Coverage Pointers - Volume XV, No. 22

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.  It’s the most common way the calls begin …

This week’s issue comes live from Vancouver, B.C. where I’m attending the 73rd Annual Meeting of the Association of Defense Trial Attorneys, a  fine trial lawyers’ organization.  I am so fortunate to be blessed with such wonderful friends and colleagues throughout North American and Europe, who join in conference for the benefit of those we serve and represent.

You will find a cache of interesting cases in this week’s edition.  We had a nice win at the Third Department in the Sportsfield case, involving an “invasion of privacy rights” case with a corporate plaintiff.  The Court held, in substance, that the privacy rights protected by Coverage B of the CGL policy (“personal injury”) are rights held by real human-beings – real “people” – even though, in other contexts, corporations are people too.

The Lenhart decision out of the First Department reminds us all of the difference between rights that may exist between trade partners under indemnity agreements and those that arise out of additional insured clauses in liability policies.  For those who are interested in training on that topic, let us know.  We have a list of suggested training programs later in this letter.

Post-Script to the Gettysburg Insurance Agency Story from Last Issue:

For those who love (or tolerate) my 100 years ago stories, you may recall that I talked about a fellow named George Fissel whose ad about purchasing insurance from insurance agents (rather than dry good stores) was in the Gettysburg paper back on April 11, 1914.  I had reached out to the surviving agency for comment and heard nothing back.  On Sunday, April 13, I received this generous note from the owner of the Hockley & O’Donnell Insurance Agency, the company that acquired Mr. Fissel’s agency, from his son George, Jr:


I was out of town when your email came through our contact page.  Sorry I wasn’t able to respond prior to your April 11th issue.

You certainly have your facts correct.  Jacob Britcher predeceased George Fissel and as stated we purchased their agency in October of 1987.  We still insure George’s wife Betty today and look back at the purchase as our major acquisition in Gettysburg.

George was very idealistic about insurance as can be seen in his ad.  Our family moved to Gettysburg in 1978 and the Hockley & O’Donnell Insurance Agency opened its doors from a scratch position.  George had befriended me as a new insurance agent in town and although he could have sold his agency to virtually anyone he called me in Sept of 1987 and said if I wanted to buy the agency he would sell it to me but I only had 30 days to put it together.  A deal was struck and the process began.  When George passed away I was asked to speak at his funeral and shared some stories that I had heard over the years.

He was a well-respected insurance agent and businessman in Gettysburg.

Charles “Skip” Hockley

Training and Empowerment:

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: 

      • Developing an Approach to Coverage Analysis – Crafting the Coverage Position Letter a/k/a “The Dangers of Writing a Reservation of Rights Letter in New York”
      • Tackling Tenders, Additional Insured Obligations, Indemnity Agreements and Priority of Coverage
      • Good Faith, Consequential Damages and Extra-Contractual Liability - the New York Experience
      • Uninsured and Underinsured Claims Handling
      • Preventing Bad Faith Claims in First and Third Party Claim Handling
      • The Cooperation Clause – How to Enforce It
      • 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


Contact us to arrange for a mutually convenient time…

Peiper’s Pandering:

The P&P column brings you a nice mix of decisions in this issue's offering.  We start off with two more decisions that reinforce two of the most consistent line of cases in the universe of first party insurance.  Repeat after me...the two-year suit limitation clause means what it says.  You kinda, you know, have to commence legal action before it expires.  In addition, you kinda have to be a resident in order to get protection under your  homeowners' coverage.  You cannot, repeat, cannot, qualify for homeowners' coverage that applies to premises that you don't live in. 

In the Potpourri column, take a moment to review the First Department's decision on indemnity clauses.  In another installment of whether "acts or omissions" means/implies "negligent acts or omissions", the First Department notes that negligence is required.  Recall, of course, the cases we've reviewed over the past couple of years that say, in words or deed, if you wish to have a negligence trigger, you need to say it.

I know Jen and Beth have already (or will) hit on it, but if you haven't registered for the Insurance Law update you really should consider it.  For those of you on Long Island, we remind you that Beth Fitzpatrick will be speaking there.  We also remind you that a CP favorite Jonathan Dachs will speaking on SUM/UM Coverage.  I have had the honor of appearing on a panel with Jonathan, and can vouch that he is a true guru on complexities of SUM/UM.

Not much else to update this week.  I will not comment on the weather as I'm fairly certain that precisely NO ONE wants to hear any more about it.  I will likewise refrain from referencing Jen's Ella as, well, let's be honest...she will.  With nothing left to be said, I'll simply adjourn until May.  Cheers.

Steven E. Peiper
[email protected]

Windstorm Training in Newark:

5th Annual WIND Regional Symposium
A One-day Exclusive Roundtable Discussion on Hot Topics
in Property/Windstorm Insurance Claims Issues

For more information visit 

"Superstorm Sandy: Lessons Learned: Now What?" 

Thursday, May 8: 6 pm & Friday, May 9, 2014:8am - 5 pm 
Hilton Newark Penn Station 
Newark, New Jersey

Keynote Speaker:
Meet Heather Abbott

Boston Marathon Bombing Survivor and Amputee
"Overcoming Adversity"

Don't miss this exclusive one-day educational and networking event on May 9, 2014 in Newark, NJ. Join top industry professionals as they lead interactive educational roundtable discussions on property/windstorm insurance claims issues.

This year's theme is "Superstorm Sandy: Lessons Learned: Now What?" In addition, keynote speaker, Boston Marathon Survivor and Amputee, Heather Abbott will speak on "Overcoming Adversity." As the one-year anniversary of the bombing took place on April 21, 2014, Heather will share her story while inspiring attendees with her contagious optimism and remarkable recovery and triumph over tragedy.

Both panel and keynote roundtable sessions will offer small-setting venues for learning and networking in an interactive and informal educational setting. Facilitators will generate valuable discussion topics, while encouraging the exchanging of ideas and knowledge in the property/windstorm insurance claims industry. In addition, attendees can earn CE credits for multiple states and bar associations, as well as network with leading industry professionals.

Fitz’ Bits:

Dear Subscribers:

As we head into May, it appears that spring has finally sprung.  We are experiencing delightful weather on Long Island and I hope you are as well.

Another reminder of the upcoming New York State Bar Association program “Advanced Insurance Coverage”, which will be presented at five venues across New York State; May 2nd in Syracuse, May 9th in Albany and Buffalo and May 16th on Long Island.  This is a full-day program exploring a broad spectrum of insurance coverage issues and strategies.  I hope to see many of you there.

Last week I brought you a case where an Alabama court found coverage for faulty workmanship under a commercial general liability policy.  This week the Georgia Court of Appeals weighs in on the issue in Builders Insurance v. Tenenbaum.  I also discuss a Florida decision regarding discoverability of the insurer’s claim files.

Til next time,

Elizabeth A. Fitzpatrick
[email protected]

A Century Ago:  Work Rules Begin to be Reasonable?:

The New York Times
New York, New York
April 25, 1914


Employers Must Give One Day’s
Rest in Seven, Court Says

Special to The New York Times

WHITE PLAINS, April 24.—Supreme Court Justice Arthur S. Tompkins at White Plains to-day decided that it was illegal to make a man work on Sunday.  The decision was the result of a writ obtained by Charles Deutermann of White plains, who owns large ice houses and employs many men.  He had himself arrested to test the constitutionality of Section 8A of the Labor Law.  This law was passed last year, requiring employers to give their employee one day of rest in seven, and its constitutionality was attacked by this proceeding of Deutermann, by attorneys representing large manufacturing and industrial interests in New York City and Westchester County, including some of the largest breweries in the State. 

