.

Peiper’s Point – Despite the fact the injured party was an employee of Marilena, the Court found that the loss did not arise out of its acts or omissions.  We would certainly agree, and would further submit this logic should govern the interpretation of AI provisions using the same terms.

8/13/15                   Artibee v Home Place Corp.
Appellate Division, Third Department
Defendant Permitted to Make Article 16 Apportionment Claims against the State, even though Plaintiff Could Not Name State as Defendant in the State Court
In this interesting case, plaintiff asserted negligence claims against both defendant and New York State.  The action against the State was commenced in the Court of Claims, and the instant action against Home Place was commenced in State Supreme Court.  At the time of trial, Home Place sought a jury instruction which would have called for apportionment of fault for purposes of determining whether Article 16’s protections from joint and several liability applied.

Plaintiff opposed the request on the theory that an apportionment instruction is not appropriate where jurisdiction cannot be obtained over the other alleged tortfeasor (i.e., NYS).  Plaintiff suggests that Article 16 protections should not apply, but rather Home Place’s remedy was a common law indemnity/contribution claim against New York State at the conclusion of trial.

In overturning the Trial Court, the Appellate Division stated that the State’s sovereignty defense is not a jurisdictional limitation.  As such, the plaintiff was free to seek recovery from the State for its portion of the responsibility.  In so holding, the Court also noted that penalizing Home Place for not impleading a party that it could not reach (i.e., the State) was inappropriate as a matter of policy. The court recognized that its ruling, in effect, would require the plaintiff to try his case twice, thereby leading to the possibilities of inconsistent verdicts.  Nevertheless, the court sided with the defense by ruling that a jury should be given the opportunity to apportion liability.

FITZ’S BITS
Elizabeth A. Fitzpatrick
[email protected]

Driving daughter to first year in college, sniff.

WILEWICZ’S WIDE WORLD OF COVERAGE

Agnes A. Wilewicz
[email protected]

New York Federal - Coverage

08/26/15       Odyssey Reinsurance Co. v. Certain Underwriters At Lloyd’s
United States Court of Appeals, Second Circuit
Second Circuit Holds That District Courts Have Authority and Obligation to Appoint Arbitration Umpire Pursuant To the Federal Arbitration Act, Where Parties Are At a Deadlock in Choosing One Themselves
In this case, Odyssey Reinsurance brought suit against Lloyd’s relative to a workers’ compensation reinsurance liability claim. Last year, the Southern District Court had ruled and denied Odyssey’s petition to appoint an arbitration umpire pursuant to the Federal Arbitration Act (9 U.S.C. § 5). This statute states that when an arbitration agreement provides a method of naming or appointing an umpire, “upon the application of either part to the controversy the court shall designate and appoint an … umpire” if either (1) “any party [to the agreement] shall fail to avail himself of such method”, or (2) “for any other reason there shall be a lapse in naming of an … umpire”. (Emphasis added by the court).

Here, the Second Circuit found that there was a deadlock between the parties in choosing who that umpire would be. Odyssey contested the qualification of two of Lloyd’s candidates, while the parties also disputed some of the terms of their arbitration agreement, resulting in a stalemate. According to prior Circuit precedent, this deadlock fell within the terms of a “lapse” and that required the District Court to designate and appoint the umpire. Indeed, the Second Circuit wrote that “the District Court had not only the authority but the obligation to appoint an umpire to correct the breakdown in the umpire selection process”. As such, its earlier decision was vacated and the case was remanded with instructions to appoint an arbitration umpire.

08/25/15       Binghamton-Johnson City Sewage vs. AM. Alternative Ins.
United States District Court, Northern District of New York
Insurance Expert Must Be Sufficiently Experienced In Order To Testify At Trial on “Niche” Industry Issues, Says the Northern District
The Binghamton-Johnson City Joint Sewage Board, the City of Binghamton, and the Village of Johnson City filed a declaratory judgment action against their insurer, the American Alternative Insurance Corporation. The case proceeded and is now ready for trial. The court’s most recent decision on the case provides very little further detail about the case or the underlying incidents involved, beyond referenced to sanitation-district insurance policies, a wall collapse, and “ensuing loss” and/or “collapse” policy language.

Ruling on a motion in limine to preclude trial testimony, the Northern District held that plaintiff’s proposed expert witness was not sufficiently experienced in the “niche” field of sanitation-district coverage to give an opinion about it. Rather, the witness would be limited to testifying about general standard practices and customs in the insurance business, understanding how the particular policy was structured and how its provisions related to each other, and understanding how some policy terms were typically understood in the context of other policies. He would not be permitted to testify about specific usage of the terms “all risk”, “ensuing loss”, and/or “collapse”, how the insured’s policy compared to standard form ISO policies, what its terms actually mean, or about customs and practices of the industry/market of insuring sanitation districts, let alone details about the alleged wall collapse itself. He was simply not sufficiently experienced to do so.

New York Federal - Environmental

07/30/15       G.M.M. and Niki Hernandez-Adams v. Mark Kimpson
United States District Court, Eastern District of New York
Ethnicity Cannot Be Used As a Criteria for Reducing Tort Damages, Says Eastern District in Lead Paint Exposure Case
In this lead paint exposure case, the defendant owner/lessor was sued by a mother on behalf of herself and her client stemming from alleged injury to the infant’s central nervous system. Following trial, the jury found that the lead-based paint in their Brooklyn apartment had not been properly removed or encapsulated, and issued a $2million verdict in favor of the plaintiffs.

