Coverage Pointers - Volume XV, No. 21

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.

Greetings from – who can believe it – Buffalo.  We’re happy to be home although by next issue, your editor will be firmly placed in his summer home on Crescent Beach, Ontario, a mere 19 minutes and an international border away from the office.  As my friend David Zizik often comments, it’s the home of blue martinis.

We had a great time at the DRI Insurance program in Chicago.  Our congratulations go to the organizers and speakers of this very interesting program.  We welcome a few new subscribers who now have joined the CP family.

There are a whole series of interesting and eclectic decisions in this week’s issue, attached.  There’s a bad faith finding in a suit by an excess carrier against a primary in the Northern District of New York.  Even more troubling, was a sanction imposed against an insurer whose corporate rep at a settlement conference was not authorized to offer any money and did not have the authority to change that decision.  See Kathie Fijal’s review of the decision from the Eastern District in Grenion v. Farmers Insurance Exchange.


NYS Bar Advanced Insurance Program:

Beth, as statewide co-chair and speaker and Steve and Jen as presenters are taking part in an excellent insurance program over the next couple of months.  See their letters below and join them for some great educational opportunities.

DRI -- INSURANCE 101 – Three-Part Webcast Series:

By popular demand, the DRI Insurance Law Committee Insurance 101 series will return this summer.  Highly successful and extremely well received in 2013, this is a series of live programs that can be watched from the convenience of your offices or homes.  This three-part series will provide a terrific opportunity to introduce a broadly defined educational program for claims professionals and attorneys alike. Diary these dates:

  • 7/09/14 Insurance 101: The Duty to Defend
  • 7/16/14 Insurance 101: What You Always Wanted to Know About Policies
  • 7/23/14 Insurance 101: Coverage and Bad Faith Lawsuits


Shaun McParland Baldwin from the Tressler firm and I will be a presenting the July 16 program, which will include discussions on:

  • What coverage is provided under a Commercial General Liability Policy, Workers’ Compensation and Employers Liability Policy, Employment Practices Liability Insurance Policy, Business Auto Policy, Directors and Officers Liability Insurance, Property Insurance Policy, Homeowner’s Policy, Personal Auto Policy, and Umbrella and Excess Policies, and how to read those policies;
  • Methodology to isolate and analyze coverage questions;
  • How courts typically construe policies of insurance, including the common rules of interpretation and construction


FDCC Litigation Management College:

Registration is now open for the premier Litigation Management College, conducted by the Federation of Defense & Corporate Counsel at Emory University in Atlanta, to be held June 8-12, 2014. The registration fee for both the College and Graduate programs is $995 ($1095 after April 15, 2014), which covers all educational sessions, course materials, snacks and beverages, receptions and meals. The College is held at the Emory Conference Center. 

This is not your typical “sit and take notes” seminar—it is a rigorous week for professionals interested in upgrading their skill set. There will be in depth sessions on preparation of case plans, budgeting, negotiation, evaluating liability exposures, insurance coverage issues, among others. Students will also gain hands-on experience negotiating in mediations, presenting to the group, and giving depositions. Each LMC student will also give a videotaped mock deposition.  This is an interactive program where all students are engaged and actively participating in all of its phases. 

This year’s program will feature negotiation expert, Marty Latz, who will teach the art of negotiation tactics and strategy. 

Click for additional information and on-line registration.

You will leave exhausted and excited – having learned lessons that you will use for a lifetime and having met new friends. Seating is extremely limited so register early, and save $100 by doing so.  Note that there are two tracks during the College, which also offers a Graduate Program for claims professionals who have already completed the College program, or managers with over 10 years of claims management experience. 

For information, contact:

Todd A. Roberts
Dean of Admissions
[email protected]

Ex-President’s Wife Opposes Suffrage – 100 Years ago:

April 11, 1914
The New York Times


Ex-President’s Wife Joins Connecticut
Body Opposing Woman Suffrage

Special to The New York Times

NEW HAVEN, Conn., April 10.—Mrs. Taft, wife of the ex-President, has joined the local branch of the Connecticut association opposed to woman suffrage, according to the announcement made to-night by the Chairman, Mrs. Hotchkiss, wife of Prof. E. W. Hotchkiss of Yale.

While Mr. Taft was in public life Mrs. Taft refrained from expressing her view on equal suffrage, and many suffragists thought her sympathies were with them.  She will take an active part in the campaign to double the association’s present membership of 10,000 before 1915.

Peiper’s Passion:

A relatively light week on the docket for this issue.  The biggest news of the past two weeks was the Court of Appeals addressing a split in the Appellate Divisions over what must be established to ensure compliance with a non-party subpoena.  The First and Fourth Departments had settled on, basically, a relevancy standard.  So long as the items were material and necessary, discovery was required.  The Second and Third Departments, however, added a requirement that the subpoenaing party also establish that the items sought were not discoverable from any other source.  As detailed below, the requirement for demonstrating no other way to obtain discovery is now a thing of the past.  Relevancy, broadly defined, is the only requirement for compelling production from non-parties. 

We also take this opportunity to swing back to our last issue, which addressed, perhaps too briefly, the distinction between General Obligations 5-322.1 and 5-321.  For those of you who don’t already know, 5-322.1 applies to construction contracts.  Essentially, it precludes a party to a construction contract from being indemnified for its own negligence. 

On the other hand, 5-321 applies to real property leases.  While 5-321 prohibits a lessor from exempting itself from liability “for damages to injuries to person or property,” it does not prohibit the lessor from requiring its lessee to provide indemnification for losses, which arise from the lessor’s own negligence. 

Due to their proximity, these sections are often interpreted as both prohibiting a party from being indemnified for one’s own negligence.  Not only are they different statutes, applying to different types of agreements, as detailed above, they do not categorically prohibit a party from being indemnified for one’s own negligence. 

In short, Section 5-322.1 does not allow a party to be indemnified for their negligence.  If a construction agreement contemplates indemnity for one’s own negligence, it will be void as a matter of law….UNLESS (a) the party seeking indemnity is not actually negligent –or – (b) the indemnity clause at issue contains “savings language” akin to the ubiquitous “fullest extent permitted by law” clause of which we are all familiar.

On the other hand, Section 5-321 does not prohibit a lessor from being indemnified for losses occasioned by its negligence.  In fact, the clause doesn’t even reference indemnity.  Rather, the provision only provides that a lessor cannot exempt itself from liability for injury to people or property that arises from the lessor’s negligence.  Whether they can seek indemnity from the lessee is, as they say, a horse of a different color. 

In our review of the Guzman case from last week, we suggested that “savings language” was not needed in a commercial lease.  This is because so long as the lease was negotiated at arm’s length, and does not purport to absolve the landlord from its liability to injured parties, it may very well be entitled to indemnification for losses caused by its own negligence.  If a lessor is not prohibited from seeking indemnity for its own negligence, it follows that the “savings language” is moot. 

Now that we’ve bored you stiff, let us remind you of more stimulating environments where you can satisfy your undying thirst for all things insurance.  As we mentioned last time, the New York State Bar Association is again presenting its Insurance Coverage Update.  This has become a rite of passage each spring, and this year’s program is yet again top notch. 

Our own Beth Fitzpatrick is the overall program chair, and is pulling double duty by chairing the Long Island program.  Jennifer Ehman and I will be making an appearance at the Buffalo program.  Not East, nor West, no matter…the panels in NYC, Albany and Syracuse are all loaded with excellent speakers.  The NYC and Syracuse programs are scheduled for May 2nd, with Albany and Buffalo trailing a week later on May 9th.  If you’re in NYC, that program is set for May 16th.  Please give it some thought, and as always shoot me an e-mail for additional information.   Looking forward to seeing you there.

Steven E. Peiper
[email protected]

Editor’s Note:  Speaking of passion …  

One Hundred Years Ago Today: “Old Friends”:

April 11, 1914
Olean Times Herald

Mrs. Morgan Gaskill Fears Husband,
Aged 79, and Affinity, Aged 72, Will Elope


Says Her Husband is Father of Eleven
Children Born to His Alleged Affinity—Gaskill
and Miss Nancy Hagar Had Been Friendly for
40 Years, Gaskill’s Wife Claims

Uniontown, Pa., April 11.—Morgan Gaskill, aged 70, and Nancy Hagar, aged 72, are being closely watched by the authorities here today for fear of an elopement. Gaskill arrived here yesterday and on complaint of his wife, Miss Hagar was arrested and held on $300 bail.  The warrant was issued at the request of a married daughter of Gaskill’s.

Mrs. Gaskill brought serious charges against her husband, alleging that he is the father of eleven children born to Miss Hagar.  For 40 years, Gaskill and Miss Hagar have been friendly.  Mrs. Gaskill alleged her husband repeatedly refused to agree to a divorce, but she took this action upon hearing that they intended an elopement. 
Editor’s Note:  We’re not sure what happened to the couple but we did find a May 5,1919 newspaper article indicating that Mrs. Gaskill threw her husband out in the cold, refused to give him his clothes and he filed for divorce.  She opposed his suit.  Of course, he was suit-less.