Justice Tompkins in his decision says:

The apparent purpose and effect of this statute is to require employers of labor in factory or mercantile establishments that are in operation on Sunday, to give their employees some other full day in every seven, for a rest.  The penal law of the State prohibits all unnecessary work in trades, manufacturers, and mechanical employments upon the first day of the week.  Hence the Statute must have been designed to apply only to men employed in enterprises that have a lawful right to carry on their operations on the first day of the week. …”

Editor’s Note:  Justice Tompkin’s Decision and Order was affirmed on appeal by a split panel:

As this act is only for factories and mercantile establishments where the tendency is to long, steady hours of daily labor, I cannot say that it is an unjustifiable encroachment on individual rights. Even mills running on half time I think should keep this seventh day of rest. The generality of the provision is essential to its practical enforcement with our large industrial plants. If the statute gives this rest only to those who have worked a minimum period—say 48 hours a week—even that limit would become a loophole for its evasion. Can we say that a seventh day of rest is only for the overworked? I think those enjoying an 8-hour day may also demand it for their protection. In four places this act refers to Sunday. It may be called a modified Sunday law protecting against work on that day, or, if work has to go on then, providing a substituted day of rest so as to save the laborer from consecutive toil beyond six days.

Hence it seems to me that we, as court, can see in this measure a real and substantial relation to the general welfare.

People ex rel. Deutermann v Doyle, 164 AD 795, 796-97 [2d Dept 1914]

Jen’s Gems:

Hope everyone enjoyed the holiday weekend. 

In this issue, I am reporting on a trial court decision from Kings County, Leading Ins. Group Ins. Co., Ltd v Greenwich Ins. Co., which addresses the scope of an Additional-Insured-Managers or Lessors of Premises endorsement.  Of interest, the trial judge found that the entire sidewalk in front of the restaurant was necessary for access to or from the leased restaurant space, even though a customer would use only a portion of it to enter or leave as determined by the intended direction of travel.  Worth a read. 

Also, I want to encourage everyone to consider registering for the New York State Bar Association’s Advanced Insurance Coverage CLE taking place in early May.  The topics are going to include additional insured issues, discovery dilemmas and construction defect claims.  You can even expect a few guest appearances from the Hurwitz & Fine team.

Lastly, in terms of my Ella update for the week, she participated in her first Easter egg hunt in my mother-in-laws backyard.  She actually enjoyed it so much that we had to hide the eggs three more times.

Until next issue…

Jennifer A. Ehman
[email protected]

Groundbreaking Products Liability Claims 100 Years Ago:

The New York Times
New York, New York
April 25, 1914


Seller, Not Maker, to Pay $8,000 Damages,
Is Verdict in Test Case

SYRACUSE, N.Y., April 24.—A jury in the United States Court decided to-day, in effect, that the occupant of an automobile who is injured by the breaking of a certain part of the car can recover damages from the company which assembled and sold the automobile rather than from the manufacturer of the part that broke.  On this ground the jury awarded $8,000 damages to E. Wells Johnson of Amsterdam, N.Y., against an automobile company of Detroit.

Johnson sued the company to recover damages for injuries received in 1909 when a wheel on his automobile broke and the car turned turtle.  The company contended that if anyone was liable, except the plaintiff, it was the manufacturer of the wheel.  This was a test case, and the outcome was waited by automobile makers throughout the country. 

Hunter’s Hints on No Fault:

Springtime is upon us, and with that so is allergy season.  Perhaps allergies are the reason the New York State Appellate Courts turned out a mere three (3) opinions on "serious injury" since we last spoke.

I'd like to thank John Lanigan, Patrick Haar and all the good folks at Allstate in Rochester, New York for inviting Hurwitz & Fine to their offices for a Serious Injury Threshold Training presentation.  Both Michael Perley and I spent the better part of a morning at Allstate's Rochester office training claims professionals on New York State serious injury threshold law.  Thanks again to our Allstate friends in Rochester for being an engaging and inquisitive audience and making our jobs as presenters easy and rewarding.

As always, if any of our dear subscribers would like a Serious Injury Threshold presentation of their own, or have any questions regarding any and all things serious injury, please contact me at your convenience.  I look forward to hearing from you.

Daniel T. Hunter
[email protected]

Huge Auto Accident Verdict a Century Ago:

The New York Times
New York, New York
April 25, 1914

$18,000 FOR LOSS OF LEG.

Steward of Steamship Cedric Gets
Records Verdict at Retrial

The value of a leg was estimated at $18,000 by a jury in the Supreme Court yesterday, and this is said to be the largest award ever given in New York County.  Harry Etchells, chief second-class steward of the steamship Cedric, the plaintiff, told Justice Edgar C. Emerson and the jury that while he was standing at Broadway and Thirty-eighth Street on Dec. 11, 1912, an express wagon of Wells, Fargo 7 Co., passed so close to him that his clothing was caught by the wheels and his body dragged under one wheel, crushing his leg so that amputation was necessary.

On the first trial a year ago the jury’s verdict was $15,000.  An appeal was taken to the Appellate Division which ordered a re-trial.  Etchells contended that the accident, by depriving him of one of his “sea legs,” precluded him from earning a livelihood at his former occupation.  John G. Milburn, Jr., attorney for the express company, defended the action on the ground of contributory negligence. 

Cassie’s Capital Connection:

I am safely back in Albany after spending a few days in Buffalo at the office, and as always, it was good to see everyone and catch up in person!  Maybe I will even get myself back out there over the summer for one of the softball games.

I am sure that is enough about me so on to the important matters.  On April 10, 2014, the Assembly held a public hearing examining the auto insurance market in New York.  For those who missed the hearing or the live broadcast and would like to check it out, the video and audio are on the Assembly website under the Live Coverage of Assembly Proceedings tab.  The insurance industry was well represented by Gary Henning from AIA, Kristina Baldwin from PCI, and Ellen Melchionni from NYIA who made persuasive arguments regarding the costs to New Yorkers associated with raising the minimum mandatory liability limits, changing the consumers ability to change limits of SUM coverage, and broadening the category of injuries which would meet the serious injury definition.  This was done while being asked pointed and tough questions by the Assembly.  For anyone concerned about No-Fault fraud and the potential impact an amendment to the Serious Injury threshold would have on auto coverage in New York, I would recommend watching as it was certainly informative.

Cassandra A. Kazukenus
[email protected]

You Mean Teenagers Knew  About Romance 100 Years Ago?:

The Brooklyn Daily Eagle
Brooklyn, New York
April 25, 1914


Was Away from Home All Night and
Tells a Romance

Mabel Henderson, a 14-year-old school girl, of 317 East Twenty-ninth street, Flatbush, frightened her parents early yesterday, when, after having been missing since the previous afternoon, she was brought home by Patrolman Murphy of the Synder Avenue station, and told her father, Frank Henderson, that she had been detained by two young men, who beat her cruelly and left her alone in the Paerdegat Woods, at Newkirk and Nostrand Avenues.

Ambulance Surgeon Johnson of the Kings County Hospital was called, and, after an examination, said that he found no marks of violence.  After quizzing the girl, her father and the police decided that she was romancing.
Editor’s Note:  Paerdegat Woods was a wooded area in the East Flatbush section of Brooklyn that has long since disappeared into housing units.

Baseball Salaries Skyrocket a Century Ago:

The Daily Republican
Monongahela, Pennsylvania
April 25, 1914


The $10,000 Mark Often Passed,
Whereas $1,500 Used to Be Big Money

As one manager expressed it recently, “The sky’s the limit in baseball salaries at the present time as far as the stars are concerned, and even the everyday players are receiving as much or more than the most famous diamond heroes of a few years ago.”

