Coverage Pointers - Volume XIV, No. 24

Dear Coverage Pointers Subscribers:

You have a situation?  We live for situations.

I love summer.  Enough said.

Peiper’s Promotion:

Hurwitz & Fine was pleased to designate Steve Peiper as head of our First Party team.  Steve has developed a national reputation as a leader in first party practice, and has been a go-to lawyer for many on Super Storm Sandy issues.  Atta-lawyer.


Ask Tim:

I had the pleasure of chatting with Tim Dodge this week.  While we’ve exchanged e-mails and shared blog posts in the past, I think it’s the first time I’ve actually spoken with him.  It was a treat, indeed.  If you don’t know Tim, and don’t follow his Ask Timblog, you’re missing a great opportunity for wisdom. Tim is the Director of Media Relations for IIABNY, Independent Insurance Agents & Brokers of New York, Inc. and has his fingers on the pulse of insurance issues throughout the state and country.


Long Island CLE Presentation:

We REALLY enjoyed participating as a panelist at the NYS Bar Advanced Insurance Coverage program in Melville a week ago.  We had great panelists (including our own Beth Fitzpatrick) and a fabulous audience.


Oh Canada:

This issue comes to you from the lovely, scenic and tranquil north shore of Lake Erie, Ontario.  Finally, construction at our beachfront home, Crescent Dreams, is virtually complete (which means, we have a huge punch list) and we’ve moved to Canada for the remainder of the summer and part of the fall.  For those who have tolerated and commented on the Facebook construction photos, we’ve dubbed the process:  While You’re At It.  The project started out as kitchen expansion, but while we were at it, every room in the place has been impacted by some transformation, great or small.  Anyway, it’s an 18-minute international commute from our Canadian home to the office.  There’s a guest house on the property.  Just saying ….  Bring your passport.


Jen’s Gems:

Greetings and Happy Memorial Day! 

For those interested in bad faith decisions, we have an excellent one this week to report on from the Tenth Circuit applying Utah law.  The case involves a situation where the plaintiff, a young woman returning home from her honeymoon, was involved in a serious motor vehicle accident suffering traumatic brain injury.  At the time of the accident, the tortfeasor only had a $25,000 per person policy in place, which was clearly insufficient to compensate her for the injuries. 

Faced with this situation, plaintiff’s counsel attempted to setup GEICO for bad faith.  He used GEICO’s desire to resolve issues related to a large medical services lien as guise to claim that GEICO failed to timely offer its policy limits.  But, in response, GEICO had truth on its side and (more importantly) a well-documented claims file that outlined its responsiveness to requests for information and its attempt to resolve issues related to the lien and a UIM claim.  In a great statement by the Court, it issued a reminder that “an insurer who acts reasonably in fulfilling its obligations under an insurance policy has no reason to fear a bad faith suit.” 

I should note that this statement is not completely true.  To be more accurate, it should have been said that the insurer who acts reasonably has no fear of losing a bad faith suit.  As my white-haired Insurance Law professor in law school always said, “You can be sued on any day but Sunday.” 

Also, I will be attending the DRI Insurance Bad Faith and Extra-Contractual Liability Seminar in Boston from June 5th to June 7th, and would love the opportunity to say “hello.” 

Jennifer Ehman
[email protected]

Editor’s Note:  I was her Insurance Law professor in law school but, by all official accounts, my hair has remained brown since I was a kid.  It may be a lighter shade of brown, but brown nonetheless.  You may ask my hairdresser or my wife who each know the proper answer to the question.

Insurance Coverage Mediation and Arbitration
Resolving the Complex without the Substantial Costs of Litigation or the Risk of Adverse Precedent

I call it, the "Fear of Success." How often is an insurer battling another over a coverage issue on a Monday and taking the opposite position on the same question in another case on a Tuesday? If the company wins on one case, that precedent can lead to a loss, perhaps even a more significant loss, in the next case. Be fearful of success because that victory can come back to hurt your company -- or the industry -- tomorrow, next week or next year.
There are times, more often recently than not, when insurers wish to resolve complex insurance coverage disputes without the expense and costs of trial and without the risk of potentially adverse judicial precedent. We have encouraged the mediation and/or arbitration of complex insurance coverage claims and our office can assist insurers and insureds in bringing reasoned resolution to coverage disputes.
Hurwitz & Fine, P.C. offers both mediation and arbitration services. Why spend the money and the time to litigate these questions when resolution by mediation or arbitration can bring closure to hotly contested matters in relatively short order for substantially reduced costs.
I have been handling complex insurance coverage matters for over 25 years. For over 20 years, I have served as an Adjunct Professor of Insurance Law at the Buffalo Law School and am often retained as an expert witness in insurance coverage matters throughout the United States, Canada and in the London market. With mediation and arbitration training and certifications and years of practical experience, common sense and scholarship, I may be able to help mediate a dispute between and among insurers -- or insureds and insurers efficiently and, if successful, without the risk of harmful precedent.
For information, contact Dan Kohane at [email protected] or 716.849.8942.

One Hundred Years Ago – Former President’s Lawsuit Ready to Begin:

Olean (NY) Times
May 24, 1913
Page 1

Ready for T.R. Trial

Marquette, Mich., May 24 – Arrangements were completed by attorneys on both sides for the trial on the libel suit brought by Col. Theodore Roosevelt against George A. Newett, editor of Iron Ore, a weekly newspaper of Ishpeming, Mich.  The trial begins on Monday.  Col. Roosevelt is expected to be in Marquette then.

In 1913, former President Theodore Roosevelt sued George A. Newett, publisher of the Iron Ore, an Ishpeming newspaper, for libel. An article in Mr. Newett's newspaper had accused Roosevelt of getting "drunk . . . and not that infrequently."

Newett defended against the suit by claiming that Roosevelt was a public figure about whom he was free to publish comments. He also claimed that the allegations were true.

At the conclusion of a week-long jury trial, Mr. Newett dramatically retracted his charges, saying, "In the face of the unqualified testimony of so many distinguished men . . . I am forced to conclude that I was mistaken." Roosevelt then withdrew his claim for damages, asking the court to instruct the jury that he wanted only nominal damages. The jury accepted his request and awarded him the sum of six cents.


Peiper’s Perception:

Another complete strike out for property decisions this week.  Not to worry, however, as we have a plethora of interesting indemnity issues in the Potpourri section of the issue.  Speaking of indemnity issues, if you haven’t yet joined the Labor Law Pointers mailing list what have you been waiting for?  David Adams’ crew provides an excellent monthly update on developments in Labor Law litigation.  Try it, you'll like it.  Send Dave a note:  [email protected].

SOS - Still On Sandy

It has been a few weeks since we've reported on Sandy related developments.  We, as you, have begun the process of slogging through the first AAA mediations.  We, like you, continue to await coming influx of litigation.  

In the interim, we have something interesting on which to report.  It turns out that the Legislature, DFS, and the Governor doesn't think much of Anti-Concurrency Causation language. 

What is an ACC you say?  

New York courts have not had many opportunities to address anti-concurrency clauses.  However, under traditional rules of policy interpretation, New York courts have been instructed to apply the terms of the policy as written.  Thus, when exposed to an anti-concurrent causation question, New York courts have (to date) held the line (see, e.g., Cali v Merrimack Mut. Fire Ins. Co., 43 AD3d 415, 841 NYS2d 128 [2d Dept., 2007]; Kula v State Farm Fire & Cas. Co., 212 AD2d 16 [4th Dept., 1995]). 

The policy at issue in the Cali case provided the following ACC language “regardless of any other cause or event contributing concurrently or in any sequence to the loss.”  In affirming the enforceability of the clause, the Second Department noted “[a]lthough it is not unreasonable for insureds to have an expectation that their insurance policy would provide coverage for their losses…we are nonetheless constrained to conclude that this policy’s language specifically excluded coverage for damages…” (emphasis supplied) (Cali, 43 AD3d at 418, 841 NYS2d 130).

Although there are no water v. wind ACC clauses that have been examined by a NY court, following the Second Department’s logic in Cali v Merrimack Mut. one should continue to assert the clauses as written until advised otherwise by the Legislature or the Court of Appeals.

Naturally, ACC language is a big deal with Sandy.  Although we haven't seen much of it, apparently it is becoming a major issue.  With this in mind, welcome Assembly Member Goldfeder to the fray.  As of last Friday, May 17th, the Mr. Goldfeder introduced the following proposed legislation, A7455 referred to the Assembly Insurance Committee:

AN ACT to amend the insurance law, in relation to anti-concurrent causation clauses

Section 1.  The insurance law is amended by adding a new section 3455 to read as follows:


  • An insurer shall not deny or exclude coverage for any claim or damage that would otherwise be covered by a policy solely because an event or peril not covered under the policy or specifically excluded under the policy was a contributing factor in such loss or damage or occurred simultaneously with the event or peril that was covered.


