Coverage Pointers - Volume XV, No. 4

Dear Coverage Pointers Subscribers:

Situations?  You have a situation?  We LOVE situations.  Two calls came in today where the word situation was in the first few words of the conversation. 

Summertime, and the living is easier. Busy here and that’s always a good thing.   Everyone’s working on K2 Investment strategies and we’ve been involved in several home office roundtables on strategic approaches.  You can be certain that we will keep sharp focus on case-law development and a birdie told me that there may be some other decisions in the hopper that will help clarify (or perhaps muddy) the waters.  Stay tuned and you can be certain that you will be the first to know.

There are number of presentations in the offing, a couple of which we will talk about in this newsletter and a few others that haven’t been formally announced. 


Wednesday in Connecticut:

2013 Catastrophe Toolbox Presentation
August 21, 2013
Stamford Connecticut

Hurwitz & Fine, P.C. was pleased to be invited to join the Catastrophe Toolbox team. Alford Bolin Dowdy, LLC of Mobile, AL; Boehm Brown Harwood, P.A. of Orlando, FL; Mozley, Finlayson & Loggins, LLP of Atlanta, GA had organized and presented two fantastic conferences held in 2011 in Boston and 2012 in Atlanta. With the arrival of Sandy, the Northeast states are now included in the program and we were honored to be included on the Catastrophe Toolbox program and presentation team.

This year the program will be presented at the University of Connecticut Extension Campus in Stamford, CT on Wednesday, August 21, 2013. It will commence at 1 pm and end at 4 pm. A reception will follow. Registration will be available beginning at noon. There is no fee to attend, but we do need a head count and so require a reservation from you. You can contact me to make your reservation.


It’s Good To Be Recognized:

The Upstate New York issue of Super Lawyers Magazine was released this week, and Hurwitz & Fine, P.C. was delighted to have 20 of our lawyers peer-selected on the list.  There is little more humbling and rewarding than having the respect of one’s professional colleagues Of all the lawyers selected outside of the City of New York, we were delighted to have two of our lawyers selected among the Top 10, eight of the Top 50 and four of the Top 25. None of this happens without the support of all of our lawyers and staff.  Here’s the H&F honor roll, along with the areas of practice selected, alphabetically in each category:

Top 10 Upstate New York Super Lawyers:

  • Dan D. Kohane                    Insurance Coverage
  • Harry F. Mooney                  Personal Injury Defense and Products


Top 50 Upstate Super Lawyers:

  • Diane F. Bosse                    Insurance Coverage
  • Ann E. Evanko                   Employment and Labor
  • Robert P. Fine                    Business and Corporate
  • Lawrence C. Franco           Business and Corporate
  • Dan D. Kohane                   Insurance Coverage
  • Harry F. Mooney                 Personal Injury Defense and Products
  • Michael F. Perley                Personal Injury Defense General
  • Andrea Schillaci                   Business Litigation
  • Paul J. Suozzi                     Personal Injury Defense General


Top 25 Women Super Lawyers:

  • Diane F. Bosse                    Insurance Coverage
  • Jody E. Briandi                    Personal Injury Defense General
  • Ann E. Evanko                    Employment and Labor
  • Andrea Schillaci                  Business Litigation


Upstate New York Super Lawyers:

  • David E. Adams                  Construction Litigation
  • Diane F. Bosse                   Insurance Coverage
  • Jody E. Briandi                   Personal Injury Defense General
  • Todd C. Bushway               Personal Injury Defense General
  • Earl K. Cantwell                  Business Litigation
  • Ann E. Evanko                    Employment and Labor
  • Robert P. Fine                     Business and Corporate
  • Lawrence C. Franco            Business and Corporate
  • Dan D. Kohane                    Insurance Coverage
  • Margaret M. Lagueras         Insurance Coverage
  • Harry F. Mooney                  Personal Injury Defense and Products
  • Steven E. Peiper                 Insurance Coverage
  • Michael F. Perley                Personal Injury Defense General
  • V. Christopher Potenza      Personal Injury Defense General
  • Edward C. Robinson           Estate Planning & Probate
  • Lawrence M. Ross              Health Care
  • Roger L. Ross                     Real Estate
  • Andrea Schillaci                  Business Litigation
  • Audrey A. Seeley                Insurance Coverage
  • Paul J. Suozzi                     Personal Injury Defense General


Long Island Calling – Fitz’s Bitz:

Dear Subscribers:
Greetings from beautiful Long Island, where we continue to enjoy beautiful weather but cooler temperatures that remind us that the end of summer is not far off.  Having just returned from the Federation of Defense and Corporate Counsel summer meeting in Colorado Springs, I’m looking forward to attending and participating in several fantastic insurance coverage programs during the next several months.
The Federation of Defense & Corporate Counsel will host its Insurance Industry Institute in New York City on October 2nd through 4th.  Additionally, and as many of you know from my previous columns, Hurwitz & Fine is excited to be involved in the New York State Bar Association sponsored Law School for Insurance Professionals.  I am honored to serve again as co-chair of the program and will be speaking in both Long Island and New York City.  Steve and Dan will also be lecturing in Albany and Buffalo respectively and we hope to see many of you at there.  If I can provide any assistance in registration, please contact me via email. 

The courts were quiet on Coverage B decisions over the last several weeks, so I will instead banter on some interesting social media issues.

Til next time,

Elizabeth A. Fitzpatrick
[email protected]


Attention Claims Professionals:

The New York State Bar Association, Torts, Insurance & Compensation Law Section has scheduled the 2013 Law School for Insurance Professionals.  Our own Beth Fitzpatrick is a state-wide Co-Chair of the program. It will be presented in the following venues

Thursday, September 12, 2013

Monday, September 16, 2013

Friday, October 4, 2013
New York City

Thursday, October 10, 2013
Long Island


Topics Include

Back to the Basics

  • Tips for writing a great coverage position letter and avoiding the common pitfalls
  • Partial denials in New York
  • When is the insured entitled to independent counsel?
  • What are reasonable fees?
  • What do you need to tell the insured?
  • Update on case law regarding timeliness and specificity.
  • Does Ins. Law 3420 apply between insurers?
  • The impact of the K2 Investment decision on claims handling

I am speaking on this topic in Buffalo and Beth Fitzpatrick is doing the same in Long Island and NYC

Strategic Use of the Declaratory Judgment Action— Understanding the Direct Action Statute in NY

  • When should each be used?
  • What is litigated in a direct action and who are the proper parties?
  • When are attorneys’ fees awarded to the successful litigant?

The Use of Social Media In Claims Investigations, Discovery and Jury Selection

  • How may you ethically avail yourself of information available through social media platforms?
  • How can social media be used against the insured?
  • Now that you’ve got it, is it admissible?

Steven Peiper is covering this topic in Albany.

The Role of the Insurance Professional In Bad Faith Litigation

  • Tips for preventing a claim
  • How to protect your file
  • What is discoverable and what is privileged;
  • Preparing for a deposition – do’s and don’ts.

So Many Liens – So Little Time

  • Workers’ Compensation, No-Fault, Medicare – understanding, negotiating and resolving claims involving liens
  • Intercompany reimbursement
  • The rights of health insurers.

