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Coverage Pointers
Volume XVII, No. 7 Friday, September 25, 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 do love situations. And I get a kick out of how many people who call for advice start out with, “I have a situation”… Welcome to autumn, a beautiful time in Western New York and Southern Ontario, although it does remind us that winter isn’t too far in the offing. I’m planning my escapes as we speak. In my column, in this issue, we offer, among other things, cases that will give our readers a “primer” on two topics, a New York State “direct action” (which differs from a declaratory judgment action) and the New York “special employee” rule, as it pertains to the exclusive remedy of workers compensation. Yogi’s Farewell and a Trivia Question: Steve Peiper covers Yogi Berra’s passing in his cover note below but I cannot resist one baseball trivia question relating to his passing. Yogi was the catcher for Don Larson’s perfect game in Game 5 of the 1956 World Series. The box score is linked here. But, before you look at it, I’ll tell you that there were 19 players that went to the field that day, nine for the victorious Yankees and 10 for the Dodgers (a pinch hitter was the 10th). Here’s the question, and you may want to look at the box score before or after you answer it: Of those 19 players, how many of them are still alive today. The answer will be found after Steve’s column below.
Thanks, Tessa: A special thank you to Tessa Scott for stepping up to write today’s column for Margo Lagueras, on litigated No Fault cases. We are hopeful to have Margo back in the fold soon, perhaps in time for our next issue. Nice to Be Recognized: We are proud to have five of our Members recognized as outstanding in the Business First and Buffalo Law Journal 2015 Legal Elite of Western New York. The list, generated from nominations by other lawyers, highlighted a limited number of Western New York lawyers although it significantly limited the number of lawyers per firm which could be included.. Those recognized were:
Upcoming Continuing Education Program: DRI's Insurance Law Committee specifically designed a brand new kind of program for insurance executives, in-house counsel, and claim professionals. DRI's Insurance Law and Claims Conference is a one-day program, October 28, in Hartford, Connecticut. This program will cover multiple issues impacting the insurance industry, while providing CLE/CE credit and great networking opportunities. October 28, 2015
I will be speaking on the “privilege” issue, a very important one, in light of recent appellate cases reported in this publication. Hope to see you there.
Fred Herbert a/k/a Herbert Kenman: Baseball Debut, September 25, 1915: With thanks to an article written by Ron Schuler. I love the stories about the ballplayers that made it up to the big leagues for merely a cup of coffee – one game, or two. A moment, a flash, a second. In 2012, someone counted and as of that time, of the 17,808 players who had stepped onto a Major League field, only 974 have had one-game careers. Herbert Kenman had two games. Herbert was a pitcher for the New York Giants. On this date, in 1915, Fred Herbert pitched his first major league game. Five days later, he pitched his second and last. He had an ERA of 1.06 in 17 innings, a pretty impressive start. Fred Herbert was actually born Herbert Frederick Kemman in La Grange Park, Illinois on March 4 in 1887. Herbert went to the University of Illinoi and then joined the Ottawa Senators’ minor-league club, where he was 16-9 in 1912. He changed his name to Fred Herbert; it is suggested that he was a little sheepish about being known as a ballplayer. He ended up in the International League with Toronto in 1913, where he worked through 1916, and pitched a no-hitter. Drafted by the Brooklyn National League team, then known as the Robins, he ended up with the New York Giants in September 1915. Herbert joined the Giants when the Federal League, the “third” major league, was still in existence. It lasted two years, the 1914-1915 seasons. A large number of talented players had jumped to the Federal League. He was signed on September 20 and given his first major league start five days later. He pitched a complete game, beating the Cards 5-3 and allowing only six hits – although the Giants were lucky to avoid forfeiting the game in the fifth inning, when infielder Fred Brainerd refused to leave after being thrown out by the umpire for disagreeing with one of Byron’s calls. On three days' rest, John McGraw started Herbert again, against the Robins, and he gave up but two runs on six hits including a triple by Casey Stengel. When the Federal League disbanded after