Hunter’s Hints:

Since the last time I wrote to you, dear Subscribers, the windows in my office have not closed.  I’ve been bathing in the fresh, warmish, allergy-inducing spring air (and collecting bugs for the firm’s newest plant addition, a Venus Fly Trap).  On this particularly beautiful Buffalo day, I’m sharing with you the freshest Serious Injury case law updates from appellate courts throughout the state.  This week we have a fair amount of cases overturning summary judgment motions initially granted to defendants by the lower court.  The first thing to remember when making a defense summary judgment motion as to whether Plaintiff actually suffered a serious injury is that the defendant has the initial burden to prove by competent medical evidence that Plaintiff is not “seriously injured” as defined by New York State Insurance law.  Without meeting that initial burden, a defendant’s motion will fail without the court even looking at the sufficiency of plaintiff’s evidence.

Enjoy the weather and the updates.  As always, please contact me with any and all questions regarding serious injuries in New York.  I look forward to hearing from you.

Daniel T. Hunter
[email protected]

One Hundred Years Ago This Weekend:  Buffalo Places Its Last Major League Team on the Field:

The Buffalo Blues was a professional baseball club that played in the short-lived Federal League, which was a minor league in 1913 and a full-fledged outlaw major league the next two years. It was the last major league baseball team to be based in the city of Buffalo. In 1913 and 1914, as was the standard for Federal League teams, the franchise did not have an official name, instead going by the generic BufFeds.

The Buffalo team took the field for the first time on April 13, 1914. Due to delays in construction of their new ballpark, the team did not play their first home game until a month after the Federal League season had started. Buffalo sold shares of stock of the team to the public through a series of newspaper ads. Preferred shares were sold for $10 each.

In the 1914 season, the team posted an 80-71 record (.530) and finished in fourth place, seven games behind the league champion Indianapolis Hoosiers. In the league's second and final season, the team, then known as the Buffalo Blues, ended in sixth place with a 74-78 mark (.487), 12 games behind the Chicago Whales.

Jen’s Gems:

Alert.  For those that follow bad faith litigation in New York, this has been a very interesting few weeks.  We have two decisions to report on, both involving New York Central Mutual and both involving excess verdicts.  

General Motors Acceptance Corp. v. New York Cent. Mut. Fire Ins. Co., issued by the First Department, reversed the trial court’s denial of the carrier’s motion for summary judgment finding that in light of conflicting medical reports submitted by the plaintiff’s own doctors, the carrier’s actions in not settling the case did not amount to “gross disregard.” 

However, New York Central received a significantly different result in Quincy Mutual Fire Insurance Co. v. New York Central Mutual Fire Insurance Co.  In an opinion penned by Magistrate Judge Peebles, out of the Northern District of New York, the carrier was admonished at length (the decision is 56 pages) for its handling of the underlying action.  Concerns were raised over the refusal to increase the $75,000 settlement offer even after liability was determined and the underlying plaintiff had undergone six surgeries.  Beyond ordering New York Central to reimburse the excess carrier for the amounts, it paid, above the primary policy limit, to settle the action, the court also directed it to reimburse the excess carrier for all the interest on the underlying judgment, and awarded Quincy Mutual separate prejudgment interest based on a breach of contract theory.  The only request not granted was for attorneys’ fees under New York General Business Law § 349.

Now that I have tempted you into reading my column this week, I also wanted to remind everyone that the NYSBA Advanced Insurance Coverage CLE is coming up in May.  Steve and I will be presenting in Buffalo on May 9th and, beyond acting as Co-Chair for the Program, Beth will be speaking in Long Island on May 16th and Albany on May 9th.  It should be a great program.

Lastly, as I am sure everyone is curious about my daughter, Ella.  We have officially hit the terrible 2’s about a month early.  This week I had the wonderful experience of carrying her kicking and screaming into daycare, and then stood there while she literally dropped to the floor and continued the tantrum rolling around in front of her classroom.   All this began because (wait for it) she did not want to take off her pajamas.  This should be a fun year. 

Until next issue…

Jennifer A. Ehman
[email protected]

Editor’s Note:  Oh Jen, you forgot to talk about the weather.  I’ll do it for you:  “it’s nice out today.”

Clever Insurance Ad – One Hundred Years Ago Today:

April 11, 1914
The Gettysburg Times
Gettysburg, Pennsylvania


            If you wanted to buy a garden rake—would you order it from the butcher?
            If you were unfortunate enough to have a pain in your stomach — would, you consult the local blacksmith?
            If you fell down the steps and broke your arm—would you call the nearest plumber?
            Or, if you wanted to buy a dress for your Baby — would, you get it from an insurance agent?

            Why then, go to a Dry Goods store for your Insurance?

This is an age of specialists. Few men know if their insurance is good or not.  They must depend upon the agent who writes it. Isn’t it reasonable to think that an Agent who gives all his time to writing insurance can protect you better than the fellow who writes it as a side issue to pick up a few dollars?

            I devote all my time to the INSURANCE BUSINESS.  I make my living at it.  The protection you get from a policy in the companies I represent is strictly first class.  That’s the kind of insurance you want—PROPERLY written.

Geo. C. Fissel
Masonic Building               (Insurance Specialist)                   Gettysburg, Pa.


Editor’s Note:

Apparently, a century ago, general stores and other commercial entities sold insurance policies.  Insurance agents fought back for the business and advertised heavily, to try to maintain the business.  Your editor happened to like that ad, by Mr. Fissel.

Because I have no life, I decided to find out what happened to George Fissel and his agency.  I scoured through later papers, and am able to report that George, although he didn’t live to see it, created a legacy.

George, Sr. died about eight years later, apparently a young man.  On July 10, 1922, Laura Fissel announced that she was taking over the practice of her late husband, George, who died a week earlier, according to the Evening Times of Harrisburg, PA.  Ten years later, on April 11, 1932, in a front-page story, Laura Fissel’s death from pneumonia, at age 46, was reported.  She left three orphaned children behind: a son, George, Jr. and two daughters, Janet and Catherine.

It appears that George. Jr. took over the agency upon his mother’s death and then in 1946, took on a partner, Jacob Britcher to operate the Fissel-Britcher Insurance Agency.  Newspaper reports show that effective February 1, 1969, that agency merged with the Philip R. Bikle Insurance Agency.  They maintained the Fissel-Britcher name until George sold it to the Hockley & O’Donnell Insurance Agency as reported in the Gettysburg Times on October 7, 1987. 

George died in 1998, leaving a wife of 23 years and several stepchildren.

Five score years later, Hockley & O’Donnell continues to thrive in Gettysburg today. It may be at a different Gettysburg address. While it has a century of history, or more, its website claims but 30+ years of existence.  We reached out to Hockley & O’Donnell for comment on this story, by e-mail, but they probably thought me nuts, and ignored my request for comment on the family.

Beth’s Bitz:

It was nice to see many of you at the DRI Insurance Coverage Claims Institute in Chicago last week.  As usual, the program featured an impressive array of speakers and topics.

As we look ahead to May, I look forward to seeing many of you at the New York State Bar Association Advanced Insurance Coverage Seminar and remind you that it’s not too early to register.  Of course, if you can’t make the meeting and would like to have us visit your offices to provide a training program developed in conjunction with the specific needs of your organization, we are always delighted to do so.  I had the great pleasure of doing so today with our good friends at Utica.

In Fitz’s Bitz, I bring you a decision from the Alabama Supreme Court who has joined the growing number of jurisdictions across the country by finding that “faulty workmanship” can constitute a covered “occurrence” under a Commercial General Liability Policy.  In Owners Insurance Co. v. Jim Carr Homebuilders, the Court withdrew its previous decision and replaced it with a decision that reached the opposite conclusion.  In doing so, Alabama joins approximately 17 other states that have held that faulty workmanship can constitute a covered occurrence under and pursuant to the terms of a Commercial General Liability Policy. 

‘Til next time,

Elizabeth A. Fitzpatrick
[email protected]

The Battle of the Bar – One Hundred Years Ago:

April 11, 1914
The Brooklyn Daily Eagle
Brooklyn, New York


Youngentab Says Jones Knocked
Him Down Outside of Courtroom


Judge Kempner Denounces “Indecent
Conduct” in hearing on Barristers’ Row

“Disgraceful” and “indecent” was the way in which Chief Magistrate Kempner, sitting in the Adams Street court this morning, characterized the behavior of Lawyer John R. Jones of 73 Willoughby Street, who was charged before him with having assaulted Lawyer Sol L. Youngentab of Rockaway Park in the hallway outside of the Sixth District Municipal court last Tuesday morning.  There had been a fistic encounter between the lawyers, and Youngentab claimed that Jones had called him “Iky, Iky”; had spat in his face, knocked him down and kicked him.  Jones is a big man, while Youngentab is small.

The case came up this morning in the Adams Street court for a preliminary hearing.  Youngentab told his story, and he had as a witness a client, who corroborated his statement.  Jones denied the charge and said that the battle was begun by the other lawyer.  He produced his client, Robert Hennessy, as a witness in his favor, and Hennessy said that Youngentab had spat in Jones’ face.

Jones refused to apologize, and Youngentab declared that he wanted the man punished.

“I’m sorry you cannot make up,” Magistrate Kempner said.  “I will be forced to hold Mr. Jones for the Special Sessions in $500 bail.”

Jones had $200 in cash and the magistrate accepted that amount as bail.

