Coverage Pointers - Volume XVII, No. 6

Coverage Pointers

Volume XVII, No. 6
Friday, September 11, 2015

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

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

© 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 must all pause on this day to remember those who died in that infamous 9/11, already 14 years past.  We must never forget.

Hope you had a lovely Labor Day weekend.  Thank for all the kind wishes on my step-daughter’s nuptials.  It was a bright, sunny and perfect day on the Lake Erie beaches on Sunday for a picture-perfect wedding.

Fortunate for us, we have weekend guests, who have traveled from San Juan to spend time in Western New York and Southern Ontario.  We’ll play tourist and that may well include a ride on the Maid of the Mist that will take us to the wake of Niagara Falls.

With the weekend at an end, the courts begin to ramp up again and in the next  30 days (two issues, by our measure), we’ll see an increased flow of decisions about which we can report.  In the meantime, we offer a few for your edification.

I am proud to say that I am 25 cents richer on a bet with Steve Peiper.  The bet was placed at the beginning of the Deflategate controversy, I wagered that Tom Brady wouldn’t miss a game by suspension.  I didn’t think I would need the courts to vindicate me, but a win is a win.

Auto Accidents in New York?  What is Recoverable? 

Why are there TWO attachments to this e-mail?

Recently I was asked whether we had a primer that would help clarify the kinds of damages that were recoverable in New York auto accident lawsuits.  I indicated to the caller that I had recently put together such a summary and that I attached it to a recent issue of Coverage Pointers.  When I went back into our archives, I found that recently was, in fact, 2005.  So, I am attaching it as a special supplement to this issue.  For those who are new to handling NY claims and for those who need a refresher, I hope you’ll find this summary useful.

CP Subscriber (Secret Handshake):

At a NAMS mediation out on the Island this week, I had the pleasure of doing business with a CP subscriber, a fine lawyer from an excellent LI law firm.  I promised him anonymity but my thanks to him for his kind words about our publication.

Upcoming Continuing Education in New York City:

Federation of Defense & Corporate Counsel
New York Athletic Club
October 21-13
Click here for brochure

Jennifer Johnsen, Patrick Nails, and Barbara O’Donnell
I-3 Co-Chairs

I-3 2015 will once again be held in New York City at the New York Athletic Club, October 21-23.  The Institute will bring together senior insurance industry leaders, regulators and insiders  - from companies such as Swiss Re, Markel, Hanover, Hamilton Re, Arch, AIG and Starr Marine - to offer their expertise and insights concerning “top burner” issues tailored to senior level insurance company representatives and their outside counsel.  Make plans now to join us for this timely conference and spread the word to your colleagues and clients. In addition to plenty of networking opportunities, programing includes --

Robert Hartwig and CEO Presentations - The President of the Insurance Information Institute will examine the topics that industry members have identified as their major areas of concern. A CEO Roundtable will share their views regarding the topics examined throughout the program and the challenges the industry will face in coming years.

Cyber Exposure and Risk -  This 2 part program will examine the problem, including the most recent tools used to perpetrate and stave off cyber-crime, and the ways in which the industry is responding to this evolving risk.  Both panels will be comprised of law enforcement, key industry professionals and other experts in the field.

Business Tools & Investments – A discussion of how leading insurers are harnessing big data tools, metrics and technological innovations to decrease litigation costs, improve risk modeling and projections and achieve productivity targets. Another panel will discuss creative approaches being utilized by leading insurers to manage their capital and investment portfolios.

Regulatory Panel – A panel of senior industry representatives as well as former and current state regulators will discuss the impact of regulatory convergence on insurers conducting business globally. Topics include supervisory colleges, ORSA requirements, amended holding company requirements, IAIS, emerging capital standard, and state regulatory initiatives for cybersecurity.

Blindfolds Off: Judges and How They Decide - Published author and attorney Joel Cohen and a panel of leading jurists will provide an insiders’ explanation of how judges decide high stakes and challenging cases.

International Maritime Panel - An international panel of lawyers and industry leaders will discuss the challenges insurers face when trying to forecast and then respond to rapidly changing international exposures in the arena of maritime risks.

Remember, Defense Counsel Members (or members of their firm) must bring a “date”, so line up a client now.

Fitz’ Bits:

Dear Subscribers:

Greetings from Columbus, Ohio where I have been fortunate to attend and speak at the PLRB Regional Adjustors meeting on the always timely topic, Reservation of Rights Letters: Effective Letters and Strategies.  Our discussion included compiling the information necessary to perform a coverage analysis, the necessary elements of the partial disclaimer or reservation of rights-depending on your jurisdiction, and the assignment of independent counsel.

I have reminded you often over the past few months of the upcoming NYSBA program, Law School for Insurance Professionals.  For those of you who register before Monday, September 14th, you may take advantage of a discount coupon good for $10.00 off registration at any location.  Simply enter the code:  INSURANCE15.  You can register at or e-mail me at [email protected] for additional information.