the 1915 season, the talent that returned to the Giants led to his dispatch to the minor leagues. He remained in the minors for the rest of his career. During the 1916 season, he sidled up to the Beloit (Wisconsin) Fairies and became a star of the club's pitching staff – this time under his own name. Herb Kemman then became a great bowler and eventually, Mayor of Beloit. He died in 1963. Cassie’s Capital Connection: Cassandra (“Cassie”) Kazakunus is our resident attorney in Albany. Her geographical area covers the Capital District and its environs. She travels up and down the Hudson, although not usually in a boat, and works throughout the Third Department (besides also covering NYC appearances). She sends you her greetings: Greetings from Albany! News on the regulatory front remains quiet, but there were two regulations approved by DFS. Also, the State Senate announced it will hold at least one hearing in October or November to discuss recovering from Superstorm Sandy. Per our friends at NYIA, there is pressure to make a private right of action for unfair claims practices a major subject of the hearing. The hearing is not yet scheduled, but I will keep you updated when more information is available. On a completely personal note, I feel the need to relate an Ethan story today. Yesterday when I picked Ethan up from school he had his usual artwork to bring home. I was asking him about it, and he informed me that it was a picture of Mommy, Daddy, and Ephan (the “th” sound is still tough for him). This is probably a regular occurrence for most parents, but it was the first time he has ever drawn a picture of us. Normally, his pictures are, per Ethan, of airplanes, motorcycles and soccer balls; the primary joys in his life. It was nice to have a reminder of how sweet he is because my days are often filled with his car accidents, attempts to jump from the highest surface, standing on his bicycle instead of sitting on it, and other adventures. Enjoy your weekend! Cassie
Fewer Pub Crawls – 100 Years Ago: The New York Times ROYAL ORDER SIGNED “Treating” Prohibited—Similar LONDON, Saturday, Sept. 25 – King George has already signed an order, which will be issued next week, applying the clauses of the Control of Liquor act to the London area. The order will prevent “treating” in public houses, clubs, and hotels in London. A similar order, which has been applied to other areas under the powers conferred by the Defense of the Realm act, has decreased the number of cases of drunkenness dealt with by the police by 40 per cent. The order of the King says: It is expedient for the successful prosecution of the present war that the sale and supply of intoxicating liquors in the area defined shall be controlled by the State, on the ground that war material is being made, loaded, and dealt with in transit therein, and that men belonging to his Majesty’s naval and military forces are assembled therein. It is expected that the hours during which drink may be sold will be shortened and that the dilution of spirits will be insisted upon. HEWITT’S HIGHLIGHTS: Dear Subscribers: Fall is officially here. Pumpkins, changing leaves, and cooler weather are coming but slowly to Long Island. Still, it is nice to get a change of season. The courts are still only slowly issuing serious injury cases since Labor Day. The most interesting case this week is a decision by the Second Department to reverse a lower court that had decided to set aside a jury verdict at plaintiff’s request. While the jury found a serious injury, and awarded damages, the plaintiff was not happy with the award, arguing that defense counsel’s conduct at trial had been inflammatory and prejudicial and that the weight of the evidence supported additional damages. Although the lower court agreed, the Second Department reversed. Until next time, Rob Buying Votes a Century Ago – Is This New?: The New York Times PAID TEN CENTS FOR VOTES Former Henchman of Mayor Bell INDIANAPOLIS, Sept. 24.—Voters were bought for ten cents, “the price of a drink,” in the last election, according to Edward J. O’Leary, who testified in the trial of Mayor Joseph E. Bell, charged with election conspiracy. About one hundred saloon keepers testified during the day that they had contributed to the Democratic Campaign Fund in the sums ranting from $5 to $75. City employees, most of whom were indicted with Mayor Bell, were named as the collectors of this fund. O’Leary, who has pleaded guilty in the case, testified that he had bought fifteen voters and that he gave eight of them “the price of a drink—ten cents.” He said he bought suppers for three others. William Kissel, a co-defendant, who held a city contract, gave him $10 on election day. O’Leary