Coverage Pointers - Volume XV, No. 10

Dear Coverage Pointers Subscribers:

We do love situations.  Have one?  Give us a call.

It’s November.  One month closer to spring.

PLRB Large Loss Conference – Jacksonville:

I will be speaking at the PLRB Large Loss Conference in Jacksonville, Florida which is being held from November 16 – 18.  The topic: We Didn't Start the Fire: But What About the Duty to Defend?  Hope to see some of you there; please stop by and say hello.


The many trips we take to our clients’ offices for continuing education opportunities are delightful.  We are often asked about training topics, so we offer some for your consideration.  We can craft what you need. 

Our goal is to empower claims professionals to take on both the routine and the complex matters that come before them. Our training modules are designed for that purpose, to promote and enable self-reliance. Here is a list of some of the topics and we can craft others to meet your needs:

      • The Impact of K2 Investments on Coverage Decisions
      • Tenders, Additional Insured Obligations, Indemnity Agreements and Priority of Coverage
      • Good Faith, Consequential Damages and Extra-Contractual Liability - the New York Experience
      • NY Disclaimer Letters - Nuts & Bolts: How to Create and Write and Send a Disclaimer Letter and How Not To (The Reservation of Rights Letter Myth)
      • Uninsured and Underinsured Claims Handling
      • Preventing Bad Faith Claims - First Party Cases
      • Preventing Bad Faith Claims - Liability Cases
      • The Cooperation Clause - How to Handle
      • No-Fault Arbitrations and Appeals: Mock Arbitrations
      • The Serious Injury Threshold
      • Preserving the Record, Taking an Appeal
      • No Fault Regs - Knowledge is Power
      • An Auto Liability Policy Primer
      • A CGL Policy Primer
      • A Homeowners Liability Policy Primer
      • EUO's Under First Party Policies
      • How to Resolve Coverage Disputes: DJ Actions, Insurance Law Section 3420 Direct Actions (Choice, Strategy and Timing)
      • Insured-Selected Counsel: When is it Necessary and How to Avoid it?
      • Mediation and the Role of the Mediator
      • ADR and How to Get to "Yes"
      • The Internet as a Tool for the Claims Representative
      • Tackling Tenders


Coverage Pointers Primer:

I received a call from a long-time subscriber who had a question.  The question surprised me, to be sure, but if he had it, others might as well.  Let me answer it here for those who might have it as well.  He asked where he could find the highlighted cases that were described at the bottom of the cover letter.  He did not realize that attached to the cover letter was the actual newsletter.  So, let me clarify what we are sending you.

What you are reading is the cover letter to Coverage Pointers.  It is designed to provide our readers with a broad overview of what is going on in the industry, interesting continuing education programs being offered, thoughts, dreams and input of our authors, fascinating (some might argue the point) historical trivia and, at the bottom of the letter, highlights of the attached issue. The heart of the newsletter, Coverage Pointers, with all of the case summaries, is an attachment. 

It is provided in Word format, so you can cut and paste the summaries into claim files, e-mails and educational programming that you may be orchestrating in your own shop.

You will find fancier publications out there, with graphics, neato formatting, etc. and while we are capable of producing such a publication, we have purposely chosen not to, so that you can do the cutting and pasting that makes the newsletter functional, relevant and practical.

If you are ONLY reading the cover letter, you are missing the quality and depth of the attached publication.  Granted, the cover letter may be more entertaining, but for those who REALLY enjoy coverage, do not miss the attached publication.


Hurwitz & Fine, P.C. Named a “Best Law Firm”—Thousands Cheer:

Hurwitz & Fine, P.C. was recently named among the most highly regarded law firms in America as U.S. News & World Report and Best Lawyers announced the 2014 “Best Law Firms” rankings. Firms included in that list are recognized for professional excellence with persistently impressive ratings from clients and peers. The publisher indicates that achieving a tiered ranking signals a unique combination of quality law practice and breadth of legal expertise. Hurwitz & Fine, P.C. was listed as a Tier One Law Firm in the following areas of law:

  • Civil Rights Law
  • Health Care law
  • Insurance Law
  • Personal Injury Litigation – Defendants
  • Product Liability Litigation – Defendants
  • Tax Law
  • Trusts and Estates Law


Mike’s Missive: About that Gap, Never Mind:

After a brief break last issue, the No-Fault Serious Injury column is back in full force.  We have an entire month’s worth of cases for your review.  Last issue, a major serious injury case, Ramkumar, came out of the Court of Appeals.  I am sure you have heard of it by now.  It concerns gaps in treatment.  We had previously advised our readers to “Mind the Gap,” but now, well, you can mind it a little less.

Basically, the decision states that a plaintiff’s deposition testimony that he was cut off from no-fault benefits and that he did not have health insurance to pay for continuing care is sufficient to meet the plaintiff’s burden of explaining a gap in treatment at the summary judgment stage.  The plaintiff does not have to offer specific documentary evidence of the termination in coverage, explain why his benefits were terminated, indicate he cannot pay for treatment on his own, or even submit an affidavit to substantiate his bare explanation.

I will try not to bloviate too much, but plaintiffs have, up until this point, seemed perfectly able to meet the First Department’s standard.  In most of the cases in which plaintiffs have asserted cessation of no-fault benefits as an excuse for a gap in treatment, the plaintiffs have also at least indicated that they were unable to pay for treatment out of pocket.  Whatever great burden the plaintiffs’ bar was claiming, it is hard to sympathize.

To further the understanding about the effects of Ramkumar, we should take a brief look at how it will affect existing law in the four Departments of the Appellate Division.  We already know Ramkumar changed the law in the First Department, but it also changed the law in the Fourth.  The Fourth Department, in fact, previously required at least as much substantiation of gap explanations as the First. 

In Smyth, the Fourth Department dismissed the plaintiff’s case for failing to adequately explain a gap in treatment.  The plaintiff asserted three explanations for the cessation in treatment.  The first explanation was that her doctor prescribed pain management instead of physical therapy and she did not want pain management because she did not want to take narcotics.  The plaintiff also stated that treatment ceased because her physician determined that further physical therapy would be palliative and because she was denied no-fault benefits.  The Court rejected her first explanation as unreasonable and the second two explanations for not having support on the record.  Under Ramkumar, this feathery explanation might stand.   
The Second Department has shown great leniency in this area in the past.  In Khavosov, for instance, the Second Department disregarded an inconsistency in the plaintiff’s reason for discontinuing treatment and the reason provided by his physician.  It is unlikely, therefore, that Ramkumar will significantly affect practice in the Second Department. 

The Third Department too has shown generosity toward gap explanations in the past.  In Lipscomb, the Third Department accepted the plaintiff’s apparently unsupported explanations that his neurosurgeon gave him some helpful exercises and only needed to see him on an as-needed basis, that plaintiff had no desire to undergo surgery, and that the plaintiff had other health issues with which to deal during the gap period.  It is unlikely that Ramkumar will significantly affect practice in the Third Department either.
Going forward, defendants will have to take a pragmatic approach to this ruling.  It will still be necessary to push for explanations for gaps in treatment to ensure rare opportunities are not missed, but no longer can defendants and defense practitioners expect a reasonable chance of success on gap arguments.

Michael Scott-Kristansen
[email protected]

One Hundred Years Ago – The Big Blow:

The Great Lakes Storm of 1913, historically referred to as the "Big Blow", the "Freshwater Fury", or the "White Hurricane", was a blizzard with hurricane-force winds that devastated the Great Lakes Basin in the US and Ontario from November 7 through November 10, 1913. The storm was most powerful on November 9, battering and overturning ships on four of the five Great Lakes.

It is known as the deadliest and most destructive natural disaster to ever hit the Great Lakes, killing more than 250 people, destroying 19 ships, and stranding 19 others. The financial loss in vessels alone was nearly $5 million (or about $118,098,000 in today's dollars).This included about $1 million at current value in lost cargo totaling about 68,300 tons, such as coal, iron ore, and grain.

The storm, an extra-tropical cyclone, originated as the convergence of two major storm fronts, fueled by the lakes' relatively warm waters — a seasonal process called a "November gale". It produced 90-mph wind gusts, waves over 35 feet high, and whiteout snow squalls.

Jen’s (Artificial) Gems:

Jen Ehman is on vacation this week, and did not submit a cover note for inclusion.  Her friends on the Editorial Board decided that it would not be right to omit a greeting from her, so we collected and considered her previous submissions, fed them into the CP computer, and have generated the following substitute:

Dear Subscribers:

Hot in Florida. Lots of alligators.

Ella, my daughter, is wonderful.  She may actually be designated as the best overall baby in America.

I’m reporting on some bad faith case that I think you might enjoy.