“Tris” Speaker’s rise in a few seasons from the minors to the highest salaried star in the game is without parallel in baseball or any other sport.  He made good from the time he went to Boston, each season being up among the leading sluggers, and it was his bat that had much to do with the Giants’ loss of a world’s championship pennant.  Last season he finished fourth among the American League batsmen with a percentage of .366.  He took part in 141 games, made 94 runs, had 190 hits for a total of 278 bases and stole 46 times.  In 520 times at best he struck out but twenty-four times.  Speaker’s salary with the Bostons will be $18,000 a season for the next two years.

Other players drawing down fancy stipends annually are Mathewson, $15,000; Cobb, $12,500; Tinker, $12,000; Evers, $10,000; Wagner, $10,000, and Walter Johnson, $7,500.  And don’t overlook the fact that John J. McGraw, the peppery little leader of the Giants, drew a salary of $30,000 in 1913, and he will get the same amount annually until the end of 1917 in accordance with the terms of his present contract.  McGraw gets no percentage from the New York Club’s profits, but he did add $3,500 to his salary last year, the tidy sum being his share of the World Series battled and some exhibition contests.

A ball player receiving from $1,500 to $1,800 in the old days was considered fortunate by most of his fellows. …

In This Week’s Issue, Attached:

Dan D. Kohane
[email protected]

  • Default Judgment Can Be Entered Against MVAIC
  • A Corporation is Not a “Person” for the Purposes of Violation of the Rights of Privacy Claims under “Coverage B”
  • Insurance Coverage Requirement Broader than the Trade Contract Indemnity Agreement


Daniel T. Hunter
[email protected]

  • Possible Limitation of Plaintiff's Right Shoulder Modifies Lower Court Order
  • Plaintiff's Physician Report in Opposition to Summary Judgment Motion Fails to Adequately Address Ailments
  • Defendants Fail to Meet Initial Burden


Margo M. Lagueras

[email protected]


  • Applicant Not Listed as Business Entity Not Entitled to Reimbursement
  • Rebuttal Letter Containing Legal Authority Raises Questions as to Authorship
  • Failure to Copy Provider on General Denial Results in Finding That It Cannot Support Denial
  • Medical Necessity of MRI Does Not Depend on Results



  • Plaintiff Is Not a “Health Care Provider” Under the Statute


Steven E. Peiper

[email protected]


  • Residency Requirement Results in Loss of Coverage for Insured
  • Two Suit Limitation Clause Dooms Homeowner’s Claim



  • Under NJ Law, a Dissolved Company can be Sued; Substitute Service Upon Dissolved Company’s Insurer is OK
  • Additional Insured’s Claims Against Named Insured for Deductible Survives Motion to Dismiss
  • “Acts or Omissions” Language Implies the Need for Negligence in an Indemnity Claim


Elizabeth A. Fitzpatrick
[email protected]

  • CGL Policy May Provide Coverage for Faulty Workmanship
  • Internal E-Mails and Correspondence Not Protected By Privilege


Audrey A. Seeley
[email protected]

  • Injury Arising From Dog Bite, While Dogs In Car, Does Not Arise Out of The Use Of A Vehicle Within Uninsured Motorist Insuring Grant.


Cassandra A. Kazukenus
[email protected]

  • Licensing of Title Agents
  • A2729 Deductible Triggers For Windstorms/Hurricanes


Katherine A. Fijal

[email protected]

  • The Term “Patient” in General Liability Policy is Not Ambiguous


Jennifer A. Ehman
[email protected] 

  • Entire Sidewalk In Front of Restaurant Determined to be Part of the Premises Leased; No Evidence that Defect in the Sidewalk was the Result of Structural Alterations

Earl K. Cantwell

[email protected]

  • Don’t Forget the Basics – Personal Jurisdiction


That’s about it:  Always great to hear from you.  Comments?  Suggestions?  Drop me a note.

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

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]

04/23/14       Archer v. Motor Vehicle Accident Indemnification Corporation
Appellate Division, Second Department
Default Judgment Can Be Entered Against MVAIC
The plaintiff was hurt in a hit-and-run accident on January 18, 2008.  He filed a notice of intention to make a claim against the Motor Vehicle Accident Indemnification Corporation (“MVAIC”) on February 11, 2008.

On January 7, 2011, nearly three years after the accident, the plaintiff commenced a proceeding pursuant to Insurance Law § 5218 for permission to commence an action against MVAIC to recover damages for his personal injuries and that petition was granted in April of that year.

On October 3, 2011 MVAIC was sued.  On or about December 23, 2011, after its time to answer had already expired MVAIC moved to dismiss the complaint on the ground that the action was barred by the three-year statute of limitations.

The MVAIC chapter of the Insurance Law was enacted to fill gaps in a compulsory motor vehicle insurance plan enacted in for accidents caused by uninsured motor vehicles, unidentified motor vehicles that leave the scene of an accident, and motor vehicles operated without the permission of the owner (see

On appeal, MVAIC contends that Insurance Law § 5214 bars the entry of a default judgment against it. The Court disagreed and found that in this type of proceeding, a default can be entered.  MVAIC’s motion to dismiss was untimely and therefore judgment was entered against it.

04/16/14       Sportsfield Specialties, Inc. v. Twin City Fire Ins. Co.
Appellate Division, Third Department
A Corporation is Not a “Person” for the Purposes of Violation of the Rights of Privacy Claims under “Coverage B”
A sweet victory.

In the autumn of 2009, Sportsfield, a sports equipment company hired a competitor's employee who was subject to a non-compete agreement from his former employee. The employee in question was subject to non-compete and electronic rights agreements. In November 2009, the competitor, a North Carolina corporation, commenced an action in that state alleging, as to Sportsfield, tortious interference with contract and business relations, unfair and deceptive trade practices and misappropriation of trade secrets.

Sportsfield was insured under two policies of insurance, a CGL policy issued by Twin City and a commercial umbrella policy issued by CastlePoint. Sportsfield notified its broker Harding and Harding notified Twin City, but not CastlePoint.   . In February 2010, Twin City declined to defend and/or indemnify Sportsfield in the action by the competitor.

The North Carolina action proceeded to trial and, in July 2011, the jury returned a verdict in favor of the competitor; the judgment was in excess of $3.2 million. One month later, Sportsfield contacted Twin City and CastlePoint requesting that they defend and indemnify plaintiff with respect to the underlying judgment.  This was Castlepoint’s first notice of the incident and lawsuit. Both Twin City and CastlePoint denied coverage under the policies. CastlePoint included a late notice disclaimer, alleging prejudice.

The complaint in the North Carolina action alleged that plaintiff engaged in tortious interference with contract and business relations, unfair and deceptive trade practices and the misappropriation of trade secrets, prompting plaintiff to seek coverage under the "personal and advertising injury" portion of the subject policies.

The policies issued by the primary and excess carriers defined "personal and advertising injury" as an injury, other than a bodily injury, arising out of both the insured's business and one or more of the enumerated offenses set forth therein, including the "oral or written publication of material that violates a person's right of privacy."

The Third Department found that the term "person" in the context of this coverage does not mean a corporation. Yes, there are times when “person” can mean corporation but not in the context of the policy.