Defendant contested the extent of damages. In so doing, the defendant’s attorney tried to show that because the child was “Hispanic” his likelihood of obtaining a higher education degree, and resultant elevated income, was “improbable”. Defendant presented a considerable amount of expert testimony, statistical data, and cross-examination of plaintiff’s experts.

In a lengthy, well-researched, and detailed opinion the Eastern District categorically rejected the argument. It held that “general ethnic characteristics of an injured person cannot be used to reduce damages” and that it was further “unconstitutional in a tort trial to premise projected societal and educational achievements on race or ethnicity to reduce tort damages”. While there may be differences in life, workplace, and education attainment of people of different ethnicities generally, it is not appropriate for a court to reduce tort damages. The court noted that this decision dealt with only the use of race- and ethnicity-based statistics to reduce damages, and not the “separate problem of advantaging particular groups or parties by the use of such tables”. The court cited dozens of cases and secondary sources to support its ruling.

CASSIE’S CAPITAL CONNECTION
Cassandra A. Kazukenus
[email protected]

Emergency Regulation to Unfair Claims Settlement Practices and Claim Cost Control Measures
Once again DFS extended the previous emergency regulation which established the mediation process for Superstorm Sandy claims.  This regulation has been amended previously as well.  As you may recall, this regulation provides for a mediation program for claims occurring between October 26, 2012 and November 2012 in the counties downstate which were severely impacted by Sandy.  This mediation program was going to expire August 1st, but it was extended until October 28, 2015 through this regulation.

 

KEEPING THE FAITH WITH JEN’S GEMS

Jennifer A. Ehman
[email protected]

On vacation.

EARL’S PEARLS
Earl K. Cantwell
[email protected]

04/17/15       Wisconsin Local Government Property Insurance Fund v. Lexington Insurance Co.
Eastern District, Wisconsin
Court Finds Limits to Arbitration of Fire Loss Claim
The Milwaukee County Courthouse sustained significant fire damage in July 2013.  The alleged origin of the fire was the electrical system.  The County had two separate insurance policies covering the Courthouse.  The primary policy, issued by Wisconsin Government Property Insurance Fund, excluded coverage for certain forms of electrical or mechanical breakdown.  The County also had a supplemental insurance policy with Cincinnati Insurance to cover certain machinery and equipment.  Both policies included a “joint loss agreement” providing that, if a dispute arose over which insurer should bear the cost of certain items, each insurer would pay half the disputed amount to the County and then submit the dispute to arbitration.

The Fund paid $17.4 Million to pay most of the County’s fire loss.  A dispute arose whether the Fund or Cincinnati Insurance should pay a remaining $1.6 Million of the claim.  Pursuant to the joint loss agreement, the Fund and Cincinnati Insurance each paid $800,000 to the County.  Lexington Insurance paid $5 Million under a policy it issued to the Fund in repayment for amounts paid to the County by the Fund.

The Fund then sued Lexington and Cincinnati Insurance seeking a declaration regarding the respective payment obligations.  The Fund asserted that Lexington owed more than the $5 Million already paid, and that Cincinnati Insurance owed the County the remaining $1.6 Million.  Significantly, the Fund and Cincinnati Insurance intended to arbitrate their dispute under the joint loss agreement.  Lexington insurance filed a motion to stay the court case and compel the Fund and Cincinnati Insurance to permit it to participate in the arbitration.  The District Court denied the motion to stay the Court action and compel the arbitration to include Lexington Insurance.

The Court first noted that, unlike the Fund and Cincinnati Insurance policies, the Lexington policy did not expressly include a joint loss agreement.  However, the Court stated it was possible for the Lexington policy to “incorporate” the joint loss agreement from the primary policy.  Nonetheless, the Court found no reason to compel the Fund and Cincinnati Insurance to include Lexington in their arbitration.  The Court found that the joint loss agreement was designed for the purpose of governing disputes between the Fund and Cincinnati Insurance.  It was also noted that the joint loss agreement applied when an insured filed a written request for payment of disputed amounts, and the “insured” under the Fund and Cincinnati Insurance Policies was the County.  In contrast, the Lexington Insurance policy essentially re-insured the Fund.  The Court thus ruled that Lexington did not have standing to compel its participation in the arbitration between the Fund and Cincinnati Insurance.

The joint loss agreement was between the County and its primary carriers, the Fund and Cincinnati Insurance, and Lexington Insurance, essentially as a re-insurance policy, did not have standing to enforce the joint loss agreement or compel its participation.  This ruling was despite the fact that, conceptually, Lexington’s payment obligations could be affected by the findings and rulings of the arbitration between the Fund and Cincinnati Insurance, and that arbitration would certainly have an impact on the remaining court case now just between the Fund and Lexington.

The lesson of this case is that arbitration is generally a creature of contract, and the scope of arbitration and the parties entitled to demand or participate in arbitration are limited and controlled by the terms and provisions of the applicable contract.

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