On this 14th anniversary of 9/11, the lives lost are in our thoughts, as we commemorate the tragedy at Ground Zero with 4 minutes of silence and the Tribute in Light.  The two 48-foot squares in the shape of the twin towers are lit at sunset on 9/11 in lower Manhattan and burn until sunrise on September 12.

We will never forget.

Elizabeth A. Fitzpatrick
[email protected]


One Hundred Years Ago - Letter to the Editor:

Reading Times
Reading, Pennsylvania
11 Sep 1915


Dear Editor:

Magistrate House of New York recently declared in court that women should not operate motor cars.  He said:

“In my opinion, no woman should be allowed to operate an automobile.  In the first place she hasn’t the strength, and in the second place, she is very apt to lose her head.”

The sex lines will not be drawn in automobile operation but some other lines might be drawn with profit to the community.  Women at the wheel are less reckless and are more regardful of the rights of others both in cars or on foot than are male drivers.  Many women are physically better able to drive big cars than many males who go shooting across the country.  Callow boys, enervated men, and men of unfit temperament are constantly endangering the killing of people.  What we need is more close scrutiny of all those applying for licenses, to exclude the unfit, male or female, and not a sex discrimination law.  The question is one of individual ability and fitness.

Hewitt’s Highlights:

Dear Subscribers:

I hope you enjoyed your Labor Day weekend. We now have football season to look forward to as the weather slowly changes.   My younger sister Dawn got married this past weekend and we were lucky enough to have great weather for the occasion.  It was nice to share the special day with family and friends, including my three grandparents who travelled up from Florida.

The Courts did not spend their Labor Day Holiday issuing decisions in the serious injury threshold area. The only decision I report on this edition is a case which reminds us that medical experts must cite to objective testing that they did when opining on whether there are range of motion limitations.  It is a good reminder that even a medical expert needs to be specific on what his opinion  is based upon.

Until next time,

Robert Hewitt

[email protected]


Without Him, No Stickball – The Death of Spalding, a Hundred Years Ago:

As a kid in Brooklyn, the games were punch ball, stickball, Chinese Handball, Stoopball, Spud and a score of others, all involving a pink rubber ball.  There were two brands and two brands only, the Pensie Pinkie  and the Spalding (“Spaldeen”).  Without those balls available, I would have certainly become a juvenile delinquent and spent my life in reform school.  Wiki, the source of all information, describes it as follows:

Spalding Hi-Bounce Ball, often called a Spaldeen, is a small rubber ball, somewhat similar to a racquetball, supposedly made from the defective core of a tennis ball without the felt. It was the more expensive and more popular version of the Pensie Pinkie (made by the Penn tennis ball company). These balls are commonly used in street games developed in the mid-20th century, such as Chinese handball (a variation on American handball), stoop ball, hit-the-penny (involving trying to make a penny flip on a sidewalk),butts upbox ballpunchballhalf-rubber, and stickball (a variation of baseball).

The term most likely arose from a New York City-accented pronunciation of Spalding, the sporting goods company that produced the balls. Across the Hudson River in Jersey CityNew Jersey, the ball was referred to as a "high bouncer." It may also have originated with a mis-reading of A. G. Spalding's signature on the ball. The name has become so common that Spalding now uses it in marketing, and it is now a registered trademark.

The article continues by indicating that the Spalding hit the market in the 1930’s.  It was 100 years ago, that A.G. Spalding passed away, dying before he could see the fruits of his invention.  He was remembered for his contributions to baseball:

The New York Times
New York, NY
11 Sep 1915


Helped to Put Game on Sound
Basis—One of its stars as a Player.

San Diego, Cal., Sept. 10.—Funeral services for the late Albert Goodwill Spalding, who died suddenly at his home at Point Loma yesterday, will be held privately at his late residence tomorrow, as his widow does not wish for a public funeral.  The remains will be cremated.

The death of Albert G. Spalding, head of the sporting goods house of A. G. Spalding & Brothers, and of the American sports Publishing Company, announced in The Times of Yesterday, came as a shock to the sport-loving public of New York, to whom he was intimately and, as a sportsman, lovingly known.

In a way “Al” Spalding was the “Father of Baseball,” as it is played professionally.  Most of the good there is in it today is the result of his initiative, for he was unique in combining ability as a player with positive genius as a manger, executive ability of a high order, and sufficient magnetism to hold men together when disasters of all sorts threatened organized baseball in its earlier tribulations.

Wilewicz’ Wide World of Coverage:

Dear Readers,

Fall might be my favorite time of the year. The weather is mostly perfect, there are lots of festivals and events throughout, and everyone falls back into the school-imposed routine. It also frequently happens to be the busiest time of year as the courts dive into everything they put off during the summer.

This week in the Wide World, we bring you one interesting federal coverage case from New York that recently came down. In Federal Insurance v. CAC/Cutlass, we have a declaratory judgment action by a carrier against its insured based upon unpaid premiums. Apparently, after an audit, the insurer found that it was owed nearly $200,000 extra for the coverage it was providing. The insured balked, ignored the suit, and later ignored information subpoenas, even though it had counsel who filed an appearance (but not an answer). The Eastern District was not pleased. Not only did they award compensatory damages and prejudgment interest, but granted the insurer’s motion to compel a response to the subpoena. It stopped short of holding them in contempt, but denied that part without prejudice to renew in the future.