Love and kisses,

Jennifer A. Ehman
[email protected]


Labor Law Pointers:

Dave Adams and his team of Labor Law aficionados, publish a monthly summary of cases decided under New York State Labor Law Sections 200, 240(1) and 241(6).  It’s a fabulous newsletter and it is just starting its third year of publication. If you handle construction accident litigation in New York, and don’t subscribe, you should.  This month’s issue is available here.

If you want to subscribe, the cost is double the cost of a Coverage Pointers subscription:  free.  Just send Dave a note at [email protected] and tell him that his pal Dan sent you.


Peiper’s Pesterings:

As long time readers already know, we are not hi-tech enough to imbed video feeds.  So we start off this week, asking you to remember the old Saturday Night Live skit with Mike Myers called “Coffee Talk.” For those of you who remember, in each skit the interview would be interrupted by a ridiculous supposition whereafter Mike Myers would instruct the audience to “talk amongst yourselves.”  An example, you query?  “The Holy Roman Empire was neither Holy, nor Roman, nor an Empire…talk amongst yourselves.”

Well, this week, we’ve got our own “Coffee Talk” moment.  Is a “Collapse” a “Collapse” if nothing actually “Collapses”…talk amongst yourselves?  In the eyes of the Third Department, the answer is yes.  As discussed below, the homeowner awoke to a four inch slope in her second floor bathroom, as well as a similar slope at the foot of the stairs.  While one could conclude (as the carrier did) that the loss arose from settling, the Court, on the other hand, reached a different conclusion.  Thus, although nothing actually “collapsed,” coverage was nonetheless triggered because the structure was substantially impaired.   We are not sure that we actually disagree with the decision; in fact, it may be spot on.  Regardless, it is an interesting read. 

For those of you interested in a little training, I am honored to be part of a coverage/indemnity update being sponsored by CLM.  The program is set for the morning of November 20, 2013 here in Buffalo.  If you’re in the area, and are interested in some CE credit, drop me a note for more information. 

That’s it for this week.  One last thing, as a gentle reminder for those of you about to burn 45 minutes looking at old SNL clips, YouTube might not be approved by your respective employer.  You’ve been warned!

Steven E. Peiper
[email protected]

Humor in the Court – a Century Ago:

New York Times
November 8, 1913


Mr. Justice Holmes Digs Up an Odd
Case to Amuse the Court.

WASHINGTON – Mr. Justice Holmes has the reputation of citing more peculiar cases from the old law books than any other member of the Supreme Court.  He dug up an additional one yesterday to the amusement of his associates, when it was contended in a libel suit that the declaration was insufficient because the offense was not stated properly.
“That leads me to recall a case in the old books,” said the Justice, “where an indictment set forth that the accused struck a man on the head, splitting the skull until a portion fell down on either shoulder, and the court held the indictment defective because it did not allege that the man was killed.”

The Justice observed that it was a hair-splitting decision and he didn’t intend it as a pun either. 

Long Island Calling – Fitz’ Bits

Dear Subscribers:

With the elections behind us, I am relieved that I will no longer be bombarded with campaign ads and signs plastered everywhere.  However, while we are three weeks away from Thanksgiving and Hanukkah, which coincide for the first time in some 125 years,  if the red and green spelling of JOY on my Dunkin’ Donuts coffee cup is any indicator, it’s going to be a long season of holiday ads cajoling, urging and enticing me to shop till I drop.

As the year winds down, the Coverage B decisions continue to flow and I bring you several this week, one involving defective Stromboli, as well as a decision from the Hawaii District Court involving the antioxidant, Astaxanthin. The decisions were both wins for the involved insurers.

Til next time, 

Elizabeth A. Fitzpatrick
[email protected]


Who Would Have Thunk? – One Hundred Years Ago:

The New York Times
November 8, 1913


And Welsh Was the Only Socialist
That Won at Schenectady.
Special to The New York Times.

SCHENECTADY – Louis A. Welsh, the first Socialist Sheriff elected in the United States, will assume office here on Jan. 1.  He was the only Socialist elected on either the city or county ticket here on Tuesday.

Mr. Welsh has been a candidate for the office for three successive times.  Five years ago he polled only 37 votes.  Two years ago, the year of the Socialist landslide, he lost to the Republican candidate by fewer than a hundred votes, and this year he got a plurality of 1,058.  He is a steamfitter. 
Editor’s Note: Welch served a single two-year term, from 1914 to 1915.


A Special Welcome to New Subscribers:
We welcome about a half dozen new subscribers this week.  Delighted to have you with us.


A Century Ago -- The Truth, the Whole Truth and Nothing But the Truth:

Martin Glynn succeeded to the position of Governor when Governor William Sulzer was impeached, convicted and removed from office.  We have written about his impeachment previously, including in our August 16, 2013 issue.

Of course, the first question asked of him when he ascended to the Governor’s office was his intention to run for his own term.  Like all good politicians who are asked about future aspirations, he denied it emphatically:


November 8, 1913

“Under No Circumstances Will
I Be a Candidate for Re-election,” He Says.


Will Camp on the Trail of Graft,
and Punish the Grafters,
Whoever They May Be, He Declares.

Governor Glynn made it clear yesterday that if there was any reorganization work to do in the Democratic party throughout his state in which he would be expected to take a hand it would have to be done soon.  The Governor deprecated the “humiliation which recent events had put upon the state” referring to the impeachment of Governor Sulzer and the “political wrangling” that figured in the location election, but emphatically declared that he would not be a candidate for re-election. 

* * *

“You can’t put it too strong he said, “that I am not and will not be a candidate for re-election.  There will be no strings on the Governor’s chair while I occupy it.   No strings from outside and no strings from within.  A Governor who is looking for second term before he has begun his first is not a free agent.  And I propose to be a free agent.  I shall serve for this term.  Let others concern themselves with future terms.
Editor’s note:  Another politician with a broken promise.  Despite his “no circumstances” guarantee to the contrary, Glynn, did in fact run for reelection in 1914.  He lost, to Charles Whitman. 

Glynn was New York’s first Catholic governor. He had owned the Albany Times-Union which was sold to William Randolph Hearst in 1924. Glynn died that same year. 

Interestingly, the news reports of his sudden death at that time – and for many years thereafter -- attributed his demise to natural causes. 

Dominick C. Lizzi, in his 1994 book, Governor Martin H. Glynn, Forgotten Hero, indicates that, in fact, Glynn committed suicide. Glynn, who had been suffering from severe, chronic back pain for decades before he began negotiating the sale to Hearst, shot himself on Dec. 14, 1924. He was 53 years old. Accounts in his newspaper cited "acute dilatation of the heart" as the cause of death. But Lizzi uncovered Glynn's death certificate that listed "suicide by firearms" and "probable mental derangement."  Glynn’s brother committed suicide in 1945. The Times-Union provides greater detail.

Constitutional Amendment to Extend Trial and Court of Appeals’ Judges Defeated:

New York’s highest court, the Court of Appeals, is comprised of appointed judges, who were, once upon a time, elected.  New York’s state trial court justices, who sit on the State Supreme Court (our state plenary court) are elected.  The debates rage on as to whether one method of judicial selection provides a wiser judiciary.  They must all retire at age 70 by virtue of our state constitution. Extensions can be granted for three, two years terms, for those who are medically certified.  A referendum to amend the state constitution to allow those extensions to age 80 was soundly defeated on election day with 61% of the voters against the proposal. Note that 57% voted to allow state gambling facilities in a referendum that passed. So you know, controversy over judicial selection is not new:

A Century Ago:  Judicial Races a Challenge for Voters?  It Has Not Changed Very Much:

November 8, 1913


In the city election this year every voter in Manhattan had to make his choice between from two to half a dozen candidates for each of a score of places as well as for Judges of the Court of Appeals.  In nearly every case the act of selection was nominal, involving no knowledge and no consideration of the fitness of the individual candidates.  Had the voter been allowed to vote only for a Mayor, a Borough President, an Assemblyman, and possibly a member of the Board of Aldermen, he might presumably have made his choice with a degree of real discretion based on fairly trustworthy information.  Every other office submitted to him to take his choice in filling could be filled with greater chance of getting good men by appointment.

This is not a theoretical statement.  It is based on the long experience of the Federal Government, and for that matter on the experience of the city itself.  No one will contend, for example, that a Sheriff cannot as well be appointed as a Police Commissioner, a District Attorney as a Corporation Counsel, a County Clerk or Register as a City Chamberlain.  Every step that has been made in the concentration of power and responsibility in the management of the city affairs has been a step in advance and has proved helpful to the voters in the discharge of their electoral duties.  This is equally true of the State.  If the voters were permitted to choose simply the Governor and Lieutenant Governor and the members of the Legislature, all other offices being filled by appointment, the choice would be made far more easily and with greater chance of its being satisfactory.  This is the sole line for real progress in the line of rule by the people.  Compared with it, the nostrums of direct primaries, initiative, referendum and recall are of little value.  It is to this object that all the efforts of political reform should be directed. 