Searching for a Segue – Got It -- Since These Pugilists May Have to Kiss and Make Up:

April 11, 1914
The New York Times


German Tribunal Tells When It’s a
Caress and When an Assault.

Special Cable to The New York Times

BERLIN, April 10. – The Imperial Supreme Court at Leipzig recently supplied a long-felt want in German legal definitions, describing with great precision the nature and legal status of a kiss.  The text of this amusing judgment follows:

A kiss is an operation performed upon another’s body, requiring under all circumstances the recipient’s sanction.  Such operation may only be carried out without express permission when the one who kisses can be reasonably sure of the other’s silent consent; for instance, in the case of relatives, parents, children, lovers, and such-like.

“If, on the contrary, the recipient of the kiss resists—and that not merely for the sake of preserving appearances, but in all seriousness—then it must be held that the person so kissed regards the kiss as an illegal infringement of privilege and an assault upon honor.  Hence, whosoever under such circumstances inflicts a kiss upon another makes himself guilty of assault.  To fulfill this condition it is sufficient that the kiss be impressed against the other’s will; it is unnecessary that the recipient should feel the kiss as an insult.” 

In This Week’s Issue:


Dan D. Kohane
[email protected]

  • Proof of Mailing Amendment to the Policy Established
  • CGL Policy Provided No Coverage for Accident So Timely Disclaimer Not Necessary
  • Time on the Risk Approach Used to Allocate Defense and Indemnity in Long – Tail Lead Paint Case
  • Three Year Statute of Limitations Against Hospital for Negligent Handling of an Insurance Claim Begins to Run at The Time of the Insurance Denial
  • Is a Police Car a “Motor Vehicle for the Purposes of Uninsured Motorists Coverage?  New York High Court Accepts Second Department Case for Review


Daniel T. Hunter
[email protected]

  • Defendants Not Held Liable for Injuries Sustained in a Second Motor Vehicle Accident that are Distinguishable from the Injuries Claimed in the First Accident
  • Order Reversed Granting Defendant's Motion for Summary Judgment
  • Order Reversed as Defendants' Motion for Summary Judgment was Improperly Granted
  • Defendants' Summary Judgment Motion Properly Granted as Plaintiff Failed to Raise any Triable Issue of Fact in Opposition
  • Lower Court Improperly Grants Defendant's Motion for Summary Judgment
  • The Second Department reversed the lower court's order which granted Defendant's
  • Order Modified Denying Defendant's Motion for Summary Judgment and Finding that Plaintiff's Cross Motion for Summary Judgment  on the Issue of Liability is No Longer Academic and Therefore Granted, was reviewed by the Appellate Division for the First Time
  • Plaintiffs Order to Vacate an Order Failed
  • Defendants' Motion for Summary Judgment Should Have Been Denied as Plaintiffs Raised Triable Issues of Fact
  • Lower Court Reversed as Appellate Division Finds Defendants Failed to Meet Initial Burden in Summary Judgment Motion


Margo M. Lagueras

[email protected]


  • Criticism of Carrier That Continued to Deny Based on IMEs Previously Determined Insufficient
  • Standard for Determining Medical Necessity Not Different Depending on Result
  • Three Days of Reported Improvement Over Course of Sixteen Treatment Dates Does Not Evidence Curative or Palliative Benefits



  • Defense Base on Failure to Appear for IME is Subject to Preclusion


Steven E. Peiper

[email protected]


  • Spoliation is Not Available Where the Defendants Failed to Take Advantage of Opportunities to Inspect Items at the Time of the Loss



  • Court Streamlines Non-Party Subpoenas by Dropping Any Requirement that the Requesting Party Establish the Material Cannot be Obtained from Alternative Sources
  • Contractual Indemnity Clause Triggered by “Caused By” Language


Elizabeth A. Fitzpatrick
[email protected]

  • Alabama Says Faulty Workmanship is an Occurrence


Audrey A. Seeley
[email protected]

  • No cases this week.


Cassandra A. Kazukenus
[email protected]

  • New Insurance Regulation 168 – 11 NYCRR 244 – Confidentiality Protocols for Victims Of Domestic Violence And Endangered Individuals.
  • A8972            Amending The CPLR Passed The Assembly


Katherine A. Fijal

[email protected]

  • Insurer Did Not Participate in Settlement Conference in Good Faith


Jennifer A. Ehman
[email protected] 

  • Plaintiff Obtains Inconvenience Award Where Hertz Rental Car Overbooked


Bad Faith

  • Court Grants Summary Judgment Dismissing Bad Faith Claim Based in Excess Verdict Situation
  • Court Finds Primary Carrier Acted in Bad Faith


Earl K. Cantwell

[email protected]

  • Failure to Submit to EUO Spins Out Motorcycle Claim


That’s all for now.  Spring in here.  We hope.

Keep those cards and letters coming in.

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]
H&F Website:


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

Diane F. Bosse
Joel R. Appelbaum

Steven E. Peiper, Team Leader
[email protected]

Elizabeth A. Fitzpatrick
Cassandra Kazukenus

Audrey A. Seeley, Team Leader
[email protected]

Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

Jody E. Briandi, Team Leader
[email protected]

 Elizabeth A. Fitzpatrick

Diane F. Bosse

Index to Special Columns

Kohane’s Coverage Corner
Liening Tower of Perley
Hunter’s Hints on Serious Injury
Margo’s Musings on No Fault
Steve on Sandy, 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]

04/03/14       Preferred Mutual Insurance Company v. Donnelly
New York State Court of Appeals
Proof of Mailing Amendment to the Policy Established
Here was our summary of the Fourth Department’s decision from our November 22, 2013 edition:

11/08/13         Preferred Mutual Insurance Co. v. Donnelly
Appellate Division, Fourth Department
Split Court Finds Sufficient Proof of Insurance Company Mailing Practices to Agree that Homeowners Policy Was Amended With Lead Paint Endorsement and Finds that Endorsement Does Not Violate Public Policy
From June 1995 until December 1995, Jackson lived in a home owned by Donnelly, who had obtained a landlord's insurance policy from Preferred with annual renewals. When first issued, it did not have a lead exclusion. That exclusion was added to the policy when it was renewed in June 1994.

The court found that Preferred met its initial burden of establishing that the lead exclusion was properly added to the policy and that notice of the lead exclusion amendment was provided to the insured, Donnelly. Although many of the documents appended to the attorney affirmation were not in admissible form the affidavit from plaintiff's Office Services Supervisor was sufficient to lay a proper foundation for the business records.

On the issue of mailing, Preferred did not submit evidence that the notice of the amendment was mailed to Donnelly and Donnelly could not recall receiving the notice, however, Preferred submitted evidence in admissible form "of a standard office practice or procedure designed to ensure that items are properly addressed and mailed," thereby giving rise to a presumption that Donnelly received the notice.  There was proof of stuffing envelopes, placing them in envelopes and delivering them to the post office.

Two dissenting judges argued that there was no evidence submitted of a practice to ensure that the number of envelopes delivered to the mail room corresponded to the number of envelopes delivered to the post office but the majority did not deem the absence of such evidence fatal light of the detailed description of all of the other office practices geared toward ensuring the likelihood that the notices were always properly addressed and mailed.

Contrary to contention of the injured plaintiff, the lead exclusion does not violate public policy nor were the terms ambiguous.
Editor’s Note:  With two dissenting votes, the Court of Appeals may be the next voice speaking on this matter.

 Sure enough, the high court weighed in as expected and affirmed the determination that a standard office procedure was sufficiently established:

Specifically, the … insurer submitted an affidavit from an employee who had personal knowledge of the practices utilized by the insurer at the time of the alleged mailing to ensure the accuracy of addresses, as well as office procedures relating to the delivery of mail to the post office. Thus, the … insurer provided proper notice of the amendment to the policy upon renewal adding the relevant exclusion.

04/09/14       Maxwell Plumb Mech. Corp. v. Nationwide Prop. & Cas Ins. Co.
Appellate Division, Second Department
CGL Policy Provided No Coverage for Accident So Timely Disclaimer Not Necessary
Nationwide established that neither of two policies it issued covered the car involved in the accident at the time of the accident. The plaintiffs argued, but failed to prove, that a policy exclusion page was omitted from either policy.

Actually, both policies specifically and unambiguously excluded coverage for automobile accidents.  The court found that coverage was not available under the general liability policy so the insurer was not required to timely disclaim coverage under that policy, as its denial of coverage was based on the lack of coverage, rather than on a policy exclusion.

An E&O claim against the insurance agent/broker was also dismissed.  There was no evidence that the insured specifically asked for auto coverage.  An insurance agent or broker has a common-law duty to obtain requested coverage for a client within a reasonable amount of time or to inform the client of the inability to do so but absent a specific request for coverage not already in a client's policy or the existence of a special relationship with the client, an insurance agent or broker has no continuing duty to advise, guide, or direct a client to obtain additional coverage.
Editor’s Note:  Interesting decision, indeed.  Was a timely disclaimer necessary?  The court says “no”, so who are we to argue?