asserted, and told him, “Go after them. You know how to get them.” It was brought out that O’Leary had been arrested a number of times here and in Detroit, Mich. Editor’s Note: The October 14, 1915 copy of the Indianapolis Star reported that Mayor Bell was acquitted, and had its banner headline: Bell Vindicated; Verdict Cheered It reported on the results of the 32 day trial, that cost $15,000 to prosecute, with 643 witnesses (five of whom were defense witnesses) and an eight and one half hour jury deliberation. Think about that – 32 days, 632 witnesses (18 or so a day). Joseph E. Bell (1865–1923) was the Democratic mayor of Indianapolis from 1914 to 1918. Raised in Union County, Indiana, Bell came to Indianapolis in August 1888 to begin a legal practice and a career in politics. He soon began an association with Thomas Taggart, who was the county chairman at the time. Bell was appointed an assistant to the city attorney in 1893, and continued his position during Taggart's three mayoral administrations. Bell won the 1914 mayoral election with thirty-seven percent of the vote. Election irregularities led to the indictment of Bell, Taggart, and others on charges of conspiracy to commit a felony. However, the mayor was acquitted. Bell established the first vice squad in Indianapolis and oversaw many public improvements. During his administration, 281 miles of streets, sidewalks and sewers were built. Notable projects involved Pogue's Run, a flood levee along White River, Garfield Park, and the extension of the city's boulevard system (Fall Creek, Maple Road (38th Street, Pleasant Run and Burdsal). A founder of the Indiana Democratic Club and a deacon of Tabernacle Presbyterian Church, Bell died in 1923 from an accidental, self-inflicted shotgun wound suffered at the Indianapolis Gun Club. Wilewicz’ Wide World of Coverage: Dear Readers, Since our last issue, the leaves have started to turn, the courts have reawakened from their summer slump, and football season has started. All the more reason to love the season. While I may be de facto partial to futbol, there’s nothing quite like a crisp Sunday afternoon watching the old pigskin being thrown around. This week, we bring you two Second Circuit coverage cases of particular interest. In National Liability v. Itzkowitz, the Court analyzed where we draw the line on aggregating “accidents” for coverage purposes in a series of closely timed but separate events. In that case, three events happened within the span of just a few minutes. First, a dump box detached from a dump truck and crashed into an overpass. Next, one vehicle crashed into the dump box. Then, another vehicle also crashed into it a couple of minutes later. Applying the “unfortunate event” test, the Court found these to have been three separate “accidents” under the policy. Though they did take place in a relatively short period of time, and were in some ways similar, they were not sufficiently related in space and time. They were not close enough on the space-time continuum, if you will. As such, the carrier had to deal with three “accidents”, not just one. Next, we have Fetch v. Allstate. There, the insured owned a groomer/doggy daycare center along the south shore of Manhattan. They rented out their space from the building owner. The insured obtained a flood insurance policy, as was required under the terms of their small business loan, even though they knew that the building owner had its own flood insurance policy for that property. Following Sandy, the owner made a claim under its policy and recovered money. The insured/tenant later made a claim under its own flood policy as well, but the carrier denied coverage on the basis of the duplicate policies. The Court concluded that the insured’s policy was indeed a duplicate, which barred coverage, and the carrier did not have to give the insured a choice between the two policies. Always interesting stuff in the wide world of coverage. See you in a couple of weeks! Agnes President Wilson Fights With Streetcars, 100 Years Ago: The Sun WILSON A NIMBLE CAR DODGER President Has Exciting Experience WASHINGTON, Sept. 24.—President Wilson walked downtown to-day to a sporting goods store to buy golf balls. He was accompanied by secret service men. While crossing at Fifteenth Street and Pennsylvania Avenue, just below the White House, Mr. Wilson had to step nimbly to get out of the way of a street car. Few recognized the President as he walked along the streets. The President evidently enjoys these little shopping tours. Frequently he walks to shops to make small purchases and visits his bank about twice a month. President Wilson at present is enjoying a “stag” house party. In addition to Col. E. M. House of Texas he has with him Col. E. T. Brown of Georgia, a cousin of the late Mrs. Wilson, and Prof. Stockton Axton of Princeton, the late Mrs. Wilson’s brother. While His Predecessor Battles a Bull Moose:
The Sun T. R. BAGS A BULL MOOSE Colonel Returns to Quebec After QUEBEC, Sept. 24.—Col. Theodore Roosevelt arrived in Quebec to-day after an exciting hunting trip on the preserves of the Tourilli Club, north of Quebec, where he bagged a splendid bull moose and a caribou. The Colonel was the guest of Arch Laurie, a prominent Quebec barrister, and he was greatly pleased with his experience. Most the hunting was done on the preserves north of St. Raymond and East Latuque. No official cognizance was taken of Col. Roosevelt’s visit here and no attempt was made to lead him into making any statement concerning the war. The Colonel refused an invitation to speak before the Canadian Club and also evaded all attempts by the newspaper men to interview him on war matters. Dr. Lambert, who accompanied Col. Roosevelt on the hunting expedition, arrived here before the ex-President and left for New York yesterday. Jen’s Gems: Greetings! It is amazing to think that we have already entered fall and, before we know it, the snow will be falling (at least in Buffalo). I am happy to report that my daughter, Charlotte (or Charlie as we call her), is already rolling, eating food and playing with toys. Five months goes fast. The New York trial courts were pretty quiet the past few weeks. Perhaps they are still trying to rev up after a relaxing summer. Accordingly, I am only reporting one case out of the District Court in New Mexico. In Sinclair v. Zurich American Insurance Company, the court addresses an application to amend plaintiff’s complaint to assert bad faith causes of action. In the decision, the court found that the proposed amended complaint did not set out sufficient facts that plausibly suggested the insurer acted in bad faith or was in violation of the state’s Unfair Insurance Practices Act. As a counseling point, when you receive a complaint which contains bad faith allegations, it is always worth considering whether these allegations have been sufficiently pled. If they have not, a motion to dismiss is appropriate. The pleading standard is very high on these claims and getting rid of them early on reduces the risk that bad faith type discovery will be sought later on in the litigation. Hope everyone has a nice weekend. Until next issue… Jen Romance, a Century Ago (A Cut Above the Rest):
Poughkeepsie Eagle-News MAY YET WED GIRL HE STABBED John Carona Given a Suspended IS FORGIVEN FOR ACT Providing he does not fall down in his promise to make good within a year’s time, John Corona, a young Italian, of Wappingers Falls, will be free to marry the girl of his heart’s desire, whom some time ago in a fit of jealous rage he stabbed and was later indicated by the grand jury on the charge of assault in the second degree. Mary Andretta, the girl in the case, was very angry with John at the time, but not half so stirred up as her father, Vincenzo Andretta, a prosperous business man, who was responsible for John’s arrest. But now that John has been forgiven, his prospective father-in-law says his daughter can be married a year from today if her young lover does not do anything he shouldn’t in the meantime. Editor’s Note: This is my kind of story. I did a little digging. By the way, Wappinger’s Falls is near Poughkeepsie. Because I have no life, I had to find out what happened to this couple. Surprisingly, the marriage of the two was eventually consummated. Mary Andretta Corona gave birth to a daughter, Ann and another child.. Sadly, Mary died in 1928 but we could not find the cause of death. John remarried and he and his new wife had several more children. The new wife, twenty years younger than John, was kind to John’s children with Mary, Ann and another sibling. Ann died in May of 2013 at age 90 and is buried in Poughkeepsie. Her descendants still live there. I did not reach out to them to let them know that grandfather stabbed his betrothed; I just didn’t have the heart. Peiper’s Position: Another sa-low week for the Property and Potpourri column this issue. Here’s hoping for next issue. Instead of law, we turn our attention to other matters this week. We, like every other baseball fan, bring this issue of CP to you with heavy hearts. As the rest of free world already knows, Lawrence “Yogi” Berra passed away yesterday at the age of 90. Yogi made an indelible mark on American culture over the past seven decades, and surely you are all aware of the Yogi-isms that have been recounted countless times. Indeed, our own Harry Mooney has taught more than a few lawyers how to avoid malpractice by heeding