Highlights of This Week’s Issue, Attached:

Dan D. Kohane
[email protected]

  • Is a Police Car a “Motor Vehicle” for the Purposes of Underinsured Motorists Coverage?  In a Case of First Impression, the Second Department Finds that It Is
  • Arbitration, Not Default Against Uninsured Motorist, Determines Value of UM Case

Michael P. Scott-Kristansen

[email protected]

  • Misrepresentation of Chiropractor as Physician Costs Plaintiff The Case
  • Defendant Fails to Meet Burden on Causation Because Radiologist’s Bare Opinion Is Insufficient in Light of Plaintiff’s Young Age
  • Plaintiff’s Assertion of Limitations Is Insufficient to Support 90/180-Day Claim Without Supporting Objective Medical Evidence
  • Orthopedist’s Opinion That Mechanism of Injury Is Not Commonly Associated With a Purported Injury Contributes to a Prima Facie Defense Based on Causation
    Expert Report Based on Examination Eight Months After Accident Insufficient to Meet Burden on Causation
  • Plaintiff’s Evidence Fails to Carry His Burden for Many Reasons
  • Summary Judgment Denied Where Plaintiff Provides Competent Evidence Directly Contrary to Defendant’s Evidence
  • Summary Judgment for Defendant Is Inappropriate Where Plaintiff Demonstrates Causation and Seriousness


Margo M. Lagueras

[email protected]


  • Denial Not Upheld Due to Failure to Submit Proof of Mailing of IME Scheduling Letters
  • Denials Not Upheld Where Respondent Failed to Indicate the Basis
  • Medicare Guidelines Do Not Dictate Prescription of DME Under No-Fault
  • Denial Based on Low Force of Accident Requires Expert Evidence
  • Applicants Fail to Submit AOB Executed in Favor of Billing Provider Resulting in Denial of Claims
  • Arbitrator Declines to Consider Late Submission That Was Readily Available When Arbitration Was Filed But Not Submitted Until Three Days Before Hearing
  • Insured Is Not Compelled to Accept Rental Vehicle’s Coverage



  • Assignor’s Failure to Attend IMEs Voids Policy Ab Initio
  • Benefit of Toll Lost Where Defendant’s Delay Letter Failed to Specifically Identify Party from Whom EUO Was Requested
  • Defendant Successful in IME No-Show Defense
  • Plaintiff Fails to Demonstrate That Assignor Filed Accident Report
  • Where Plaintiff’s Assignee Knew Identity of Vehicle’s Owner, Assignee Was Required to Exhaust Its Remedies Prior to Seeking Relief from Defendant


Steven E. Peiper

[email protected]

  • A Collapse Isn’t a Collapse Unless the Property Actually Collapses.  Wrong.  Court Says a Collapse Can Occur Without an Actual Collapse.
  • Common Law Indemnity Award Enables Recovery of Defense Fees and Costs
  • Question of Fact on Indemnity Obligations Where a Signed Copy of the Agreement Could Not be Produced


Elizabeth A. Fitzpatrick
[email protected]

  • No Coverage Under Coverage B – Personal And Advertising Injury – One of Two
  • No Coverage Under Coverage B – Personal And Advertising Injury – Two of Two

Audrey A. Seeley
[email protected]

  • Under Florida Law, Golf Cart Not a “Car” Under Personal Auto Policy
  • Under Alabama Law, Exclusion Barring Injury Arising Out of Custody of Non-Owned Dog Applied to Scooter Accident Caused by Dog on Retractable Leash


Cassandra A. Kazukenus
[email protected]

  • Circular Letter No. 8 (2013) Post Disaster and Natural Catastrophe Guidance


Katherine A. Fijal

[email protected]

  • D & O – Known Circumstances Revealed in Financial Statement Exclusion


Jennifer A. Ehman
[email protected]

  • Claim for Punitive Damages Dismissed Where No Breach of Duty Independent of Defendant's Contractual Obligations was Asserted


Earl K. Cantwell

[email protected]



All the best.  Please continue to provide us with your feedback, always welcomed.

Dan D. Kohane
Hurwitz & Fine, P.C
1300 Liberty Building
Buffalo, NY 14202    

Office:      716.849.8942
Mobile:     716.445.2258
Fax:          716.855.0874

E-Mail:     [email protected]

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

Dan D. Kohane
[email protected]

Audrey A. Seeley
[email protected]

Jennifer A. Ehman
[email protected]

Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley
Elizabeth A. Fitzpatrick
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

Peiper on Property and Potpourri
Beth’s Banter on Coverage B and Fitz’ Bits
Audrey’s Angles on the Nationally Noteworthy
Cassie’s Capital Connection
Fijal’s Federal Focus
Keeping the Faith with Jen’s Gems
Earl’s Pearls

Dan D. Kohane
[email protected]

11/06/13       Matter of State Farm Mutual v. Fitzgerald
Appellate Division, Second Department
Is a Police Car a “Motor Vehicle” for the Purposes of Underinsured Motorists Coverage?  In a Case of First Impression, the Second Department Finds that It Is
Fitzgerald, a police officer, is a passenger in a police driven by fellow officer Knauss.  That car is involved in an accident with another and the other car was underinsured.  Fitzgerald put a claim for Supplementary Uninsured/Underinsured Motorist benefits with State Farm, under that carrier’s SUM endorsement.

In that endorsement, an "insured" is defined as the named insured (i.e., Knauss) and "any other person while occupying …any other motor vehicle …being operated by [Knauss]" [emphasis added].

State Farm filed a petition to permanently stay the arbitration, arguing that Fitzgerald was not an "insured" under the endorsement because police vehicle involved in the accident was not a "motor vehicle" for purposes of the endorsement.

An interesting question of first impression came before the court.  Under one section of the Vehicle & Traffic Law, §388(2), the section which imposes derivative liability on the owner of a vehicle for the negligence of a permissive user, a police vehicle is specifically excluded from the definition of “motor vehicle”. In another section of the Vehicle & Traffic Law, §125, which provides the general definition of “motor vehicle” for the purposes of the statute, the term includes police vehicles.

The court sides with the policy officer and finds that VTL § 125, instead of VTL § 388(2), should be used to define the term "motor vehicle," as it appears in the uninsured/underinsured motorist endorsement. VTL § 125 is a general provision that defines the relevant terminology for the entire VTL.

10/30/13       Matter of Helen Aftor v Geico Insurance Company
Appellate Division, Second Department
Arbitration, Not Default Against Uninsured Motorist, Determines Value of UM Case
Helen, age 10, was hurt while riding as a passenger in a Geico-insured car that was involved in an accident with an uninsured vehicle.  The GEICO policy provided SUM (supplementary uninsured/underinsured motorist) coverage for all occupants of the vehicle in the amount of $25,000 per person or $50,000 per accident.

The petitioner, by her mother, commenced an action against the owner and the driver of the uninsured vehicle and was awarded a default judgment against them in the sum of $25,000. Pursuant to the Geico SUM endorsement, the petitioner requested arbitration with Geico, seeking to enforce the $25,000 default judgment against it. Following an arbitration hearing, the arbitrator awarded the petitioner $10,000.

Thereafter, the petitioner commenced this proceeding to vacate the arbitration award, alleging that, under the Geico SUM insurance policy, Geico was obligated to pay her the amount that she had been awarded in the civil judgment, and that, therefore, the arbitrator should have awarded her $25,000. Geico opposed the petition, arguing that the petitioner had agreed to be bound by the arbitration award. The Supreme Court agreed with the petitioner, granted the petition, vacated the arbitration award, and awarded her $25,000.   The Second Department reinstated the arbitration award.

Here, the terms of the SUM endorsement clearly provide that any sum Geico was obligated to pay the petitioner, which the petitioner was legally entitled to recover, was subject to arbitration, and that the parties agreed to be bound by the arbitrator's award. Thus, the Supreme Court erred in vacating the arbitration award on the ground that it was contradicted by the SUM endorsement.
Editor’s Note:  Kudos to the Second Department on this one.  It would have been downright wrong if the arbitrator simply adopted the award taken in default against the uninsured motorist and enforced it against the insurer that had no role in that decision or determination. The UM and SUM carrier is entitled to its day in court.


Michael P. Scott-Kristansen
[email protected]

11/6/13         Paul-Austin v. McPherson
Appellate Division, Second Department
Misrepresentation of Chiropractor as Physician Costs Plaintiff the Case
The plaintiff submitted an affirmation of an expert, Roland Rose, in support of his position.  Roland Rose was in fact a chiropractor, but the affirmation identified him as a physician.  Chiropractors cannot affirm and must instead submit affidavits.  As a result, the affirmation was not considered by the lower court and the defendant’s motion for summary judgment was granted.  The Court denied the plaintiff leave to renew and correct the error because the plaintiff failed to offer a reasonable justification for this error.