04/03/14       Karen Manor Associates LLC v. Virginia Surety Company, Inc.
Appellate Division, First Department 
Time on the Risk Approach Used to Allocate Defense and Indemnity in Long – Tail Lead Paint Case
This was a lead paint coverage case.  The court held that an issue of fact existed as to whether or not the infant plaintiff suffered an injury or sickness during the time when Virginia Surety had its policy in place. Arch, on the other hand, was entitled to summary judgment dismissing the complaint because of unrefuted proof that the lead paint condition was abated Before the Arch policy was in effect.

New York State Liquidation Bureau was acting on behalf of nonparty Villanova Insurance Company. The lower court correctly declined to apportion defense and densification cause against it because it had not yet been brought into the action.

The court relied on a First Department case decided 2007 to conclude that defense and indemnification costs should be allocated under a “time on the risk” approach. If later, The Liquidation Bureau is brought into the lawsuit, the parties can seek proportional recovery.
Editor’s Note: While the Court of Appeals has not yet ruled on the allocation of the defense costs in long-tail cases, the decision in this case is a reflection of the current trend. That is especially so in cases where carriers have agreed to contribute to defense costs, rather than avoid responsibilities for same. In cases where insurers have refused to contribute to defense costs in pending matters and another carrier is successful in a declaratory judgment action in compelling that carriers’ contribution the courts are more willing to allow the party that has paid defense cost to secure a more favorable allocation method, e.g. joint and several liability. Insurers should consider that when contemplating a refusal to participate in defending long-tail cases.

04/03/14       Lambe v. Lenox Hill Hospital
Appellate Division, First Department
Three Year Statute of Limitations Against Hospital for Negligent Handling of an Insurance Claim Begins to Run at The Time of the Insurance Denial
An odd little case; apparently the plaintiff sued Lenox Hill Hospital alleging negligence in handling a claim for insurance coverage. The insurer denied the claim in July 2005. The plaintiff did not sue Lenox Hill Hospital until June 28, 2010, more than three years after the coverage denial.  Accordingly the three-year statute of limitations had expired and the claim was dismissed.

04/01/14       Matter of State Farm Mutual v. Fitzgerald
Is a Police Car a “Motor Vehicle for the Purposes of Uninsured Motorists Coverage?  New York High Court Accepts Second Department Case for Review
We reported on this case of first impression in our November 8, 2013 edition:

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 police 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.


Daniel T. Hunter
[email protected]

03/28/14       Fanti v. Concepcion
Appellate Division, Fourth Department
Defendants Not Held Liable for Injuries Sustained in a Second Motor Vehicle Accident that are Distinguishable from the Injuries Claimed in the First Accident
The Appellate Division, Fourth Department unanimously revered the lower court's order granting Defendants' motion for summary judgment.  In reversing the order, the Appellate Division points out that Plaintiff suffered injuries from a May 2007 motor vehicle accident, and suffered separate injuries in an October 2007 incident.  Both accidents were virtually identical rear end collisions.  Since the injuries sustained in the second accident are clearly distinguishable from the injuries sustained in the first accident, Defendants cannot be held liable for injuries sustained in that second accident.

03/28/14       Heatter v. Pmowski
Appellate Division, Fourth Department
Order Reversed Granting Defendant's Motion for Summary Judgment
Plaintiff claims to have sustained a serious injury under New York Insurance Law §5102(d).  Defendant moved for summary judgment and submitted an affirmed physician's report stating that, although Plaintiff sustained a cervical strain, it had resolved within weeks of the accident.  Further, post-accident MRI films of Plaintiff's cervical spine were unchanged from prior films taken five (5) years earlier, and revealed no objective evidence of recent traumatic or causally related injury.  Plaintiff failed to rebut this evidence, and summary judgment should have been ordered.

04/01/14       Ferrara v. Middleton
Appellate Division, First Department
Order Reversed as Defendants' Motion for Summary Judgment was Improperly Granted
Defendants met their initial prima facie burden that Plaintiff did not sustain a serious injury of a permanent nature in submitting an affirmative report of an orthopedic surgeon who found that Plaintiff had full range of motion and no restrictions in activities.

In opposition, Plaintiff raised a triable issue of fact concerning a significant limitation and a permanent consequential limitation with respect to his left shoulder.  An MRI and surgical reports of Plaintiff's orthopedic surgeon demonstrated objective evidence of a superior labrum anterior and posterior tear.  As such, Defendants' motion fails, and the order granting Defendant's motion for summary judgment is reversed.

04/02/14       Mohamed v. Blackowl
 Appellate Division, Second Department
Defendants' Summary Judgment Motion Properly Granted as Plaintiff Failed to Raise any Triable Issue of Fact in Opposition
Defendants made a motion for summary judgment claiming that Plaintiff did not sustain a serious injury under New York State Insurance Law §5102(d) as a result of a motor vehicle accident.  Defendants' met their prima facie burden showing that Plaintiff did not sustain a serious injury in submitted competent medical evidence establishing that Plaintiff's alleged injuries to the cervical and lumbar spines did not constitute serious injuries under either the permanent consequential limitation of use or a significant limitation of use categories.  Further, evidence was submitted that Plaintiff did not sustain a serious injury under the 90/180 day category.

Since Plaintiff failed to raise a triable issue of fact in opposition to Defendants' motion, the lower court properly granted Defendants' motion for summary judgment.

04/02/14       Pirayatamwong v. Ronbeck
Appellate Division, Second Department
Lower Court Improperly Grants Defendant's Motion for Summary Judgment
The Second Department reversed the lower court's order which granted Defendant's motion for summary judgment.  The Defendant did meet the initial burden by submitted competent medical evidence establishing that Plaintiff's alleged spinal injuries did not constitute serious injuries under any category of Insurance Law §5102(d).  However, the Second Department, without going into detail, noted that Plaintiff raised triable issues of fact as to whether he sustained a serious injury to the cervical and lumbosacral regions of his spine.  As such, the lower court's order was reversed.

04/02/14       Sanclemente v. MTA Bus Co.
Appellate Division, Second Department
Order Modified Denying Defendant's Motion for Summary Judgment and Finding that Plaintiff's Cross Motion for Summary Judgment  on the Issue of Liability is No Longer Academic and Therefore Granted, was reviewed by the Appellate Division for the First Time

An order from the Supreme Court, Queens County granted Defendant's motion for summary judgment, rendering Plaintiffs' motion for summary judgment purely academic.  The Appellate Division, Second Department found that Plaintiff never met the prima facie burden as their attempts to prove Plaintiff's injuries were not caused or exacerbated by the subject matter accident failed.  As such, it is unnecessary to determine whether Plaintiff's papers raised a sufficient triable issue of fact since Defendant failed to meet the initial burden.

Plaintiff's cross motion for summary judgment, being no longer academic, was viewed for the first time by the Appellate Division.  Plaintiff's cross motion was denied since Defendant raised a triable issue of fact regarding whether or not Plaintiff's comparable negligence was a factor in the motor vehicle accident.

04/02/14       Silva v. Honeydew Cap Corp.
Appellate Division, Second Department
Plaintiffs Order to Vacate an Order Failed
Defendants move for summary judgment claiming Plaintiffs did not sustain a serious injury as a result of a motor vehicle accident.  Since Plaintiffs failed to oppose Defendants' motion, the lower court granted Defendants' summary judgment motion and dismissed Plaintiff's complaint.

Plaintiff attempted to vacate the order, and in doing so, is required to demonstrate both a reasonable excuse for the default and a potentially meritorious opposition to the motion.  Whether or not an excuse is reasonable is a determination within the discretion of the Supreme Court, and, the Appellate Division found the Supreme Court exercised its discretion in refusing to accept Plaintiff's explanation for failing to oppose Defendants' motion.  As such, the Appellate Division affirmed the Supreme Court's order.

04/02/14       Will v. Potocka
Appellate Division, Second Department
Defendants' Motion for Summary Judgment Should Have Been Denied as Plaintiffs Raised Triable Issues of Fact

The Appellate Division reversed the lower court's granting of Defendants' motion for summary judgment.  Although Defendants met their prima facie burden in showing that Plaintiff did not sustain a serious injury, Plaintiff did raise triable issues of fact as to whether he sustained a serious injury to his right shoulder, and whether that alleged injury was caused by the accident.  Accordingly, the lower court should have denied Defendants' motion.

04/02/14       Doulos v. Revera
Appellate Division, Second Department
Lower Court Reversed as Appellate Division Finds Defendants Failed to Meet Initial Burden in Summary Judgment Motion

The Appellate Division reversed the lower court's finding granting of Defendants' Motion for Summary Judgment.  The Appellate Division notes that Defendants failed to meet their prima facie burden of showing that Plaintiff did not sustain a serious injury within the meaning of Insurance Law §5102(d) as a result of the subject matter motor vehicle accident.  The papers submitted by Defendants failed to adequately address Plaintiff's claim as set forth in Plaintiff's bill of particulars, particularly that he sustained a serious injury under the 90/180 category of Insurance Law.  Since the Defendants did not meet their initial burden, the Appellate Division notes that it is unnecessary to determine whether the papers submitted by Plaintiff in opposition were sufficient to raise a triable issue of fact.