the keen words of Mr. Berra. As Harry tells it, all you need to do to avoid malpractice is to follow the logic of Yogi. Uh, yeah, follow the logic. Sure. If you want to be entertained, and learn a little about malpractice, drop Harry a line. In any event, we wanted to highlight some of the less frequently known facts about Yogi as part of our issue. Mr. Berra was part of that greatest generation. Long before he was known for homeruns or his comments about them, Mr. Berra sailed, and was wounded, on D-Day in support of the mission to bring freedom to Europe. I did not know that until yesterday. Aside from baseball accomplishments, that alone heeds celebration of his contributions. We are, as much as we try to avoid it, a publication that at least purports to comment on legal issues. So, with this in mind, we also note an interesting story about Berra’s connection to another Bear; that being Yogi Bear. I had always assumed that Hanna Barbara created Yogi Bear as a homage to the Yankee great. While the creator has repeatedly stated that it was a mere coincidence, we remain unconvinced. There are some who say that Yogi Berra did contemplate legal action against Hanna Barbara for the use of his likeness. In typical Yogi fashion, however, he stated that he was going to sue them until someone pointed out that his name was actually Lawrence. Apparently, a search of previous court records fails to turn up any evidence of a formal legal proceeding. Regardless of whether Yogi did sue Hanna Barbara in the 1960’s, and regardless of whether Yogi Bear was inspired by Yogi Berra’s likeness, the fact that there is no tangible evidence of any formal legal proceeding underscores how different likeness rights were in 1962 as opposed to 2015. Think a cartoon bear sounding curiously like a baseball All Star would not engender litigation today? Yeah, we don’t think so either. In closing this week, we couldn’t resist one final Yogi-ism. We remind you, as he did, “you gotta go to other people’s funerals, otherwise they won’t go to yours.” We trust that his devotion to friends that have passed will be paid back 10 fold in the coming days. God Speed. Steve Editor’s note: The answer to the trivia question above. There is only one player alive who played in Don Larson’s perfect game in the 1956 Series. That player? Don Larson. Today’s headlines from the attached issue: KOHANE’S COVERAGE CORNER
HEWITT’s HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW
MARGO’S MUSINGS ON NO FAULT This week appearing as: TESSA’S TUTELAGE
PEIPER ON PROPERTY (and POTPOURRI)
FITZ’S BITS
WILEWICZ’S WIDE WORLD OF COVERAGE
CASSIE’S CAPITAL CONNECTION
KEEPING THE FAITH WITH JEN’S GEMS
EARL’S PEARLS
That’s all we have to say. Less than three weeks left for me in my Canadian home and then we return to the Buffalo house (17 minutes and one Great Lake less) away. We’re going to miss the DRI Annual Meeting this year because of court ordered depositions in Atlanta. Ahh well. Sometimes duty calls. Best wishes. Dan D. Kohane Office: 716.849.8942
Hurwitz & Fine, P.C. is a full-service law firm ASSOCIATE EDITOR ASSISTANT EDITOR INSURANCE COVERAGE TEAM FIRE, FIRST-PARTY AND SUBROGATION TEAM APPELLATE TEAM Topical Index 09/16/15 Friedlander Organization, LLC v. Liberty Ins. Underwriters, Inc. The process is requires the judgment creditor to send a copy of the judgment to the insurer and the insured, wait 30 days. If the insurer does not make payment, the judgment creditor can then bring the action against the carrier but only for amounts covered by the policy. So, if there is a $1,000,000 judgment and a $50,000 policy limit, the action can be only for the $50,000. The insurer can raise any coverage defenses that may be claimed under the policy. Here, Liberty moved to dismiss the case against it but the court, for reasons not specified, denied the motion to dismiss the direct action and denied dispositive motions relative to the rescission action. 09/16/15 Wilson v. A.H. Harris & Sons, Inc. Wilson then sued the defendant and the defendant moved to dismiss the lawsuit contending that the action was barred by the exclusivity provisions of the Workers' Compensation Law. Workers compensation benefits are the exclusive remedy of an employee against an employer for any damages sustained from injury or death arising out of and in the course of employment. For purposes of the Workers' Compensation Law, a person may be deemed to have more than one employer, a general employer and a special employer. The receipt of those benefits from a general employer precludes an employee from commencing a negligence action against a special employer. What is a “special employee”? It is "one who is transferred for a limited time of whatever