In Twin City's policy, the "[o]ral or written publication of material that violates a person's right of privacy", is sandwiched between two other offenses in Twin City's policy that make express reference to misdeeds perpetrated against either a person or an organization, thereby suggesting that the omission of any reference to an organization from the subject offense was intentional. Although the parties debate whether CastlePoint's policy draws as clear a distinction between the terms at issue, the claim of tortious interference with contract and business relations, unfair and deceptive trade practices and misappropriation of trade secrets,  do not constitute a violation of "a person's right of privacy" within the meaning of either Twin City's or CastlePoint's policy.

The complaint in the underlying action alleged conduct on the part of plaintiff that extended beyond the misappropriation of trade secrets and, in general, encompassed the acquisition and/or use of confidential and proprietary information belonging to its competitor. However, those allegations cannot be equated with an invasion of the competitor's "right of privacy" which is a personal right.

Moreover, exclusions relative to the personal and advertising injury coverage otherwise afforded by its policy — the intentional conduct exclusion, the breach of contract exclusion and the trademark exclusion would remove coverage in any event.

So both carriers walk and the Third Department never reached the issue of the late notice defense raised by the excess carrier.
Editor’s Note:        We were delighted to represent Castlepoint, the excess carrier in this matter.  Your editor argued the cases both at the lower court and at the Appellate Division and had the great assistance of Kathie Fijal, Diane Bosse and Jen Ehman.  We extend our congratulations as well to my good friend, Stephen M. Lazare of Lazare Potter & Giacovas LLP, who ably represented Twin City.

04/15/14       Lenart Realty Corp. v. Petroleum Tank Cleaners, Ltd.
Appellate Division, First Department
Insurance Coverage Requirement Broader than the Trade Contract Indemnity Agreement
Crystal was making a delivery of oil to a building owned by Lenhard when an oil spill occurred. Under the delivery agreement, Crystal was responsible for any damage or loss to the equipment or premises of a Castle customer to the extent caused by [Crystal]'s acts or omissions.

There was also an indemnity agreement wherein Crystal was to hold Castle harmless from any and all claims, losses, etc. arising out of or relating to the “performance or breach of this agreement or any acts or omissions of Crystal in connection therewith”.  Crystal was “solely responsible for all claims, losses, liability, damages, penalties, or violations resulting from Crystal's oil spills or erroneous deliveries . . ."

The delivery agreement also required Crystal to obtain comprehensive liability coverage for its fuel delivery vehicles, including for oil spills and environmental cleanup and remediation, naming Castle as an additional insured. Crystal procured a policy with the required limits from Zurich, but did not name Castle an additional insured.

Plaintiff asserted causes of action for negligence and strict liability against Castle, Crystal and the fourth cause of action also alleged that Castle was vicariously liable for Crystal's negligence. Castle tendered its defense of the action to Zurich under the policy procured by Crystal. Zurich accepted tender only with regard to the fourth cause of action but refused to provide coverage to Castle, for its own negligence or strict liability.

Castle asserted that it is not required to prove that the alleged oil spill resulted from Crystal's negligence, but only that it resulted from Crystal's performance of the delivery agreement or any act in connection with the agreement. However, the court rejected that argument because such an interpretation renders meaningless the first paragraph of the indemnification agreement which requires negligence.

However, Crystal breached the contract by failing to procure insurance naming Castle as an additional insured. Crystal argues that it was only required to obtain insurance covering Castle to the extent that Castle was vicariously liable for Crystal's negligence. However, the insurance procurement provision contains no such limitation and the provision limiting indemnification to Crystal's acts or omissions does not similarly limit the insurance Crystal was required to procure.
Editor’s Note:  This is a good “teaching” case and a reminder that the insurance requirements in a contract might be broader (or narrower) than the contractual indemnity provisions.  Here, the insurance requirements were broader and covered not only vicarious liability for the negligence of the named insured, Crystal, but, in addition, covered claims arising out of the delivery even if not caused by the named insured’s negligence.

Daniel T. Hunter
[email protected]


04/15/14       Kang v. Almanzar
Appellate Division, First Department
Possible Limitation of Plaintiff's Right Shoulder Modifies Lower Court Order
Defendants' motion for summary judgment dismissed Plaintiff's complaint based on the failure to establish a serious injury within the meaning of Insurance Law §5102(d) was unanimously modified by the First Department in finding an issue of fact as to whether Plaintiff suffered a significant limitation of her right shoulder.

In support of their motion, Defendants submitted an orthopedic surgeon's affirmation finding normal range of motion in Plaintiff's neck and back, no disc herniations or bulges, and degenerative changes in Plaintiff's right shoulder unrelated to the motor vehicle accident.  In opposition, Plaintiff failed to submit evidence of a recent right shoulder examination, and therefore, did not raise an issue of fact as to whether she sustained a permanent consequential limitation in her shoulder. 

However, the First Department notes that Plaintiff raised an issue of fact as to whether she suffered a significant limitation in the shoulder by submitting that affirmation of her treating orthopedic surgeon.  Plaintiff's orthopedic surgeon found qualitative limitations that persisted for almost two (2) years following the motor vehicle accident, which required orthopedic surgery to repair following conservative treatment.  As such, Plaintiff can now proceed with the lawsuit since a question of fact exists regarding the significant limitation prong of the serious injury threshold law in relation to her right shoulder injury.


04/07/14       Nicholas v. Cablevision Systems Corporation
Appellate Division, First Department
Plaintiff's Physician Report in Opposition to Summary Judgment Motion Fails to Adequately Address Ailments
Defendants made a motion for summary judgment to dismiss Plaintiff's complaint, claiming Plaintiff did not sustain a serious injury under New York State Insurance Law.  Defendants submitted affirmed reports of an orthopedist who found normal ranges of motion in all of Plaintiff's body parts.  Further, the affirmed report of a neurologist was also submitted by Defendants which opined that Plaintiff's lumbar spine MRI's showed non-specific degenerative conditions unrelated to the motor vehicle accident.

In opposition, Plaintiff submitted a report from her examining physician showing recent range of motion deficits.  The physician's report failed to explain the inconsistencies between his earlier findings of almost full range of motion in Plaintiff’s cervical lumbar spine with his present findings of deficits in those areas.  Nor did the physician's report address the degeneration findings addressed by neurologist's report submitted by Defendants.  The physician's report also failed to take into account the pre-existing conditions of morbid obesity and scoliosis suffered by Plaintiff.  Finally, in affirming the lower court's judgment, the First Department states that Plaintiff failed to offer a reasonable explanation for ceasing treatment, despite her physician's recommendations for further treatment.

04/23/14       Berisha v. Liu
Appellate Division, Second Department
Defendants Fail to Meet Initial Burden
Defendants made a motion for summary judgment to dismiss Plaintiff's complaint on the grounds that Plaintiff did not sustain a serious injury within the meaning of Insurance Law §5102(d) as a result of a motor vehicle accident.  The Second Department affirmed the lower court's decision finding that Defendants failed to meet their prima facie burden of showing that Plaintiff did not sustain a serious injury since their papers failed to adequately address Plaintiff's claim, set forth in his bill of particulars, that he sustained injuries to his cervical and thoracic regions of his spine. 

The Court notes that since Defendants did not sustain their initial burden, it is unnecessary to determine whether Plaintiff's opposition papers were sufficient to raise a triable issue of fact.