Enjoy! See you in a couple of weeks,

Agnes A. Wilewicz
[email protected]

Dannemora Prison Subject to Controversy 100 Years Ago:

Of course, we all followed the escape of two convicts from the Dannemora Prison recently.  Don’t think that was the only time the prison was in the news:

The New York Times
New York, NY
11 Sep 1915


Dannemora Nines in Controversy
Over Alleged Forced Play.

The baseball league at Dannemora Prison has been in confusion temporarily over a play about which the umpires could not agree.  The league is made up of teams representing the different shops of the prison, and Mr. Hurd, a member of the Prison Commission, has presented a silver cup which will to presented to the team winning the season’s series.  The men show a remarkable interest in the game, and recently appealed to a baseball authority to settle a question in dispute.

The play which caused the controversy was as follows:  There was a runner on first base and one on third, and one batsman out.  The batsman then hit a grounder to the first baseman, who touched first base, retiring the runner, and then threw to second to get the runner going to that base.  The player ran up and down between first and second bases, and finally got back to first base safely, the man on third scoring.  The team in the field declared that there was a double play, the runner at first base being out at second when the second baseman, after getting the ball, touched second base.

The legal interpretation of the play is that the runner going to second got back to first base safely after the batter had been retired, and the run counted, only one out being made.

The run tied the score, and a controversy arose, one team counting the run and the other a double play and no run.  According to the rules, the game was a tie and must be played over again.

The point arose over the misinterpretation of the rule covering a force-out play.  A force-out at second base on a double play is made before the out is made at first base.  When the first out of a double play is made at first base it is necessary to touch the runner going to second base with the ball, and not touch the base only.

What was the right answer?

At least under modern rules, the run should have counted:  This from current MLB Rules:


(a) One run shall be scored each time a runner legally advances to and touches first, second, third and home base before three men are put out to end the inning.

EXCEPTION: A run is not scored if the runner advances to home base during a play in which the third out is made (1) by the batter-runner before he touches first base; (2) by any runner being forced out; or (3) by a preceding runner who is declared out because he failed to touch one of the bases.

This not being a force out, and the runner having crossed the place before the tag-out, the run scores.

Jen’s Gems:


I apologize for not sending in a note last issue, but I was on vacation with my family near Ocean City, Maryland.  This was the first time my whole family (with kids) has ever gone away together.  In total, this meant that we had five kids under the age of four.  I have to admit the one time we all went out to dinner it was certainly something to watch with our two booster seats, two highchairs and a car seat sling.

In terms of my column, as many of you know, I report on Supreme Court decisions in New York along with bad faith cases from around the county.  For those that do not practice in New York, the Supreme Court is our trial court.  So, while the decisions are not necessarily controlling precedent, they do provide a good indicator as to where the courts are leaning and what trends are developing.

This week, in my column, I want to highlight a bad faith decision out of the Eleventh Circuit applying Florida law.  What I think is the most interesting aspect of the decision is that it sets forth a general guide for proper handling of claims in Florida, a notoriously difficult state, where the injuries are significant and the amount of coverage is low.  In the decision, the court highlights the fact that the carrier, upon receiving notice, immediately opened a claims file, retained a third-party administrator to investigate the claim, retained an attorney to identify other claimants and work toward a global settlement and offered the policy limits early on in the claim.

Beyond that, I also wanted to remind everyone that the NYSBA 2015 Law School for Insurance Professional is starting next week.  I will be speaking about additional insured coverage issues on September 16, 2015 in Rochester.   Beth Fitzpatrick will likewise be speaking on the same topic on September 17, 2015 in New York City and emerging risks on September 24, 2015 in Long Island.  It should be a great program, and I would encourage you to attend.

Until next issue…

Jennifer A. Ehman
[email protected]

Those Trials Must Have Been Fun to Watch – a Century Ago:

The New York Times
New York, NY
11 Sep 1915


Lucille Storer Charged Merchant’s Grandson
Failed to Keep Promise to Marry Her.


Defendant’s Lawyer Moves to Have
the Case Transferred to the
United States Court

John Wanamaker, Jr., son of Rodman Wanamaker and the grandson of John Wanamaker, the merchant, has been sued in the Supreme Court for $100,000 damages for breach of promise to marry.  The plaintiff’s name is Lucille Storer.  Nothing more could be learned about her yesterday.  Her attorney, Henry V. M. Connelly, said last night that he had only met his client once, and knew very little about her.

“I am going to see her at 8:30 this evening,” he said, “and get some more particulars concerning the matter.  I hope to have a statement for publication later in the evening.”

Lewis Rodman Wanamaker (February 13, 1863 – March 9, 1928) was a department store magnate.  He owned stores in PhiladelphiaNew York City, and Paris, France. He was a patron of the arts, of education, of golf and athletics, of Native American scholarship, and was an investor in early aviation. He served as a Presidential Elector for Pennsylvania in 1916.