duration to the service of another". In determining whether that relationship exists, a court should consider factors such as the right to control the employee's work, the method of payment, the furnishing of equipment, and the right to discharge. A significant and weighty factor . . . is who controls and directs the manner, details and ultimate result of the employee's work'". Here, defendant established, prima facie, that this action was barred by the exclusivity provisions of the Workers' Compensation Law. Evidence submitted in support of the motion demonstrated, prima facie, that the defendant controlled and directed the manner, details, and ultimate result of the plaintiff's work, and that the defendant was the plaintiff's special employer. In opposition, Wilson failed to raise a triable issue of fact. 09/17/15 Bayswater Development LLC, v. Admiral Insurance Company Courts in Florida have consistently held that pollution exclusions, such as those contained in the Admiral and American Empire policies, preclude coverage for damage caused by "Chinese Drywall". HEWITT’s HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW 09/23/15 Lariviere v. New York City Transit Authority The plaintiffs moved to set aside the verdict pursuant to CPLR 4404(a): (1) in the interest of justice, contending that defense counsel's improper and inflammatory remarks during summation deprived them of a fair trial; and (2) contending that the verdict as to damages was contrary to the weight of the evidence. The Supreme Court granted the motion on the first ground. The appellate court determined that the Supreme Court improvidently exercised its discretion in ordering a new trial. The plaintiffs' claims regarding defense counsel's conduct center on remarks made by defense counsel during her summation, although they also challenged her cross-examination of certain witnesses. Although the Appellate Court found some of the challenged conduct improper, viewing defense counsel's conduct in the context of the entire trial, it was concluded that it was not pervasive or prejudicial, or so inflammatory as to deprive the plaintiffs of a fair trial As for the damages, the Appellate Court found that a jury verdict should not be set aside as contrary to the weight of the evidence unless the jury could not have reached the verdict by any fair interpretation of the evidence, and that this was not the case here. 09/23/15 McFarlane v. Klein 09/16/15 Santucci v. Sousa Margo M. Lagueras This week appearing as: TESSA’S TUTELAGE 09/15/15 American Transit Ins. Co. v. Longevity Medical Supply, Inc. Justice Friedman heartily disagreed with the conclusions drawn by the majority. He noted that the issue of whether the carrier had complied with the 30 day time frame had not been argued by the Defendants until the submission of Defendants’ opposition to Plaintiff’s appeal. He pointed out that if the time frame had been called into question prior to Defendant’s opposition, Plaintiff “may well have been able to establish compliance with the regulation.” He further explained that there was no reason for the court to assume that the carrier did not follow the timeframe. Most importantly, he noted that no appellate court previously required a carrier to show compliance with the 30-day time frame unless it was called into question. Ultimately, following this decision and the three following cases, the carrier must, at the onset show that it is entitled to deny coverage by demonstrating that it was in compliance with the 30-day rule. 09/15/15 American Transit Insurance Co. v Vance Justice Friedman again wrote a dissent on similar basis as he did in American Transit Insurance Company v. Longevity Medical Supply, Inc., supra. 09/15/15 American Transit Insurance Co. v Clark 09/15/15 National Liability & Fire Ins. Co. v Tam Medical Supply Corp. This decision, along with the other four decisions of the day, reinforce that carrier must show proof that it complied with 30 day rule for IMEs and EUOs if it wants to deny coverage. PEIPER ON PROPERTY (and POTPOURRI) 09/23/15 Gershman v Ahmad After nine months of waiting, plaintiff moved for a default judgment. Thirty days after that, Billiard finally appeared through counsel that was different than the previous counsel who had arranged the extensions. Upon appearing, Billiard opposed the default application and moved to compel plaintiff to accept its Answer. The Trial Court granted Billiard’s application. However, the Appellate Division reversed finding that the plaintiff had complied with all procedural requirements for obtaining a default judgment, and had established the merits of her claim. The Court also noted that Billiard’s opposition failed because it did not submit a