What’s My Case Worth?
An interactive panel discussion of case values in different venues, with the assistance of a judge/mediator and with your input and participation.

Register online now at  to guarantee your seat at the program.

Peiper’s Pickings:

Well, another two weeks have passed and still we have no first party decision upon which to report.  Our other “go to”, Labor Law/Indemnification, is likewise silent this week.   With pressure mounting, we had to find something to write about this week…and we did.  From time to time, particularly in the dry spells that always accompany July and August, we produce a CPLR column.  This week is our 2013 entry into that category. 

Trust me; the cases reviewed this week will become useful at some point in the next six months.  These are the decisions that you can never seem to find when you’re trying to add a final point to a motion just before it goes out the door.  We review the standard on vacating a default, on whether a cross-motion is needed to seek affirmative relief, when/how to amend a bill of particulars, and an amended pleadings impact on previous pleadings in the same litigation.    

You don’t have to believe me now.  To be safe, though, print this week out, and keep it in your desk drawer.  When these issues pop up from time to time (and they will), you’ll be glad to have the answers at your fingertips.

For those of you who care to remember, I had a busy spring on the speaking tour.  From Chicago to Mineola to Syracuse to Chicago again, I had the great fortune of being in front of a different group every week.  After a brief respite, we’re gearing up to get back on the road. 

Our own Beth Fitzpatrick has  put together an “A” list of panels for this year’s Law School for Claims Professionals.  I am happy and honored to report that I have been tasked with working with the Albany panel this year.  A new location for me, as I have traditionally broken bread with the fine folks of Syracuse in years past.  For those of you in the Capital District, I would encourage you to come out to one of the best insurance programs out there.  See Dan’s column above for additional information, or feel free to drop me a line if you’d prefer. 

Also, if you’re into major first-party disaster work, please consider the CAT Seminar that Dan and I are participating in next week.  If you’re on the East Coast, it’s a short ride to Stamford.  We’d love to see you there. 

That’s all we have for this week.  See you again on the eve of football season. 

Steven E. Peiper
[email protected]

“And The Answer Is …” Spelling Errors -- One Hundred Years Ago:

Over the last couple of weeks, there has been a maelstrom of complaints and commentary about poor Thomas Hurley, III, who answered the Final Jeopardy question about the Emancipation Proclamation by spelling the first word Emancipitation. The answer was disqualified by the judges.  He bet $3,000 of his $9,600 in winnings and finished well behind a rival who amassed $66,600.  Were the judges right or were they overly and unnecessarily harsh?  We do not suggest an answer.

Is this controversy a new one?  Nah.  One hundred years ago today, a letter to the New York Times Editor from one W.J.L, contemplated the same question, and concluded that partial credit should be given if words are spelled partially right:

New York Times
August 16, 1913


Should Credit Be Given for Partly
Correct Words?

To the Editor of The New York Times:

Speaking of spelling, which is more frequently spoken of than done correctly, one county in Kentucky is having an orthographic battle to a finish, and Kentucky is a State in which thousands of persons can’t spell at all on paper without sticking their tongues out in the effort.  Just why that action of the human tongue has any effect on orthography is not apparent, but it is a well-known fact that before one of these Kentuckians has written two lines of a letter he sticks his tongue out till he can almost use it as a blotter.  Be that as it may, up in Leslie County, which is a mountain county, the Superintendent of County Schools – by the way, a woman, Miss Mary Hoskins – in a spelling examination marked the pupils according to the number of words misspelled; also, by the way, no pupil passed the examination, and the friends of one of them objected to the examination and had the court appoint examiners to do it properly. 

This particular public out of, say, twenty words, spelled five correctly, and got a rating of 25 per cent on the Superintendent’s examination.  The court examiners, however, judged differently, and after careful investigation of the examination paper allowed the pupil a rating of 55 per cent  sufficient to pass on.  But how did they do it?  There does not seem to be any way of getting around a misspelled word, because if it is spelled incorrectly it is spelled incorrectly, and that ends it, at least, according to the ordinary orthographio rules.  But the Leslie court examiners don’t look at it that way.  Their proposition is that the speller should have some allowance for coming close to it.  For example, if he spelled “protection” as here spelled he would be allowed 100, but if he missed three letters and got, say, “protecshun,” he would be allowed 70 per cent. on that word; other words in the same ratio, so that a list of twenty words could not be so incorrectly spelled what the pupil would lose completely out on it. 

And why not?  Doesn’t a pupil deserve a higher rating who misses spelling a word by only one letter than does a pupil who misses by half a dozen?  This style of spelling might result in queer kind of print, perhaps, but the moral principle is right, whatever may be the orthographic principle.  I am not sure that the Leslie court examiners adopted this rule entirely, but I can see no other way to raise a spelling rate, and the statement of Supt. Hoskins in the Leslie County Banner leave no other method by which to raise the rating from 25 to 55 per cent. on the face of the returns.  In any event, it is an interesting study in orthography to which the attention of the teachers and pupils of the New York public schools is respectfully called…                   
Michael’s Serious Injury Missive:

The drought continues.  Rather than accept another decision-less week in the serious injuries arena, I went hunting in federal court to report on Evans v. United States (No. 11-CV-1661 [ADS][GRB], 2013 WL 3967119 [EDNY July 31, 2013]).  Even though it is not binding precedent on New York courts, the court purports to apply New York law and the decision includes a lengthy discussion that navigates through many of the elements of a serious injury claim.

One of the serious injury questions I received this week concerned migraine headaches.  Do migraine headaches meet the serious injury threshold?  As a preliminary matter, ordinary headaches will not meet the serious injury threshold.  No headache will meet the dismemberment, significant disfigurement, fracture, or permanent loss of use requirement, and generally, headaches are not severe enough to amount to more than a “minor, mild, or slight limitation of use,” which is not sufficient to be a permanent consequential or significant limitation (Zeyger v. Litman, 250 AD2d 841, 842 [2d Dept 1998]).

The plaintiff might prevail under a theory of permanent consequential limitation of use, significant limitation of use, or the 90/180-day category where the plaintiff can offer proof that her headaches incapacitated her or interfered with her ability to work or engage in substantial activities at home (Licari v. Elliott, 57 NY2d 230, 238-39 [1982]).  Such headaches would have to be quite severe.  The Second Department held that periodic severe headaches accompanied by vomiting, which had diminished in frequency with time, did not constitute a serious injury (Coughlan v. Donnelly, 172 AD2d 480, 481 [2d Dept 1991]).  The First Department also held that headaches that restricted a minor’s participation in sports and made him work slower were not a 90/180-day serious injury (Torres v. Dwyer, 84 AD3d 626, 626-27 [1st Dept 2011]).  The First Department also implied, however, that had the minor been unable to attend school or suffered academically as a result of the headaches, that there might have been a question whether he met the definition of a 90/180-day injury (id.). 

From the standpoint of litigation strategy, where there is an exacerbation of headaches a motion for summary judgment on the issue of causation may be warranted, if for nothing else, to force the plaintiff to establish a question of fact regarding his or her headaches.  If the defendant can submit evidence that the plaintiff suffered from headaches or migraines before the accident, for which even her deposition testimony should suffice, then upon motion for summary judgment the plaintiff will have to produce evidence establishing an exacerbation.  Unless the plaintiff can produce objective proof of the exacerbation, which is not satisfied by an affidavit of a medical provider stating that headaches were caused by the accident, the defendant should prevail.