2. This act shall take effect immediately and shall apply to claims made on or after such effective date.
Believe it or not, this proposal appears to be gaining strength.  DFS is already on board as supportive of it, and the Governor will not be far behind (or, perhaps, is pushing from behind).  We'll continue to monitor it.  
Editor’s insertion:  The bill, introduced in the Assembly on May 17 has already been reported out of Committee (on May 23) and is awaiting consideration by the full Assembly.  The Senate version,  S.5581, introduced by Senator Seward on May 22, in in the Senate Insurance Committee.
H&F in HD

Thanks to my friends in Latham for a fun morning last Friday.  We were invited to provide a two hour presentation on Business Interruption Coverage.   To those of you joining us for the first time, welcome aboard. 

A special thanks to those of you who joined us at the NY Bar Association's Annual Coverage Update in Buffalo and Long Island.  For those of you getting  your first issue of Coverage Pointers, we welcome you too.   

That's it for now.  Enjoy the long weekend, make sure to thank a veteran and remember those who gave their life for our freedom.   

Steven E. Peiper
[email protected]

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Enrollment has been robust and there promises to be a dynamic, diverse group of students from all over the country with a variety of backgrounds and experiences.


Beth on Coverage B and Fitz’ Bits:

As there were no noteworthy coverage B cases this week, I will skip the B and head straight to the bits.

I was fortunate to chair and lecture at the New York State Bar Association’s Advanced Coverage on Long Island last Friday with an excellent panel of attorneys, including our very own Dan Kohane.  To those new subscribers who were present at the seminar, WELCOME!

Fitz’ Bits will address a handful of cases involving social media and discovery, including a case which held that plaintiff’s deletion of Facebook account constitutes spoliation.

Enjoy the long holiday weekend!

Elizabeth A. Fitzpatrick
[email protected]


Sunday Baseball, a Century Ago:

Middletown Times-Press
May 24, 1913
Page 1
Sheriff is to Stop Game at Newburgh

Sheriff Sayer announced this morning that he received a communication from the members of the Newburgh Ministerial Association regarding the Sunday ball game scheduled at Glenwood Park, and that he would have representatives on hand tomorrow to see that the game was not played.

If the management of the Newburgh and Kingston teams in the leagues which are scheduled to play, attempt to start the game, arrests will be made and prosecutions follow.

Sulzer’s Orders

Upon receipt of a complaint from the New York Sabbath Committee Against Sunday Baseball, Governor Sulzer said he “proposed to hold every official in the state accountable for non-enforcement of the law.”

He said he would act on charges filed with him against any local authorities for failure to perform their duty.

Editor’s Note:  It was not until April 19, 1919, that Sunday baseball was legalized in New York.  In fact, Governor Alfred E. Smith, upon signing the bills permitting both Sunday baseball and Sunday movies, said in part:

Some such form of relaxation on Sunday is almost imperative and certainly beneficial in the case of the great mass of people, who during the six week days are employed in confining occupations, having during those days no opportunity for recreation at all.  I cannot think that if the sentiment of the majority of any community, as represented by its duly elected officials, is in favor of permitting under such restrictions and regulations as they may see fit to impose the enjoyment of this very harmless amusement on a Sunday.  The minority should not be given the right to impose their views on this question on which people so widely and conscientiously differ upon those who disagree with them.  They should at least represent the sentiment of the majority in their respective communities.

Editor’s Note: Philadelphia did not permit Sunday baseball until 1934.


Mike’s Missive Missive’s on Serious Injury:

I consider myself very fortunate to work here.  The Coverage Department is filled with people who are not just coverage geeks, but superb attorneys.  One way superb attorneys separate themselves from the ordinary and all-too-common is by approaching discovery strategically. 

For those of you who read this column regularly, you know that we often see motions where the expert reports aren’t affirmed and effectively useless, or where a physician’s affidavit lack the required elements to support the client’s case.  Cases are frequently lost for a variety of legitimate reasons.  Sometimes they are just a close call or the evidence is just not available.  Too often, however, the losses we see, like those described above, are a result of that party’s attorney turning discovery into a mindless assembly line.

Assembly line attorneys rely almost exclusively on form discovery demands and hope everything falls into place.  Many of their motions for summary judgment, as a result, clearly lack sufficient evidence to support the elements of their client’s claim.  These attorneys failed to tailor their discovery demands and approach the case strategically.  Because of this, many assembly line attorneys are not even aware that the motion is a waste of time and money.

Superb attorneys determine different avenues for victory, make a list of what they need to make those avenues viable in light of the prevailing law, and tailor discovery to those avenues.  When it’s time to make a motion for summary judgment, they have a good indication of whether they have enough evidence to make a strong case or if they are just wasting their client’s resources. 

Michael Scott-Kristansen
[email protected]


A Peek into the Crystal Ball, One Hundred Years Ago:

On May 20, 1913, Mrs. Christian Hemmick, society woman and suffragist, produced a play entitled, “Some Years Hence”, in which she portrayed what she thinks life will be like in 2013. Many regarded her play as a prophetic look into the future. Some of the predictions within the play included:

  • Skirts will be discarded and both sexes will parade in oriental trousers. The attire of 2013 is to be loose and fluttery. It is to be light and pliant; airy, flowing drapery. Woman’s attire will be somewhat similar to that of the Japanese, only still more free;
  • Shoes will be without heels;
  • The hats will all be crownless;
  • Kissing will have gone the way of the skirts. (The people of 2013 will be masters of self-control and will regard kissing as unhygienic);
  • Couples bent on matrimony will be compelled to approach the altar armed with personal health certificates;
  • It will be the right of a woman to pick out a husband and men will wait to be proposed to;
  • Men will sew and share household chores with his wife;
  • Furniture will be plain and easy to care for;
  • Housework will be done by electricity;
  • Work, well done, will be a form of worship;
  • People will go to church to watch plays. The modern church building is used as a theater, the most effective mode of conveying moral lessons being through the medium of the play;
  • By a perfect system of training, bad manners, alcohol, prisons and snobbishness will also be abolished;
  • The laws of the land make ignorance a crime;
  • It will also be against the law to get into a temper, to think ugly thoughts, to worry, to owe, to envy and to gossip;
  • The law will also state what can be eaten: rice, grain, fresh vegetables and fruit;
  • People will come and go by means of aeroplanes, casually dropping out of the clouds above;
  • Illness and old age will have been eliminated by 2013. People will be “renewed”, as science has learned to “arrest age”;
  • Orchestras, rather than consisting of human musicians, will be made up of musical insects;
  • Newspapers will become unnecessary.  American newspapers of 2013 will be very small so that they fit into one’s pocket;


The editor of the Bridgeport News-Blade expressed satisfaction in the thought that he would not be living in 2013 because he didn’t want to live in a world where there were no skirts or kisses.  Mrs. Christian Hemmick presented her two original plays "Woman," preceded by "Some Years Hence" at the National Theatre, May 20, 1913 at 4 p.m. for the benefit of the Congressional Union for Woman Suffrage. "


Headlines for This Week’s Issue:

Dan D. Kohane
[email protected]

  • Framed Issue Hearing Necessary to Determine Whether Hit and Run Vehicle Was Properly Identified, So As To Stay Uninsured Motorist Arbitration
  • In Lead Paint Claims, Abatement Order Insufficient to Require Notice to Insurer; Statement to Superintendent of Building Might Be Enough
  • When a Policy is Canceled Effective the Date of Property Transfer and an Accident Takes Place on the Property Thereafter, There is No Coverage Available Under that Policy for An Action Against the Prior Owner for Failure to Disclose a Dangerous Condition. 
  • Cannot Have Coverage Under an Occurrence Policy Without an Occurrence
  • Enough Discovery, Proceed to SUM Arbitration
  • Fraud and Consequential Damages Claims Arising out of Alleged No Fault Breach are Not Properly Pled and Therefore Dismissed
  • “Assault and Battery” in Exclusion is Civil Assault, Not Criminal.  However, Evidence Obtained in Criminal Assault Trial May be Probative to Assault Exclusion in Policy


Michael P. Scott-Kristansen

[email protected]  

  • Defendants Must Be Comprehensive: Plaintiffs Only Need to Prevail on One Injury to Survive Summary Judgment
  • Records and Reports Must be Affirmed to Be Admissible—Bootstrapping Is Not Allowed
  • Conclusory Physician Affidavits, Inconsistent Testimony, and Contradictory Expert Reports Fail to Sustain the Plaintiff’s Burden
  • Plaintiffs’ Expert Report, Contradicted by the Plaintiff’s Own Physician, Is Insufficient to Rebut the Defendant’s Evidence


Margo M. Lagueras

[email protected]


  • Identical Treatment Goals Listed in Pre-EMG/NCV Plan and Post-Test Plan Defeat Claim
  • If New Amendment Were Applicable, Decision May Have Been for Respondent
  • Applicant’s Claim for Substitute Wages Is Denied



  • Defenses Should Not Have Been Precluded Where Late Service of Discovery Responses Was Not Willful and Contumacious
  • Only Proof of Proper Mailing Gives Rise to a Presumption of Receipt


Steven E. Peiper

[email protected]

  • Nothing doing this week.