John, Jr. eventually married someone else named Pauline. What happened to the lawsuit, I cannot discover.  It was reported in the Chicago Sunday Tribune of September 12, 1915 that Lucille “Cap” Storer was “well known in certain Chicago circles of a theatrical tendency” and was “formerly a chorus girl in a Cincinnati theatrical organization”.

Peiper’s Particulars:

After years of CP columns, I’ve learned the hard way that it is best to plan your vacation time on the “off weeks.”  Given the places we check in from, you know that is not always the case.  I will say, though, that every trip I take, my spouse eventually wonders if she’ll be deserted for a couple of hours on a Thursday afternoon.  She is very patient, and I am very lucky.

So it was, last week (an off week), that I had the chance to visit a family friend in beautiful downtown Anchorage.  Yes, as in Alaska.  I covered much ground from the coast to several hours north of Anchorage.  I am told that Anchorage is still several hours south of Fairbanks, which is, itself, several hours south of Barrow.  I saw several Moose, and even a Grizzly Bear, live and in person, although I was too close to the grizzly for comfort.  It is a great experience, and truly difficult to appreciate how something so vast, and so far from home, could feel so normal, so American.

Speaking of “off weeks”, we again struggle for content for our voracious readers.   While pickings are still slim, we would note the First Department’s decision regarding school house bullying and whether it, alone, is enough to trigger notice of a physical altercation.  At the conclusion of an interesting 3-2 split, we trust we haven’t seen the last of this issue.  Take a moment to review, and let us know where you come down on the issue.

That’s it for now.  If you are unsure of what to do this weekend, we remind you that a certain team from Upstate NY opens its football season on Sunday.  It’s been 15 seasons since we’ve experienced the unadulterated joy (and additional lost Sundays) of playoff football.  Perhaps this is our year…just perhaps.

Or, perhaps more likely, the Bills will again set out on a year of failed expectations with losses to the Colts and Patriots, respectively.  Like that hasn’t happened, repeatedly, for the last decade and half.   Either way, we’ll be back in two weeks with more to say.

Steven E. Peiper
[email protected]

Gender Confusion Isn’t New – Was There 100 Years Ago:

The Seattle Star
Seattle, Washington
10 Sep 1915


“Professor” Has Been Both Husband and
Wife and Was Preparing to Marry Second
“Wife” When Arrested—Says She’s Cursed With
Masculine Personality—Has Worn Male Attire for 20 Years

LOS ANGELES, Sept. 10—“Before God, I have never harmed or done wrong to a living being.”

“Born with a handicap of strange personality, which makes me wish to appear as a man, I have done my very best with the life God has given me.”

“All I ask is to have the right to earn an honorable livelihood, and to live in peace without hurt to any one.”

Teaches Dramatics
Tragic in her earnestness, pathetic in her disavowal of wrongdoing toward any human, and with almost a childlike faith in those friends who are standing staunchly by her in her present remarkable predicament, Prof. “Eugene De Forest,” noted dramatic teacher and idealist, frankly confesses to being a woman, physically, but a man in many natural tendencies.

Professor “De Forest” was discovered and confronted with the charge of masquerading as a man, while calling at the home of a Los Angeles woman to whom she was engaged to be married during the present month. …

The News of Her Retirement Was Premature – a Century Ago:

The Evening World
New York, NY
11 Sep 1915


Actress Finds She Cannot Use
Artificial Leg—Cancels Her
American Engagement.

PARIS, Sept. 11.—Sarah Bernhardt, the world’s greatest actress, may never appear upon the stage again.  After a single performance here for the movies, she discovered she was unable to use her new artificial leg well enough to walk.

She has cancelled her American engagement and returned to-day to Bordeaux.

Bernhardt’s part in the movie play “Jean Dore” required that she come to Paris for a big scene on the city’s fortifications.  She complained to the director of the movie scene that her artificial leg seemed too short, and made her way through the part with the greatest difficulty.

Mme. Bernhardt herself hopes that continued use of the artificial limb will make it possible for her to walk unsupported, but admitted before leaving Paris that she was greatly disappointed.  Her friends believe it certain that she will never appear on the stage again and that her only acting will be before the movie camera.

In 1905, while performing in Victorien Sardou's La Tosca in Teatro Lírico do Rio de Janeiro, Bernhardt injured her right knee when jumping off the parapet in the final scene. The leg never healed properly. By 1915, gangrene set in and her entire right leg was amputated; she was required to use a wheelchair for several months. Bernhardt reportedly refused a $10,000 offer by a showman to display her amputated leg as a medical curiosity. (While P.T. Barnum is usually cited as the one to have made the offer, he had been dead since 1891.)

She continued her career, sometimes without using a wooden prosthetic limb, which she did not like. She carried out a successful tour of America in 1915, and on returning to France she played in her own productions almost continuously until her death. Later successes included Daniel (1920), La Gloire (1921), and Régine Armand (1922).

According to Arthur Croxton, the manager of London's Coliseum, the amputation was not apparent during her performances, which were done with the use of the artificial limb. Her physical condition may have limited her mobility on the stage, but the charm of her voice, which had altered little with age, ensured her triumphs.