Michael Scott-Kristansen
[email protected]

A Century Ago, Impeachment of a New York Governor:

Governor William Sulzer was elected at the behest of Tammany Hall supporters, with his term beginning on January 1, 1913.  On taking office as Governor, Sulzer in an initial move announced the renaming of the Executive Mansion, “The People’s House”. The populist rhetoric of this move was followed by a campaign to “let the people rule”, through a series of reforms, including a move to promote open primaries for party nominations, and investigations into corruption in the legislature and executive branches of state government.

At the same time Sulzer refused to follow Tammany decisions for state appointments. These moves would damage the power of Tammany and other machines. Critics claimed that Sulzer was using the Direct primary issue to build his own machine or to co-opt Tammany but Sulzer claimed he wanted open and fair government.

Sulzer’s refusal to work with Tammany on appointments was a major threat to the organization, which had since its foundation been dependent on Civil Service work to develop its power.

As the conflict between Sulzer and Tammany moved on, accusations arose against the Governor, claiming that he committed perjury in an 1890 lawsuit, and that he was involved in fraudulent companies in Cuba while a Congressman. In May 1913, a Joint Committee was established by the state legislature to investigate the financial conduct of state institutions, with Senator James Frawley, a loyal Tammany Democrat, appointed its chairman. Over the next two months the committee moved to find misconduct on the part of the Governor.

That summer the Frawley committee, using Tammany-provided information, accused Sulzer of having diverted campaign contributions to purchase stocks for himself and to have lied under oath in regards to it. Sulzer, his supporters and many historians later affirmed that the impeachment charges were made under instructions from a Tammany Boss to remove him as an obstacle to Tammany Hall's influence in state politics.

On August 11, 1913 the findings of the Frawley committee were announced to the state legislature, and moves began towards impeachment, managed by Tammany Hall’s legislative leaders. The only support Sulzer had was in the Progressive legislators, who were too few to slow the process down.

On August 13, 1913, the New York Assembly voted to impeach Governor Sulzer, by a vote of 79 to 45. Sulzer was served with a summons to appear before the Court for the Trial of Impeachments and Lieutenant Governor Martin Glynn was empowered to act in his place pending the outcome of the trial.

After the Trial, on October 17, 1913, Sulzer was removed by a vote of 43–12, and Lt. Gov. Glynn succeeded to the governorship. Sulzer is the only Governor to be impeached in New York’s history.

Audrey’s Angles:

The 2013 NY Super Lawyers list is out and I am proud that we have 20 lawyers on the list!!  Congratulations to all of those who were recognized.  It is also a tremendous honor to be included as one of the several lawyers from Hurwitz & Fine, P.C. on the list for insurance coverage.

Last edition I asked you to save the date for DRI’s Insurance Coverage and Practice Symposium in NYC from December 12-13, with more information on the program to come.  The brochure is out and some of the topics include:

  • How the ALI Principles of the Law of Liability Insurance May Impact Insurers,
  • Targeting Insurance: Coverage Issues in Firearm and Self-Defense Claims,
  • Are We Covered?  Professional Liability Coverage Implications of Cyberliability Claims Against Law Firms,
  • What’s Next on the Mega-Event Front?, and
  • A Policyholder Attorney’s View of Coverage and the Claims Process.


It is recommended that you register early and book your hotel early as many people love to be in NYC at that time of year.

Also, if you are eligible in-house counsel or a claims executive you could qualify for free registration to this program.  Likewise, if you hold a panel counsel meeting, depending upon the number of participants at your meeting, you could qualify for a free registration, airfare, hotel, as well as refreshments at your meeting.  If you have any questions regarding the program or panel counsel meetings please feel free to email me at [email protected].   

Audrey A. Seeley

One Hundred Years Ago:  The Birth of Ernie “Tiny” Bonham
Pitcher Ernie Bonham was one of the known as one of the few masters of the forkball.  Born on August 16, 1913, he received his nickname because he stood 6'2" and weighed well over 200 pounds.

Joining the Yankees farm system in 1935, he moved up to the Bigs in 1940, after a stellar minor league career, although it was plagued with injuries.

When Bonham arrived in early August, the Yankees had fallen 11 1/2 games behind the league-leading Detroit Tigers. He won five of his first six decisions, and on September 19 defeated Cleveland's ace, Bob Feller, to boost the Yankees into first place for a few hours. They finished third, two games behind the Tigers.  Manager McCarthy said the Yankees would have won the pennant if they had had Bonham for the full season.

The rookie right-hander contributed a 9-3 record and a 1.90 ERA.

Bonham threw a high, hard fastball, but he said his best pitch was the forkball: "It sinks and is a fine change of pace." The forkball, thrown by wedging the baseball between the index and middle fingers, took a sudden dive as it approached the plate. Few pitchers used it.

In 1941 Yankees won the pennant and Tiny started the fifth game of the World Series against the Dodgers; his 4-1 victory gave the Yankees the championship. Joe DiMaggio caught a fly ball for the last out and handed the ball to Bonham.  In 1942. Bonham finished with a 21-5 record and a 2.27 ERA, second best in the league. He allowed less than one walk per nine innings and struck out nearly three times as many batters as he walked, the best ratio in the majors. Baseball writers ranked him fifth in the Most Valuable Player voting; his teammate, second baseman Joe Gordon, won the award.

He pitched in the 1942 World Series, where he took a loss and in 1943, won 15 games for the Pinstripers.  He stayed with the Yankees for the next few years, but was traded to the Pirates in 1946 where he had two mediocre seasons

He told teammates he planned to retire to his California farm after the 1949 season. His record was 7-4 by early September, but he had been complaining of abdominal pain and told Meyer he felt tired all the time. He entered Pittsburgh Presbyterian Hospital on September 8 for an appendectomy. According to news reports, the surgeons discovered intestinal cancer.

Bonham died a week later at age 36. The death certificate listed the cause as "irreversible shock [and] cardiovascular failure."

He was survived by his wife, Ruth, six-year-old daughter Donna Marie and son Ernie Jr., 4. Ruth Bonham was the first baseball widow to collect a death benefit under the new player pension plan. She was awarded $90 a month for the next 10 years.

Jen’s Germs?

I am currently suffering from the dreaded summer cold.  Nothing is worse than coughing and sneezing while it is sunny outside and the temperature is in the 70s.  I blame my current condition on a little girl, measuring approximately two foot high, that lives with me, attends daycare and pretty much will pick up any object (including sticks, rocks and other kids’ toys) and put them into her mouth.  Yes, I am blaming this on my fifteen month old daughter.

But anyways, this week I report on a Queens County trial court decision that addresses the impact of a waiver of subrogation clause in a construction contract.  The court found that the property owners made an insurance claim for damages to that part of the structure which pre-existed the new construction undertaken by the general contractor; thus, the waiver of subrogation clause had no applicability to the existing first and second floors which were damaged; an interesting decision that is worth a read. 