  • General Oversight of a General Contractor DOES NOT Trigger Special Employment Status of Subcontractors
  • Dismissal of Labor Law § 200 Clears Way for Contractual Indemnity Claim; Failure to Include Third-Party Pleadings is Fatal to Indemnity Claim
  • Owner, Owner’s Agent Entitled to Contractual Indemnity against Subcontractor
  • Judgment Against Named Insured Does Not Preclude Re-litigation by the Insured’s Judgment Creditor


Elizabeth A. Fitzpatrick
[email protected]

  • Compelling Production of Social Media Accounts
  • Scope of Discovery of ESI
  • Production of Social Media Content


Cassandra A. Kazukenus
[email protected]

  • Tending to the little one.


Katherine A. Fijal

[email protected]

  • Appeal Dismissed for Failure to Comply with Court’s Scheduling Order


Jennifer A. Ehman
[email protected]

  • Police Report Containing License Plate Number but No Insurance Codes, which was Not in Admissible Form, was Deemed Sufficient to Temporarily Stay the Uninsured Motorist Arbitration Pending the Outcome of a Hearing, but Not Sufficient to Permanently Stay It
  • A Policy Warranty that a Central Station Fire and Burglar Alarm would be Fully Operational was Breached Where the Insured Neglected to Turn the Alarm on Prior to Leaving the Evening before the Fire
  • Medical Service Providers Entitled to Collect Interest on Overdue Payments Even if Under Five Dollars


Bad Faith

  • Court Rejects Injured Party’s Attempt to Set Carrier Up For Bad Faith


Earl K. Cantwell

[email protected]



That’s all the news that fits this week, but be certain that we’ll be back here in two, with more from the insurance universe.

We salute our nation’s heroes and heroines.

P.S.  For those of you who have missed Audrey Seeley’s good counsel (count me among you, by the way), she is about to return from maternity leave and resume her rightful place on our coverage team! 



Dan D. Kohane
Hurwitz & Fine, P.C.

1300 Liberty Building
Buffalo, NY 14202    
Phone: 716.849.8942
Fax:      716.855.0874
E-Mail:     [email protected]



urwitz & 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
Katherine A. Fijal
Audrey A. Seeley
Steven E. Peiper
Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

Michael P. Scott-Kristansen
Diane F. Bosse

Steven E. Peiper, Team Leader
[email protected]

Elizabeth A. Fitzpatrick
Cassandra Kazukenus
Michael P. Scott-Kristansen

Audrey A. Seeley, Team Leader
[email protected]

Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

Jody E. Briandi, Team Leader
[email protected]

 Elizabeth A. Fitzpatrick

Diane F. Bosse

Index to Special Columns

Kohane’s Coverage Corner
Michael’s Mini-Missives on Serious Injury
Margo’s Musings on No Fault

Steve on Sandy, Peiper on Property and Potpourri
Beth’s Banter on Coverage Band Fitz’ Bits
Cassie’s Capital Connection
Fijal’s Federal Focus
Keeping the Faith with Jen’s Gems
Earl’s Pearls
Across Borders

Dan D. Kohane
[email protected]

05/22/13       Matter of Hertz Corporation v Holmes
Appellate Division, Second Department
Framed Issue Hearing Necessary to Determine Whether Hit and Run Vehicle Was Properly Identified, So As To Stay Uninsured Motorist Arbitration
This was an application to permanently stay a claim for uninsured motorist benefits (UM benefits).
On September 8, 2011, the Holmes, was operating a Hertz-owned and self-insured rental vehicle when it was involved in a collision with another vehicle in Brooklyn. The other vehicle allegedly left the scene of the accident. Holmes described the other vehicle as a sport utility vehicle. The police accident report contained a license plate number for the other vehicle, but only the last four digits were legible.

Hertz concluded that the other vehicle was owned by Morrison and insured by Travelers. Morrison denied involvement and Travelers refused to pay for damaged. Holmes filed a claim for UM benefits with Hertz and Hertz brought an a proceeding to permanently stay the arbitration or to temporarily stay arbitration pending a framed-issue hearing to determine whether the vehicle owned by Morrison was involved in the accident. The petition sought to add Morrison and Travelers as parties to the proceeding.

Here, the documents submitted by Hertz in support of the petition demonstrated the existence of sufficient evidentiary facts to establish a preliminary issue justifying a temporary stay. In opposition to the petition, Morrison denied any involvement in the accident. There is a triable issue of fact as to whether or not Morrison was involved in the accident and as such, a framed hearing ought to be conducted on the matter.
Editor’s Note:  Once every eight weeks or so this kind of case comes before us in Coverage Pointers.  We take the opportunity to remind our readers that the arbitrator does not have the power to make a determination on whether or not the other vehicle was or was not involved in the accident.  If that vehicle was involved, the claim for UM benefits could not go forward, so this question goes to arbitrability, a power reserved for the courts, not the arbitrator.  The only way that this matter can be presented to the courts is by an application to stay arbitration (as was undertaken here) and that proceeding must be commenced within twenty (20) days of the demand for arbitration being filed.

05/21/13       Tower Insurance Company v Metro Property Group, LLC
Appellate Division, First Department
In Lead Paint Claims, Abatement  Order Insufficient to Require Notice to Insurer; Statement to Superintendent of Building Might Be Enough
Tower denied coverage on late reporting based on an August 2007 Commissioner of Health Order to Abate Nuisance.  The court found that abatement order was insufficiently specific to trigger the insured's obligation to notify plaintiff of a potential claim.

Tower then submitted a statement given by the building superintendent to an investigator plaintiff hired after receiving a notice of claim on behalf of Metro. The superintendent stated that in 2007 the child’s father told him that his son had an elevated blood lead level and that he was "making a claim." However, Tower did not mention this statement in its disclaimer.   The court did not rule whether or not that position was maintained.

In any event, issues of fact exist as to the reliability of the statement, which did not comply with the requirement of CPLR 2101(b) as to affidavits in a foreign language.
05/15/13       Jericho Atrium Associates v Travelers Property Cas. Co.
Appellate Division, Second Department
When a Policy is Canceled Effective the Date of Property Transfer and an Accident Takes Place on the Property Thereafter, There is No Coverage Available Under that Policy for An Action Against the Prior Owner for Failure to Disclose a Dangerous Condition.  Cannot Have Coverage Under an Occurrence Policy Without an Occurrence
In 2007, Jericho owned NY commercial premises, insured by Travelers, under a policy which was effective from May 2007 to May 2008. The policy included provisions requiring Travelers to defend and indemnify the plaintiff against bodily injury claims "caused by an occurrence' that takes place in the coverage territory'" and "occurs during the policy period." On July 31, 2007, the Jericho sold the sold the premises to AGMB and requested that Travelers remove the premises from coverage under the policy as of that day. Travelers complied

Ten days later, on August 10, 2007, Mary slipped and fell at the entrance to the premises.  She sued Jericho and AGMB.  When Jericho asked Travelers to defend it, Travelers denied coverage (claiming that the property was not on the premises as of the date of the accident) and Jericho sued Travelers.

When dispositive motions were made, Jericho argued that it was entitled to coverage because Mary’s theory against Jericho was that it was aware of the dangerous condition on the property before and at the time of the sale and failed to advised AGMB of the need to repair prior to transfer.  The lower court ruled against Travelers, holding that Jericho plaintiff could potentially be held liable in Mary’s action on the basis that a dangerous condition existed on the premises prior to its removal from coverage.

Thankfully, the Second Department reversed.  This was an occurrence policy and for an occurrence to take place there must be bodily injury during the policy period.  There was not.