Sarah Bernhardt died as a result of kidney failure in 1923. Newspaper reports stated she died "peacefully, without suffering, in the arms of her son at age 78.

Highlights of this week’s issue, attached:

Dan D. Kohane

[email protected]

  • Nothing.


Robert E.B. Hewitt III
[email protected]

  • Plaintiff’s Treating Physicians Failed to Support Claims of Range of Motion Limitations By Identifying Tests Relied Upon to Measure Range of Motion


Margo M. Lagueras
[email protected]

  • On hiatus for a bit


Steven E. Peiper
[email protected]

  • Bullying, Alone, Does Not Provide Constructive Notice of Forthcoming Assault among Students
  • SUV that Cuts Off Big Rig Causes Emergency Situation
  • Assumption of the Risk Applies for Injuries Sustained in Spirited Go-Kart Race


Elizabeth A. Fitzpatrick
[email protected]

  • Speaking at a PLRB Conference today.


Agnes A. Wilewicz
[email protected]

  • Insured Who Defaults In Declaratory Judgment Action Still Must Respond To Insurer’s Information Subpoena, Says The Eastern District


Cassandra A. Kazukenus

[email protected]

  • Claim By Landlord Under Its Property Coverage Is Not Covered Where The Damages Were Caused By The Criminal Acts Of Its Tenant – An H&F Win


Jennifer A. Ehman
[email protected]

  • The Phrase “Being Built” Does Not Require a Determination as to Whether the House was Substantially Complete on the Date of Loss


Bad Faith

  • Roadmap for Handling Cases in Florida Where the Damages arei High and the Coverage Low in order to Avoid a Bad Faith Finding


Earl K. Cantwell

[email protected]

  • You Cannot Make This Stuff Up



On this 11th day of September, hugs those who are close to you.


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] 
Twitter:           @kohane

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

Dan D. Kohane
[email protected]

Audrey A. Seeley
[email protected]

Jennifer A. Ehman
[email protected]

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

Steven E. Peiper, Team Leader
[email protected]

Elizabeth A. Fitzpatrick
Cassandra Kazukenus

Audrey A. Seeley, Team Leader
[email protected]

Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

Taylor F. Gabryel

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

Dan D. Kohane
[email protected]

In 16+ years of this publication, this is only the second time that there was not a single case decided by the NY appellate courts on insurance coverage in the two weeks between issues.  Have no fear, the summer slump is about over.

Robert E.B. Hewitt III
[email protected]

09/02/15       Durand v. Urick
Second Department
Plaintiff’s Treating Physicians Failed to Support Claims of Range of Motion Limitations By Identifying Tests Relied upon to Measure Range of Motion
Defendant submitted evidence that demonstrated a prima facie case of summary judgment. Defendant’s medical evidence demonstrated that the alleged injuries to the cervical and lumbar spine did not constitute serious injuries. There was no limitation in the range of motion.

Plaintiff failed to raise a triable issue of fact in opposition. Plaintiff submitted reports from treating physicians indicating that Plaintiff suffered from range of motion limitations as a result of the subject accident. However, the reports did not indicate any objective tests or tests which were utilized to measure range of motion. Therefore, the claims of range of motion limitation were medically unsupported and the Plaintiff could not defeat summary judgment.




Margo M. Lagueras
[email protected]

On hiatus for a bit

Steven E. Peiper
[email protected]

09/08/15       Emmanuel B. v City of New York
Appellate Division, First Department
Bullying, Alone, Does Not Provide Constructive Notice of Forthcoming Assault among Students
Plaintiff, a second grade student, at a New York public school, reported that he was being picked on and called names by another child in class.  Plaintiff’s mother also reported the bullying to school administrators.  Moreover, evidence in the Record revealed that several complaints of bullying had been made against the same child in the weeks leading up to the incident in question.

The situation culminated when plaintiff and the other student engaged in an altercation; the result of which left plaintiff being pushed into a bookcase where he struck his head.  Plaintiff’s mother commenced the instant action seeking damages from the School due to negligent supervision.  In affirming the trial court’s dismissal, the Appellate Division noted that a school cannot be held liable for “unanticipated third-party acts which cause injury” unless there is actual or constructive notice of prior similar conduct.  Because there was no evidence of prior physical conduct, the Court ruled that the School was not sufficiently on notice of a potential issue.  This is despite the fact that a teacher apparently witnessed the two students engaged in a quarrel immediately prior to the incident.

In addition, the Court also noted that any possible negligence attributable to the School was not the proximate cause of the loss.  The Court noted that “there is no non-speculative basis for finding…greater…supervision…would have prevented the sudden and spontaneous altercation.”

In a thoughtful dissent, Justice Kapnick argued that the Record contained evidence of previous aggressive behavior by the bullying student.  In addition, she noted the fact that a very young child, such as plaintiff, is entitled to a greater level of supervision.  Accordingly, the dissent argued that, at a minimum, plaintiff’s prior conduct and incessant bullying was sufficient to create a question of fact relative to notice.