Enjoy the weekend.  Till next issue…

Jennifer A. Ehman
[email protected]

One Hundred Years Ago:  County Fairs

Middletown Daily Times Press
August 16, 1913


Even Dolls and Carriages May be Entered

The annual baby show and parade of the Orange County Fair will be held Wednesday morning, August 27, at 10 o’clock.  All entries must be mailed or filed prior to the day of the competition with W. F. Royce, of this city.  If possible, the babies competing should be in carriages or go-cars, as they are more readily placed in the parade.  Entries may be made from any nation, competition being unrestricted.  The prizes offered by the society are as follows:

            Finest baby boy between three months and one year, $5 in gold.
            Prettiest girl baby between three months and one year, $5 in gold.
            Finest boy baby between one year and eighteen months, $5 in gold.
            Prettiest girl baby between one year and eighteen months, $5 in gold. 
            Finest boy baby between eighteen months and two years, $5 in gold.
            Prettiest girl baby between eighteen months and two years, $5 in gold.
            Finest boy baby between two years and 2 ½ years, $5 in gold.
            Prettiest girl baby between two years and 2 ½ years, $5 in gold.
            Twin babies under eighteen months, $10 in gold.
            Twin babies between eighteen months and 2 ½ years, $10 in gold.
            Heaviest baby, 2 ½ years, $5 in gold.
            Lightest baby over six months, $5 in gold.
            Prettiest negro baby under one year, $5 in gold.
            Prettiest negro baby between one year and 2 ½ years, $5 in gold.
            Negro twin babies under 2 ½ years, $10 in gold.
            Twins under three years old, $10 in gold.
            Decorated baby carriage, first, $5; second, $2.
            Decorated go-cart, first, $3; second, $2.
            Handsomest dressed doll, first, $2; second, $1.
            Decorated doll’s carriage, first, $2; second, $1.

Special Prizes:

            Hanford &Adams, for heaviest baby, pair of shoes.
            J. V. Demerest Drygoods Co., for baby with the least hair, comb and brush.
            Stanley Millspaugh, for the youngest boy baby, a dress.
            J. J. Reigeluth, for the prettiest colored baby, doll.
            Carson &Towner, for the youngest girl baby, go-cart robe.
            Crawford Furniture Co., baby over two years with prettiest eyes, a doll’s go-cart.
            Charles Wolff, for the largest three-year old boy, a wash suit.
            Weiss Drygoods Co., for baby between two and three years with most hair, comb and brush.
            Harding Shoe Store, for smallest baby, one year old, a pair of shoes.
            Henderson Drygoods Company, for the prettiest girl baby with homeliest father, a baby coat.
H. M. Howell, prettiest boy baby between six months and thirty months and residing in New York, New Jersey or Pennsylvania, a silver cup.
Hon. A. Denniston, for prettiest girl baby between six months and thirty months, born and residing in New York state, a silver cup.
           Frank Drake, Goshen, homeliest baby, $10.

Editor’s Note:  Homeliest baby?  We did take notice that a Frank Drake was the editor of the Goshen Independent Republican, a competitive newspaper in Orange County, NY.  Of course, that may be a coincidence.

In This Week’s Issue of Coverage Pointers:

Dan D. Kohane
[email protected]

  • Choice of Law Favored in Coverage Case Decided Based on Domicile of Insured and State Where Policy Issued
  • Dog Bite, Not Car, Caused Injuries, So SUM Coverage Not Available


Michael P. Scott-Kristansen

[email protected] 

  • Defendant Prevails Because Plaintiff’s Injuries Were Not Significant, Consequential, Permanent, or Caused by the Accident, and Limitations Did Not Affect Substantially All of His Usual Daily Activities


Margo M. Lagueras

[email protected]


  • Respondent’s Submissions Fail to Support Denial of Wage Loss Benefits
  • Respondent Fails to Prove Applicant’s Wage Loss Claim Was Fraudulent



  • Foundation Is Not Required for the Assignment of Benefits Form
  • Plaintiff Fails to Lay Proper Foundation for Admissibility of Claim Form
  • Defendant Fails to Establish Privilege of SIU File
  • Failure to Establish Timely Denial Precludes Independent Contractor Defense
  • Defendant Fails to Make Prima Facie Showing With Regard to EUO and IME Scheduling


Steven E. Peiper

[email protected]

  • Amended Complaint Supersedes All Allegations Asserted In, and Litigation Pending Related to, the Initial Complaint
  • Application to Amend Bill of Particulars Denied Where Request Was Made After the Initial Trial, and Years After the Close of Discovery
  • Non-Party Discovery Requires Movant to Establish “Reasons and Circumstances” Why the Requests Are Necessary
  • Trial Court Has Discretion to Grant Requests for Relief That Are Not Reduced to a Notice of Motion
  • Authorizations for SSD Records Discoverable Where Plaintiff’s Daily Activity Level Is “In Controversy”

Elizabeth A. Fitzpatrick
[email protected]

  • Use of Social Media for Service of Process


Audrey A. Seeley
[email protected]

  • Significant Change In Whether Insured Bound By Consent To Settle Provision In Policy When Defense Offered Subject To Reservation Of Rights


Cassandra A. Kazukenus
[email protected]

  • Amendment to CPLR §3103 Expanding Who May Seek Protective Order
  • Legislation Seeking To Enhance Regulatory Efficiency And Efficacy


Katherine A. Fijal

[email protected]

  • Products Warranty Condition Precedent to Coverage


Jennifer A. Ehman
[email protected]

  • Waiver of Subrogation Provision Does Not Bar Contractual Subrogation Claim
  • Court Upholds Late Notice Denial Where Insured Was Aware of Leak and Damage to Adjoining Property Shortly After It Began; Belief that Tenant Was Responsible Was Not a Reasonable Excuse


Bad Faith

  • Carrier in Kentucky Did Not Act in Bad Faith When It Took UM Claim to Judgment
  • Under Pennsylvania Law, Differing Expert Opinions Undermines Bad Faith Claim


Earl K. Cantwell

[email protected]



That’s it for now.  It’s hard to imagine that the next issue will be bumping up on Labor Day.

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]



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

Dan D. Kohane
[email protected]

Audrey A. Seeley
[email protected]

Jennifer A. Ehman
[email protected]

Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley
Elizabeth A. Fitzpatrick
Katherine A. Fijal
Audrey A. Seeley
Steven E. Peiper
Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

Michael P. Scott-Kristansen
Diane F. Bosse

Steven E. Peiper, Team Leader
[email protected]

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

Audrey A. Seeley, Team Leader
[email protected]

Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

Jody E. Briandi, Team Leader
[email protected]

 Elizabeth A. Fitzpatrick

Diane F. Bosse

Index to Special Columns

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

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]

08/14/13       Jimenez v. Monadnock Construction, Inc.
Appellate Division, Second Department
Choice of Law Favored in Coverage Case Decided Based on Domicile of Insured and State Where Policy Issued
Jimenez sued Monadnock Construction, Inc. and others after allegedly sustaining an injury while working for Bedroc at premises located in Manhattan.  Common law claims and Labor Law violations were alleged.  Monadnock (and others) commenced a third-party action against Bedroc for indemnification, for breach of a contract to procure insurance, and for contribution.