Margo M. Lagueras
[email protected]


03/24/14       RES Physical Medicine & Rehab. Services v Geico Ins. Co.
Erie County, Arbitrator Douglas S. Coppola
Criticism of Carrier That Continued to Deny Based on IMEs Previously Determined Insufficient
In a prior arbitration on a related claim, Arbitrator Benziger determined that the IME reports upon which denials were based were, for a number of reasons, insufficient to support those denials.  Nevertheless, Respondent used the already rejected IMEs to continue to deny subsequent claims.  Applicant argued that the denials were issued in bad faith.  The Arbitrator noted that such conduct was not appropriate claims handling and that Respondent was clearly acting in an adversarial manner towards both its insured and the medical provider in continuing to deny treatment based upon rejected rationales. 

The Arbitrator also noted, as he has on numerous occasions, that Dr. Christopher Grammar is an anesthesiologist and his resume does not indicate that he has any credentials in the field of physical medicine and rehabilitation.  Therefore, the dates of treatment in dispute that were denied based on the “pain management evaluation” performed by Dr. Grammar were also improperly denied.  Furthermore, Respondent apparently did not provide Applicant or Applicant’s counsel with a copy of said report, even when specifically requested.  The Arbitrator stated that even if he had found Dr. Grammar’s report to be sufficient, which he did not, he would preclude it from consideration given Respondent’s refusal to disclose it. 
Note:  Truly an unfortunate example that only serves to bolster insurance carriers’ critics.

03/19/14       WNY MRI, LLP v National Interstate Insurance Co.
Erie County, Arbitrator Michelle Murphy-Louden
Standard for Determining Medical Necessity Not Different Depending on Result
At issue were cervical, lumbar and right shoulder MRIs performed one month after the accident.  The initial hospital examination was of the EIP’s neck and thoracic spine with no acute findings.  Two days later the EIP presented to a different hospital complaining of neck and right knee pain, but denying numbness, tingling or weakness.  He stated he wanted a collar and that his attorney directed him to go to the hospital.  Two weeks later, he had an initial consultation with Dr. Williams complaining of neck pain radiating to the right shoulder with tingling in the right shoulder and arm.  He also stated that the pain in his mid and lower back had subsided somewhat.  Dr. Williams diagnosed acute cervical and lumbar strain and acute right shoulder strain and recommended the MRIs, chiropractic and physical therapy.  The MRIs were performed, revealing some conditions.  Just over two years after the accident, the EIP underwent an orthopedic IME.  He told the IME doctor that he was scheduled for cervical surgery and the IME doctor opined that the EIP would benefit from the surgery.

Respondent had requested a peer review to determine the medical necessity of the MRIs about three weeks after they were performed.  The peer reviewer found no medical necessity for the cervical MRI as no treatment had been provided prior and there were no red flags or conditions warranting an MRI at that time.  With respect to the lumbar and shoulder MRIs, he noted that no complaints had been noted in the ambulance report or the ER records.  He reasoned that if an injury had occurred, some discomfort would have been reported.  The peer reviewer therefore determined that the lumbar and shoulder MRIs were not causally related to the accident. 

The Arbitrator found the peer review persuasive and that Applicant failed to offer any rebuttal.  She disagreed with Applicant’s argument that the medical necessity of the cervical MRI was established because there were positive results and that the IME doctor had the burden of “explaining away” the positive results.  The Arbitrator noted that insurers are only liable for the payment of medical expenses that are reasonable and necessary.  She pointed out that had the findings been normal, Applicant would have argued the reverse, as he had numerous times in other matters, that the pre-examination findings justified the test.  She stated that what she considers relevant is the pre-examination findings which lead the doctor to prescribe the MRI, not the results of the MRI. 

In this case, Dr. Williams failed to give any actual range of motion values and his neurological exam was normal.  The Arbitrator reasoned that Dr. Williams clearly was not overly concerned by the MRI results because he referred to physical therapy and chiropractic at the same time.  Furthermore, the surgery performed almost two years after an MRI did not serve to render the MRI medically necessary.  With respect to the lumbar and should MRIs, the arbitrator noted that the peer reviewer’s conclusion of lack of causal relationship was based on the lack of any notation in the EMS or hospital reports.  In fact, the first mention of lower back and right shoulder pain was in Dr. Williams’ report from two weeks before the MRIs in which he stated that the EIP was complaining of pain in the neck, lower back and should since the accident.  The Arbitrator found this statement to be unsupported by the records and that Dr. Williams performed only cursory examinations and did not review the EMS or hospital records prior to causally relating the conditions to the accident.  As a result, the claims were denied.

03/19/14       Rochester Chiropractic Assocs., PC v 21st Century Ins. Co.
Erie County, Arbitrator Michelle Murphy-Louden
Three Days of Reported Improvement Over Course of Sixteen Treatment Dates Does Not Evidence Curative or Palliative Benefits
Applicant sought reimbursement for chiropractic treatment rendered from December 16, 2011 to April 30, 2012, for injuries allegedly sustained in an accident on November 16, 2009.  The EIP began treatment with Applicant on March 30, 2010, and underwent lumbar and cervical MRIs, which were essentially unremarkable, about a month later.  In August 2010, The EIP also presented for an orthopedic consultation with Dr. Fishkin who recommended continuing with chiropractic.  Chiropractic treatment continued twice a week and the EIP continued with constant complaints documented in a re-evaluation performed in October 2011.

In July 2010, a chiropractic IME was performed.  It was noted that a prior exam had been performed two months earlier.  At the time of the July exam, the EIP was complaining of neck and low back pain, radiating pain and numbness in the left leg and left finger.  The cervical examination revealed no spasm, mild tenderness, some range of motion restrictions and some positive test results. 

The examination of the thoracic spine was normal, and the lumbar examination revealed no spasm, mild tenderness, some degrees of restriction with pain and some positive tests.  The EIP was diagnosed with resolving cervical and lumbar sprain/strain, and resolved thoracic sprain/strain.  The IME doctor performed an IME addendum in October 2010 in which he opined that, despite positive findings, the EIP had reached an end result with chiropractic and referred to orthopedic treatment.

To rebut the opinion that the EIP had reached an end result with respect to chiropractic, it had to be documented that the disputed treatment was providing either curative or significantly quantifiable palliative benefits.  In support of his claim for the time period in dispute, Applicant only submitted daily SOAP notes.  In denying the claim, the Arbitrator noted that Applicant’s SOAP notes only documented three days of reported improvement over the course of sixteen treatment dates, and no findings of objective improvement.  This was not evidence of either curative or palliative benefits.  In addition, the reports from Dr. Fishkin recommending a continuation of chiropractic treatment were dated long before the dates in dispute and there was no indication that Dr. Fishkin ever recommended continuing chiropractic care after December 2010.



03/11/14       Clinton Place Medical, PC v New York Cent. Mut. Fire Ins. Co.
Appellate Term, Second Department
Defense Base on Failure to Appear for IME is Subject to Preclusion
As with any non-coverage defense, the defense of failure to appear for a properly scheduled IME does not support denial if the denial is not timely issued.  On appeal, the court found that defendant’s motion to dismiss plaintiff’s first, second and fifth causes of action should have been granted where defendant submitted an affidavit from an employee of the company retained to schedule the IMEs showing that the letters were timely and properly mailed.  Contrary to the Civil Court’s holding, such letters did not need to also be mailed to plaintiff and defendant should have been granted summary judgment on those causes of action.  However, with respect to plaintiff’s third, fourth, sixth and seventh causes of action, defendant was not entitled to summary judgment because its defense, that plaintiff’s assignor failed to attend the IMEs, was not raised in timely denials.  As a result, plaintiff was entitled to reimbursement of those causes of action.

Steven E. Peiper
[email protected]


04/03/14       Markel Ins. Co. v Bottini Fuel
Appellate Division, Third Department
Spoliation is Not Available Where the Defendants Failed to Take Advantage of Opportunities to Inspect Items at the Time of the Loss
Plaintiff Markel commenced the instant subrogation claim after its named insured, Camp Simcha, sustained a significant fire loss in 2001.  During the origin and cause investigation, it was revealed that the fire must have started at, or within, two laundry dryers.

Plaintiff commenced the instant action against Bottini, as the installer of the dryers, shortly after the fire loss.  However, in 2006, Markel amended its Complaint to assert claims against Bermil Industries and Wascomat.  Bermil/Wascomat were the distributors of the dryers, and as such presented a joint, unified defense.  In 2012, Bottini and Wascomat both moved for dismissal based upon a spoliation allegation.  In the alternative, the parties also moved for summary judgment against Markel. 

Defendants argued that Markel’s failure to preserve the dryer, and more particularly certain component parts, prejudiced their respective abilities to mount an appropriate defense to the claim.  The Court immediately rejected Bottini’s spoliation claim where they were present at the fire scene before it had been disturbed, and also conducted a second examination several months later.  As such, there was no basis to conclude that Bottini had been prevented from properly investigating the claim.

The Wascomat motion to dismiss was also rejected by the Court.  The Record demonstrated that Wascomat was notified of the loss shortly after it occurred, and offered multiple opportunities to inspect the premises.  Having elected to decline plaintiff’s offer to inspect, there was no basis to later argue that evidence was not properly preserved. 

Wascomat’s summary judgment was denied on a question of fact.  Even though Wascomat produced an expert affidavit that insisted the loss did not arise from the dryers at issue, the Court noted the installer of the dryer testified that the unit was not working properly and, in fact, advised Camp leaders that the dryer should not be used.  In addition, the Court also noted that the dryer was being used, despites its warnings to the contrary, on the evening before the fire.  Accordingly, Markel had presented enough evidence to garner a question of fact on the ignition source of the loss.