10/31/13       Angeles v. American United Transportation
Appellate Division, First Department
Defendant Fails to Meet Burden on Causation Because Radiologist’s Bare Opinion Is Insufficient in Light of Plaintiff’s Young Age
Defendant’s motion for summary judgment was properly denied.  The defendant met its burden on the significance and consequence of plaintiff’s cervical spine and lumber injuries by submitting neurologist and orthopedist reports finding full range of motion and a radiologist’s report finding that the MRIs showed no evidence of bulges or herniations.  The defendant failed to meet its burden on causation because the radiologist’s bare opinion that any discogenic changes were age-related or a co-morbidity of increased body habitus was insufficient in light of the plaintiff’s young age (29).

The plaintiff met his burden of showing serious injury to his cervical and lumbar spine by submitting radiologist and physician reports finding bulges and herniations from MRIs taken immediately after the accident.  The physician also found continuing range of motion deficits in the spine.  The lack of contemporaneous evidence of limitation was not problematic according to the Court.

10/29/13       Batista v. Porro
Appellate Division, First Department
Plaintiff’s Assertion of Limitations Is Insufficient to Support 90/180-Day Claim without Supporting Objective Medical Evidence
The lower court should have granted the defendant’s motion for summary judgment.  The defendant met its burden via an orthopedist’s affirmed report, which found no range of motion deficits and that the surgical findings were consistent with the plaintiff’s age and preexisting condition.  The defendant also submitted a radiologist’s affirmed report finding degenerative, preexisting conditions.  As for the plaintiff’s 90/180-day claim, the defendant submitted the plaintiff’s verified bill of particulars alleging he was incapacitated for 34 days.

The plaintiff’s orthopedic surgeon, inadvertently supporting the defendant’s position, found degenerative conditions without explanation.  The plaintiff also failed to rebut the defendant’s showing on his 90/180-day claim because his assertion that he was significantly limited in his ability to do everyday activities was insufficient without substantiating objective medical evidence.

10/29/13       Thomas v. NYLL Management
Appellate Division, First Department
Orthopedist’s Opinion That Mechanism of Injury Is Not Commonly Associated with a Purported Injury Contributes to a Prima Facie Defense Based on Causation
The defendant’s motion for summary judgment regarding the plaintiff’s significant limitation of use of his left shoulder was properly denied because both the defendant and the plaintiff met their burdens. 

The defendant met its burden in two ways.  The defendant established that the plaintiff’s shoulder injury was not significant by submitting an orthopedist’s findings of minor limitations in forward elevation and abduction.  The defendant established a lack of causation by submitting a radiologist’s findings of preexisting degenerative changes and an absence of recent traumatic injury.  The defendant’s orthopedist’s further notation that the mechanism of injury was not commonly associated with the injury purported as well as the plaintiff’s testimony that no part of his body struck the interior of the vehicle was also sufficient to meet the defendant’s burden on causation.

The plaintiff met his burden on significance by submitting his treating physician’s reports showing increasing quantified limitations and positive impingement tests results in the three months after the accident (which ended in surgery).  The plaintiff met his burden on causation by submitting his surgeon’s findings that there was a causal relationship, that the purported injury was consistent with a traumatic etiology, and that there was an absence of prior shoulder complaints.

10/17/13       Linton v. Gonzales
Appellate Division, First Department
Expert Report Based on Examination Eight Months After Accident Insufficient to Meet Burden on Causation
Defendants’ motion for summary judgment should have been granted.  The defendants met their burden and the plaintiff in turn, failed to meet hers.  The defendants submitted an orthopedic surgeon’s report concluding the plaintiff’s shoulder injury was not caused by the accident.  The surgeon explained that the shoulder symptoms were secondary to degeneration, impingement, and diabetes and noted that the EMS and emergency room records include no complaints of shoulder pain.

The plaintiff’s chiropractor’s and neurologist’s records show only spinal treatment and her orthopedic surgeon did not evaluate her until eight months after the accident, making his or her opinion insufficient to meet the plaintiff’s burden on causation.

10/16/13       Irizarry v. Lindor
Appellate Division, Second Department
Plaintiff’s Evidence Fails to Carry His Burden for Many Reasons
The lower court should have granted the defendants’ motion for summary judgment.  The plaintiff’s evidence included medical records and reports that were certified by the records custodian at the medical facility.  The Court held this certification was not sufficient to put the medical conclusions and opinions contained in such records into evidence because the opinions themselves must be sworn to or affirmed.

The plaintiff’s evidence also included MRI scan reports.  These, however, were properly relied upon by the plaintiff and his treating physician because, even though the reports were unsworn, the defendants’ expert presented the results of those scans in his or her affirmation.

The plaintiff’s treating physician’s opinion as to causation was speculative and insufficient to carry the plaintiff’s burden because it did not address the non-conclusory finding of the defendants’ radiologist that the plaintiff’s bulges and herniations were degenerative.

The plaintiff’s treating physician did find limited range of motion in the plaintiff’s cervical and lumbar spine, but the limitations were not significant.

10/16/13       Robles v. Munich
Appellate Division, Second Department
Summary Judgment Denied Where Plaintiff Provides Competent Evidence Directly Contrary to Defendant’s Evidence
The lower court improperly granted the defendant’s motion for summary judgment.  The defendant established that the plaintiff’s lumbar injury was not caused by the accident.  The defendant also established that the plaintiff did not suffer a serious injury to his cervical spine by submitting evidence that the plaintiff had normal range of motion in that joint.

The plaintiff, however, submitted evidence showing exactly the opposite.  The plaintiff demonstrated causation for his lumbar spine injuries and also submitted evidence that he suffered from a limited range of motion in his cervical spine.  As a result, the complaint was reinstated.

10/16/13       Lella v. Lincoln General Insurance
Appellate Division, Second Department
Summary Judgment for Defendant Is Inappropriate Where Plaintiff Demonstrates Causation and Seriousness
The lower court improperly granted the defendant’s motion for summary judgment.  Although the defendant demonstrated that the plaintiff’s injuries were not caused by the accident and that the plaintiff did not sustain serious injuries, the plaintiff, in turn, also met his burden.  The plaintiff met his burden of showing causation and serious injuries to his cervical and lumbar spine.

Margo M. Lagueras

[email protected]


10/30/13       Applicant v Nationwide Insurance Co. of America
Erie County, Arbitrator Kent L. Benziger
Denial Not Upheld Due to Failure to Submit Proof of Mailing of IME Scheduling Letters
Respondent denied Applicant’s claim for reimbursement of chiropractic treatment alleging breach of a condition precedent for coverage by failing to appear at two scheduled chiropractic IMEs.  Applicant claimed she never received the letters.  At the hearing, Applicant contended that Respondent failed to timely submit copies of the scheduling letters and demanded, pursuant to the “Rocket Docket”, that the evidence be precluded.  The Arbitrator noted that Respondent did not comply with the “Rocket Docket” and failed to state a good faith basis for that failure.  The Arbitrator further noted that, even if he were to consider Respondent’s late submission of the scheduling letters, Respondent had also failed to submit any proof of mailing.  Therefore, Respondent, in failing to document proof of mailing, failed to substantiate the sole basis for its denial.

10/29/13       Cameron B. Huckell, MD v Peerless Insurance Co.
Erie County, Arbitrator Veronica K. O’Connor
Denials Not Upheld Where Respondent Failed to Indicate the Basis
On July 11, 2011, John Ring, MD, performed an IME on the Assignor.  He examined the neck, mid and lower back and left knee and found no need for further treatment to the left knee.  Over a year later, Applicant examined the Assignor’s neck, mid and lower back and performed several follow-up examinations over a four month period.  The denials for all the dates of service stated that benefits were terminated on July 11, 2011, but did not reference any report. 

The Arbitrator noted that if Respondent issued a general denial based on Dr. Ring’s IME at that time, it was not included with Respondent’s submission.  Moreover, even if Dr. Ring’s report was the basis for the denials, it was insufficient because, although he examined the neck and mid and lower back, he did not address those complaints in his diagnosis/impression but rather only opined that no further treatment was indicated for the left knee.  As such, Respondent’s denials were insufficient and Applicant was entitled to reimbursement.

10/29/13       Elite Med. Supply of NY, LLC v Liberty Mut. Fire Insurance Co.
Erie County, Arbitrator Douglas S. Coppola
Medicare Guidelines Do Not Dictate Prescription of DME Under No-Fault
At issue was reimbursement for an interferential stimulator, prescribed approximately 25 days after the accident, and denied based on a chiropractic peer review.  The letter of medical necessity was not a typical boilerplate but rather provided specific diagnosis and stated that an in-office trial had provided significant relief.  Respondent’s peer reviewer indicated that while there were positive findings, Medicare guidelines for TENS units dictated them for “chronic” conditions present for at least three months and that the medical records must document the location and duration of the pain.  He opined that the EIP did not meet these criteria.