They also sued American Safety Casualty Insurance Company (“ASCIC”), Bedroc’s carrier; American Safety Claims Service, Inc. (“ASCSI”), which had disclaimed coverage to Bedroc on ASCIC’s behalf based on, among other things, late notice; and Global Associates, the broker which secured the policy.  Bedroc joined in the claim against ASCIC and ASCSI claiming that ASCIC was obligated to provide a defense and indemnification in the underlying action.

At the time of the issuance of the policy, New Jersey, the state where ASCIC issued its policy, required a demonstration of prejudice before an insurer could disclaim based on late notice; New York did not.

“‘In the context of liability insurance contracts, the jurisdiction with the most significant relationship to the transaction and the parties [sic] will generally be the jurisdiction which the parties understood was to be the principal location of the insured risk . . . unless with respect to the particular issue, some other jurisdiction has a more significant relationship’” [internal substitutions and quotations omitted].  Where the covered risks are spread over multiple states, the state of the insured's domicile should be regarded as the principal location of the insured risk.

Here, based on the plain language of the subject policy, Bedroc and ASCIC understood that the insured risks were spread over multiple states and, in certain circumstances, beyond the United States. Moreover, the policy was issued to Bedroc, a New Jersey corporation, through a New Jersey broker, and contains a New Jersey endorsement. Accordingly, New Jersey law would apply and ASCIC’s disclaimer was invalid because ASCIC failed to show that it was prejudiced as a result of Bedroc’s late notice of the plaintiff's accident.

08/07/13       Matter of Allstate Insurance Company v. Reyes
Appellate Division, Second Department
Dog Bite, Not Car, Caused Injuries, so SUM Coverage Not Available
This case involved an application to permanently stay arbitration of a SUM (Underinsured Motorist) claim.  Reyes was walking in front of a Sunoco Mart.  As she passed a parked car, a Rottweiler extended its head from the vehicle and bit her on the right breast.

She sued the owner of the car, insured by GEICO, which later settled for the $25,000 policy limits.  She then sought to recover SUM benefits.  Allstate, her SUM carrier, denied the claim alleging that the incident did not arise out of the ownership, maintenance or use of a motor vehicle.

Underinsured endorsements provide coverage only when the injuries are the result of an accident "arising out of such underinsured's motor vehicle's ownership, maintenance or use."  Use of an automobile encompasses more than simply driving it, and includes all necessary incidental activities such as entering and leaving its confines.  To satisfy the requirement that the accident arise out of the "ownership, maintenance or use of" a motor vehicle, the accident must have arisen out of the inherent nature of the automobile and, as such, inter alia, the automobile must not merely contribute to the condition which produces the injury, but must, itself, produce the injury.

To be a cause of the injury, the use of the motor vehicle must be closely related to the injury."  Here it was a dog bite, not a vehicle that caused the injuries so no coverage is available.
Editor’s Note:  The right decision for the right reason.  When we reported on the lower court decision in our December 21, 2012 decision, which was reversed by this decision, the Editor’s Note read: Now That’s Just Ridiculous.


Michael P. Scott-Kristansen
[email protected] 

07/31/13       Evans v. U.S.
United States District Court, Eastern District of New York
Defendant Prevails Because Plaintiff’s Injuries Were Not Significant, Consequential, Permanent, or Caused by the Accident, and Limitations Did Not Affect Substantially All of His Usual Daily Activities
Maybe you are thinking this case is not worth your time because it was not issued by the Appellate Division of the New York State Supreme Court.  While we almost exclusively limit the serious injuries column to the New York appellate courts, federal court decisions often present extensive analysis and detailed factual accounts that are seldom seen at the state level.  A benefit of this rich discussion is that the federal courts often explain the law as if they were speaking to an outsider.  As long as you read decisions with some care (sometimes federal courts will interpret state law differently than state intermediate appellate courts), this is an excellent opportunity to take advantage of a court’s scholarly work and walk away with a more comprehensive understanding of the law and how it applies to the facts of a case.  The case is long, but worth the effort.

In this case, the plaintiff, Evans, was allegedly injured in January 2010 when he was rear ended by a Chevy Suburban, traveling at approximately twenty miles per hour.  Although the Suburban was driven by an employee of the United States Fish and Wildlife Service and the United States is a defendant, it did not affect the serious injury analysis in this case. 

Evans admitted in his deposition testimony that he did not suffer dismemberment, disfigurement, or fracture, so the only serious injury categories at issue were the permanent loss of use, permanent consequential limitation of use, serious limitation of use, and 90/180-day categories.  Evans’ allegations consisted of causally related injuries to his cervical and lumbar spine.

Evans had a history of prior injuries, including:

  • A 1974 basketball back injury that resolved in approximately two weeks;
  • A period in 2002 where he experienced level ten neck and back pain, on a one to ten scale, at C1, C2, C6, L4 and L5; severe restricted joint function at C1, C2, C6, L4, and L5; and spasm in his suboccipital and lumbar paraspinal muscles, for which he experienced only a 20% improvement in pain; and
  • A 2004 rear-end motor vehicle accident that resulted in lumbosacral sprain/strain, lumbar subluxation, lumbosacral radicular syndrome, and cervical sprain/strain, causing difficulty with moderate standing, walking, bending, sitting, repetitive light lifting, and repetitive light twisting and turning as well as stiffness upon rising.


The accident at issue was not particularly severe.  Evans’ airbags did not deploy, he did not make contact with the dashboard or steering wheel, and he was able to get out of his car and move around within minutes.  Although he complained to the police about back and neck pain, no ambulance was called and Evans drove himself home.

After the accident, Evans treated with his chiropractor several times per week until March 2011 and then with an orthopedic physician.  Evans’ MRI showed disc bulging at C3-4, C4-5, and C6-7.  A sworn affidavit of Evans’ chiropractor contained measurements reflecting a decreased range of motion in Evans’ cervical and lumbar spine, confirmed the above MRI results, and stated that Evans’ injuries were caused by the accident “to a reasonable degree of chiropractic certainty.”  The affidavit also stated that Evans was permanently partially disabled and suffered limitations, including difficulty in sitting, standing, walking, climbing stairs, and lifting heavy objects.

Evans testified at his deposition that his injuries affected his ability to perform chores for several months after the accident, including taking out the garbage three times per week and cutting the grass for ten minutes every week.  He alleged that his injuries made him stay home more due to decreased energy levels, causing him to picking up his son from school once per week instead of every day.  He also alleged that his injuries resulted in depression.  Notably, no physician ever placed restrictions on Evans’ activities, Evans never received any disability certificates, and Evans never sought treatment for or received a diagnosis of depression.

Because Evans never sought treatment for depression or decreased energy levels, there is no objective medical evidence to support those allegations.  Therefore, his depression and energy levels did not qualify as serious injuries because “subjective complaints concerning [the plaintiff’s] mental state do not satisfy the serious injury threshold.”