The Court also noted that plaintiff had established a viable question of fact over whether Wascomat was responsible for the loss under a breach of warranty theory.  While the Court acknowledges that the Camp continued to use the dryer after it was warned of the dangers of doing so, dispostive relief was not appropriate where, as here, it was foreseeable that people would still attempt to use a dryer that was malfunctioning, yet remained operational.

With respect to Bottini’s motion for summary judgment, the Court affirmed dismissal of plaintiff’s breach of warranty claim because “no warranty attaches to the performance of a service.”  Bottini’s involvement with the dryer in question was limited to installation and repair services.  Where, as here, it was established that the dryer was properly installed, it follows that no breach of warranty claim existed.

In addition, the remaining claim against Bottini was likewise dismissed because there was no evidence demonstrating that Bottini had acted negligently.  Bottini’s role was to connect the dryer to the existing gas lines via new fittings.  After attaching the lines, Bottini confirmed that there were not gas leaks.  With respect to the limited service, Bottini recognized that the dryer was not working properly and diagnosed the problem as something that needed to be addressed by Wascomat.  It undertook no efforts to repair the dryer other than following step-by-step instructions prepared by Wascomat.  Therefore, where plaintiff could not point to any specific act that was allegedly negligent, all remaining claims against Wascomat were dismissed.


04/03/14       Kapon v Koch
Court of Appeals
Court Streamlines Non-Party Subpoenas by Dropping Any Requirement that the Requesting Party Establish the Material Cannot be Obtained from Alternative Sources
Petitioner Capon is an officer in AMC which is a retailer and auctioneer of fine and rare wines.  In 2008, Koch commenced an action against AMC alleging that five bottles of wine he had purchased from AMC were counterfeit.  Thereafter, in 2009, Koch also commenced a proceeding in California against non-party Kurniawan.  Koch alleged that certain wines purchased from Kurniawan, through AMC, were counterfeit.

The instant dispute stems from a non-party subpoena that Koch served upon AMC as part of Koch’s California action against Kurniawan.  AMC immediately moved to quash the Koch subpoena on the basis that it was facially defective, while also seeking a protective order seeking to avoid, or at least limit, the application of a non-party deposition to the California lawsuit only. 
In reviewing the matter, the Judge Pigott, writing for a unanimous Court, began by reviewing the history of the non-party subpoena provision as codified at CPLR 3101(a)(4).  Prior to a 1984 amendment, the CPLR required an entity seeking non-party disclosure to obtain a court order premised upon a showing of “adequate special circumstances.”   With the amendment in 1984, non-party subpoenas were permitted without leave of court, and also permitted discovery of items that were only “material and necessary” to the prosecution (or defense) of the matter.   However, to assist the party from whom discovery was sought, a non-party subpoena must identify “circumstances or reasons” as to why the disclosure is sought.

Over the years, a split developed among the Appellate Division Departments  regarding the appropriate standard to use when assessing if the subpoenaing party had established sufficient circumstances or reasons for the request.  The First and Fourth Departments, respectively, adopted the traditional “material and necessary” standard which permits discovery so long as the items are relevant to the matter at hand.  The Second and Third Departments, however, required a showing that the items sought were “material and necessary,” as well as evidence that the requested disclosure could not be obtained from another source. 

The Court of Appeals resolved the dispute among the Appellate Divisions by definitively adopting the “material and necessary” standard previously endorsed by the First and Fourth Departments.  In so holding, the Court noted that 3101 subpoenas should be liberally interpreted to require production of discovery that will “assist in the preparation for trial by sharpening the issues.”   In other words, as long as the items sought are relevant, they must be provided.  The Court went on to hold that applications to quash a non-party subpoena should only be grated where the request is obviously futile or where it is obvious the information sought is “utterly irrelevant to any proper inquiry.”    

Nonetheless, the Court also reminded the subpoenaing party that it must include a description of the “circumstances or reasons” why the discovery is requested.  Failure to satisfy this requirement may lead to the dismissal of the subpoena due to a facial insufficiency. 

04/08/14       Cerverizzo v City of New York
Appellate Division, First Department
Contractual Indemnity Clause Triggered by “Caused By” Language
Plaintiff commenced this action after he allegedly sustained injury due to inhalation of toxic fumes at the Hunts Point Sewage Treatment Plant.  Essentially, plaintiff was working in a large cement tank that was used to aerate and clean sewage.  Under the Industrial Code, owners are required to monitor air quality conditions of confined spaces.  Here, the Court found that the tank in question was a “confined space.”  Nonetheless, the Court found a question of fact on whether the tank was properly monitored by defendant.

For the same reasoning, NYC’s motion to dismiss Labor Law 200/Common Law Negligence claims was also denied on a question of fact.

In addressing NYC’s contractual indemnity claim against plaintiff’s employer, the Court noted that the broad indemnity language contemplated NYC’s protection in this claim.  That clause provided indemnity for losses arising out the Subcontractor’s work, whether “caused in whole or in part by the Subcontractor.”  Moreover, as the clause appears to have had “savings language,” it was not invalid under New York 5-322.1  

Elizabeth A. Fitzpatrick
[email protected]

03/28/14       Owners Insurance Company v. Jim Carr Homebuilder, LLC
Alabama Says Faulty Workmanship is an Occurrence
The Supreme Court of Alabama, on an application for rehearing, withdrew its opinion of September 20, 2013 and substituted a decision finding that Owners was obligated to pay an arbitration award entered against Jim Carr Homebuilder under the terms of a Commercial General Liability Policy.  The pertinent facts underlying the coverage issue are as follows. 

Thomas and Pat Johnson contracted with Jim Carr Homebuilder, a licensed homebuilder, for the construction of a new house.  They paid approximately $1.2 million for the design and construction of the home and took possession in early February 2007.  Within a year, they noted problems with the house relating to water leaking through the roof, walls and floors resulting in water damage.  They notified Jim Carr and Jim Carr evidently made some efforts in an effort to remedy the issues.  Evidently, dissatisfied, the Johnsons brought suit alleging breach of contract, fraud, negligence and wantonness. 

Jim Carr had a CGL policy issued by Owners.  They submitted a claim with Owners requesting that it provide defense and indemnity in connection with the Johnson’s claims.  Owners hired counsel to defend Jim Carr, while reserving its right to withdraw, if it later determined the claims were not covered under the policy.  Owners moved in the Trial Court seeking intervention for the limited purpose of determining whether there was coverage for the claims.  The Trial Court declined to rule on the motion, but invited Owners to reapply at the appropriate time.  Instead, Owners thereafter filed a declaratory judgment action.  Ultimately, the claims as between the Johnsons and Jim Carr were determined through an arbitration proceeding and the Johnsons were awarded some $600,000.  The day after the award was returned in the underlying case, the Johnsons moved for summary judgment in the declaratory judgment action.  Owners cross moved.

The central argument was one that has been litigated in courts throughout the country, to wit, whether the property damage was the result of an “occurrence” under the terms of the policy, as the policy applied only if bodily injury or property damage was caused by an occurrence.  Occurrence was defined, as it typically is, as an accident, including continuous or repeated exposure to substantially the same general harmful conditions.  Citing a prior decision and opining that the issue of whether poor workmanship can lead to an occurrence is dependent upon the nature of the claim, the Court opined that faulty workmanship itself, while not an occurrence, may lead to an occurrence if it subjects personal property or other parts of the structure to continuous or repeated exposure to some other general harmful condition and that as a result damage results.  The Court concluded that the policy did not define an occurrence in terms of the ownership or character of the property damage and that as such, no logical basis allowed for distinguishing between damages to the insured’s work and damage to some third-party’s work or property.  The Court further noted that the Owners’ policy, like other standard CGL policies, was intended to insure the builder from losses resulting from its negligence while engaged in the process of performing the construction work for which it was hired.  Absent the purchase of completed operations coverage, once the builder’s ongoing operations came to an end, it was not the intent of the Owners.’ policy to insure them against claims for damage to the home arising from exposure to harmful conditions made possible by faulty workmanship previously performed. 

The Court also discussed the inclusion of the “your work” exclusion which excludes property damage to your work arising out of it or any part of it and included in the products completed operation hazard.  The Court noted that in order for the “your work” exclusion to apply, the damage must not only be to “your work,” but also must be “included” in the products completed operations hazard. 

What is included in the products completed operations hazard?  Generally speaking products that have left the insured’s possession or work that has been completed are included in the hazard.  However, the products completed operations hazard specifically does not include bodily injury or property damage arising out of “products or operations for which the classification, shown in the declarations, states that products-completed operations are included.”  The opinion of the Court continued by noting:  “Simply put, the “your work” exclusion applies if and only if the policy’s declarations fail to show any coverage for products completed operations.  That is not the case here.” 

As the Court determined that Owners had agreed to provide $4,000,000 in coverage for products completed operations, this nullified and rendered inapplicable the “your work” exclusion here.  The Court thus found that Owners must indemnify Jim Carr for the judgment entered against it. 



Audrey A. Seeley
[email protected]

No cases this week.