The Arbitrator found the peer review to be completely unpersuasive.  The reviewing chiropractor did not discuss the facts of the treatment or explain why the DME would not be necessary other than to say that its prescription was not in accord with Medicare guidelines.  The Arbitrator remarked that this peer reviewer obviously did not understand that the burden of proving lack of medical necessity is on the Respondent.  He also evidently did not understand that Medicare guidelines do not dictate what is appropriately prescribed in the no-fault context.

10/28/13       Rochester Chiropractic Assocs. v Regional Transit Serv. Inc.
Erie County, Arbitrator Kent L. Benziger
Denial Based on Low Force of Accident Requires Expert Evidence
The EIP was injured when the bus in which she was a passenger slid on snow and ice, striking other vehicles.  Respondent denied claims for chiropractic treatment stating that 1) she was not an EIP; 2) that her injuries did not arise out of the alleged accident; and 3) that the injuries did not arise out of the use or operation of a motor vehicle.  Respondent contended that the EIP could not have sustained injury based on the low force of the accident.  The Arbitrator noted that such a determination is not for a layperson but requires an expert with expertise in biomechanical engineering and medicine to analyze human body dynamics incorporating the medical history.  Respondent did not submit any expert testimony as to the alleged low impact.  The Arbitrator also determined that, as a matter of law, the accident did arise out of the use or operation of a motor vehicle.  Finally, the Arbitrator held that Respondent’s claim, first made at the hearing, that the EIP was in the course of her employment and that workers compensation would be primary, was not raised in the denials and had no corroboration and that no verification had been requested to support that defense.

10/24/13       Cynthia Odachowski PT and David Bosela PT v Allstate Property and Casualty Insurance Co.
Erie County, Arbitrator Michelle Murphy-Louden
Applicants Fail to Submit AOB Executed in Favor of Billing Provider Resulting in Denial of Claims
The bills submitted, as well as Applicants’ testimony during the hearings, indicated that the billing provider was East Aurora Family Physical Therapy (East Aurora).  However, the AOB submitted was executed in favor of only David Bosela, PT.  After the first hearing, Applicants were told that they would be allowed to amend the AR-1 to change the name of the Applicant to East Aurora if they submitted an AOB executed in favor of East Aurora. 

Applicants submitted the same AOB and an NF-3 listing David Bosela as the provider.  The tax identification number on the NF-3 was the same, however, as that listed on the bills from East Aurora.  During the second hearing, Applicants stated that whichever of the two initiated treatment of a patient, that person would obtain an AOB in his or her name.  Applicants were advised that East Aurora was the proper applicant and they were again given additional time to submit an AOB executed in favor of East Aurora.  However, Applicants failed to do so and the Arbitrator had no choice but to dismiss the claim without prejudice.

10/24/13       Renovatio Med. Surg. v A. Central Insurance Co.
Erie County, Arbitrator Veronica K. O’Connor
Arbitrator Declines to Consider Late Submission That Was Readily Available When Arbitration Was Filed But Not Submitted Until Three Days Before Hearing
At issue was a claim for reimbursement for an LSO brace and interferential unit and supplies that was denied based on a peer review by Antoinette Perry, DC, dated March 13, 2013.  The prescribing chiropractor apparently wrote an addendum but it was never submitted until three days before the hearing.  The Arbitrator commented on this late submission, as well as noting that the studies referred to in the addendum were not submitted for review.  She therefore declined to consider the late submission and held that Applicant’s submission failed to adequately refute the conclusions set forth in Respondent’s peer review.
Note: Our office represented the Respondent.

10/24/13       RS Medical v A. Central Insurance Company
Erie County, Arbitrator Douglas S. Coppola
Insured Is Not Compelled to Accept Rental Vehicle’s Coverage
The insured was driving a rental vehicle when she was involved in a motor vehicle accident.  She timely presented a claim for no-fault benefits to her carrier.  Respondent denied claiming she was an occupant in a rental vehicle and that the rental company was primary.  The insured claimed that this violated Insurance Law § 5106(d) which provides that if there would be more than one source of first-party benefits, the insurers may agree which will cover or, if there is no agreement, the company that first receives the claim will cover it and then seek reimbursement pursuant to § 5105.  In this case, the insured had declined all coverage through the rental company and the Arbitrator found that Respondent’s position was mistaken and that it owed coverage.  The Arbitrator noted that an insured is not compelled to accept coverage from the rental company as that coverage is optional since the rental vehicle is a temporary substitute vehicle for purposes of retaining one’s own coverage.

However, Respondent also argued that the claim was premature as there was outstanding verification.  The Arbitrator agreed that the insurer has the right to see that a proper assignment of benefits has been executed and a claim is not overdue until there has been compliance with the verification request.  The claim was therefore dismissed without prejudice upon submission of the proper verification.


11/07/13       American Transit Insurance Co. v. Lucas
Appellate Division, First Department
Assignor’s Failure to Attend IMEs Voids Policy Ab Initio
On appeal, the trial court is reversed and the First Department holds to its precedent set forth in Unitrin Advantage Insurance Co. v Bayshore Physical Therapy, PLLC (82 AD3d 559 [1st Dept 2011]).  As in Unitrin, the court holds that if the insurer sufficiently establishes proper mailing of the IME scheduling letters and that the EIP failed to attend (in this case based on affidavits from the physician scheduled to conduct to examination and his employee), the carrier is entitled to deny all claims retroactively, whether or not from different medical specialties, whether or not initially denied based on medical necessity and whether or not the denials were timely issued.  In essence, the policy is void ab initio and coverage never existed. This is the rule in the First Department.

10/15/13       Right Aid Med. Supply Corp. v Nationwide Insurance
Appellate Term, Second Department
Benefit of Toll Lost Where Defendant’s Delay Letter Failed to Specifically Identify Party from Whom EUO Was Requested
Defendant lost the benefit of the toll of the 30-day pay or deny rule pending verification because, although it properly scheduled and re-scheduled EUOs, it failed to comply with the requirement in 11 NYCRR § 65-3.6[b].  This requires that, at the same time an insurer mails its final EUO scheduling letter, it advise the provider of the reasons why the claim is delayed.  This must include identification of the missing verification and the party from whom it was requested.  Since defendant failed to demonstrate compliance, it lost the benefit of the toll which resulted in its failure to demonstrate that its denial was timely.

10/15/13       Barclays Med., PC v New York Central Mut. Fire Insurance Co.
Appellate Term, Second Department
Defendant Successful in IME No-Show Defense
Defendant denied plaintiff’s claims based on plaintiff’s assignor’s failure to appear for scheduled IMEs.  The Civil Court denied defendant’s summary judgment motion but on appeal the court found that defendant’s submissions were sufficient.  Specifically, defendant submitted an affidavit from the manager of the IME scheduling service and one from its own litigation examiner which established that IME requests had been timely mailed.  Defendant also submitted an affidavit from the chiropractor who was to perform the IMEs stating that the assignor did not appear.  In addition, the affidavit by defendant’s litigation examiner also demonstrated that the denial of claim forms had been timely mailed to the address indicated by plaintiff.  All this proved sufficient.

10/15/13       Optimal Well-Being Chiropractic, PC v MVAIC
Appellate Term, Second Department
Plaintiff Fails to Demonstrate That Assignor Filed Accident Report
In order to qualify as a “covered person” and recover no-fault benefits from MVAIC, the person must comply with the requirements set forth in Article 52 of the Insurance Law which include the filing of an accident report within 24 hours of the accident, unless it is shown that it was not reasonably possible or that it was made as soon as possible.  Here, the assignor was a bicyclist allegedly injured in a hit-and-run.  Defendant’s claims examiner stated in his affidavit that despite repeated requests for proof that an accident report was filed, no proof was ever provided.  In addition, plaintiff’s papers in opposition to defendant’s cross motion did not include any indication that plaintiff’s assignor complied with the reporting requirement, or that it was not reasonably possible to comply.  As such, defendant was entitled to summary judgment.
See also: Shore Med. Diagnostic, PC v MVAIC, Appellate Term, Second Department, 10/15/13.

10/08/13       Rainbow Supply of NY, Inc. v MVAIC
Appellate Term, Second Department
Where Plaintiff’s Assignee Knew Identity of Vehicle’s Owner, Assignee Was Required to Exhaust Its Remedies Prior to Seeking Relief from Defendant
The parties stipulated to the timely submission of claims forms to MVAIC and to the admission of various documents into evidence.  The documentation was sufficient to show that plaintiff’s assignor was entitled to no-fault coverage from MVAIC and judgment was entered in favor of plaintiff.  However, since plaintiff and its assignor knew the identity of the owner of the vehicle in which the assignor was a passenger, plaintiff, as assignee, was required to exhaust its remedies against the vehicle’s owner before seeking relief from MVAIC.  As plaintiff did not demonstrate that it had, judgment was reversed.