meritorious defense, nor a reasonable excuse for the default in the first place. Further, the Court rejected Billiard’s excuse that it was negotiating with its insurance carrier in light of the insurer’s decision to deny coverage. While a delay occasioned by the carrier might be an excuse, delay based upon a challenge to a coverage denial is not a basis for a delayed response to a lawsuit. Finally, while the principal of Billiard supported Billiard’s application with an affidavit, his affidavit did not speak to the merits of Billiard’s proposed defense. Absent anything else, the Court noted that an attorney affidavit baldly stating that Billiard’s actions did not give rise to a Dram Shop claim was insufficient to establish a potentially meritorious defense. Elizabeth A. Fitzpatrick Speaking at Law School for Insurance Professionals. WILEWICZ’S WIDE WORLD OF COVERAGE Agnes A. Wilewicz 09/15/15 National Liability & Fire Insurance Company v. Itzkowitz The only policy at issue in this litigation was one issued by National Liability. That policy stated that “Regardless of the number of covered ‘autos’, ‘insureds’, premiums paid, claims made or vehicles involved in the ‘accident’, the most we will pay for the total of all damages … resulting from any one ‘accident’ is the Limit of Insurance for Liability Coverage shown in the Declarations. All ‘bodily injury’ [and] ‘property damage’ … resulting from continuous or repeated exposure to substantially the same conditions will be considered as resulting from one ‘accident’”. The court first reiterated prior New York precedent that holds that this language does not evince intent to aggregate incidents. Instead, the “unfortunate events” test is applicable in determining number of accidents. The unfortunate event test has two parts. First is a determination of the “operative event, giving rise to liability in this factual context”. Next, “we consider whether there is a close temporal and spatial relationship between the incidents giving right to injury or loss, and whether the incidents can be viewed as part of the same causal continuum, without intervening agents or factors”. Here, applying that test, the court found that three separate “accidents” had occurred. First, each collision was clearly a separate operative incident. However, in terms of whether there was a close enough temporal or spatial relationship, the court found a connection lacking. Contrasting this case to those of a pile ups or multi-car accidents, versus wall collapses that occur nearly an hour apart, the court found that there was no evidence that the relative timing of the events played any role in causing them to unfold as they did. That is, though they took place close in time, “nothing suggests that the narrow timespan between each incident played a role in causing any of the other incidents”. Moreover, the events lacked spatial proximity as the collisions occurred in different locations. Finally, the court found that there was no common “unbroken” continuum between the events sufficient to aggregate them into on accident. While there were many similarities and commonalities, these simply did not come together as a chain reaction or connected chain of events to constitute one accident. As such, the Second Circuit held that three separate accidents occurred for the purposes of National Liability’s policy. 09/10/15 Fetch, NYC Inc. v. Allstate Insurance Company In October 2012, Hurricane Sandy hit and caused flood damage to the building and Fetch’s property located inside. The building owner made a claim under his SFIP policy and Hartford paid over $250,000 in recompense. Meanwhile, Fetch reported their damage to Allstate (including both building and property damage) and the carrier denied on the basis of duplicate policies covering that property. In 2014, the Southern District held that Allstate’s SFIP’s provision precluding recovery under duplicate policies barred Fetch’s recovery. Moreover, the court held that coverage could be denied if the policies were indeed duplicates and such duplicate policy was knowingly created. Here, the Second Circuit agreed, stating that there was no genuine dispute as to whether the two policies were duplicate and there was no dispute that Fetch’s CFO knew that other flood coverage has been procured. As such, the Circuit Court affirmed the Southern District’s decision and held that Allstate did not breach the terms of its SFIP in rejecting Fetch’s claim thereunder. Cassandra A. Kazukenus Regulation No. 172 (11 NYCRR 82) Adopted By DFS Regulation No. 96 (11 NYCRR 62) Adopted By DFS KEEPING THE FAITH WITH JEN’S GEMS Jennifer A. Ehman 09/11/15 Sinclair v. Zurich American Ins. Co. In considering the allegations in the proposed