Margo M. Lagueras
[email protected]

04/10/14       Lockport Chiropractic v Allstate Insurance Co.
Erie County, Arbitrator Kent L. Benziger
Applicant Not Listed as Business Entity Not Entitled to Reimbursement
Applicant brought the arbitration seeking reimbursement for thoracic and cervical MRIs.  However, the Arbitrator noted that this was the second time that Applicant filed for arbitration with documents that listed at least three distinct entities, not all of which were listed as active business entities.  The Arbitrator further noted that he was unable to locate Lockport Chiropractic on the Division of Corporations website.  The claim form did not contain the name of Lockport Chiropractic but rather that of Rainbow Imaging whose principal is a radiologist, not a chiropractor.  The MRI reports were on “Lockport MRI” letterhead, but Lockport MRI was not listed as an active business entity.  Instead, in 2006, the name was changed to Western New York Imaging.  In addition, that same radiologist, who is the same that performed the services, in this case, is listed as the current medical director at Western New York Imaging.  Finally, no assignment of benefits had been exchanged.

The Arbitrator dismissed the claim with prejudice, specifically noting that “although no proof has been submitted as to fraudulent incorporation or “Malella” issues, this arbitrator is not inclined to dismiss this case “without prejudice” to give Applicant’s counsel a third opportunity to file for arbitration.”  He pointed out that a prior proceeding was filed by Rainbow Imaging for the same MRI studies.  That proceeding was dismissed by Arbitrator Murphy-Louden without prejudice for lack of standing.  Now, Lockport Chiropractor attempted a second bite at the apple.  In addition to the lack of standing, the Arbitrator found that the peer review by Dr. Portnoy was sufficient to support the denial based on lack of medical necessity.

04/10/14       Elite Medical Supply of NY, LLC v Allstate Insurance Co.
Erie County, Arbitrator Kent L. Benziger
Rebuttal Letter Containing Legal Authority Raises Questions as to Authorship
At issue was the medical necessity for an LSO brace.  Respondent denied reimbursement based on the peer review of a chiropractor who noted that it remains unclear whether lumbar supports are more effective than no intervention for low-back pain.  The rebuttal letter by the treating chiropractor cited medical studies that found no adverse effects to the use of an LSO brace, as well as trials that he claimed found improvements in strength, flexibility and pain relief.  In addition, he cited to case law as to the carrier’s burden of proof in establishing medical necessity.

While agreeing that the peer review was not persuasive, the Arbitrator agreed with Arbitrator Murphy-Louden in questioning the credibility of the many rebuttal letters submitted in cases filed by this provider.  All the letters, supposedly authored by different treating providers, contain the exact wording and citations and would cause any reasonable person to question who is the real author of the reports.  The Arbitrator agreed that a reasonable person would find the rebuttal letter to be a boilerplate provided by the provider, or a third-party, and then given to the treating provider to fill in a few specific items.  Furthermore, all the rebuttal letters make reference to in-office trials of equipment prior to the prescription being written when there are no references whatsoever to trials in the treatment records.  The Arbitrator additionally noted that he would not consider authority submitted by counsel but not cited by the peer review or treating provider. 

In spite of all the concerns, the Arbitrator awarded reimbursement because the peer review was insufficient to support the denial.  He noted, however, that another issue was why a custom fitted and very expensive brace, as opposed to a less expensive generic LSO, was prescribed.  The prescription for the custom LSO could be questioned when there is conflicting evidence as to whether an in-office trial was performed.  Cost containment, together with compensation, is both goals of the no-fault regulations.

04/09/14       Elite Med. Supply of NY, LLC v National Liability & Fire Insurance Co.
Erie County, Arbitrator Veronica K. O’Connor
Failure to Copy Provider on General Denial Results in Finding That It Cannot Support Denial
At issue was the reimbursement for a multimode stimulator prescribed by a chiropractor three weeks after the EIP was injured in the subject motor vehicle accident.  The denial was issued on June 1, 2012, based on a peer review.  On June 5, 2012, Respondent also issued a general denial of all benefits, effective March 18, 2012 (the date of loss), due to the EIP’s failure to comply with two requests for chiropractic IMEs.  However, the Arbitrator determined that the general denial could not form the basis for the denial of the multimode stimulator because only the chiropractor, but not Applicant, was copied. The Arbitrator additionally found that the peer review that served as the basis for the specific denial was insufficient because it referenced a TENS unit, which is distinct from the multimode stimulator, and because the peer reviewer failed to support that the dispensing of the multimode stimulator was inconsistent with “generally accepted medical/professional practice.”  As such, Applicant was awarded reimbursement.

04/09/14       Western New York MRI, LLP v Geico Insurance Co.
Erie County, Arbitrator Michelle Murphy-Louden
Medical Necessity of MRI Does Not Depend on Results
The Arbitrator again stated that merely because MRIs may reveal positive findings does not establish the medical necessity of the testing.  She noted that on many occasions Applicant’s counsel has argued that a peer reviewer must “explain away” positive MRI findings and that the peer review is defective if it does not do so. Once again this Arbitrator rejected that argument, in part because such a proposition has never been adopted by a higher court and because it would eviscerate the No-Fault Law’s provision that insurers are only liable for the payment of medical expenses that reasonable and necessary. If the MRI results had been normal, Applicant’s counsel would have argued, as he has on other occasions, the exact opposite: that medical necessity was established by the prescribing provider’s examination and notes, regardless of the ultimate findings.  The Arbitrator reiterated that she sees no reasoning behind Applicant’s argument that the standard of determining the medical necessity of an MRI should be different depending upon whether the results were negative or positive.


04/15/14       Aetna Health Plans v Hanover Insurance Co.
Appellate Division, First Department
Plaintiff Is Not a “Health Care Provider” Under the Statute
The No-Fault Law provides for payment of benefits either directly to the applicant or to the provider of health care services where an assignment of benefits has been executed.  Under the statute, Aetna Health Plans is not a “health care provider” but rather a health care insurer.  As such, it cannot maintain a subrogation claim against defendant, nor can it assert a breach of contract claim as it is neither in privity nor an intended third-party beneficiary with the contract.  Therefore, the decision dismissing plaintiff’s complaint was unanimously affirmed.


Steven E. Peiper
[email protected]


04/23/14       Zises v New York Central Mutual Fire Ins. Co.
Appellate Division, Second Department
Residency Requirement Results in Loss of Coverage for Insured

A subject of a lot of litigation in recent years, NY Central denied plaintiff’s claims for a fire loss where it was revealed that he did not live at the residence on the date of loss.  On appeal, the Second Department affirmed the trial court’s dismissal of plaintiff’s action. 

In addition, the Appellate Division also noted that the policy was also void due to misrepresentations.  Apparently, plaintiff advised that he “lived at” the insured premises on a “full time basis” at the time the policy was bound.  However, discovery revealed that plaintiff maintained his residence elsewhere. 

04/16/14       Vaccaro v NY Central Mutual Fire Ins. Co.
Appellate Division, Second Department
Two Suit Limitation Clause Dooms Homeowner’s Claim
Plaintiff failed to commence the instant action within two years of the date of loss.  The policy, which NY Central properly submitted into evidence, included a suit limitation clause which required any action to be commenced within that two year time window.  Plaintiff didn’t, and their case was dismissed as a result.


04/17/14       In re. New York City Asbestos Litigation
Appellate Division, First Department
Under NJ Law, a Dissolved Company can be Sued; Substitute Service Upon Dissolved Company’s Insurer is OK
In a series of Complaints, multiple plaintiffs asserted claims for asbestos related injuries against Jenkins Bros. and Jenkins’ insurer, Liberty Mutual.  Liberty Mutual moved to dismiss the claims against Jenkins on the basis that the company had previously declared bankruptcy and formally dissolved under relevant New Jersey law.

However, upon appeal, the First Department noted that New Jersey law did not restrict when or whether a dissolved company could be sued for allegedly tortious conduct.  Accordingly, plaintiffs’ claims against Jenkins could proceed.