05/15/13       New York Central Mutual Fire Ins. Co., v Librizzi
Appellate Division, Second Department
Enough Discovery, Proceed to SUM Arbitration
Librizzi was hurt in a car accident and sought underinsured motorist benefits (SUM).  After she filed a demand for arbitration, the parties agreed to a stay of arbitration to complete discovery. That was accomplished by then NY Central wanted additional discovery and Librizzi refused, insisting on arbitration.

The court found that the discovery demands served were overbroad, lacked specificity and sought improper documents. Accordingly, the parties were directed to proceed to arbitration.

05/15/13       Genovese v State Farm Mutual Automobile Ins. Co.
Appellate Decision, Second Department
Fraud and Consequential Damages Claims Arising out of Alleged No Fault Breach are Not Properly Pled and Therefore Dismissed
A cause of action premised upon fraud cannot lie where it is based on the same allegations as a cause of action alleging breach of contract.  Where "a claim to recover damages for fraud is premised upon an alleged breach of contractual duties and the supporting allegations do not concern representations which are collateral or extraneous to the terms of the parties' agreement, a cause of action sounding in fraud does not lie".

Here, the fraud cause of action against the defendant State Farm Mutual Automobile Insurance Company (hereinafter State Farm) is based on the same allegations as the breach of contract cause of action.

A cause of action to recover damages for fraud requires allegations of (1) a false representation of fact, (2) knowledge of the falsity, (3) intent to induce reliance, (4) justifiable reliance, and (5) damages.  The breach of contract case will go forward.

The cause of action that sought consequential damages for breach of the no-fault insurance benefits policy is also dismissed. There are no fact alleged facts that would support a finding that his damages for pain and suffering arose out of State Farm's alleged breach of its obligations under its no-fault insurance contract with him.

05/14/13       20-35 86th Street Realty, LLC v Tower Insurance
Appellate Division, First Department

“Assault and Battery” in Exclusion is Civil Assault, Not Criminal.  However,
Evidence Obtained in Criminal Assault Trial May be Probative to Assault Exclusion in Policy
Building owner sought a judgment that its liability carrier, Tower, had an obligation to defend and indemnify it in connection with a building fire that left several people dead and injured. An individual was arrested and indicted on charges of arson in the fourth degree and assault in the first and second degree in connection with the fire.

Tower had denied coverage based on an “assault and battery” exclusion, which removed coverage for bodily injury arising from assault and/or battery or any act or omission in connection with any assault and/or battery.

Civil assault and battery are intentional acts, and the assault offenses with which the accused arsonist is charged do not include the intent to harm a specific individual. Thus, assuming that the insurance policy exclusion is triggered by civil, rather than criminal, assault or battery, the critical inquiry is whether the accused arsonist, in allegedly causing the fire, intended to harm any occupant of the building.

Although the determination of the criminal action is therefore not necessary to a determination of the application of the exclusion, the criminal trial may shed light on the accused arsonist's motives, including whether he intended to harm anyone inside the building. In any event, the criminal trial may enable defendant to obtain access to evidence and witnesses that will assist in determining whether the exclusion applies.

Tower did not refer in its disclaimer of coverage to a failure to comply with the policy terms or a failure to cooperate, and those grounds may not be asserted as affirmative defenses.


Michael P. Scott-Kristansen
[email protected] 

05/21/13       Santana v Tic-Tak Limo Corp   
Appellate Division, First Department
Defendants Must Be Comprehensive: Plaintiffs Only Need to Prevail on One Injury to Survive Summary Judgment
The plaintiff alleged she sustained permanent consequential and significant limitation of use injuries to her cervical and lumber spine when she was rear-ended by the defendants.  She also made a 90/180-day claim.   The defendants met their burden on every injury and claim; however, the plaintiff was able to rebut the defendants on the issue of her cervical spine, so summary judgment for the defendants was denied.

The defendants carried their burden by submitting affirmed reports of an orthopedist and a neurologist stating the plaintiff had normal ranges of motion in her cervical and lumbar spine.  The defendants also submitted the report of a radiologist who found only degenerative injury to the plaintiff’s spine.

The plaintiff did not submit any objective medical evidence to support her lumbar spine allegations, and so failed to carry her own burden on that issue.

The plaintiff met her burden on her cervical spine injuries by submitting her chiropractor’s affidavit stating that there were continuing deficits in range of motion and that such deficits were caused by the accident.  The plaintiff also submitted an affirmed report of a radiologist opining that her MRI showed a disc bulge in her cervical spine.

The plaintiff’s 90/180-day claim consisted of an allegation that she missed 90 out of 180 days of work after the accident and was supported by her chiropractor’s affidavit stating that she was totally disabled.  The defendants, however, submitted the plaintiff’s own testimony, admitting that she was able to return to normal activities within two or three weeks after the accident.  The chiropractor’s affidavit was too general to rebut the defendants’ submission.

05/16/13       Malupa v Oppong
Appellate Division, First Department
Records and Reports Must be Affirmed to Be Admissible—Bootstrapping Is Not Allowed
The defendants in this case met their burden twice over.  First, defendants met their burden of establishing the lack of serious injuries by submitting the affirmed reports of a neurologist and an orthopedist based upon examinations of the plaintiff that stated plaintiff lacked any neurological deficits, had full range of motion, and lacked permanency or residuals.

The defendants separately met their burden of establishing the lack of causation by submitting a radiologist’s MRI report, based upon an examination of an MRI film taken soon after the accident, stating the film showed only preexisting degenerative conditions.

Although the defendants’ experts did not review the plaintiff’s medical records their reports were not insufficient because the neurologist and orthopedist detailed the specific objective tests they used and the radiologist reviewed the plaintiff’s MRI films.

The plaintiff’s submissions were insufficient to carry her burden and rebut the defendants’ case because the operative reports and MRI reports were unaffirmed and her physician’s findings of range of motion limitations were minor.  The plaintiff’s physician also failed to opine on causation.  The fact that plaintiff’s physician recited the findings from the unaffirmed reports did not cure their inadmissibility.  The Court declined to accept this kind of “bootstrapping.”

05/14/13       Cruz v Martinez
Appellate Division, First Department
Conclusory Physician Affidavits, Inconsistent Testimony, and Contradictory Expert Reports Fail to Sustain the Plaintiff’s Burden
Some cases make you wonder why they were ever appealed.  This is one of those cases.  Plaintiffs fail so utterly to establish their injuries; it is a mystery why they would waste the resources on an appeal.

Cruz alleged permanent injury to his cervical and lumbar spine.  The defendants met their burden against Cruz by submitting the affirmed reports of an orthopedist and a radiologist, stating that Cruz has full range of motion in his neck and back, that his injuries are degenerative, and that there was no evidence of acute traumatic injury.

Peralta alleged permanent injury to her lower back.  The defendants again met their burden by submitting identical evidence to that used against Cruz.  The orthopedist’s report submitted against Peralta went further, however, and stated that Peralta’s lower back injuries from a prior accident would explain the X-ray and MRI findings from immediately after this accident.

Cruz and Peralta’s physician’s unsupported opinion that there was a causal connection between the their injuries and the accident was insufficient to resist the defendants’ motion because the plaintiffs’ own radiologist’s report, based on MRIs, stated that the plaintiffs’ suffered from disc desiccation (degenerative).

Clark alleged many injuries.  Defendants met their burden with an orthopedist’s report finding full range of motion in Clark’s lower back, and Clark’s deposition testimony that his lacerations did not require stitches.  Clark’s subjective description of the facial lacerations was insufficient to rebut the defendants’ case.  The affidavit of an expert, in support of Clark’s allegations of anxiety disorder, was insufficient because it failed to set forth the expert’s credentials and did not acknowledge whether any objective neuropsychological tests were performed.

All three plaintiffs’ claims failed on additional grounds.  They all stopped treatment within six months after the accident.  This gap in treatment was not sufficiently explained by any plaintiff.  Cruz and Peralta’s individual affidavits, stating they stopped receiving treatment when their no-fault benefits expired, were insufficient because Cruz testified at his deposition that he had no reason for stopping and Peralta testified at her deposition that she had health insurance at least for part of the gap period.

05/09/13       Colon v Torres
Appellate Division, First Department
Plaintiffs’ Expert Report, Contradicted by the Plaintiff’s Own Physician, Is Insufficient to Rebut the Defendant’s Evidence
All the parties moved for summary judgment, including multiple plaintiffs and the defendant.  The Court held the defendant was entitled to summary judgment and dismissed all the claims against her.