Steven E. Peiper

[email protected]

11/07/13       Wangerin v New York Cent. Mut. Fire Ins. Co.
Appellate Division, Third Department
A Collapse Isn’t a Collapse Unless the Property Actually Collapses.  Wrong.  Court Says a Collapse Can Occur Without an Actual Collapse.
On March 23, 2003, plaintiffs awoke to discover that the floor in her upstairs bathroom had dropped approximately four inches in the overnight hours.  Upon further investigation, plaintiffs also uncovered similar drops in the hallway outside the bathroom and on the first floor at the bottom of the stairs.  Finally, the homeowners discovered that the ductwork in the basement had also shifted downward in the overnight hours.

Plaintiffs presented their claims to NY Central immediately upon discovery.  NY Central, in turn, denied the claims on the basis that the loss did not constitute a “collapse” under the terms of the policy.  Specifically, collapse was defined to remove all coverage for losses arising from “settling, cracking, shrinking, bulging or expansion.” 

At the conclusion of a non-jury trial, the trial judge rendered a verdict that concluded the loss fell within the terms of the collapse coverage of the policy.  NY Central appealed. 

On appeal, the Third Department noted that the term “collapse” involved “an element of suddenness, a falling in, and total or near total destruction.”  However, the court went on to state that collapse coverage will be affirmed if it is established that the loss resulted in the “substantial impairment of the structural integrity of the building or any part of a building.” 

Here, plaintiffs presented the testimony of an engineer that opined the damage to the premises was resultant from pressures from the roof being imposed upon the lower structure of the house.  The opinion was based upon damage to support beams in the house, as well as damage to the ductwork in the basement.  As the damage created a substantial impairment to the structural integrity of the house, the engineer opined that a collapse had occurred. 

Defendant’s expert acknowledged the damage observed by plaintiff’s retained expert. However, he opined that the loss was the result of settlement of the structure.  Of course, as noted above, settlement does not fall within the definition of the term “collapse.” 

At the conclusion of trial, the trial judge found plaintiff’s expert to be more compelling.  On appeal, the Third Department saw no basis by which it could justifiably disturb the trial court’s ruling.  This was the case even though, as the Appellate Division acknowledged, “no part of the floor/ceiling actually fell completely”

10/30/13       Gibau v Atlantic Infiniti, Ltd
Appellate Division, Second Department
Common Law Indemnity Award Enables Recovery of Defense Fees and Costs
Mr. Hamburger was involved in an automobile accident while driving a car owned by Atlantic Infiniti.  Apparently, the car involved in the collision was loaned to Mr. Hamburger while his vehicle was undergoing service at Atlantic’s garage. Not surprisingly, plaintiff sued both Atlantic (as owner) and Hamburger (as driver) for injuries allegedly sustained in the collision.

Atlantic asserted cross-claims against Mr. Hamburger seeking common law indemnity, and such relief was granted by the trial court.  As such, Atlantic was entitled to recover indemnity payments (if any), as well as all attorneys’ fees, costs and disbursements incurred “in connection with defending the suit brought by the injured party.”

Peiper’s Point - There must be, must be, more to this story.  Regardless of what actually happened, the point to remember is that common law indemnity does provide an avenue by which a non-negligent party can recover defense fees.

10/29/13       Moyano v Gertz Plaza Acquisitions, LLC
Appellate Division, First Department
Question of Fact on Indemnity Obligations Where a Signed Copy of the Agreement Could Not be Produced
Years prior to the incident giving rise to the current lawsuit, Gertz retained Electra Cleaning under a written service agreement.  That agreement, it appears, expired long before the incident with plaintiff occurred.  However, by continued performance of services, the Court concluded that the terms of the agreement may have been renewed. 

Importantly, the original agreement did include an indemnification clause running to the benefit of Gertz.  Unfortunately, however, Gertz could not produce a signed copy of the Agreement.  The result of which created a question of fact.

Elizabeth A. Fitzpatrick
[email protected]


Beth’s Banter on “B”
10/23/13       United States Fire Insurance Company v. Cyanotech,
2013 W.L. 575,5338 (United States District Court, District of Hawaii)
No Coverage Under Coverage B – Personal And Advertising Injury – One of Two
In United States Fire Insurance Company v. Cyanotech, the court considered the availability of coverage under Coverage B of Commercial General Liability Policies issued to Cyanotech and Nutrex.  The court ultimately concluded that the claims did not constitute “personal and advertising injury” as defined within the policy and, in any event, would have been excluded based upon policy exclusions for patent infringement, breach of contract and knowing violation of rights of another.  The claims involved a product known as Astaxanthin, a highly potent antioxidant used as a dietary supplement to ameliorate free radical and light induced retinal damage and age-inducted macular degeneration, among other claimed health benefits.  It was alleged that the insured intentionally, improperly and without justification interfered with the business relationship between two other entities by approaching one of the entities in an effort to sell its Astaxanthin product directly.  The underlying plaintiff alleged that as a result of the insured’s intentional and unjustified interference, they were damaged by loss of business reputation, lost sales and lost profits.  There was also an allegation that the insured breached a Confidentiality Agreement by disclosing confidential and/or propriety information it learned from the underlying plaintiff, to others.  The underlying plaintiff also alleged that the insured had engaged in patent infringement and contended that despite having knowledge of the patent, they knowingly continued to induce the infringement of the patent, such infringement being willful.

The policy defined advertisement as a notice broadcast or published in the general public or specific market segments about your goods, products or services for the purposes of attracting customers.  Personal and advertising injury was defined as injury, including consequential bodily injury, arising out of enumerated offenses, the only potentially applicable of which were 14(f), the use of another’s advertising idea in your advertisement, or 14(g), Infringing upon another’s copyright, trade dress or slogan in your advertisement.   The court rejected the insured’s contention that there was a potential for indemnification liability because they alleged wrongdoing in advertising, citing authorities across the country who consistently conclude that allegations of patent infringement (even if allegations also involve advertisement of a patented invention) cannot constitute “advertising injury” sufficient to trigger insurance coverage under a CGL Policy, unless the patented idea, itself, concerns a method of advertising. 

The court went on to note that the policy specifically excluded patent infringement from advertising and also cited the exclusion entitled, Knowing Violation of Rights of Another, as well as the Breach of Contract Exclusion, which excluded personal and advertising injury caused by or at the direction of the insured, with knowledge that the act would violate the rights of another and would inflict personal and advertising injury, as well as personal and advertising injury arising out of a contract, except an implied contract to use another advertising idea in your advertisement.  Based upon the allegations, the court found that the referenced exclusions would, in any event, preclude coverage. 

10/24/13                 Charter Oak Insurance Co. v. Maglio Fresh Food
2013 W.L. 5763209 (United States District Court, (E.D. Pennsylvania)
No Coverage Under Coverage B – Personal and Advertising Injury – Two of Two
This coverage action derived from a suit filed in Philadelphia by Leonetti’s, a supplier and competitor of Maglio, which resulted in two jury verdicts against Maglio.  The claims related to Maglio’s sale of frozen Stromboli.  Leonetti alleged that Maglio impermissibly sold an inferior Stromboli product, under Leonetti’s brand name, Forte, after the parties had terminated their private label agreement.  Leonetti’s also alleged that Maglio sold its own brand of Stromboli in boxes that reflected Leonetti’s product information, not the product information of the actual manufacturer.  Theories of tortious interference, unfair competition, trade libel, breach of contract, negligent misrepresentation and unjust enrichment were asserted by Leonetti against Maglio.

Maglio tendered the claims to Charter Oak and Charter Oak, in May 2010, issued a reservation of rights, in which it agreed to defend Maglio subject to its reservation under the policy.  In the underlying lawsuit, the claims of negligent misrepresentation and unjust enrichment were dismissed and only claims of unfair competition, trade libel and tortious interference proceeded to trial.  A mistrial as to the use of the Forte brand was declared due to a hung jury.  The unfair competition cause of action proceeded to verdict with the result that the jury returned a general verdict against Maglio, awarding compensatory damages of $2,000,000 and punitive damages of $550,000.

Thereafter, Leonetti’s retried the claim regarding the use of the Forte brand on a single count of unfair competition.  During that trial, Maglio requested that Charter Oak make available its $1,000,000 policy limit for settlement purposes.  Charter Oak did so, although the matter did not settle.  A jury returned a verdict against Maglio, awarding Leonetti $660,000 of compensatory damages on that claim.