complaint, the court noted that it was oddly bereft of factual allegations that would support the bad faith claims. After setting out the facts of the underlying accident, plaintiff alleged that he made a claim on Zurich for underinsured motorist benefits (“UIM”) and Zurich denied the claim, contending that the insurance policy excluded coverage for UIM benefits in New Mexico. Plaintiff also asserted that he requested a complete certified copy of the Zurich policy, but Zurich failed or refused to provide a complete copy prior to suit being filed and the portions provided did not properly reject UIM benefits under New Mexico law. Plaintiff then claimed in conclusory fashion that Zurich acted in bad faith when it failed to timely and fairly investigate, evaluate, settle or pay his claim, and further failed to timely communicate its position. It then claimed that Zurich violated the Unfair Insurance Practices Acts (“UIPA”) and parroted the language of the statute. The court found that while plaintiff adequately alleged that Zurich denied UIM benefits under the policy, his proposed amended complaint did not set out sufficient facts that plausibly suggested that Zurich acted in bad faith or in violation the UIPA. Of note, this decision has an interesting side discussion concerning whether an insurer’s conduct during litigation maybe admissible as evidence of bad faith. The court references the fact that Zurich’s counsel had moved for summary judgment in this action but had knowingly or negligently misrepresented and failed to disclose controlling New Mexico case law in its briefing. In considering this issue, the court held that in its view, it believed New Mexico courts would recognize that an insurer’s duty to act in good faith does not end when it insured files suit against it even though the insured and insurer begin an adversarial relationship at that time. And, in its view the duty to act in good faith would include an obligation to timely reassess its initial decision to deny coverage based upon information received subsequent to the initial decision, even if that information is received after suit is filed. With that said, the court still did not find evidence of bad faith in this action in light of the fact that plaintiff made no suggestion in its briefing relative to the summary judgment motion that Zurich was acting in bad faith. In fact, plaintiff suggested, at one point that, that the case should go to the New Mexico Supreme Court because of inconsistent precedent on the issue. EARL’S PEARLS 04/17/15 White Mountain Communities Hospital, Inc. v. Hartford Casualty Insurance Co. The Court initially noted that Hartford had paid for lost income based on hospital repairs and cleaning through August 2011 even though the hospital was officially evacuated only through June 14, 2011. The Court also found no evidence of bad faith claims handling as, for example, the insurance company paid for some business income losses less than a month after receiving profit and loss statements and other information. The primary issue was that the hospital failed to establish that smoke-related repairs and cleaning constituting property damage caused the drop in business as opposed to the evacuation of the local populace and the general downturn in the local economy. Finally, the Court rejected claims that Hartford performed inadequate claims investigation, noting that the company continually worked to assess and respond to the hospital’s claims. This case demonstrates the importance of documenting the claim file to demonstrate to a court or other outsider that the claims department “continually worked” to assess the claim. It is also important to promptly respond and communicate with the insured, and leave little “blackout” time in the claims file and history. The court in this case also found it important that Hartford promptly paid parts of the claim which were deemed to be covered as being due to “property damage” rather than delaying processing and payment due to disagreements with respect to the entire scope of claim. In many cases, it is beneficial to pay those parts of claims that are deemed covered to demonstrate good faith, and take those parts of the claim out of contention. This case raises the point that business interruption and lost income insurance can be negated or affected by other non-loss specific factors such as fires, weather, road closures, etc. unrelated to the actual point-specific property damage. General local weather, economic, and other conditions can diminish business income and traffic unrelated to specific property damage. |
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Coverage Pointers - Volume XVII, No. 7
Friday, September 25th, 2015
