Coverage Pointers - Volume II, No. 15

TRAVELERS INDEMNITY CO.
New York State Supreme Court, Appellate Division, Second Department
Action on Policy commenced Beyond Contractual Limitations Period Dismissed in Absence of Waiver
In an action to recover the proceeds of an insurance policy, the court held that summary judgment dismissing the complaint was properly granted. The insurer demonstrated that the action was commenced beyond the two-year limitations period provided in the insurance policy. Further, the plaintiffs did not demonstrate the existence of an issue of fact as to whether the insurer waived its right to assert the limitations period as a defense. The insurer had reserved its rights and defenses under the policy while attempting to negotiate the sums due, and its delay in investigating the plaintiffs’ claim did not establish a waiver.

01/18/01: KAZI v. STATE FARM FIRE AND CASUALTY CO.
California Supreme Court
An Easement is Not Tangible Property under Liability Policy
An insurer providing a liability policy that covers damage to tangible property on the insured’s premises has no duty to defend an easement dispute. "Tangible property" is not ambiguous, and coverage therefore does not turn on alternative meanings. Consistent with an insured’s reasonable expectations, "tangible property" refers to things that can be touched, seen, and smelled. To construe tangible property as including a legal interest in an easement or in property "requires a strained and farfetched interpretation. Instead, an easement is a non-possessory ‘interest in the land of another that gives its owner the right to use the land of another or to prevent the property owner from using his land.’ "

01/18/01: ST. PAUL FIRE &MARINE INS. CO. v. MURRAY GUARD, INC.
Arkansas Supreme Court
No "Two-Step" Subrogation Permitted
The critical issue in this case, as we see it, is whether St. Paul is entitled to equitable subrogation when the law firm paid in a fire case for its losses was not its insured but still was paid its business interruption losses under an errors and omissions policy issued to an insurance agency (that had failed to have the business interruption policy issued. Court holds that St. Paul cannot be subrogated to the claim because this would result in "two step subrogation" with St. Paul first being subrogated to the rights of its insured, the insurance agency, and then, second, to the rights of law firm.

01/17/01: COHEN v. AUTO CLUB INS.
Michigan Supreme Court
Fraud Committed by Insured in Claim for Non-Mandatory Uninsured Motorist Benefits Can Void Policy
Insured seeks uninsured-motorist benefits. Insurer denied those benefits under a clause that, relied on a policy clause that voids the entire policy if the insured misrepresents a material fact relating to a claim. Mindful of the great protection that the Legislature and this Court have provided for the no-fault benefits required by statute, Court did not decide the full extent to which the disputed clause, if applicable, could void the policy. It needed only decide whether it can void uninsured-motorist coverage. It can. A contractual provision that plainly governs the facts alleged to exist in this case is enforceable to the extent that it is not contrary to law.

01/16/01: HAWKES v. COMMERCIAL UNION INS. CO.
Maine Supreme Judicial Court
Exclusivity of Workers Compensation Law Does Not Bar Trespass and Privacy Claims against Workers Compensation Carrier
The Maine Supreme Court determined that the actions of a workers compensation insurer were not subject to the exclusivity protection of the workers compensation statutes and the insurer was not immune from liability for allegedly invading the injured worker’s privacy and trespassing on his property to obtain sub rosa photographs of the injured worker. Such claims did not arise out of the workplace and did not allege personal injuries.

Newsletter Editor
Kevin T. Merriman
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Insurance Coverage Team
Dan D. Kohane, Team Leader
[email protected]
Sheldon Hurwitz
Carolyn M. Henry
Kevin T. Merriman

Fire, First Party & Subrogation Team
James D. Gauthier, Team Leader
[email protected]
Donna L. Burden
Andrea Schillaci
Jody E. Briandi

In an action to recover the proceeds of an insurance policy, the plaintiffs appeal from an order and judgment (one paper) of the Supreme Court, Suffolk County (Hall, J.), entered March 9, 2000, which, inter alia, granted the defendant's motion for summary judgment and dismissed the complaint.

ORDERED that the order and judgment is affirmed, with costs.

The Supreme Court properly granted the defendant's motion for summary judgment dismissing the complaint. The defendant demonstrated that the action was commenced beyond the two-year limitations period provided in the insurance policy at issue (see, Brown v. Royal Ins. Co. of Am., 210 AD2d 279). Further, the plaintiffs did not demonstrate the existence of an issue of fact as to whether the defendant waived its right to assert the limitations period as a defense (cf ., Greenpoint Bank v Security Mutual Ins. Co., 247 AD2d 583). The defendant reserved its rights and defenses under the policy while attempting to negotiate the sums due (see, Compis Servs. v Hartford Stam Boiler Inspection & Ins. Co., 272 AD2d 886). Moreover, the defendant's delay in investigating the plaintiffs' claim did not establish a waiver (see, Brown v Royal Ins. Co. of Am., supra).

The plaintiffs' remaining contentions are without merit.

BRACKEN, ACTING P .J., ALTMAN, GOLDSTEIN and FEUERSTEIN, JJ., concur.