Peiper’s Point – Justice Kapnick was joined in dissent by Justice Acosta.  With a 3-2 Split, it is likely this issue gets resolved at the Court of Appeals.
09/02/15       Bonaforte v M.K.’s Landscaping of Liberty, LLC
Appellate Division, Second Department
SUV that Cuts Off Big Rig Causes Emergency Situation
Plaintiff was a passenger in a SUV that was struck by a tractor trailer owed by M.K.  Testimony revealed that the SUV, in which plaintiff was riding, sped around the tractor trailer, and then immediately crossed back into its lane of travel.  When the SUV then attempted to navigate an off ramp, it was struck by the tractor trailer.

The driver of the tractor trailer argued that he was entitled to a defense based upon the emergency doctrine.  Both he, and a non-party witness, provided testimony that the SUV’s actions were sudden and created a situation that was unavoidable.  In opposition, plaintiff argued that a question of fact existed based upon the driver’s attentiveness (or lack thereof).

However, in affirming the trial court, the Appellate Division noted the Record established that regardless of the driver’s attentiveness, the SUV created a sudden situation that did not provide sufficient time for the driver of the tractor trailer to react.  Under such circumstances, the emergency doctrine applied to support the dismissal of plaintiff’s action.

09/01/15       Garnett v Strike Holdings, LLC
Appellate Division, First Department
Assumption of the Risk Applies for Injuries Sustained in Spirited Go-Kart Race
From the well, Duh, department.

Plaintiff was riding as a passenger in a go-kart with her then boyfriend/now third-party defendant.  During the course of a go-kart race at defendant’s facility, plaintiff reported that the vehicle in which she was riding was twice bumped by other participants.  Immediately after the second “bump”, plaintiff reported pain.  She was, apparently, provided with ice for her foot immediately after the race concluded.

Plaintiff, subsequently, commenced the instant case arguing for strict products liability and negligent supervision by defendant’s staff.  In dismissing the negligence claims, the Court appeared to have little difficulty in establishing that the act of riding in a go-kart is the type of recreational activity that is tailor made for the assumption of the risk doctrine.  To that end, where there are apparent, or reasonably foreseeable, risks in an activity, one cannot recover for injury sustained during participation therein.  Cars bumping into each other during a go-kart race is, decidedly, foreseeable. 

In so holding, the Court rejected plaintiff’s argument that Strike Holdings’ rule prohibiting “bumping” during go-kart races created a duty.  Where, as here, Strike has no duty to protect a rider from inherent and foreseeable risks, it follows that its general safety policies do not give rise to a duty.

The products liability claim was also summarily rejected where the go-kart in question was deemed to have complied with the “guidelines adopted by most states.”  Essentially, plaintiff argued that the floor of the go-kart should have been padded, and the court disagreed. 

Elizabeth A. Fitzpatrick
[email protected]

Speaking at a PLRB Conference today.


Agnes A. Wilewicz
[email protected]

09/04/15       Federal Insurance Company v. CAC of NY, Inc. and Cutlass
United States District Court, Eastern District of New York
Insured Who Defaults in Declaratory Judgment Action Still Must Respond to Insurer’s Information Subpoena, Says the Eastern District
This one stems from a declaratory judgment action that Federal Insurance started against its insureds CAC/Cutlass for recovery of additional premiums owed. Federal issued workers compensation and employers liability policies to CAC/Cutlass and quoted certain premiums. According to the carrier’s complaint, those premiums were based upon information submitted by CAC and/or their broker. However, following an audit based upon actual exposures such as employee payrolls, the Federal found that additional premiums were owed, totaling over $188,000. The insured failed to pay those premiums and the insurer brought this action based upon diversity jurisdiction.

The insured defendants had initially failed to answer the complaint and a default judgment was entered against them. The court also adopted the Magistrate Judge’s recommendation to award the carrier compensatory damages and prejudgment interest. Nevertheless, the defendants continued to ignore the matter. In this latest ruling, the court decided Federal’s application to compel Cutlass to respond to an information subpoena and/or holding Cutlass in contempt for failing to respond. Though an appearance by counsel had been entered, no answer was ever filed in the case. Thereafter, despite adjournments, defendants also failed to oppose this motion. In light of this, the court granted the motion to compel. Since Federal is a judgment creditor, the court reasoned, it is entitled to seek information relevant to the satisfaction of the judgment it obtained against the insured. Thus, the court ordered Cutlass to respond to the subpoena within thirty days. As for the motion to hold them in contempt, the court found that Federal was unlikely at this juncture to adduce sufficient evidence to establish contempt in the first instance. Since it is only available in certain limited circumstances, it would not be awarded here.

Cassandra A. Kazukenus
[email protected]

09/08/15       United Specialty Ins. Co. v. Barry Inn Realty, Inc.
United States District Court, Southern District
Claim by Landlord under Its Property Coverage Is Not Covered Where the Damages Were Caused By the Criminal Acts of Its Tenant – An H&F Win
United Specialty Ins. Co. (“United Specialty”) issued a Commercial Lines Policy to Barry Inn which provided first-party coverage to premises in the Bronx which Barry Inn leased to various tenants over several years for use as bar/restaurants.  In December 2012, Barry Inn entered into a lease for use of the premises with Luis Zepeda Castelliano (“Castelliano”).  Prior to entering into the lease, Barry Inn obtained a copy of Castelliano’s driver’s license and performed a credit check which did not raise any concerns.  Per the terms of the lease, Castelliano was to use the premises to operate a bar/restaurant, and Castelliano did not have to pay rent for one month because it was making changes to the premise’s floor, kitchen and gas lines for the new restaurant/bar.  Further, the lease allowed Barry Inn to enter the premises, but the facts revealed that he never exercised that right.