Having been dissolved for years, however, plaintiffs also had problems serving Jenkins.  Noting the difficulty, and noting that Liberty Mutual undoubtedly provided coverage for Jenkins during the time periods in question; the Court approved substitute service directly upon Liberty Mutual. 

04/17/14       United States Fire Ins. Co. v ACE Am. Ins. Co.
Appellate Division, First Department
Additional Insured’s Claims Against Named Insured for Deductible Survives Motion to Dismiss
In 2002, plaintiff Rose Trucking entered into an agreement with FICA Trucking whereby FICA would transport Rose’s trailers to supermarkets in the Tri-State area.  As part of that agreement, FICA agreed to procure insurance providing coverage of up to $1,000,000, and also name Rose as an additional insured thereunder. 

FICA, we are told, procured a $1,000,000 policy and named Rose as an additional insured thereunder.  However, the policy purchased by FICA had a $250,000 deductible.  ROSE commenced the instant action seeking a declaration that FICA owed the deductible since the contract required $1,000,000 in coverage and did not reference a deductible.  FICA moved to dismiss. 

The trial court refused to grant the motion, and the First Department affirmed that denial in the instant decision. 

04/15/14       Lenart Realty Corp. v Petroleum Tank Cleaners, Ltd.
Appellate Division, First Department
“Acts or Omissions” Language Implies the Need for Negligence in an Indemnity Claim
This case involved an oil spill at plaintiff’s premises.  The oil was delivered by defendant Crystal.  Crystal had been retained to provide the delivery service by defendant Castle.  The Castle/Crystal Contract provided that:

Crystal was “responsible…for any damage or loss to the equipment or premises of a Castle customer to the extent caused by Crystal’s acts or omissions.”

Immediately thereafter, however, the contract also provided that Crystal shall indemnify and hold harmless Castle from any and all claims…arising out of or relating to the performance or breach of this agreement or any acts or omissions of Crystal in connection therewith.

Castle moved for summary judgment on the basis that the loss clearly arose out of Crystal’s performance of the contract.  The trial court agreed, and granted Crystal’s request for contractual indemnification.

On appeal, however, the First Department noted Crystal’s argument that the first clause only created responsibility for losses occasioned out of Crystal’s “acts or omissions.”    Crystal’s argument was that the clauses, when read together, mean that the loss had to have arisen out of Crystal’s negligence. 

The Court noted that where, as here, there are two seemingly inconsistent indemnity clauses the Trial Court was empowered to reconcile the two so both would have effect.  Under the current scenario, the Court noted that the two clauses compelled a decision that Crystal only owed obligations if it arose out their “acts or omissions.”  As there had been no determination on either party’s purported negligence, the court could not reach a determination on the indemnity issue.

Elizabeth A. Fitzpatrick
[email protected]

04/18/14       Builders Insurance v. Tenenbaum
(2014 WL 1508511 Court of Appeals of Georgia)
CGL Policy May Provide Coverage for Faulty Workmanship
The coverage action here derived from an action brought by Sheldon Tenenbaum against Hallmark Homes of Savannah on the construction of a home on Tybee Island and asserting construction claims, including problems with the stucco and concrete floors, leaks, and moisture issues.  The contract was executed on November 17, 2002 and construction began in January 2003.  Builders issued Hallmark a CGL policy for the period January 23, 2004 and continuing thereafter, with the last policy ending on July 10, 2008.

During the construction, Tenenbaum and his architect communicated with Hallmark’s principals about alleged defects.  Construction was completed in April 2004 and the parties then developed a punch list of specific issues to be completed or corrected, which included problems with the stucco and leaks that had caused water damage to floors and areas of mold and rot.

Tenenbaum was not satisfied with Hallmark’s efforts to correct the defects and on July 14, 2006, an attorney for Tenenbaum wrote a letter to Hallmark’s registered agent to provide notice of claim prior to initiating an action against Hallmark, as required by Georgia statute.

Through correspondence dated December 31, 2008, Tenenbaum’s attorney again advised Hallmark of numerous construction defects that Tenenbaum had brought to Hallmark’s attention “through the years” and stated that there continued to be leaks, moisture issues and stucco problems.

Through correspondence dated August 4, 2009, Tenenbaum’s attorney directed Hallmark to cease work, advising that another contractor had been hired to address the damage resulting from the construction defects.  They reiterated the request that Hallmark disclose its liability insurance carriers and requested that Hallmark’s agent promptly place any liability insurer that may provide coverage to you for the claims upon notice of Tenenbaum’s intent to seek recovery.  The lawsuit was thereafter filed on December 18, 2009 asserting claims for breach of contract and breach of express and implied warranty.

Through correspondence dated January 21, 2010, Hallmark notified Builders of the action and requested a defense under the four CGL policies.  Hallmark agreed to defend Hallmark subject to a reservation of rights through correspondence dated February 12, 2010.  A supplemental response to Hallmark’s notice of claim was issued through correspondence dated September 19, 2011 advising that a defense was being provided under a reservation of rights, but stating that it had determined there was no coverage for the claims.  Builders’ September 19, 2011 letter noted that Hallmark had received Tenenbaum’s statutory notice of claim in 2006 and 2008 but the first notice provided to Builders was in 2010.

After a bench trial, the trial court ruled in favor of Tenenbaum and entered judgment against Hallmark in the amount of $366,867.  In the ensuing garnishment action, the trial court determined that the judgment was a covered liability under Hallmark’s CGL policies.

In the subject action, Builders contended that the trial court erred in finding coverage because Hallmark failed to satisfy its obligation under the policies to provide prompt notice of the claims.  The policies included the standard condition obligating the insured to notify Builders as soon as practicable of an occurrence which may result in a claim.

The court noted that under George law, CGL coverage generally is not intended to insure against liabilities for the repair or correction of faulty workmanship, based upon the definition of occurrence and the additional limitations imposed by the requirement of property damage.  However, the court noted that subject to specific exclusions, a CGL policy may provide coverage when the defective work of the insured unexpectedly damages other non-defective property or work.  This was the basis for the finding of coverage here.

After discussing the law regarding the insured’s failure to provide timely notice of an occurrence as a condition precedent to coverage, the court noted that Georgia courts do not favor forfeitures by insureds in construing contracts, but rather favor waiver by insurers of non-essential parts of an insured’s contract that are penal in nature.  After noting that Hallmark’s failure to notify Builders of Tenenbaum’s claim would ordinarily have provided a defense to coverage, the court found that Builders was aware of Tenenbaum’s July 2006 and December 2008 notices when it issued its first reservation of rights in February 2010 but failed to notify Hallmark of that defense to coverage until its supplemental correspondence in September 2012.  (The court refers to this as a September 2012 letter here but earlier in the decision refers to it as a September 2011 letter.)  In any event, the court found that Builders failed to give Hallmark timely notice of its intention to assert Hallmark’s untimely notice as a defense and thereby waived that defense.

Turning next to the known loss provision of the policy and Builders’ contention that Hallmark knew of the claim before the policy incepted, the court rejected same, finding that even if there were communications prior to the inception of the first policy, none of the communications made any reference to damage to framing, support beams, sheathing, sheetrock and interior walls, that is, damage to non-defective work, as found by the trial court.

Finally, the court acknowledged that there was an error in the actual amount of the judgment and remanded the case for correction of the judgment.