The Court noted that a permanent loss of use requires a total loss of use.  A permanent consequential limitation of use or significant limitation of use requires demonstration of more than a mild, minor, or slight limitation of use.  Consequential limitations require an important and qualitative limitation of use of a body part, considering that part’s normal function, purpose, and use.  Significant limitations must also be important limitations.  All limitations require objective medical proof.  Any conclusion of permanence is a medical determination that requires an objective basis, not just a physician’s conclusory assertions.  A significant limitation can be demonstrated through either quantified losses in range of motion or a qualitative assessment of the plaintiff’s condition based upon objective medical evidence; both of which must be compared to a normal baseline.

The plaintiff’s alleged limitations, concerning chores and household tasks, lack permanence because Evans admitted they only lasted a few months.  Evans’ household limitations were also minor, not the important limitations that the statute requires.  Therefore, Evans did not suffer a permanent loss, a permanent limitation, or a significant limitation of use. 

Evans’ alleged limitations also did not support his 90/180-day claim.  A 90/180-day injury requires that the plaintiff demonstrate he or she was prevented from performing his or her usual activities “to a great extent.”  A “slight curtailment” in the material acts that constitute substantially all of the plaintiff’s usual or customary daily activities is not sufficient.    Regardless of the fact that Evans’ limitations probably failed to meet the 90-day time period, mowing the lawn, picking up his son from school, and taking out the trash did not constitute substantially all of Evans’ daily activities.

While the above addressed most of Evans’ contentions regarding the serious injury threshold, his remaining contentions were rejected because he could not demonstrate a causal connection.  Evans’ medical evidence showed that he suffered from bulging discs in his cervical spine, decreased range of motion, and limited ability to sit, stand, walk, climb stairs, and lift heavy objects.  The defendant submitted plaintiff’s prior medical records showing his strikingly similar prior back injuries and movement limitations.  In response, the plaintiff submitted the affidavit of his treating chiropractor, stating that the injuries were caused by the accident.  The Court rejected this evidence because, among other things, it was conclusory and failed to explain either the causal connection or why Evans’ injuries were not preexisting. 


Margo M. Lagueras

[email protected]


08/07/13       Applicant v. Farmington Casualty Company
Erie County, Arbitrator Veronica K. O’Connor
Respondent’s Submissions Fail to Support Denial of Wage Loss Benefits
Respondent alleged that Applicant was denied further wage loss benefits because her employer failed to return NF-6 verification forms, because her employer was not permitted to do business in New York from September 2011 through September 2012, and because Applicant failed to comply with vocational rehabilitation services.  Applicant claimed lost wages for the period from July 13, 2011, through November 29, 2011.

Applicant, a collections specialist, was involved in an accident on June 25, 2011, and filed her No-Fault Application with a request for lost wages on June 29, 2011.  In December, Respondent paid for June 29, 2011, through July 12, 2011.  Although Applicant’s employer failed to return any of the NF-6 wage verification forms, on February 2, 2012, Applicant’s new attorney forwarded pay stubs and a letter from the employer dated May 2011.  On February 6, 2012, Respondent assigned a vocational rehabilitation service to Applicant’s claim.  On April 13, 2012, Respondent issued a denial.

The Arbitrator determined that Respondent’s submission did not support the denial.  The pay stubs submitted provided sufficient information to pay the additional period claimed, so denial on the basis of lack of verification from the employer was groundless as payment had been made from June 29 to July 12, 2011.  In addition, Respondent failed to submit any documentation to support its allegation that Applicant’s employer was not allowed to do business in New York from September 2011 to September 2012, so the additional period claimed could not be denied on that basis.  Furthermore, vocational rehabilitation was not requested until February 2012.  As such, wages for the period claimed in 2011 could not be denied on that basis.  Finally, Applicant refuted Respondent’s allegation that she was terminated due to unrelated issues on July 12, 2011, by establishing that her termination was caused by unacceptable “work performance” as a result of the injuries sustained in the accident.  As such, the Arbitrator awarded wage loss for the period claimed.

08/05/13       Applicant v. Esurance Insurance Co.
Erie County, Arbitrator Kent L. Benziger
Respondent Fails to Prove Applicant’s Wage Loss Claim Was Fraudulent
Applicant was rear-ended by an intoxicated driver in February 2010.  He then allegedly hired an individual to cover his snowplowing commitments and presented a claim for wage loss based on his payments to the substitute worker.  He later withdrew the wage loss claim.  Respondent commenced an investigation and the SIU investigators obtained an affidavit from the supposed substitute worker in which the worker denied being paid by Applicant.  The substitute worker also claimed the initial receipts were blank and later filled in by Applicant, who was also examined under oath.  Based on the investigation, a denial was issued for all No-Fault benefits.  The State Department of Insurance commenced an investigation, and criminal charges were filed by the local SA’s office.

At the hearing, Applicant, his wife, and two SIU investigators testified.  The Arbitrator determined that Respondent failed to prove fraud by a preponderance of the evidence.  He found the substitute worker’s affidavit to not be credible as evidence was presented of his prior criminal history and credit history.  In addition to the affidavit, he also gave a supporting deposition in which he contradicted himself and admitted to plowing certain properties.  The Arbitrator found that the substitute worker’s prior history raised issues of credibility and noted that although subpoenaed, he did not appear.

The Arbitrator also indicated that the SIU investigators never obtained copies of the snowplowing agreements or contacted any of the homeowners on the route.  In addition, they never questioned Applicant’s wife who was his bookkeeper and testified credibly to making payments to the substitute worker.  Finally, Applicant presented a certificate of disposition that all criminal charges against him as to insurance fraud, falsifying business records and petite larceny were dismissed.

Since in this proceeding Applicant was seeking reimbursement for medical bills, including a cervical surgery, and all the denials were based on fraud, Respondent’s denials were not upheld.  Furthermore, some of the denials also included lack of medical necessity based on an orthopedic IME.  The Arbitrator additionally did not find the IME to be persuasive as the IME doctor did not adequately discuss the objective MRI findings. 


07/12/13       All Borough Group Medical Supply, Inc. v. GEICO
Appellate Term, Second Department
Foundation Is Not Required for the Assignment of Benefits Form
The Civil Court denied plaintiff’s motion to admit into evidence its assignment of benefits form, document delivery receipt and claim form.  On appeal, the Appellate Term held that the assignment of benefits form is not hearsay and that it, like a contract, has independent legal significance and only needs to be authenticated to be admissible.  However, a foundation must be laid for both the delivery receipt and claim form if being submitted to prove the transactions recorded. 

During the nonjury trial, plaintiff’s employee-witness testified that he generated the claim forms and that his father, the owner, had generated the delivery receipts.  The witness also testified that he was familiar with the office routine, that the claim forms and delivery receipts were contemporaneously and routinely made in the course of business, and that it was the regular business practice to make such records.  Nevertheless, the Civil Court sustained defendant’s objection to the admission of the documents holding that the witness was not a proper person to lay a foundation. 

On appeal, the court noted that it is not necessary to call the person who made a record in order to lay a proper foundation pursuant to the business record exception.  Since the witness was plaintiff’s employee and was familiar with the office’s routine, he was a proper person and his lack of personal knowledge only affects the weight, not the admissibility, of the record.  Judgment was reversed.