The plaintiffs alleged permanent consequential and significant limitation of use injuries to their cervical and lumbar spines.  The plaintiffs also asserted 90/180-day claims.  The defendant met her burden on the 90/180-day claim by submitting the plaintiffs’ own deposition testimony establishing that they were confined to bed for only two weeks and to home for only one month. 

Because I just cannot let Kwitek v. Seier from last week go without another parting shot, I note that, under disagreeing judge’s opinion, the defendant would have lost on the 90/180-day claims here for failure to demonstrate all the plaintiffs’ customary and daily activities.

The defendant met her burden on the plaintiffs’ other serious injury allegations by submitting admissible medical expert reports stating the plaintiffs exhibited normal ranges of motion in their lumbar and cervical spine.  In return, the plaintiffs submitted their chiropractor’s findings of range-of-motion deficits.  The conflicting chiropractor’s report was not sufficient to deny the defendant’s motion for summary judgment, however, because it failed to account for full range-of-motion findings by a physician to whom the chiropractor had earlier referred the plaintiff.

The Court further clarified some alleged weaknesses in the defendant’s position.  The discrepancies in the defendant’s expert’s range-of-motion values were not significant.  There were also bulging and herniated discs indicated on the plaintiffs’ diagnostic tests.  The Court explained that this was not sufficient to rebut the defendant’s showing in light of the Onishi case.  In Onishi, the Court held that herniated discs, by themselves, are not serious injuries.  There must be some objective evidence of the extent of physical limitations caused by such herniated disc to qualify as a serious injury.

Margo M. Lagueras
[email protected]


05/20/13       Scott Croce DC v Geico Ins. Co.
Erie County, Arbitrator Michelle Murphy-Louden
Identical Treatment Goals Listed in Pre-EMG/NCV Plan and Post-Test Plan Defeat Claim
Applicant’s assignor was involved in an accident on June 22, 2012 and began treating with Applicant five days later.  On July 23, 2012, a lumbar MRI was performed, and on August 16, 2012, Applicant performed a neurological exam, the findings of which were documented in his letter of medical necessity for the lower extremity EMG/NCV.  On October 4, 2012, a peer review of the EMG/NCV testing was performed.  Among other things, the peer reviewer noted that, according to Applicant’s records, the treatment remained the same before and after the disputed study.  Thereafter, Applicant submitted a rebuttal letter and an affidavit to the peer review, and the peer reviewer submitted an addendum. 

The Arbitrator found the peer reviewer’s report and addendum established a lack of medical necessity for the study and that Applicant’s records did not support that he in fact utilized the test results to determine the proper course of treatment as he claimed he did in his rebuttal letter and affidavit.  Applicant’s first treatment plan dated July 19, 2012, a month prior to the study, already indicated referral to a spine orthopedist.  Furthermore, Applicant’s treatment plan immediately following the study set forth certain goals, all of which had previously been set forth on the pre-test plans of June and July.  Moreover, the Arbitrator agreed with the peer reviewer that treatment recommendations such as exercises to increase range of motion could have, and should have, been made without having to perform an EMG/NCV study.

05/16/13       RS Medical v Allstate Property & Casualty Ins. Co.
Erie County, Arbitrator Kent L. Benziger
If New Amendment Were Applicable, Decision May Have Been for Respondent
The issue was whether the continued rental of durable medical equipment was medically necessary.  The only submissions were the prescription and the IME report.  The Arbitrator noted that, substantively, the IME noted no objective clinical findings.  However, from a procedural standpoint, while the examining IME doctor found no basis for the subjective complaints and determined that no further chiropractic treatment was necessary, he did not specifically recommended against reimbursement for the equipment.  “Respondent then embellished upon the recommendation against continued chiropractic treatment adding it included ‘related claim benefits’”.  Clearly, denials must be specific and be based on findings in the examination reports or peer reviews and a vague or conclusory denial will not be sufficient. 

The Arbitrator therefore determined that the denial was insufficient because it did not specifically deny durable medical equipment.  The Arbitrator additionally found the denial to be insufficient because, since the IME did not specifically address durable medical equipment, it did not set forth a factual basis and medical rational for the denial.

However, the Arbitrator noted that, under the Fourth Amendment to 11 NYCRR 65-3 which applies to accidents after April 1, 2013, the decision may have been in favor of Respondent.  Section 11 NYCRR 65-3.8(h), an insurer’s non-substantive technical or immaterial defect or omission on an NF-10 shall not invalidate the denial.  Therefore, under the new amended regulation, the arbitrator can look to the overall intent of the IME or peer review examiner rather than focusing on technical omissions or procedural deficiencies in the report and denial. 

05/16/13       Applicant v Geico Ins. Co.
Erie County, Arbitrator Kent L. Benziger
Applicant’s Claim for Substitute Wages Is Denied
Applicant claimed that following the accident he had to hire his brother to help with his convenience store.  Respondent contended that Applicant failed to provide the requested verification as to the lost earnings claim and retained a forensic accountant to review those few records that were, little by little, provided.  The accountant found that monthly sales after the accident were up and that there was no loss of business earnings.  In addition, records revealed that the brother worked at the store prior to the accident and actually had earned more.

During the hearing, Applicant admitted hiring his brother prior to the accident and that, following the accident, he turned the business over to the brother, did not receive money from the store and did not know whether the store was making or losing money.  The Arbitrator found Applicant’s testimony to strain credibility as he was unable to answer basic questions regarding his business.  In addition, the accountant found that the records provided did not substantiate the amounts Applicant claimed to have paid the substitute worker.  As such, the Arbitrator denied the claim in its entirety.


05/06/13       Five Boro Psychological Servs., PC v MVAIC
Appellate Term, Second Department
Defenses Should Not Have Been Precluded Where Late Service of Discovery Responses Was Not Willful and Contumacious
The trial court precluded defendant from interposing its defense of lack of coverage and awarded judgment to plaintiff where plaintiff argued that, although defendant ultimately did serve discovery responses, they were served late and had been sent to plaintiff’s counsel’s old address.  On appeal, the court found that the record did not establish that defendant’s conduct was willful and contumacious and that the trial court erred in precluding defendant from raising its defense of lack of coverage.

05/06/13       Infinity Health Prods., Ltd. v Redland Ins. Co.
Appellate Term, Second Department
Only Proof of Proper Mailing Gives Rise to a Presumption of Receipt
Defendant’s cross motion alleged that plaintiff’s assignor failed to appear for duly scheduled independent medical examinations, thus breaching a condition precedent to coverage.  The trial court denied the cross motion finding that defendant mailed the scheduling letters to the wrong address.  On appeal, with regard to the address to which the notices were mailed, defendant argued that the notices were mailed to plaintiff’s assignor’s counsel and copied to the assignor at the address provided.  However, the file revealed that, while plaintiff’s assignor’s zip code was listed as 10469, the mailing log listed the scheduling letters as having been mailed to 10468.  The court affirmed the trial court noting that only proof of proper mailing gives rise to a presumption of receipt.  In addition, the record did not establish that plaintiff’s assignor was represented by the attorney to whom the scheduling letters were sent.  As such, defendant failed to establish that the examinations were properly scheduled.


Steven E. Peiper

[email protected]

Nothing doing this week.


05/22/13       Nolan v Irwin Contracting, Inc.
Appellate Division, Second Department
General Oversight of a General Contractor DOES NOT Trigger Special Employment Status of Subcontractors

Defendant Irwin served as the General Contractor of a construction project, and retained Vision 4 to serve as the carpentry subcontractor.  Plaintiff, an employee of Vision 4, was working as a carpentry foreman at the time he sustained injury. Subsequently, plaintiff sought and received workers’ compensation benefits from Vision 4’s insurance carrier.

At the same time, plaintiff also commenced the instant personal injury action against Irwin.  Irwin moved to dismiss the claim on the basis that it was barred by Section 29 of the Workers’ Compensation Law because plaintiff was working as a Special Employee at the time of the incident.  In denying Irwin’s position, the Appellate Division noted that a Special Employee relationship can only be created where it is established that the party seeking protection controlled and directed the “manner, details and ultimate result” of the injured party’s work.  General oversight authority, which Irwin possessed, was insufficient to create a special employment status.   