Cassandra A. Kazukenus
[email protected]

New Insurance Regulation 168 – 11 NYCRR 244 – Confidentiality Protocols for Victims Of Domestic Violence And Endangered Individuals.
DFS has implemented a new regulation, Regulation 168, which sets forth protocols for the protections of families who are victims of domestic violence.  The regulation applies to any policy issued pursuant to the Insurance Law, and there are some additional requirements for accident and health insurers.

Under the new regulation, an insurer must develop and implement a confidentiality protocol where the insurer keeps confidential and may not disclose the address and telephone number of victims of domestic violence or any child residing with the victim to a policyholder or another insured covered under the policy.  This applies where the victim has a valid order of protection delivered to the insurer or a valid order of protection pursuant to Ins. Law §2612(f) and (g).

The confidentiality protocol must include written procedures to be followed by an insurer’s employees, agents, representatives or other persons whom the insurer contracts with and who may have access to the information which should be kept confidential.  The procedures must include:

  • The procedure by which a victim of domestic violence or a covered individual may provide an alternative address, phone number or method of contact
  • The procedure for limiting access to personally identifying information such as the name, address, phone number and social security number of a victim or covered individual
  • The procedure for limiting or removing personal identifiers before information is used or disclosed where possible
  • A system of internal controls that are reviewed annually that ensures the confidentiality of the addresses, phone numbers, contact information, the fact that an order of protection was delivered


Further, an insurer must notify its employees, agents, representatives and other persons with whom it contracts that the protocol is to be followed within 3 business days after receiving a valid order of protect, alternative address, phone number or other method of contact.

A8972           Amending The CPLR Passed The Assembly

The Assembly recently passed Legislation which seeks to amend the CPLR by allowing a party that files papers in connection with a motion to incorporate by reference only those papers which had previously been filed electronically with the court.  Of course, this only applies in e-filed cases.  The filing attorney must make reference to the document by giving the docket number on the e-filing system associated with the referenced papers.

Katherine A. Fijal
[email protected]

03/14/14       Grenion v. Farmers Insurance Exchange
United States District Court, Eastern District of New York
Insurer Did Not Participate in Settlement Conference in Good Faith
Before the court was an application by plaintiff, Bryon Grenion, for the imposition of costs and sanctions upon Farmers Insurance Exchange [“FIE”] based upon its purported failure to participate in a court mandated settlement conference in good faith. 

As part of a Scheduling Order, the parties were directed to complete Phase I discovery which was designed to prepare the parties to engage in reasoned settlement discussions. The Scheduling Order set a date for a settlement conference and directed that “clients or other persons with full settlement authority must be present at the conference”.  This directive repeated a requirement contained in the court’s Individual Rules that states that Attendance of the Parties is Required” - parties with full and complete settlement authority are required to personally attend the conference.  Stating further, that an insured party shall appear with a representative of the insurer authorized to negotiate, and who has full authority to settle the matter.

Approximately two weeks before the conference FIE requested an adjournment “to a date after plaintiff’s deposition” – when the Scheduling Order was drafted defendant stated that it did not need a deposition.  FIE stated that without the deposition FIE would not be prepared to make a settlement offer. The court denied the adjournment, directing instead that the parties shall hold plaintiff’s deposition prior to the conference. The deposition was held the day before the conference.

In house counsel for FIE attended the conference. At the start of the conference the court was advised that FIE had a process whereby there was an analysis of the facts and the law and that a decision had been made that FIE would not make an offer to settle. Further, the court was advised that counsel present for FIE did not have authority to change that decision notwithstanding any additional information that would be raised at the conference.  Any information would have to go back to the FIE process for additional consideration. 

The principal question presented to the court was whether FIE’s provision of a corporate representative who came to the settlement conference with authority of “zero” and was not authorized to change that position on behalf of FIE, and had no ability to contact anyone with such authority, constituted good-faith compliance with this Court’s rule and orders.

FIE argued that it should not be sanctioned for declining to make a settlement offer at the Settlement Conference.  Although the court agreed that FIE was correct in that a court may not try to coerce parties into settlement, and the imposition of a sanction upon a party for failing to make or accept a settlement offer is impermissible, the court determined that FIE’s argument missed the point.  The court stated that the issue was not whether FIE failed to make an offer – the issue was whether defendant failed to participate in good faith in the mandatory settlement conference.  The court continued by noting that the unambiguous court rules and order directed defendant to produce “a representative of the insurer authorized to negotiate, and who has full authority to settle the matter.” 

Full Settlement Authority” was interpreted to mean that the corporate representative attending the conference was required to hold a position within the corporate entity allowing him to speak definitely and to commit the corporation to a particular position in the litigation.  The court pointed out that it did not view authority to settle as a requirement that the corporate representative must come to court willing to settle on someone else’s terms, but only that they come to court in order to consider the possibility of settlement.

In rendering its decision that FIE did not act in good faith the court analyzed case law available in other jurisdictions and also found that the circumstances preceding the settlement conference provided important context.  Based on the record, the court determined that FIE made a decision in advance of the conference that “the ceiling was zero” and endeavored to derail the court’s effort to facilitate reasoned settlement discussion among the parties.  As part of this effort, FIE requested an adjournment of the conference predicated on the fact that it had not deposed the plaintiff.  Further, notwithstanding that FIE did obtain a deposition of the plaintiff, defendant maintained the “no pay” position.  The court did note that although FIE was within its right to take a no pay position, it dispatched a representative to the settlement conference with illusory settlement authority.  When questioned by the court the FIE representative acknowledged that he was not in a position to change the decision of the company that they would not pay any money on the case. No matter what facts, evidence, or issues arose during the conference, the FIE representative lacked authority to change FIE’s position or settle the case for so much as ten cents. 

The court found it significant that FIE had a process on any case and there were no exceptions. The court found that although FIE did follow that process in this case, a corporation cannot implement an internal process or policy that excuses it from compliance with court orders. 

Based on the record, the court found that FIE did not act in good faith in connection with the court-mandated settlement conference.  In fact, the court found the opposite to be true because FIE’s unilateral action rendered the settlement conference superfluous. The Court found that FIE’s efforts undermined the court’s process, imposing unnecessary costs upon its adversary and wasting the resources of the court.  Accordingly, the court found that FIE acted in bad faith, and awarded expenses and sanctions under Federal Rules of Civil Procedure, §16(f).

The court also considered whether additional sanctions would be awarded under Rule 37(b)(2).  The court determined that several factors weighed in favor of imposing additional sanctions; however, given the early stage of the proceedings and given the fact that this episode represented FIE’s first transgression in this case, Rule 37 sanctions were too severe and inappropriate at this junction. 

Jennifer A. Ehman
                                             [email protected] 

03/24/14       Crawford v Hertz
Civil Court of the City of New York, New York County
Plaintiff Obtains Inconvenience Award Where Hertz Rental Car Overbooked
In a win for the little guy, Jeremy Crawford made a reservation at Hertz for a car for the Thanksgiving holiday, 45 days in advance.  When he arrived at the designated time, he was informed that Hertz overbooked.  Two hours later, Hertz offered to reduce his charge if Crawford would go to Hoboken or Hackensack where it could not guarantee a car would be available.  While Crawford did not incur any out of pocket expenses, he missed the holiday with his family. 

Hertz did not appear in this action, and an inquest was held in its absence.  The court found that although damages are not recoverable for mental anguish in an action for breach of contract, actual damages for “inconvenience, delay and uncertainty” are available even in the absence of out-of-pocket costs.  Crawford was awarded $500 for inconvenience. 

Bad Faith

04/08/14       General Motors Acceptance Corp. v New York Cent. Mut. Fire Ins. Co.
Appellate Division, First Department
Court Grants Summary Judgment Dismissing Bad Faith Claim Based in Excess Verdict Situation
This decision arises out of an excess verdict rendered in the underlying action.  Plaintiffs, the defendant’s insured and the excess carrier, brought this action alleging bad faith on the part of the primary carrier for failure to settle within the policy limits. 

In reversal the trial court’s denial of defendant’s motion for summary judgment, based on the long established Pavia standard, the court found that the record did not present conduct that constitutes a "gross disregard" by defendant of plaintiffs’ interests.  While there was some indication that damages could be significant if the medical records substantiated the underlying plaintiff's claim of loss of smell from a severe blow to the head, the record established that defendant's investigation presented a great deal of medical evidence tending to show that the underlying plaintiff's injuries were primarily preexisting soft tissue injuries unrelated to the automobile accident.  Defendant's investigation included the medical opinion of four physicians that conducted independent medical examinations; one psychologist who conducted a review of the extensive medical records; experienced defense counsel; and separate monitoring counsel for the damages trial. The review of the numerous medical records, which included contradicting evaluations of the underlying plaintiff's treating physicians, provided a justifiable basis to fairly evaluate potential damages and assess the relative risks of declining to offer a settlement of the policy limit.

Given this evaluation, defendant’s actions did not amount to bad faith. In hindsight, it is evident that defendant's failure to make a settlement offer of the policy limit was not prudent. However, "[a]n insurer does not breach its duty of good faith when it makes a mistake in judgment or behaves negligently." 