04/3/14         Redfish Key Villas Condominium Association, Inc. v. Amerisure Insurance Company
(2014 WL 1333202 District Court Florida)
Internal E-Mails and Correspondence Not Protected By Privilege
In another action which involved coverage for construction defect claims, the court focused on the issue of discoverability of certain portions of the insurer’s file.  In Redfish Key Villas Condominium Association, Inc., supra, the plaintiff sought coverage for construction defects suffered by the association as a result of work performed by or on behalf of Amerisure’s insured, DooleyMack Constructors, Inc. (hereinafter “DooleyMack”).  After the association hired another contractor to perform work, allegedly as a result of the faulty workmanship performed by DooleyMack, Amerisure denied coverage.  The association then brought an action against Amerisure for breach of contract and a declaratory judgment, contending that it was an intended third-party beneficiary of the policy under Florida law and that Amerisure breached its duty to DooleyMack and therefore the association, to pay the final judgment.

A request for production of documents was served upon Amerisure and various claims of privilege were asserted.  The plaintiff brought a motion to compel, after which Amerisure produced a privilege log, citing work product and attorney-client privilege as a basis for withholding internal Amerisure e-mails and correspondence, as well as coverage analysis memos.  The court found that an affidavit submitted by Amerisure supported their position that the primary motivating purpose behind the creation of some 14 pages of documents identified as coverage analysis memos and internal claim/log notes was to aid in litigation, as they were created after Amerisure was aware of the default judgment in the underlying construction defect litigation.  The court thus found that the documents were protected by privilege.

However, with respect to documents identified in the privilege log as internal Amerisure e-mails and correspondence which, according to an affidavit submitted, contained opinions and thought processes of Amerisure employees regarding issues of insurance coverage for the claim, the court found that they were not protected by the work product privilege because there was no indication that they concerned anything more than a routine claim investigation conducted in the normal course of business by two non-attorneys within Amerisure over one year before the underlying litigation.  The court reviewed certain other demands which were objected to on the grounds that they were overly broad or subject to privilege and ultimately denied the request for attorney’s fees sought by the condominium, finding that Amerisure had cooperated in discovery regarding the request at issue.


Audrey A. Seeley
[email protected]

04/15/14       Walden v. Smith and American Fam. Mut. Ins. Co.
Court of Appeals Western Dist., Missouri
Injury Arising From Dog Bite, While Dogs In Car, Does Not Arise Out of The Use Of A Vehicle Within Uninsured Motorist Insuring Grant.
An issue of first impression in Missouri, the Court held that an automobile liability policy afforded insurance coverage for bodily injury caused by a dog while being transported in a vehicle as the injury arose out of the use of the vehicle.  On September 28, 2006, Ms. Walden, was walking to her place of employment, a bar and grill.  Mr. Smith was parked in his pick-up truck in the parking lot with two pit bull terriers in the cab of the truck.  Ms. Walden approached Mr. Smith’s truck and while standing at the driver side door one of the dogs lunged at her biting her upper lip.

Mr. Smith was uninsured and Ms. Walden tendered the claim to her automobile liability insurer, American Family Mutual Insurance Company (“American Family”) as an uninsured motorist claim.  American Family’s automobile liability policy, uninsured motorist coverage, issued to Ms. Walden afforded insurance coverage for damages for bodily injury sustained by an injured person and must be caused by accident and arise out of the use of the uninsured motor vehicle.  American Family disclaimed insurance coverage to Ms. Walden on the ground that her injuries did not arise out of the use of a motor vehicle.

The Court, looking at this issue of first impression, began its analysis with case law interpreting the phrase “arising out of” not only under an auto policy but under other types of insurance policies.  The phrase “arising out of” has been broadly interpreted to require the injury to flow from, originate from or grow out of the motor vehicle.  Thus, the motor vehicle does not need to be the proximate cause of the injury but must have a causal relationship.

Next, the Court analyzed the automobile liability policy’s defined term “use.”  The policy defined “use” as “ownership, maintenance, or use.”  Of course the definition uses the term to define itself so the Court was required to determine the vehicles “uses” other than ownership and maintenance which would result in coverage.  Absent the case facts implicating a policy’s specific “use” definition, the Court applied a broad definition of “use” to include any means by which a vehicle may be employed or put into service that is consistent with the vehicle’s nature.

Yet, the Court further stated that American Family’s insuring grant was not satisfied simply because there could be “use” of a vehicle.  Rather, the policy’s insuring grant required an accident causing injury arising out of the use of a vehicle.  The Court proceeded to analyze the two phrases – “arising out of” and “use” together.

The Court stated that if the vehicle is merely the situs or locus of the injury then the injury does not arise out of the use of the vehicle.  This is because a temporal or spatial relationship between the injury and the vehicle is established and not a causal relationship.  However, the injury may arise out of the use of the vehicle even if the vehicle itself or the vehicle’s operation does not cause the injury.

The Court proceeded to address existing Missouri case law requiring the vehicle to be either the instrumentality causing the injury or the injury arising out of the vehicle’s inherent use.  The Court held that those cases were not inconsistent with the Court’s approach analysis of “arising out of the use” as ultimately there must be a causal relationship between the vehicle and the injury. 

Thereafter, the Court concluded that to arise out of the use of the vehicle that vehicle’s use must be consistent with the vehicle’s nature as a vehicle and the vehicle must create the condition that contributes to the cause of the accident. 

Here, the Mr. Smith’s vehicle was simply the situs for the injuries and this accident did not fall within American Family’s policy’s insuring grant.  The uncontroverted facts were that Mr. Smith was using his vehicle to transport his dogs.  Ms. Walden was injured when the dogs bit her.  Also, the injury was sustained while Mr. Smith was using his vehicle.  Importantly, Mr. Smith’s use of the vehicle to transport his dogs did not create the condition which caused the dogs to bite Ms. Walden. 

Cassandra A. Kazukenus
[email protected]

Licensing of Title Agents

New York will join 47 other states in requiring title insurance agents to be licensed.  New York State’s 2014 Budget includes legislation requiring title insurance agents to be licensed by the Department of Financial Services beginning October 1, 2014.  The legislation requires title agents to pay a biennial licensing fee of $40.00 and earn 20 hours of continuing education credit during the licensing period.  Additionally, the title agents must take a licensing test as well.  Attorneys admitted to the New York Bar are exempt from the continuing education and testing requirements but must maintain a license and pay the fee.  Non-attorney sub-agents such as paralegals and title company employees who can show continuous and regular work as a title agent in a competent and trustworthy manner for the five year period preceding the filing of a license application will also be exempt from the testing and continuing education requirements. 

Although regulations have not yet been promulgated and are anticipated, the legislation defines a title agent as “any authorized or acknowledged agent of a title insurance corporation, and any sub-agent or other representative of such an agent, who or which for commission, compensation, or other thing of value performs the following acts in conjunction with the issuance of a title insurance policy.”  The listed acts include evaluating the insurability of title, preparing and delivering title insurance commitments, marking up a title insurance commitment for the purpose of issuing the title policy and issuing title insurance policies on behalf of title insurance corporations. 

The bill also includes various consumer protection measures.  Title agents must disclose to insureds a “breakdown of all fees and services costs, including filing fees, closing costs and any other ancillary or discretionary charges to be incurred and the amount of any commission or other compensation to be paid to such agent by the title insurance corporation”.
Editor’s Note:  Thanks to my long-time friend and real estate partner, Roger Ross, [email protected], for his insight.

A2729 Deductible Triggers For Windstorms/Hurricanes

This legislation recently reported out of the Assembly Insurance Committee, and last year, the legislation passed the Assembly where it died in the Senate Insurance Committee. 

This legislation would require the superintendent to establish standards for hurricane and windstorm deductibles which would create uniformity in what a triggering even is for application of the deductible.  This is interesting in light of the fact that an insurer must submit a windstorm filing which is subject to the guidelines set forth by the Department before it may apply a windstorm deductible. 