Leonetti and Maglio ultimately entered a Settlement Agreement in May 2012 for $4.4 million, pursuant to which Maglio assigned its rights under the Charter Oak and the American Guarantee Policy, which afforded umbrella and excess coverage to Leonetti’s.  Prior to the Settlement Agreement, which Charter Oak was not involved in, Charter Oak had filed an equitable interpleader action, asking that they be permitted to deposit the policy limit plus post-judgment interest to halt the accrual of interest and demonstrate a good faith effort to settle.  The court issued an order directing Charter Oak to distribute the full amount of the deposit to Leonetti’s and the funds were released to Leonetti’s on July 26, 2012. 

The declaratory judgment action was commenced by Charter Oak prior to the release of the funds in the equitable interpleader action.  Ultimately, the declaratory judgment action resulted in both sides moving for summary judgment.  The court addressed the coverage for damages resulting from advertising injury, as well as the applicable exclusions.  The American Guarantee umbrella coverage provided coverage for personal and advertising injury, which was defined similarly to that included within the Charter Oak Policy and excluded coverage for personal and advertising injury that arose out of oral or written publication of the material by or at the direction of the insured with knowledge of its falsity or arises out of the failure of goods, products or services to conform with any statement of quality or performance made in your advertisements.  In addition to arguing that coverage was afforded by the policies, the insured contended that Charter Oak and American Guarantee were estopped from asserting non-coverage by failing to timely file a declaratory judgment action, failing to timely seek intervention and failing to appeal the denial of intervention.  They also claimed that Charter Oak waived its ability to challenge coverage because it partially indemnified Maglio for the verdict by tendering its policy limit for all claims in the lawsuit, without reserving its rights.

The court rejected the contentions of the insured, finding that they failed to meet their initial burden to show that the claims fell within the policies’ grant of coverage.  Further, they concluded that even if the policies covered the claim as an advertising injury, the knowledge of falsity exclusion present in both the underlying and excess policies defeated coverage.  The court also rejected the arguments by the insured alleging waiver or estoppel, noting that where an insurer assumes the duty to defend, the insurer can simultaneously challenge whether the claim is covered under the insurance policy, even if the underlying claim settles.  They further noted that if the insured accepts the insurer’s defense subject to a reservation of rights, the insurer retains full control of the litigation.  The court, thus, declared that neither Charter Oak nor American Guarantee’s policies afforded coverage for the claims against the insured. 


Audrey A. Seeley
[email protected]

10/28/13       Baldassini v State Farm Mut. Auto. Ins. Co.
United States Court of Appeals, Eleventh Circuit
Under Florida Law, Golf Cart Not a “Car” Under Personal Auto Policy
The Baldassinis were minding their friend’s 2009 E-Z-GO ST Express (four wheeled electric vehicle) in Key Biscayne, Florida, while away on a trip.  The Baldassinis’ 15 year old daughter took the ST Express out on the streets of Key Biscayne and accidently struck another individual, pinning him between the ST Express and his truck, whereafter he sustained bodily injuries.

After suit was commenced, the Baldassinis tendered the matter to their automobile insurer, State Farm, as there was no recreational vehicle policy in place.  State Farm denied the claim on the ground that the ST Express was a golf cart and not a car under the policy’s insuring grant.  State Farm commenced a declaratory judgment action seeking a declaration that the golf cart was not a car under the insurance policy.

The insurance policy defined “car” as “a land motor vehicle with four or more wheels, which is designed for use mainly on public roads.”  The parties agreed that the golf cart had four wheels but disagreed whether it was designed for use mainly on public roads.

The evidence presented with regard to the ST Express golf cart was that its manual provided it was designed and manufactured for off-road use and did not conform to Federal Motor Vehicle Safety Standards.  The manual further stated that it was not equipped for operation on public streets.  The golf cart also contained a sticker on the dashboard warning against operation on the highway.  The golf cart also did not have a number of the safety features legally required for passenger cars to be operated on public roads.  Further, the golf cart’s owner did not modify it in any way to make it roadworthy.

The Court held that the phrase “designed for use” within the definition of “car” was unambiguous.  Its ordinary meaning had already been addressed by one Florida appellate court as an object made for a particular purpose so that it can be used for that purpose with reasonable efficiency and safety.  Also, the phrase “mainly on public roads” was previously interpreted by a Florida district court as a vehicle that is primarily used on public highways.

The Court held that the evidence before it led to the conclusion that the vehicle was not a “car” as it was not designed to be used mainly on public roads.

10/23/13       Alfa Mut. Ins. Co. v Thornton
Dist. Court of Appeals of Florida, Third Circuit
Under Alabama Law, Exclusion Barring Injury Arising Out of Custody of Non-Owned Dog Applied to Scooter Accident Caused by Dog on Retractable Leash
In May 2011, the Alfa Mutual Insurance Company’s insured (“the insured”) was walking a dog the insured did not own on a retractable leash.  The insured stopped to chat with a friend when a woman, operating a motorized scooter, came by between the insured and the dog.  The insured raised the retractable leash over her head to permit the woman on the scooter to pass under the leash.  However, the woman ran into the leash sustaining significant injuries when she fell from the scooter.

After a bodily injury action was commenced, the homeowner’s insurer afforded a defense under a reservation of rights and commenced the instant declaratory judgment action to establish that the policy contained an exclusion barring insurance coverage.  The specific exclusion was for bodily injury arising out of the care or custody of animals not owned by an insured.  The Court, applying Alabama law, held that the exclusion was not ambiguous just because the phrase “arising out of” and “care or custody” was undefined.  Rather, the phrase “arising out of” is afforded its ordinarily understood meaning of originating from, flowing from, or in connection with the activity or the object that follows it.

Here, the Court simply concluded that had there been no dog there would have been no leash giving rise to the accident.  Thus, the exclusion applied barring coverage.

Cassandra A. Kazukenus
[email protected]
Circular Letter No. 8 (2013)
Post Disaster and Natural Catastrophe Guidance

On October 28, 2013, Governor Cuomo issued a press release announcing new emergency disaster protocols for insurers to follow during future severe storms.  Governor Cuomo explained that “During Superstorm Sandy these steps helped us speed up relief to New York families and business, and they will now become a standard part of our storm response arsenal.  Insurance companies have a vital responsibility to promptly process claims for consumers hit by a natural disaster and this new emergency protocol will help make sure that they live up to that standard.”

Thus, we have Circular Letter No. 8 (2013).  This Circular Letter simply sets forth potential responses by the Department which tend to mirror the responses that occurred in the wake of Storm Sandy.  As explained by the Department, the purpose of the Circular Letter is to inform insurers of the various post-disaster regulatory measures they should anticipate in the event that the President or Govern declares a State Disaster Emergency in all or some NYS counties in the wake of a disaster.  Each of the items discussed below MIGHT be implemented in the wake of a disaster.

  •  Moratorium on Policy Cancellation or Non-renewal for Non-payment of Premium


A moratorium of up to three months may be declared precluding policy termination or suspension of policies for areas declared to be in a state of emergency due to a disaster.

Further, the Department expects insurers to work with any policyholders in affected areas by making reasonable accommodations to assist policyholders in making premium payments.

  • Processing of Claims


The Department expects insurers, upon receipt of claim, to:

  • promptly establish contact with the claimant;
  • promptly survey and assess the damage;
  • promptly comply with any directive relating to the activation of the Insurance Emergency Operations Center;
  • promptly respond to Department inquiries, including inquiries made relating to complaints;
  • promptly inform claimants of documents that must be submitted;
  • provide prompt and accurate responses to claimants;
  • provide prompt payment for additional living expenses and for temporary repairs after the assessment of damages; and
  • promptly set appointments with the claimant for examination and resolution of all claim matters.

Additionally the Department might,  by emergency regulation, create further claim handling requirements similar to those implemented after Storm Sand such as permitting immediate, necessary repairs and broadening proof of loss documentation to include such items as photographs.

  • Expedited Process for Adjuster Licensing


The Department might implement an expedited process for issuing temporary independent and public adjuster licenses for adjusters in good standing from other states. 

  • Claims Data Reporting


The Department could require claims data reporting which would be similar to that sought after Storm Sandy.  Likewise, the Department anticipates using this data to create report cards assessing insurance company performance. 

  • Mediation


The Department might, by regulation, establish a mediation program for the resolution of disputed open claims for damage to real or personal property damaged as a result of a disaster.  Again, this appears to be similar to that implemented after Storm Sandy as the claims that would likely be eligible would be those where an insurer has denied the claim in whole or in part; the amount in controversy exceeds $1000; or the insurer has not offered to settle within a specified time period after receiving the necessary documentation.

Essentially, the Circular Letter informs insurers that they may or may not implement regulations/emergency regulations similar to those implemented by the Department after Storm Sandy. 