On August 8, 2013, the New York City Police Department executed a search warrant at the premises because they believed Castelliano was using the property for drug trafficking.  This was the first time that Barry Inn learned that the premises were potentially being utilized in this manner.  When the NYPD entered the premises on August 8, 2013, it was discovered that Castelliano was utilizing the premises as a marijuana grow operation, and as a result of the humid conditions necessary for this activity, there was extensive damage to the premises.  Barry Inn was unaware of the changes made to the property to create the humid conditions, and it was purportedly informed by the NYPD that Castelliano had provided false information to Barry Inn regarding his true identity.

Three days prior to the NYPD raid, United Specialty issued a Commercial Lines Policy to Barry Inn which contained an exclusion which stated, in relevant part, that United Specialty “will not pay for loss or damage caused directly or indirectly by…dishonest or criminal acts by anyone to whom [Barry Inn] entrusts the property for any purpose…”  The parties did not dispute that the damages to the premises were caused by the criminal acts of Castelliano.  Rather, the dispute centered on whether Barry Inn had entrusted the property to Castelliano.

The court held that the term “entrust means that the insured surrendered or delivered or transferred possession of premises with confidence that the property would be used for the purpose intended by the owner and as stated by the recipient.”  Further, the controlling element in determining whether this has occurred is “the design of the owner rather than the motive of the one who obtained possession.”  The court explained remains true despite the fact that Castelliano may have had a fraudulent intent.  In so holding, the court rejected Barry Inn’s assertion that there can be no transfer, in this instance, because the entrustment was a result of deceit not only as to the intended use of the premises but also as to his identity.  The court disagreed with this position because the admissible evidence demonstrated that Castelliano’s identity was known and verified, and the allegation that it was an alias was hearsay and inadmissible.  Thus, the court held the exclusion applied to preclude coverage for the damages caused by the marijuana grow operation. 
Editor’s Note:  A victory for the good guys (Dan and Cassie).


Jennifer A. Ehman
[email protected]

08/21/15       Voli  v. Cambridge Mutual Fire Ins. Co.
Supreme Court, Queens County
The Phrase “Being Built” Does Not Require a Determination as to Whether the House was Substantially Complete on the Date of Loss
Franco Voli (“Voli”) owned real property located on 159th Avenue in Howard Beach, New York. He also owned property on 87th Street.  On September 21, 2011, Gabriele Capacchione (“Capacchione”) sustained injury at the 87th Street property when he slipped and fell on exterior steps.  At the time of the incident, the 159th Avenue property was insured by Cambridge while the 87th Street property was insured by State Farm.

Voli testified at his deposition that he purchased the 159th Avenue property in 2009 and resided there with his family until May 2012.  He further testified that he purchased the 87th Street property in 2007, and after purchase completely demolished the house and hired an architect and general contract to construct a new two story, one-family house on the site.  Capacchione was a subcontractor hired to construct and install custom cabinets at that location.  When he fell, the job was 75% done.  Also, Voli testified that no one yet resided at the 87th Street property, and that his family did not intend to move into the house until construction was complete.

Capacchione, the injured party, brought suit against Voli who tendered the matter to State Farm for a defense.  State Farm accepted the tender and acknowledged its obligation to provide a defense.

This action was then brought seeking contribution under the Cambridge policy.  Under the Cambridge policy, an “insured location” included “[l]and owned or rented to an ‘insured’ in which a one or two family dwelling is being built as a residence for an ‘insured.’”

Cambridge denied any obligation to contribute to Voli’s defense stating that at the time of the accident Voli was living at 87th Street full time, and that the property was fully built.

In directing Cambridge to contribute, the court held that the words “being built” encompassed the work being done on the property (i.e., the installation of kitchen cabinets).  And, contrary to Cambridge’s assertions, the words “being built” does not require a determination as to whether the house was substantially complete on the date of loss.

Bad Faith

08/28/15       Mesa v. Clarendon National Ins. Co.
United States Court of Appeals, Eleventh Circuit
Roadmap for Handling Cases in Florida Where the Damages is High and the Coverage Low in Order to Avoid a Bad Faith Finding
Plaintiff was one of four injured parties involved in an automobile accident.  The alleged tortfeasor was insured under a policy issued by defendant with bodily injury limits of $10,000.00 per person and $20,000.00 per accident.  The plaintiff in this matter eventually brought a claim against defendant for bad faith failure to settle.