05/16/13       Mouta v Essex Market Develop., LLC
Appellate Division, First Department
Dismissal of Labor Law § 200 Clears Way for Contractual Indemnity Claim; Failure to Include Third-Party Pleadings is Fatal to Indemnity Claim
Plaintiff, an employee of Marangos, was in the course of his employment, when he fell approximately two stories.  As the claim clearly involved a gravity related injury, and the plaintiff was not provided with any safety devices, the trial court had little struggle in finding a violation of Labor Law § 240(1).  At the same time, however, JF Contracting (the GC at the project) moved for summary judgment dismissing plaintiff’s claims for Labor Law § 200/Common Law Negligence.  In so doing, JF was able to establish that it did not possess any authority to supervise, direct or control the work plaintiff was performing at the time of the incident.

By demonstrating it was free of negligence, JF concurrently established that it was entitled to contractual indemnification against Marangos.  In addition, JF was also entitled to a conditional order granting common law indemnity if it was later established that plaintiff’s ailments rose to the level of “grave injuries.” 

It is noted that the owner, Essex’s, motion for contractual indemnity against Marangos was denied where Essex did not include a copy of the third-party Complaint as part of the motion record.

05/16/13       Britez v Madison Park Owner, LLC
Appellate Division, First Department
Owner, Owner’s Agent Entitled to Contractual Indemnity against Subcontractor
Plaintiff, an employee of Pecci, was injured in the course of his employment when he fell from a Baker scaffold.  At the time of the incident, Madison Park was the owner of the project site.  Madison’s agent, W&S, had retained G Builders to serve as the Construction Manager.  G Builders, in turn, retained National to perform, among other things, sheetrock work at the project.

National then subcontracted the work to Citywide.  Citywide, in turn, retained Pecci to actually perform the work. 

Madison Park, G Builders and W&S all moved for contractual indemnification against National pursuant to the agreement entered into between G. Builders and National.  The particular provision at issue provided that National would indemnify Madison Park G. Builders and Madison’s agent for liability “caused in whole or in part by acts or omissions” of National or someone working on behalf of National.  As the incident “arose out of” National’s work, the indemnity clause was triggered. 

In so holding, the Appellate Division rejected National’s argument that G. Builders was also negligent and therefore precluded from obtaining summary judgment.  National’s argument fell upon deaf ears because the Labor Law § 200/Common Law Indemnity claim against Madison Park, G. Builders and W&S had previously been dismissed. 

Peiper’s Point - Of note is the fact that the Appellate Division apparently had no problems granting an indemnity right to W&S.  W&S, as you will recall, was the agent of Madison Park.  Generally, where an “agent” is not otherwise defined in the contract, the provision will not be read to provide an indemnity right.  We presume that W&S must have been named as the agent within the four corners of the contract at issue.

05/09/13       State of New York v Zurich American Ins. Co.
Appellate Division, Third Department
Judgment Against Named Insured Does Not Preclude Re-litigation by the Insured’s Judgment Creditor
Non-party Northland operated a gas station and automobile repair shop.  In approximately 2009, it was discovered that petroleum was escaping from a holding tank at Northland’s business.  This, unfortunately, resulted in contamination of the surrounding ground water and soil.  The State stepped into to remedy and remediate the problem, therein spending in excess of $100,000 in clean-up costs. 

At the same time, Northport sought coverage under its policy with Zurich.  That claim, however, was denied, and the Appellate Division upheld Zurich’s disclaimer by way of Decision and Order from 2012.

Prior to the Third Department’s decision against Northland, however, NYS began an independent action against Zurich in April of 2011.  Zurich immediately moved to dismiss that action on the basis that it was barred by collateral estoppel.  In analyzing Zurich’s position, the Court first noted that in order to invoke the protections of collateral estoppel, Zurich had to establish privity between Northland and NYS.  To determine privity, the Court advised that Zurich was required to demonstrate that NYS’ purported rights were only derivative of those previously possessed, and litigated, by Northland. 

Here, however, NYS had a direct right to proceed against Zurich pursuant to Navigation Law §190.  In addition, NYS’ claims sounded in indemnity against Northland.  Northland’s claims against Zurich, on the other hand, were derived from the insurance contract.  Where Zurich would only obtain standing through Northland by way of an indemnity order, the Court reasoned the two entities could not be deemed to have been privity.  Rather, NYS possess completely independent rights of those possessed by Northland.



Elizabeth A. Fitzpatrick
[email protected]

Compelling Production of Social Media Accounts

In Fawcett v. Altieri, Sup. Ct. 2013, the court denied both a motion to compel production of the plaintiff’s social media accounts as well as the account holder’s motion for a protective order.

The action was brought on behalf of a high school student who was involved in an altercation at the school.  The court noted the applicability of CPLR §3101(a) to the dispute and the liberal interpretation applied to the phrase “material and necessary”.  The trial court then undertook a survey of cases dealing with the production of social media accounts in both the criminal and civil context and concluded that a two-prong analysis was necessary to determine whether the production of the contents of social media accounts should be directed.  This involved an analysis by the court as to whether the content contained in a social media account is material and necessary and then application of a balancing test as to whether the production of this content would result in a violation of the account holder’s privacy rights. 

The court took judicial notice that subscribers to sites such as Facebook and Twitter share their political views, their vacation pictures and various other thoughts and concerns that they deem fit to broadcast to those viewing on the internet.  The court, however, held that they would not go so far as to hold that all social media records are material and necessary based solely on the fact that many people avail themselves to such sites.  In order to obtain a closed or private social media account by a court order directing the subscriber to execute an authorization for their release, the adversary must show, with some credible facts that the adversary subscriber has posted information or photographs that are relative to the facts of the case at hand concluded the court.

Scope of Discovery of ESI

In Reid v. Ingram & Smith, LLP decided by the Eastern District of New York at the end of last year, the court noted that the law regarding the scope of discovery of electrically stored information is still unsettled but noted that there is no dispute that social media information may be a source of relevant information that is discoverable.  Of significance, the court agreed with the defendant’s contention that since postings and photographs from the public portions of plaintiff’s Facebook account contained information that contradicted plaintiff’s claims of mental anguish resulting from the alleged sexual harassment by the defendant and termination of her employment, the non-public portions may also provide relevant information.  The court further found that even had plaintiff used privacy settings that allowed only her friends on Facebook to see postings, she had no justifiable expectation that her friends would keep her profile private. 

Nevertheless, the court declined to require full disclosure of all materials contained in plaintiff’s social media accounts, determining that not all postings would be relevant to her claims.  The court issued an order directing the plaintiff to identify every social media account held by her or to which she had access during a limited period of time and to produce to her counsel all social media posts, communications and photographs made since that same time period with counsel to review and produce information that is relevant as to her emotional or physical state.

Production of Social Media Content

In Keller v. National Farmers Union Property & Casualty Co. decided by the Montana District Court earlier this year, the court addressed National Farmers motion for an order compelling plaintiffs to respond to discovery requests for the production of social network site content in an action seeking uninsured motorists’ benefits.  In the context of that action, in which the plaintiff placed her medical condition at issue, contending that she injured her head, neck and back in an automobile accident and suffered from migraine headaches, pain and suffering, emotional distress and lost course of life, National Union had served a document demand requesting a full print-out of all plaintiff’s social media website pages and all photographs posted therein, including but not limited to Facebook, My Space, Twitter, LinkedIn, Live Journal, Tagged, Meet Up, My Life, Instagram and MeetMe for the time period following the accident.  The court cited case law from across the country that allows discovery of a plaintiff’s social networking sites where the defendant makes a threshold showing that publicly available information on those sites undermines the plaintiff’s claims.  The court agreed with such an approach and, applying that standard to the facts present, determined that National Farmers Union had not made the requisite showing.  Absent such a showing, the court held that National Farmers Union was not entitled to delve carte blanche into the public sections of plaintiff’s social networking accounts.

This is the standard articulated throughout the country for disclosure of privacy protected content, to wit, that a party seeking disclosure of social media accounts must initially demonstrate that the public portions of such sites reveal information contradictory to plaintiff’s claims in the lawsuit in which the discovery is sought.  Absent this, a motion to compel access will likely be denied outright or as premature pending additional discovery.


Cassandra A. Kazukenus
[email protected]

Tending to the little one.

Katherine A. Fijal
[email protected]

05/10/13       RLI Insurance Co. v. JDJ Marine, Inc.
United States Court of Appeals Second Circuit – New York Law
Appeal Dismissed for Failure to Comply with Court’s Scheduling Order
On September 28, 2012, appellant filed its notice of appeal.  It filed a scheduling letter on November 13, 2012 pursuant to Local Rule 31.2(a)(1) selecting a date of January 15, 2013 on which its brief and appendix would be due.  The court so ordered the deadline.