03/31/14       Quincy Mutual Fire Insurance Co. v. New York Central Mutual Fire Insurance Co.
United State District Court, Northern District of New York
Court Finds Primary Carrier Acted in Bad Faith
This is a long summary, but worth the read.  New York Central issued a personal auto policy to Randolph Warden with limits of $500,000, and Quincy Mutual issued a $1 million excess policy. 

On November 21, 2000, Warden was involved in a motor vehicle accident caused by a failure to yield the right-of-way at an intersection.  As a result, Peggy Horton, the driver of the other vehicle, sustained personal injuries.  Warden was ticketed as a result of the accident and pled guilty.

When a lawsuit was brought, New York Central assumed the defense of Warden and assigned counsel.  Notice was also provided to Quincy Mutual, who assigned a monitoring adjuster. The complaint alleged that Warden had negligently caused the accident which resulted in the plaintiff suffering serious injuries and sought $1 million.  At the time of the accident, Horton was thirty-seven years old, married mother of three children, and had been employed as a licensed practical nurse. Following the accident, she no longer was able to work as a nurse or at any other type of employment.  Also, as a direct result of the injuries, she ultimately underwent six separate surgeries, including:  a spinal fusion cage surgery at L4-L5 level; insertion of screw instrumentation at L4-L5 level due to lumbar instability at the fusion sight caused by nonunion; repair to an incarcerated incision hernia of the lower abdomen; removal of a percutaneous pedicle screw instrumentation at L4-L5, disc fusion surgery at L5-S1; and repair of a ventricle incision hernia of the lower abdomen caused by an earlier surgery.  In addition to these surgeries, the Horton also suffered mentally, claiming depression and post-traumatic stress disorder.  Below is a brief summary of the litigation:

  • On December 18, 2003, Horton underwent an IME. The IME made findings that the radical tear, two fissures and herniation of the L4-5 disc were a direct result of the subject motor vehicle accident, Horton’s surgical fusions were medically necessary, Horton was unable to return to her job as a nurse, Horton had not reached maximum medical improvement; and she had a scar due to surgical trauma, which was significant.
  • On November 4, 2004, defense counsel wrote to the adjuster at New York Central, advising that a partial motion for summary judgment had been filed on the issue of liability and serious injury. The letter predicted that liability would be assessed against Warden, even if the motion was not granted.
  • On May 18, 2005, Horton’s summary judgment motion was granted on the issue of liability and serious injury.
  • In a letter dated May 25, 2005, defense counsel expressed his view that there was not much basis for appeal. Notwithstanding, an appeal was authorized by New York Central.
  • On December 14, 2005, the adjuster authorized defense counsel to offer $75,000 to settle the case. This was the first settlement offer approved by New York Central.
  • In December of 2005, Horton’s attorney indicated that he would accept the $500,000 policy limit. Of note, at that point, he was not aware of the excess policy.
  • In January 2006, Horton’s counsel, for the first time, learned of the excess policy. Despite this knowledge, he did not withdraw the $500,000 demand.
  • On August 3, 2006, the summary judgment’s determination was affirmed by the Third Department.
  • On February 12, 2007, expert reports were exchanged and the experts provided by Horton’s counsel opined that as a result of the injuries sustained in the motor vehicle accident, Horton was permanently and totally disabled.  She also lost approximately $200,000 in past wages and would realize losses of over $1million in future wages. This was in addition to future life care costs of between $2 million and $4 million. 
  • In early 2007, the insured retained personal counsel to monitor the action.
  • On May 23, 2007, defense counsel wrote to New York Central advising that the excess carrier did not intend to contribute to the settlement until the New York Central policy was tendered.
  • In late May 2007, defense counsel also submitted his own disclosures which included the report of a vocational rehabilitation expert. In that report, there was estimation that Horton had 17.9 more years to work and that she had pre-injury earning capacity of $557,265 as a nurse. At this point, while New York Central increased its reserve, it did not increase its offer. 
  • In June 2007, a pretrial conference occurred.  It came to light that the insured’s retained IME physician had encountered disciplinary problems and was no longer permitted to perform surgeries as a result of malpractice.  Also, Horton was awarded SSD and was being treated for significant depression.
  • Following this conference, defense counsel wrote to New York Central advising that the judge felt the current offer of $75,000 was low in light of the injuries.  In addition, counsel for Horton issued a bad faith letter.
  • At the second pretrial conference in June of 2007, Horton’s counsel advised that he had authority from his client to accept an offer of $750,000; however, New York Central maintained its $75,000 settlement position. At this point, defense counsel openly advised New York Central that it should tender the $500,000 policy.
  • In addition, the insured’s personal counsel expressed his belief to New York Central that it was highly likely that the verdict would exceed both the limits of the primary and excess coverage.  He also asked New York Central directly to tender the policy in good faith.
  • In January of 2008, defense counsel was stipulated out and replaced with a more experienced trial lawyer.
  • In anticipation of the trial, on May 11, 2009, a supplemental IME was performed which did little to negate the Horton’s positive findings.   
  • Finally in September 2009, New York Central increased its offer to $200,000 and then shortly thereafter tendered the policy limit.
  • Upon that tender, the excess carrier offered $250,000 to settle the case. This was rejected and the case was ultimately settled for close to $1.1million plus interest from 2005, which amounted to around $400,000.
  • Quincy Mutual then brought this action seeking to recover the $1 million it paid to settle the case. 


To prevail in this action, in addition to demonstrating a breach of the duty of good faith owed by New York Central, the excess insurer also needed to establish a causal link to the damages claimed.

In considering the settlement negotiations, the court divided them into two distinct periods, one in which plaintiff’s counsel would have accepted $500,000 and the other in which he would have accepted $750,000. In relying on testimony from the plaintiff’s attorney that the offer of $500,000 remained open, even after learning of the excess policy, the court found that the excess carrier met its burden of establishing, by a preponderance of the evidence, that there existed an actual opportunity to settle the claim at that time for that amount. Thus, the court moved on to consider whether all serious doubts about the insured’s liability were removed as of the December 2005 date. The court found that even though the appeal in the underlying action was pending, at that time, there were no serious doubts about the insured’s liability as both defense counsel and the adjuster had concluded at that point that there was little hope of the insured escaping liability. The court went on to note that in December 2005, New York Central should have anticipated that the damages would have exceeded the policy limits in light of the number of surgeries the underlying plaintiff had already undergone.  Thus, it was ultimately found that New York Central had acted in bad faith in the negotiations, suggesting a gross disregard of the interest of the excess carrier and the insured.

The court also discussed how New York Central missed the opportunity to settle the case for $750,000 in July 2007.

In considering damages, Quincy Mutual was denied the opportunity to settle the underlying litigation for New York Central’s policy limit in December 2005.  Accordingly, the court found that the excess carrier suffered damage in the amount of $1 million and was entitled to recovery of that from New York Central.  In addition, the court also awarded the excess carrier prejudgment interest calculated from January 1, 2006, the date in which it was determined that New York Central breached the contract.  However, the court declined to award attorney’s fees under New York General Business Law §349, since the underlying litigation stemmed from a policy or practice that was individual to this insured and not applicable to the public as a whole, or in any way consumer oriented.  Perhaps, as a last and final rebuke of New York Central, the court noted that while there was testimony concerning New York Central being a difficult carrier and  remarkably stingy in negotiations, such a reputation standing alone was insufficient to satisfy the requirements of §349.
Take Away:  In reviewing the damages, the award of prejudgment interest starting from January 1, 2006 to Quincy Mutual jumped out at me.  How can an excess carrier obtain prejudgment interest for breach of a contact it was not a party to?  Also, Quincy Mutual never laid out any money until 2009. 

Earl K. Cantwell

[email protected]


Allen v. Country Mutual Insurance Co., 2013 WL 6903748 (D. Arizona, December 31, 2013).

The insured filed a claim with Country Mutual claiming that two motorcycles and a trailer were stolen in November, 2012.  Country Mutual disputed the value of the motorcycles, and also received a “tip” through the NICB Hotline that the motorcycles had not, in fact, been stolen.  The insurer asked for documents showing improvements made to the vehicles, and requested that the insured submit to an EUO.

The insured sued Country Mutual for bad faith five months after the theft was reported.  Country Mutual moved for summary judgment essentially arguing that the claim was barred by the insurance contract, at least until the insured complied with the EUO request.  The federal District Court agreed.

          The Court noted that the parties had the right to contractually agree to an EUO as one of the terms of the contract, and this is in fact a common, standard claims term.  Even though the EUO request was made some five months after the reported loss, the Court concluded that it was reasonable due to the circumstances and amount of the claim, even aside from the supposed “fraud tip”.  The insured failed to show that Country Mutual had actually denied his claim because with the EUO request pending the insurer was actually still conducting its claim investigation.  The case was dismissed with leave to re-file after the insured complied with the policy terms with respect to disclosure and the EUO. 

          The EUO is a valuable and useful claims investigation tool.  As experienced adjusters know, even the threat or mere notice of the EUO can break a claims stalemate.  The EUO can also recover valuable information and investigation leads.  Insureds may feel conflicted about appearing and testifying at an EUO due to the possibility of a criminal investigation, or other pending litigation.  Failure to appear at an EUO and cooperate in discovery can provide a basis for denying a claim, or at least contending that the claim investigation is still open and ongoing.

Newsletter Sign Up