07/05/13       Peace of Mind, Social Work, P.C. v. Travelers Property Casualty
Appellate Term, Second Department
Plaintiff Fails to Lay Proper Foundation for Admissibility of Claim Form
At a nonjury trial, plaintiff’s foundation witness, who was employed by a third party, testified that she used plaintiff’s file documents to prepare the claim form.  However, she failed to demonstrate that the documents relied upon were made consistent with CPLR 4518(a), or that the documents were incorporated into her employer’s records and were relied on in the regular course of her employer’s business.  As such, on appeal the Civil Court was reversed and the complaint dismissed.

07/05/13       All Boro Psychological Services, P.C. v. Allstate Ins. Co.
Appellate Term, Second Department
Defendant Fails to Establish Privilege of SIU File
Plaintiff’s motion, which sought discovery of defendant’s SIU file, was denied, but reversed on appeal.  Defendant’s cross motion to dismiss the complaint or, alternatively, to compel plaintiff to produce individuals for depositions, was granted and affirmed. 

To avoid production, defendant was required to show that the file was prepared solely for litigation.  Defendant failed, however, to demonstrate that it had decided to deny plaintiff’s claim before commencing the investigation.  Therefore, the SIU file was not privileged. 

With respect to defendant’s cross motion, plaintiff contended that defendant was not entitled to discovery regarding whether plaintiff was a professional service corporation which failed to comply with the applicable licensing laws because in prior, unrelated actions defendant had entered into stipulations stating plaintiff was in full compliance.  The court noted, however, that collateral estoppel did not apply because the issue was resolved by stipulation and not actually litigated.  As such, defendant was entitled to seek discovery regarding plaintiff’s compliance.  Furthermore, plaintiff did not timely object to defendant’s demand for verified written interrogatories, so plaintiff was obligated to produce the information sought with the exception of matters that were privileged or palpably improper.  Since plaintiff failed to show that the requested discovery was privileged or palpably improper, defendant’s cross motion was properly granted.

07/01/13       Top Choice Medical, P.C. v. Republic Western Ins. Co.
Appellate Term, Second Department
Failure to Establish Timely Denial Precludes Independent Contractor Defense
Plaintiff moved for summary judgment and defendant cross-moved to compel plaintiff and its treating physician to appear for depositions.  The Civil Court granted plaintiff’s motion and denied defendant’s cross motion in light of plaintiff’s submissions, including the treating physician’s W-2 form, because it concluded that additional discovery would not lead to relevant evidence.  The court determined that defendant failed to establish that it timely denied the claim and, as such, it was precluded from asserting most defenses, including the defense that the treating physician was an independent contractor and not plaintiff’s employee.  Furthermore, even if defendant had established timely denial of the claim, it would nonetheless be precluded from asserting that defense because it was not raised in its NF-10.  As such, on appeal, the decision was affirmed.

07/01/13       SS Medical Care, P.C. v. Nationwide Ins.
Appellate Term, Second Department
Defendant Fails to Make Prima Facie Showing With Regard to EUO and IME Scheduling
The Civil Court granted defendant’s motion for summary judgment dismissing several causes of action in plaintiff’s complaint on the grounds that plaintiff’s assignor failed to attend scheduled EUOs and IMEs.  On appeal, the court was reversed.  With respect to the EUO scheduling letters, defendant showed that it mailed letters to plaintiff’s assignor at three different addresses.  Defendant failed, however, to establish that it mailed a follow up letter after the assignor failed to appear.  With respect to the IMEs, defendant submitted the affidavit of an employee of the company contracted to schedule the medical examinations.  The employee attested that the standard practice was to mail a scheduling letter to the address shown on the NF-2 verification of treatment form.  However, in this case, that address was in Port Jefferson Station and the scheduling letters were mailed to two different addresses in the Bronx.  As such, defendant’s submissions were insufficient.

Steven E. Peiper

[email protected]

08/14/13       Re-Poly Mfg. Corp. v. Dragonides
Appellate Division, Second Department
Amended Complaint Supersedes All Allegations Asserted In, and Litigation Pending Related to, the Initial Complaint
Despite a confusing set of facts, the dispute in this case boils down to the fact that the principal of Re-Poly failed to submit premium checks to the carrier.  As a result, the company’s fire policy lapsed.  That, in and of itself, was not such a big problem.  When, however, the company’s building was lost in a fire, the lack of insurance became a major problem.  As a result, the shareholders of the Re-Poly commenced an action directly against defendant, as Re-Poly’s president, and against Cary Chin, Re-Poly’s CFO.

In addition, the shareholders sought specific performance of an option to purchase certain real estate owned by Mr. Dragonides, which became exercisable, as here, when the shareholder investments were not returned within a specified time period.

Finally, pursuant to a contract between Re-Poly’s shareholders and Maine Services, Mr. Dragonides/Maine Services agreed to transfer accounts receivable from Maine Services to the shareholders.  As such, the shareholders also commenced a fifth cause of action for specific performance of that contractual provision.

Mr. Dragonides moved to dismiss the claims against him, and the court, in fact, dismissed the causes of action for specific performance.  The basis of the decision was that Re-Poly had not commenced manufacturing, and as such those causes of action had not ripened. 

Thereafter, plaintiffs served an amended Complaint reasserting the causes of action for specific performance. This time, however, plaintiffs alleged manufacturing commenced prior to the fire at issue.  Mr. Dragonides immediately moved to dismiss the amended Complaint because the plaintiffs were not granted leave.

On appeal, the Appellate Division noted that under CPLR 3211 a party is permitted ten days to serve an answer after a decision on a Notice to Dismiss is served with Notice of Entry.  The same provision also permits a plaintiff to serve an amended Complaint without leave of court.  Having served the amended complaint within the time frame permissible by the CPLR, the court permitted the amendment.

It followed that because the amended complaint superseded all allegations in the original complaint, any further argument relative to allegations in the first complaint were rendered academic.  

08/14/13       Rodgers v. NYC Transit Auth.
Appellate Division, Second Department
Application to Amend Bill of Particulars Denied Where Request Was Made After the Initial Trial, and Years After the Close of Discovery
At trial, the jury was instructed that it could award damages based upon the plaintiff’s increased susceptibility to injuries as a result of a pre-existing condition.  Based upon this instruction, the jury awarded a verdict in excess of $2,000,000 to plaintiff. 

On appeal, defendant (who timely objected at trial) argued that the instruction was improper because the plaintiff had not alleged susceptibility in his complaint or bill of particulars.  The Second Department agreed, and remanded the matter back to the Trial Court for a new trial. 

Upon arrival at the Trial Court, plaintiff moved to amend his bill of particulars to allege “aggravation and/or activation of a previously asymptomatic condition to the spine and activation of latent disease defect.”  The Trial Court permitted the amendment, and the instant appeal immediately ensued. 

In overruling the Trial Court, the Appellate Division noted that, in general, amendments should be freely granted.  However, where, as here, the application for leave to amend was made “long after the action had been certified for trial, judicial discretion…should be discrete, circumspect, prudent and cautious.”  Here, where there was more than four years of open discovery exchange, and the motion to amend did not occur until after the first trial concluded, the Appellate Division found that the it was an abuse of discretion to permit the bill of particulars to be amended at such a late date. 