On January 10, 2013, five days before the brief was due, appellant filed a motion for an extension of time.  Appellant stated that counsel had been unable to complete the brief because his offices were significantly affected by the October 28, 2012 storm –Hurricane Sandy. 

The court granted the motion for extension on January 17, 2013, giving counsel an additional month and one half to file the brief.  The order stated that “[T]he appeal is dismissed effective March 1, 2013, unless a brief is filed by that date.  A motion for reconsideration or other relief will not stay the effectiveness of this order.”

On February 26, 2013, three days before the extended due date, appellant moved for another extension, this time for 30 days.  In his affidavit counsel stated that preparation for other cases, out-of-state business travel, and responsibilities as a mediator precluded him from submitting the brief by the due date.

On March 8, 2013, the court denied appellant’s second motion for extension because the court’s order of January 17, 2013 directed that the appeal “is dismissed effective March 1 unless a brief is filed by that date” and that “a motion for reconsideration or other relief will not stay the effectiveness of this order. 

On March 8, 2013, the appellant filed the present motion to reinstate the appeal.  In the accompanying affidavit counsel stated that he was “prejudiced” because, rather than decide his motion on a timely basis, the court left the motion “open and undecided seven full days after the filing deadline.”

In rendering its decision denying appellant’s motion to reinstate the appeal, the court analyzed the caseload crisis in the Courts that occurred about 10 years ago and the indifference of counsel to the court’s scheduling orders and the belief that briefing schedules were issued only to be automatically extended until convenient for counsel to file a brief.  The court started conducting experiments with attorneys who had numerous appeals pending.  Some of the attorneys were asked to propose a schedule for filing their briefs with the understanding that the schedule would be met without further extensions or motions.  Since the experiment was successful it led to the present method of allowing parties to appeals and petitions for review to select a filing date within a 91-day period after the ready date; or, in the case of appellees, after the appellant’s brief is filed. Under this procedure counsel was expected to comply with the date chosen and extensions of time would be granted grudgingly and only for brief periods of time. For civil action, the extension was often granted with a provision for automatic dismissal of the appeal if the appellant’s brief was not filed by the extended date. When entered, the automatic dismissal provision was accompanied by a warning to counsel that further motions will not stay the effectiveness of the order. 

In the present matter, the court stated that the appeal was dismissed because the appellant had demonstrated a persistent indifference to the court’s scheduling orders and local rules.  First, the motion for a second extension was inadequate because the press of other business is not an “extraordinary circumstance” justifying an extension under the court’s rules.  Second, the appellant violated a local rule by waiting until the last minute to file both extension motions.

The court pointed out that the purpose of the rules is to maintain an orderly docket and to prevent counsel from triggering “automatic” extensions simply by filing motions for extensions and waiting for the rulings.  Although the appellant claimed prejudice by the court’s delay in deciding the second extension motion, the court held that the prejudice was entirely the result of counsel’s lack of familiarity with the January 17 order and the court’s rules.

In denying appellant’s motion for reinstatement the court stated that although appellant’s indifference to its scheduling orders and rules along would justify denial; the court also considered the fact that appellant’s motion for reinstatement did not append to the motion appellant’s proposed brief or an appropriately detailed statement demonstrating that the appeal is meritorious.

Finally, the court determined that although the appellee consented to the reinstatement, said consent was outweighed by the court’s institutional concerns over handling its docket and requiring adherence to its rules.



Jennifer A. Ehman
                                            [email protected]    

05/09/13       Government Employees Insurance Co. v Sepulveda
Supreme Court, Suffolk County
Police Report Containing License Plate Number but No Insurance Codes, which was Not in Admissible Form, was Deemed Sufficient to Temporarily Stay the Uninsured Motorist Arbitration Pending the Outcome of a Hearing, but Not Sufficient to Permanently Stay It
To stay arbitration of an uninsured motorist claim, the claimant’s insurer bears the initial burden of proving the offending vehicle was insured at the time of the accident.  Where GEICO only submitted a police report not in admissible form, which was prepared by an officer who did not witness the accident and contained information from an unknown source concerning the license plate of an offending vehicle, this was insufficient to meet its burden.  But, the court did grant a temporary stay pending a framed issue hearing. 

The court also joined the alleged tortfeasor and his carrier as additional respondents to the matter, and denied GEICO’s application for an order compelling disclosure including depositions and physical examinations absent a showing by GEICO of extraordinary circumstances. 

                    05/02/13       Triple Diamond Café, Inc. d/b/a The Rare Olive v Those Certain Underwriters at Lloyd’s London
Supreme Court, Suffolk County
A Policy Warranty that a Central Station Fire and Burglar Alarm would be Fully Operational was Breached Where the Insured Neglected to Turn the Alarm on Prior to Leaving the Evening before the Fire
Those Certain Underwriters at Lloyd’s London (“Lloyd’s”) issued a policy to Triple Diamond Café, which contained a provision on the declarations page entitled Forms and Special Conditions, which stated “Warranted Automatic extinguishing system and hood and duct cleaning, central station fire and burglar alarms will be Fully operational throughout the period of the policy.” 

After the policy was issued, a fire broke out in the early morning of April 1, 2010 and severely damaged the premises which housed the café.  Fire department personnel reported that the back door of the café had been freshly damaged by tools and they observed the presence of ignitable liquids on the floor of both levels of the café.  At the time of the fire, the central station burglar alarm system was not on as the principals of the café did not set it before they left the night before.

The existence of a warranty is generally a question of law.  The court held that the provision in the declarations page constituted a warranty on the part of the café.  The failure to set the alarm materially increased the risk Lloyd’s undertook when it issued the policy.  The dispute then was whether the failure to set the alarm constituted a breach of the warranty’s requirement that it be “fully operational.”

Initially, it rejected the argument that the warranty was ambiguous.  It opined that any interpretation of “fully operational” that would exclude a failure to set an otherwise working central station burglar alarm would be unreasonable.  In relying on case law from the Second and First Department, the court found that the failure to set a burglar alarm has been held to constitute a breach of a warrant to maintain a burglar system at the insured premises. 

02/25/13       Medalliance Med. Health Servs. v Allstate Ins. Co.
Civil Court of the City of New York, Queens County
Medical Service Providers Entitled to Collect Interest on Overdue Payments Even if under Five Dollars
Medalliance Med. Health Servs. (“Medalliance”) submitted four claims seeking reimbursement for services rendered to Ana Oneal.  The claims were mailed on March 10, 2009, June 11, 2009, June 25, 2009 and June 25, 2009.  Allstate then paid the claims on June 1, 2009, July 29, 2009, August 16, 2009 and August 10, 2009, respectively. 

Pursuant to Insurance Law §5106(a) and 11NYCRR 65-3.5, insurers are required either to pay or deny a claim for no-fault benefits within 30 days from the date of the applicant supplying proof of claim.  Overdue payments earn monthly interest at a rate of two percent and entitle a claimant to reasonable attorneys’ fees incurred in securing payment. 

Here, there was no dispute that the payments were overdue when paid.  However, in light of 11 NYCRR 65-3.9(a), which provides that “[w]hen payment is made on an overdue claim, any interest calculated to be due in an amount exceeding $5 shall be paid to the applicant or applicant’s assignee without demand,” Allstate argued that the overdue interest is limited to an amount exceeding five dollars.  Here, because the interest on three of Medalliance’s four claims was for less than five dollars, it was precluded from demanding these amounts.  Allstate also argued that interest should be calculated on a 30-day monthly basis and not on a daily basis. 

Where the primary aim of the no-fault system is to ensure prompt compensation for losses incurred by accident victims, the court determined that the construction advocated by Allstate would be contrary to the legislative intent and increase the delay in compensating low cost medical benefits that accumulate minimal overdue interest.  The court also declined to accept Allstate’s position on the calculation of interest.  IT held that interest should be calculated on a daily basis.  Any reference in the statute to using a 30-day month only explains the manner of determining the daily rate of interest as opposed to restricting collection to a monthly amount. 