Katherine A. Fijal
[email protected]

04/10/14       Linda Volk as guardian of Andrew Johnson v. Ace American Ins. Co.
United States Court of Appeals, Eighth Circuit (Minnesota Law)
The Term “Patient” in General Liability Policy is Not Ambiguous
Andrew J. Johnson [“Johnson”], through his guardian Linda Volk [“Volk”], sought recovery from an insurance policy issued by Ace American Insurance Company [“Ace”] to North Country Home Care, Inc. [“North Country”].  The district court granted summary judgment to ACE based on the patient exclusion; and, for the following reasons, the United States Court of Appeals, Eight Circuit [“Court”] affirmed.

Johnson being developmentally disabled required a personal care assistant.  In November 2005, while supervised by an assistant from North Country, was blinded in his left eye by a BB gun given to him by the assistant.

At the time of the injury North Country was covered through ACE for both general liability and professional liability.  The policies were in effect until June 2006, when North Country ceased operations.  Johnson reported his claim to North Country’s last president and then to ACE. 

ACE denied coverage determining that the professional liability coverage covered only claims made before the policy’s termination. This disclaimer was not contested by Johnson.  ACE also denied general liability coverage, citing the exclusion for:  “Any loss, cost or expense arising out of ‘bodily injury’ to your patients”.

Johnson sued North Country in state court.  After a Miller-Shugart settlement (the claimant releases the insured from personal liability and the claimant’s recovery is limited to the amount obtained from the insurers) he received a judgment of $2,695,758.27.  Johnson then sued ACE in State Court.  ACE then removed the case to Federal Court.

It was Johnson’s position that his injury is within the general liability coverage because he was not a “patient” within the meaning of the patient exclusion.   The term “patient” is not defined in the policy; and, according to Johnson the term “patient” means someone receiving licensed medical care.  Johnson argued that the assistant supervising Johnson was not licensed and (for purposes of summary judgment) did not provide medical care or medication. 

Based on its analysis of Minnesota Law regarding the interpretation of an insurance policy the Court determined that the district court properly determined that the term “patient” in the general liability policy was not ambiguous.  Minnesota courts rely on dictionaries for the plain and ordinary meaning of an undefined term; and, the dictionary definition of “patient” is “the recipient of various personal services.”  Webster’s Third New Int’l Dictionary 1655 (1981).  Based on this definition the Court held that Johnson was a patient of North Country.  Although Johnson argued that he was a “customer” or “client” – not a “patient”, the Court noted that the same dictionary definition of “patient” also included a “client” or “customer”.

The Court went on to point of that the use of “patient” in the context of the policy as a whole confirms that it is unambiguous.  When a term is used multiple times in a contract, as here, the court should read the term consistently throughout the entire contract. 

Next, Johnson focused on the definition of “patient” in several Minnesota statutes, arguing, without authority, that these statutes “inform the relationship between insurers and insureds.”  The Court found this focus to be misplaced because the ACE policy did not incorporate the statutes in any way, and the statutes do not purport to define generally the word “patient”.



Jennifer A. Ehman
  [email protected] 

04/17/14       Leading Ins. Group Ins. Co., Ltd v Greenwich Ins. Co.
Supreme Court, Kings County
Entire Sidewalk In Front of Restaurant Determined to be Part of the Premises Leased; No Evidence that Defect in the Sidewalk was the Result of Structural Alterations
Yelena Neizvestny tripped and fell on a sidewalk on Avenue U in Brooklyn as a result of an allegedly dangerous condition.  She commenced suit against S.M.M.B. Realty Inc., the alleged owner of 2319 Avenue U, and John and Christian Abadiotakis, who allegedly owned, leased or controlled 2323 Avenue U.  Yelena later amended her complaint to add Mei Juan Lin and Number 1 Chinese Restaurant, the alleged lessees of the street level floor of 2319 Avenue U. 

At the time of the incident, S.M.M.B. was insured by plaintiff, Leading Ins. Group Ins. Co.  Leading defended S.M.M.B in the underlying action, but tendered its insured’s defense to defendant, Greenwich Ins. Co., Number 1 Chinese Restaurant’s insurer, pursuant to an endorsement which provided additional insured coverage to S.M.M.B. The tender was denied.

After Leading settled the underlying matter, it brought this action.  Greenwich moved to dismiss this complaint relying on the Additional-Insured-Managers or Lessors of Premises endorsement which provided coverage to S.M.M.B., “but only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to you and shown in the Schedule and subject to the following additional exclusions, …[s]tructural alterations, new construction or demolition operations…”

The court held that the precise location of Yelena’s fall on the sidewalk was immaterial, as was any contention that liability for her fall would not be covered because she was not entering or leaving the restaurant. It was obvious that the entire sidewalk in front of 2319 Utica is necessary for access to or from the restaurant, even though a customer would use only a portion of the sidewalk entering or leaving as determined by the intended direction of travel.

The court also found that Greenwich Insurance had failed to point to any allegation in the underlying action that Yelena’s alleged trip-and-fall was caused by any “alteration” to the sidewalk made by S.M.M.B., whether “structural” or “non-structural.”  Nor did Greenwich provide any evidence that Yelena’s alleged injury was in fact caused by some “alteration” or repair by S.M.M.B.  The attempt by Greenwich to convert an exclusion for “structural alterations” into an exclusion for ”structural defects” was not supported by the English language.

The courtly lastly found that, following a comparison of the respective “other insurance” clauses, that the Greenwich policy was primary.

Earl K. Cantwell

[email protected]


Pennsylvania National Mutual Casualty Insurance Co. v. Allen, 2014 WL 92635 (Ala., January 10, 2014).
A car crash in New Jersey in April 2010 killed Roger Allen’s girlfriend, Jane Miner.  Allen was driving a “company car” issued to Miner who worked for an Alabama-based company which insured the car under a business-automobile liability policy with Penn National.  After the crash, Miner’s son filed a wrongful death claim against Allen in New Jersey state courts.  Penn National filed an action in Alabama seeking an order declaring that it owed no duty to defend or indemnify Allen in the New Jersey wrongful death case because he was driving the car without permission of the corporate owner. 

Allen moved to dismiss Penn National’s “declaratory judgment action” in Alabama based upon lack of personal jurisdiction.  Penn National opposed the motion arguing that there was jurisdiction because the Alabama company owned and insured the car.  The Trial Court initially ruled against Allen, but later reconsidered and then dismissed Penn National’s declaratory judgment action.  This ruling was affirmed on appeal.

          The Alabama Supreme Court concluded that Allen’s contacts with the State of Alabama were not sufficient to permit personal jurisdiction over him in that state.  At the time of the crash, both Allen and his girlfriend Miner were residents of New Jersey.  The accident occurred in New Jersey, and the New Jersey courts were involved in the underlying wrongful death action.  The vehicle’s connection to the Alabama-based corporate owner of the car was not sufficient to establish jurisdiction over Allen.  Therefore, the Trial Court’s ruling was affirmed, and Penn National’s declaratory judgment action was dismissed.

          The lesson of this case in this era of multi-state transactions, multiple corporate offices, travel, and inter-related companies and offices is not to forget that a court can only properly handle a case and resolve a matter pertaining to citizens over whom it has personal jurisdiction.  Personal jurisdiction often depends on whether the particular party acted within or did something to invoke the forum state’s laws and protection; connections to the state of other persons and parties may not be sufficient.  In particular cases, there may also be one or more choices on where a substantive or declaratory judgment action can be filed, and one of the considerations should be whether jurisdiction can be properly laid and soundly defended in the forum state.

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