Katherine A. Fijal
[email protected]

10/23/13       Clark School for Creative Learning, Inc. v. Philadelphia Indem.
United States Court of Appeals, First Circuit
D & O – Known Circumstances Revealed in Financial Statement Exclusion
In 2009, the Clark School for Creative Learning [“School”] and its directors Jeffrey Clark were sued in state court by two of the School’s donors, Marcia and Joseph Valenti. The suit alleged that the School and its director Jeffrey Clark had not followed through on two promises it made in soliciting the donation:  (1) to convey to the Valentis a security interest in the land on which the School is situated and (2) to use the funds to construct a new facility for the School’s high school. The Valentis claimed that Clark instead had intended to use their $500,000 donation for other purposes; and, had no plans to acquire property for a high school; and, that shortly after receiving the donation, Clark caused the School to pay approximately $175,000 to his mother and his sister – purportedly for repayment of loans.

The state court case settled and the school returned part of the gift.  The school then filed suit in federal court, seeking defense costs and indemnity under a D & O liability insurance policy issued by Philadelphia Indemnity Insurance Company [“PIIC”]. 

The district court granted summary judgment for PIIC based on an exclusion entitled “Known Circumstances Revealed in Financial Statement Exclusion”.  This exclusion precluded coverage for any losses “in any way involving any matter, fact, or circumstance disclosed in connection with Note 8 of the School’s Financial Statement.” Note 8 of the Financial Statement set forth a description of the gift and referred to Note 7, which described the gift in more detail. For the following reasons the United States Court of Appeals for the First Circuit [“Court] affirmed.

The Known Circumstance Exclusion provided that:  “[T]he Underwriter shall not be liable to make any payment for Loss in connection with any Claim made against the Insured based upon, arising out of, directly or indirectly resulting from or in consequence of, or in any way involving any matter, fact, or circumstance disclosed in connection with Note 8 of the Financial Statement  . . . submitted on behalf of the Insured.”

Note 8, in turn, were titled “Insufficient Net Assets.”  It discussed the School’s financial difficulties at length and referenced the Valentis’ gift:  “Subsequent to the date of the accompanying financial statement, in May 2008 the School was a recipient of a major gift totaling $500,000 (see Note 7).  The donation is unrestricted and will be used to support the School’s general operations as management’s plans for the School’s future are implemented and allowed time to succeed.  Management feels that its plans and the subsequent major gift will enable to School to operate as a going concern.”

The Valenti’s gift was further described in Note 7, which Note 8 referenced in the parenthetical. Note 7 provided, in relevant part:   “Major Gift” – During March of 2008, the management of the School became aware of a current student’s parents’ intent to donate $500,000 to the School for unrestricted operating support.  The $500,000 cash gift was received by the School in its entirety on May 5, 2008.”

In analyzing the Known Circumstances Exclusion the Court determined that its reference to Note 8 of the Financial Statement was both clear and broad in its language. 

The School made three arguments:  (1) the language of the Known Circumstance Exclusion shows that the parties did not intend for the exclusion to apply to Valenti’s gift; (2) the canon of ejusdem generis requires a different reading of the exclusion; and (3) the plain language reading must give way to the School’s reasonable expectation of coverage.

First, the School argued that Note 8 focused on the School’s financial difficulties and so the Known Circumstance Exclusion was intended to exclude only those losses that would result from a future stoppage of the School’s operations due to financial problems. Further arguing that if the parties had intended for the Exclusion to apply to the gift they would have referenced Note 7, which discusses that gift in greater detail. The Court disagreed pointing out that the School’s argument misunderstands the “baseline rule” of Massachusetts law, which states that an insurance contract must be interpreted based on the intention of the parties “as manifested by the policy language”.  The Court noted that the language was not limited to losses caused by financial difficulties and that it explicitly referenced the Valentis’ gift.  The Court also pointed out that the School’s argument was factually incorrect, because the parties did reference Note 7 – the discussion of the Valentis’ gift in Note 8 explicitly referred to Note 7.

Next, the School argued that the ejusdem generis cannon requires the phrase “in any way involving” to be interpreted in light of earlier phrases in the list, i.e., “based upon, arising out of, directly or indirectly resulting from or in consequence of.”  The Court rejected the School’s interpretation recognizing that every word in an insurance contract must be presumed to have been employed with a purpose and must be given meaning and effect whenever practicable. The Court concluded that adopting the School’s reading would render the phrase “or in any way involving” meaningless, as the earlier phrases already established exclusions for losses “directly or indirectly resulting from” the disclosed matter. Further holding the even assuming arguendo that some causation was required, that requirement would plainly be met here because the losses from the Valentis’ suit were caused by the School’s alleged misrepresentations about the gift.

The School’s final argument was that on reading the Known Circumstance Exclusion it would not have expected the exclusion to reach the Valentis’ suit because the exclusion focused on the School’s financial difficulties and because the suit had not yet been filed and could not have been a “known circumstance”.  The Court disagreed stating that the footnote referred to the known circumstance of the gift and went further, describing the gift as unrestricted.  The Valentis’ lawsuit alleged otherwise therefore, the School’s argument fails on its own terms.

Finally, the Court held that the reasonable expectations doctrine had no application here. When a contract is not ambiguous, a party can have no reasonable expectation of coverage when that expectation would run counter to the unambiguous language of an insurance policy.  Because the language of the PIIC policy clearly excludes coverage “in any way involving” the Valentis’ gift, the School had no reasonable expectation of coverage.


Jennifer A. Ehman
                                            [email protected]    

10/31/13       Dinstber v. Allstate Ins. Co.
Appellate Division, Third Department
Claim for Punitive Damages Dismissed Where No Breach of Duty Independent of Defendant's Contractual Obligations was Asserted
Plaintiff commenced this action after his no-fault insurance carrier denied his claim following a motor vehicle accident.  He asserted claims of breach of contract and tort with an associated request for punitive damages.

Allstate moved to dismiss the complaint based on 3211(a)(7), failure to state a cause of action. Plaintiff cross-moved to, among other things, amend the complaint.  The motion court granted Allstate's motion and denied plaintiff's cross-motion.

On appeal, the court found that plaintiff's allegations that Allstate engaged in "bad-faith tactics" by failing to properly investigate his no-fault claim and failing to renew this insurance policy did not allege a breach of duty distinct from Allstate's contractual obligations.  Further, while plaintiff alleged a violation of Insurance Law § 2601 based upon Allstate's purported failure to timely investigate his no-fault claim; New York does not recognize a private cause of action under that statute. 

Even if the complaint were liberally construed, it did not allege a tort existing independently from the parties' contract, and therefore failed to state a cause of action for punitive damages based upon tortious conduct. 

The motion court further did not abuse its discretion in denying plaintiff's cross-motion for leave to amend the complaint, as plaintiff failed to establish that the proposed amendment was not plainly without merit.  Thus, the decision of the motion court was affirmed. 

Earl K. Cantwell

[email protected]


Advertir Inc. v Peerless Indemnity Insurance Co., 2013 WL 4603094 (E.D. Pennsylvania, August 29, 2013).  The claimant Advertir owned a warehouse in Pennsylvania that flooded in September 2011 during a heavy rain.  The warehouse had three loading bays which had concrete slabs sloped down towards the base of the building and an industrial sump pump to pump water out of the building.  The policy with Peerless covered damage from water that entered into and overflowed from within the sump pump or other system designed to remove surface water.  The policy also had an exclusion that barred covered for damage caused by “surface water” flooding. 

What happened was that the sump pumps could not handle the rainfall, and the loading bays filled with water which then flooded the warehouse.  Peerless denied coverage based on the exclusion that the water that flooded the warehouse never came from or overflowed the sump pits.  Not to be discouraged, Advertir sued the insurer for breach of contract and bad faith and the parties filed cross motions for summary judgment.  Decision for the insurance company.

The claimant argued that coverage applied because, in effect, the entire loading bay structure was a system designed to remove sub-surface water.  The District Court disagreed noting that the evidence was clear that the water that entered the warehouse never came out of the sump pit at the bottom of the loading bay and therefore did not fall within the provision covering damage from water that enters and overflows from the sump pump.  The water that caused the damage in the warehouse was essentially surface water which flowed over and across the filled loading bays into the warehouse without ever coming up from the sump pit.  Therefore, there was no coverage since the water did not enter into and overflow from the sump pit.  The exclusion also applied since the water that flooded the warehouse was surface water that never went through the sump pit.  The Court also ruled there was no bad faith where Peerless had reasonable bases for denying coverage.

This case highlights the importance of factual investigation in determining coverage.  The parties essentially agreed that the sump pumps could not handle the rainfall causing the loading bays to fill and water simply ran into the warehouse. This made it an easier factual argument for the carrier to present that there was no coverage because the flood water actually never came through the sump pump, and that the exclusion applied since the flooding was really caused by surface water.

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