In considering defendant’s handling of the claim, the Eleventh Circuit found insufficient evidence for a reasonable jury to find that defendant acted in bad faith.   Upon notification of the accident, defendant immediately opened a claim file.  Within four days, defendant hired a third-party claim administer to conduct an investigation and adjust any potential claims. Defendant then retained an attorney shortly thereafter for the purpose of assisting the claimants in reaching a global settlement.  Within seventeen days of being notified of the accident, defendant’s investigation revealed four claimants. Having acknowledged that there were insufficient funds under the per-person liability limit to satisfy the claimants' damages in full, defendant offered the full $20,000.00 per accident liability limit amount in furtherance of a global settlement.

Furthermore, the court found no evidence in the record that plaintiff or his counsel ever communicated to defendant an unwillingness to participate in a global settlement. Indeed, without knowing that information, defendant had good reason to believe that all four claimants were working towards a global settlement agreement-especially since the other three claimants had already conferred and had expressed to defendant their willingness to settle globally.

Although plaintiff contended that defendant’s failure to immediately tender the per person liability limits was evidence of bad faith, because there were multiple claimants, its decision to pursue a global settlement was consistent with its duty of good faith under Florida law.

Finally, although defendant may have been negligent in failing to keep its insured advised of settlement opportunities, the probable outcome of the litigation, and the possibility of an excess judgment, such negligence was not the cause of the excess judgment, and is therefore immaterial.

Earl K. Cantwell
[email protected]

04/06/15       State Farm Mutual Automobile Insurance Co. v. Beauchane
Minnesota Court of Appeals
You Cannot Make This Stuff Up
A recent decision in Minnesota provided an entertaining view of how and why insureds can wreak havoc and mayhem far beyond the powers of mere mortal men to imagine.  State Farm Mutual Automobile Insurance Co. v. Beauchane, 2015 WL 1514025 (Minn. Ct. App. April 6, 2015).  It all started when Mr. Beauchane attached one end of a rope to a dead tree on his property and the other end to his Chevy Silverado parked in the street (of course) about 4 feet from the curb.  He planned to pull the tree down with the truck, and one can only imagine the issues that might have ensued from that operation.  United Fire Insurance insured the parked Silverado.  Mr. Beauchane then went over to his driveway to move an uninsured Chevy Blazer from his driveway so it would not be in the tree’s path of descent.  You would think he might be rewarded for such thoughtful thinking, but that was not to be.

As bad luck would have it, Mr. Sandness was riding a motorcycle down the road at the same time.  Mr. Beauchane realized the bike rider was heading right for the rope stretched across the roadway.  He stopped the (uninsured) Blazer near the end of his driveway and tried to alert the bike rider.  He was somewhat successful in this endeavor.  The bike rider swerved to duck under the rope and hit the (uninsured of course) Blazer.  He sustained a leg injury that required surgery.  The jousting among the respective insurance companies then began.

United Fire Insurance, and North Star Mutual Insurance who insured Mr. Beauchane under a homeowner’s policy, refused to cover the medical costs.  He did receive reimbursement of $45,000 from State Farm which insured the motorcycle.  State Farm brought a subrogation action against Mr. Beauchane who tendered his defense to United Fire and North Star who both denied coverage.  Beauchane eventually agreed to a judgment against him in return for State Farm promising to seek recovery only from the insurance companies.

Confident in their respective positions and that they were all right, all three insurance companies then filed motions for summary judgment.  The Trial Court ruled that United Fire’s auto policy (Silverado) covered the injuries but North Star’s homeowner’s policy did not.  United Fire and State Farm both appealed.

The Court of Appeals rejected United Fire’s argument that its auto policy on the Silverado did not apply because the injuries did not arise from “use” of an insured vehicle.  Injuries may result from use of an insured vehicle when it is an active accessory to the injury, and a vehicle can be an active accessory to an injury even if its mere positioning creates the injury-causing hazard.  Since the Silverado’s position with the rope attached required the bike rider to swerve, the vehicle, although parked, was “actively connected” to the injury.

The Appellate Court further held that the injury resulted from the Silverado’s use for transportation purposes.  Since Mr. Beauchane had positioned the truck preparing to pull the tree down, the Court held that the injuries arose sufficiently from use of the Silverado for transportation purposes.

United Fire’s third argument was that, if its policy covered the injuries, Mr. Sandness could not be an “uninsured motorist”, and therefore State Farm’s payment to him was merely a voluntary payment which did not trigger a right of subrogation.  The Court rejected this argument noting that this overlooked the fact that United Fire had denied coverage, and coverage was reasonably uncertain, therefore to State Farm and the injured bike rider the injuries were or appeared to be otherwise uninsured.

Finally, the Court noted that, since it found that United Fire’s automobile policy applied, it did not need to reach State Farm’s argument that coverage was owed under North Star’s homeowner’s policy, but it did note that the plain language of that policy excluded coverage for injuries resulting from ownership or use of motorized vehicles, so that claim most likely would have crashed in the driveway as well.

The major lesson of this case is that life is more bizarre and unusual than any fact pattern that could otherwise be imagined.  Insurance professionals are constantly challenged to apply policy definitions, principles, and intent to a puzzling host of situations and injuries to the best of their judgment, training and ability.

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