Bad Faith

05/16/13       Berendes v GEICO Casualty Co.
United States Court of Appeals, Tenth Circuit
Court Rejects Injured Party’s Attempt to Set Carrier Up For Bad Faith
On June 1, 2004, while coming back from their honeymoon in California, Tara and Josh Berendes were traveling southbound on I-15 in Salt Lake County when their car was struck by a vehicle operated by Thad Goodman (“Goodman”) that lost control, became airborne and entered their lane of traffic.  At the time of the accident, Goodman had only a $25,000 per person and $15,000 for property damage auto policy issued by GEICO in place.  The following timeline outlines the events after the accident:

  • June 2, 2004 – GEICO assigned Theresa McCormack (“McCormack”) to handle the claims against Goodman;
  • June 3, 2004 – McCormack received a call from the Berendes’ insurer, Progressive.  Basic information was exchanged;
  • June 7, 2004 – Acknowledgment by GEICO that claims would likely exhaust policy limits;
  • June 11, 2004 – McCormack spoke with Tara’s father who advised that she was still in a coma and that her medical bills were likely to be significant;
  • June 17, 2004 – policy report received indicating Goodman was traveling 20 miles over speed;
  • June 23, 2004 – McCormack spoke with Rich Humphreys (an attorney retained by Tara and Josh) and indicated orally that GEICO would tender its policy limits.  Humphreys requested a copy of the Goodman policy.  Humphreys then contacted Progressive in relation to his clients’ UIM claim and advised that GEICO orally tendered its policy limits;
  • July 1, 2004 – fax from Humphreys to GEICO indicating that Tara remained in a coma and might suffer permanent brain damage;
  • July 2, 2004 – McCormack acknowledged fax and inquired about any liens;
  • July 2, 2004- July 29, 2004 – McCormack verified no prior insurance fraud claims, logged medical information, received a bill from the State of Utah for property damage that occurred during the accident, and received a request by Progressive for copy of its policy;
  • July 27, 2004 – GEICO received a signed Notice of Lien from the treating hospital in the amount of $226,000;
  • July 30, 2004 – McCormack requested a certified copy of the GEICO policy;
  • August 4, 2004 – Humphreys complained to GEICO that he had not received a copy of the policy, written verification of policy limits and a certification of no other coverage;
  • August 23, 2004 – Humphreys obtained a copy of the policy after it was incorrectly sent to counsel for Goodman;
  • August 23, 2004 – claim reviewed by GEICO claim administrator who agrees that the Berendes’ claim far exceeds the policy;
  • August 24, 2004 – McCormack left a message for Humphreys tendering its policy limits and asking what he wanted to do about the hospital lien.  McCormack requested a waiver of subrogation from Progressive.  Message was not returned;
  • September 16, 2004 – McCormack sent letter to Humphreys indicating that it would have to issue settlement checks with the hospital’s name on them.  Also, she again requested a waiver of subrogation from Progressive.
  • September 21, 2004 – Humphreys replied that he had no record of GEICO previously tendering its limits and that GEICO’s current offer was conditional;
  • September 22, 2004 – McCormack responded reminding him of the August 24, 2004 voice message, and indicating that Progressive already confirmed that he was aware the limits were offered;
  • September 23, 2004 – Humphreys sent a letter indicating that GEICO had not tendered because the offer had various conditions.  He then indicated that the conditional offer was rejected;
  • September 27, 2004 – GEICO issued two checks (in the form mentioned above) for $25,000 to Humphreys and provided releases;
  • October 18, 2004 – Humphreys returned the checks indicating that in light of GEICO’s bad faith, the limits were no longer $25,000;
  • November 2004 - Jon reversed course and accepted the $25,000;
  • June 1, 2005 - hospital released its lien; and
  • July 2008 – Goodman’s estate settled with Tara for $1.5 million and brings this action against GEICO.


This decision arises out of Tara’s motion for partial summary judgment, and cross-motion to dismiss, with respect to her claim of breach of the duty of good faith and fair dealing.  Tara alleged GEICO repeatedly ignored reasonable requests for information, did not communicate with the claimants, and did not make a timely offer of settlement.

In applying Utah law, and affirming the lower court, the Tenth Circuit emphasized that an insurer owes its insured a duty to accept an offer of settlement within its policy limits when there is a substantial likelihood of a judgment being rendered in excess of those limits, but the test is one of reasonableness.  It then considered each of Tara’s challenges. 

First, it was alleged that McCormack was untimely in responding to Humphreys’ requests for information.  The court rejected his argument noting that McCormack accurately informed Humphreys of the policy limits on their first phone call and responded to the request for a copy of the policy. 

Next, it was alleged that McCormack’s offer of the limits was untimely.  Tara suggested that under Utah law, GEICO should have offered the policy within thirty days of learning of the claim.  The court rejected this argument as well noting that Utah’s unfair claims settlement act is simply in place to establish general standards to guide insurers.  It does not create a private right of action.  Also, it accepted GEICO’s evidence that it needed information concerning the existence of any liens and a waiver of subrogation prior to settling any claim. 

Lastly, where Humphreys had authority to settle the claims, and returned the settlement checks for no other reason than his belief that Goodman’s estate might have a viable bad faith claim, a jury could not reasonably find in Tara’s favor on her claim that GEICO’s actions exposed its insured to a judgment greatly in excess of the policy. 

Take Away:  This is an excellent case for considering how proper claims handling can protect an insurer from a claim for bad faith (especially a manufactured one).


Earl K. Cantwell
[email protected]


Mitsui Sumitomo Insurance Co. of America v. Duke University Health System, Inc., 2013 WL 491942 (4th Circuit, February 11, 2013).

As they say, it all started with the simple renovation of two elevators in Duke Hospital’s parking lot.Duke hired Automatic Elevator to handle the renovations.  As ill luck would have it, Duke employees made available to Automatic Elevator several empty 15-gallon plastic barrels that previously contained surgical detergent.  On the first go around, Automatic Elevator used the containers to store hydraulic fluid removed from the first elevator and disposed of the contents properly.  When working on the second elevator, however, Automatic Elevator used more empty barrels, but this time workers left the barrels filled with hydraulic fluid in a storage area at the parking garage.  Eventually, Duke Hospital employees directed the detergent supplier, Cardinal Health, to retrieve the barrels.  Cardinal Health did so, and later sold the barrels to Duke and another hospital mistakenly believing that the containers were indeed filled with surgical detergent.  The contents of the barrels were later used in sterilizing equipment resulting in about 150 personal injury claims against Duke, Cardinal, and Automatic Elevator.

Duke settled with some 127 claimants for over $6 Million and then sued Automatic Elevator.  Automatic Elevator’s insurer, Mitsui Sumitomo, would pay only $1Million of the settlement amount citing the $1Million policy limit for “any one occurrence” that covered the period involving the renovations to the second elevator.

Mitsui brought a declaratory judgment action in North Carolina asserting it had no further obligation to Automatic Elevator beyond the $1 Million “single occurrence” coverage.  The District Court agreed and entered judgment for the insurance company.  Duke appealed, but the decision was affirmed on appeal. 
On appeal, Duke argued that the mistake involving the hydraulic fluid involved multiple occurrences and that the insurer should have to pay Automatic Elevator’s aggregate policy limit of $3 Million.  The Fourth Circuit disagreed and said the number of occurrences is determined by the cause or causes of the resultant injury.  In determining how many “occurrences” were involved, the cause or causes of the incident rather than its effects control.  Since Automatic Elevator, not Duke, was the insured party, the analysis turned on that insured’s actions which involved leaving the hydraulic fluid on site in the barrels with the misleading labels on essentially one instance or occasion.  Therefore, the majority said the North Carolina state courts would likely find that there was only one covered occurrence involved, at least from the point of view of Automatic Elevator as an insured.

The decision was a 2-1 decision with the dissenting judge taking the different position that the accident or occurrence was not leaving the hydraulic fluid behind but the several times it was mistakenly used for sterilizing surgical equipment, and that judge would have ruled in Duke’s favor.

In an unfortunate case but interesting decision, this case stands for the proposition that in examining how many ”occurrences” exist for purposes of covered acts, the focus should be on the cause or causes of the incident with respect to the insured, and not necessarily upon the effects or even number of claimants that may eventually be involved.

Courtesy of the FDCC Website


05/15/13       Bombardier Recreational Products v. Dow Chemical Canada
California Court of Appeal
Foreign Supplier to Foreign Manufacturers Does Not Have Necessary Minimum Contacts for Personal Jurisdiction.
The California Court of Appeal, following J. McIntyre Machinery, Ltd. v. Nicastro, 180 L.Ed.2d 765 (2011), held there were no constitutionally required minimum contacts by a Canadian manufacturer of fuel tanks incorporated into personal watercraft by a Canadian manufacturer who sold its products in California. In reaching this conclusion, the court agreed that the mere forseeability that the product manufactured, would after incorporation into another product, find its way to California was insufficient to establish that the foreign component manufacturer had purposefully availed itself of the privilege of doing business in California.
Submitted By: Andrew B. Downs, Bullivant Houser Bailey PC

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