08/14/13       Dicenso v. Wallin
Appellate Division, Second Department
Non-Party Discovery Requires Movant to Establish “Reasons and Circumstances” Why the Requests Are Necessary
In this case, the Second Department reemphasizes the well-worn path of decisions that limit the ability to seek non-party discovery.  In order to obtain discovery material from a non-party, the movant must establish the documentation is “material and necessary” and must set forth an explanation of why the discovery is sought from the particular non-party subpoenaed. 

Failure to establish the “circumstances or reasons” why the discovery is necessary, as was the case here, will result in the application for non-party discovery and depositions being denied.

08/07/13       Fried v. Jacob Holding, Inc.
Appellate Division, Second Department
Trial Court Has Discretion to Grant Requests for Relief That Are Not Reduced to a Notice of Motion
Plaintiff commenced the instant action against Jacob Holding on April 30, 2010.  As service was perfected upon the Secretary of State, per the Business Corporation Law, defendant was required to appear within thirty days.  On July 6, 2010, nearly six weeks after defendant’s answer was due, plaintiff sent a follow up letter to Jacob Holding.  When that letter went unanswered, approximately one week later plaintiff moved for a default judgment.

Not surprisingly, the motion for default garnered the attention of someone at Jacob Holding.  Jacob Holding timely responded to the default motion and, at the same time, requested the court issue an order compelling plaintiff to accept the answer.  Unfortunately, however, Jacob Holding’s request was not reduced to a formal cross-motion.  Rather, it just requested relief as part of its opposition papers and in those papers “wherefore” clause. 

In deciding the motion, the Trial Court denied plaintiff’s motion for a default on the basis that Jacob Holding had presented both a reasonable excuse for the delay in appearing as a well as a potentially meritorious defense.  The Trial Court also excused defendant’s failure to formally cross-move, and granted the application compelling plaintiff to accept the Answer.

On appeal, the Second Department affirmed the Trial Court’s denial of plaintiff’s default motion.  In this case, defendant established that its broker had inadvertently sent the suit to the “wrong department” of defendant’s insurance company.  When the error was recognized, the mistake was immediately remedied. 

The more interesting question, however, was the issue related to whether a party can receive affirmative relief without actually asking for it.  The Appellate Division began a lengthy discussion by saying that the CPLR makes the use of cross-motion mandatory for affirmative relief.  That said, Courts have been given discretionary authority to provide relief without a notice of cross-motion where the party from whom relief was sought was aware of the nature of the request and there was no undue prejudice to that party due to that lack of a formal notice. 

In the instant case, because the plaintiff knew that defendant wanted to have its Answer accepted there was no surprise or prejudice at issue.  Accordingly, the Trial Court appropriately exercised its discretion in granting defendant’s request for relief.  In so holding, the Court warned that the practitioner omitting a cross-motion gambles on the Court’s benevolence in overlooking the technical violation.  If the Trial Court wishes to ignore requests for relief that are not made “on notice,” the litigant may very well be out of luck.  For instance, a motion that is not made “on notice” (via Notice of Motion or Notice of Cross-Motion) does not possess an automatic right to seek appellate review.  Under those circumstances, any denial of a request for relief (without notice) will be appealable only after leave is sought, and subsequently granted. 

Peiper’s Point Spend the $45.00, and file the cross-motion.  It is money well spent to avoid the potential embarrassment of having the request denied and having no right to seek appellate review. 

08/06/13       Walters v. Sallah
Appellate Division, First Department
Authorizations for SSD Records Discoverable Where Plaintiff’s Daily Activity Level Is “In Controversy”
Defendant sought medical authorizations to obtain records related to plaintiff’s pre-existing arthritis, as well as any relevant disability records in possession of the Social Security Administration.  Defendant posited that because plaintiff alleged the automobile accident involving defendant Sallah precluded him from performing his usual and customary activity for 90 of the 180 days post-accident, a review of his medical conditions prior to the incident was relevant.  ‘

In reversing the Trial Court, the First Department agreed that plaintiff had placed his conditions “into controversy.”  Accordingly, defendant was entitled to the requested authorizations.   However, the Appellate Division remanded the matter back to the Trial Court for a determination on what, if any, limitations should be placed on the authorizations (ie, limited time, space, particular body part, etc.).

Elizabeth A. Fitzpatrick
[email protected]

I have written several times in this column about decisions regarding the use of social media posts in bodily injury litigation.  The case law makes clear that the courts in New York are treating the availability of social media information by applying CPLR §3101 and directing plaintiffs to provide defendants with social media account username and password information where a defendant can demonstrate that the material contained on privacy-protected pages of a plaintiff’s social media account is likely to lead to the discovery of admissible evidence.  It is only where the court has determined that the defendant is engaging in a fishing expedition that they have not directed plaintiffs to provide such information. Romano v Steelcase, Inc.

How about the use of social media, and in particular, Facebook, for service of process? A District Court in Kansas recently held that Facebook was not an appropriate method for service of process.  Joe Hand Promotions v. Carrette, The court cited to Rule 4(e) & (h) of the Federal Rules of Civil Procedure, noting that alternative service via means not listed in Rule 4 is all about due process. E-mail has been permitted in some instances; specifically, where the plaintiff demonstrates that service via e-mail is likely to reach the defendant.  With the continued proliferation of social media and the decline of print, it remains to be seen whether, at some future point in time, a court will allow such service.

In addition to the continued popularity of social media, recent studies have demonstrated that social media is being accessed more and more from our mobile devices.  A 2012 survey by Nielsen NM revealed that we spend almost one-third of our online minutes accessing social media from mobile devices, compared to 20% of online time spent visiting social networks from PCs.  It should come as no surprise that employees are accessing social media from their mobile devices while at work, and a variety of issues related to the prevalence of social media continue to challenge employers. 

Pennsylvania appears likely to be the next of a growing list of states who have enacted laws which prohibit employers from requiring prospective or current employees to disclose their social media usernames and passwords.  Companies continue to grapple with an appropriate social media policy, which balances a company’s concern about employees badmouthing their place of employment online with the concomitant right to engage in freedom of speech.  There have been numerous decisions issued by the National Labor Relations Board regarding social media policies that may violate the rights pro-offered by National Labor Relations Act Section 7, which allows employees to engage in concerted activities for their mutual aid or protection, including communicating with each other about the terms and conditions of their employment and communicating to third parties about ongoing labor disputes.  Any social media policy crafted by a corporate employer must be mindful of this delicate balancing act. 


Audrey A. Seeley
[email protected]

08/01/13                 Zhang v. The Superior Court of San Bernardino County
Supreme Court, California
Significant Change In Whether Insured Bound By Consent To Settle Provision In Policy When Defense Offered Subject To Reservation Of Rights
The issue in this case was whether insurance practices that violate the Unfair Insurance Practices Act (“UIPA”) can support an Unfair Competition Law (“UCL”) action.  The California Supreme Court held that the Unfair Insurance Practices Act (“UIPA”) bars a private action and cannot serve as a basis for a claim under the Unfair Competition Law (“UCL”).  However, if an insurer engages in conduct which violates both UIPA and obligations imposed by some other statute or the common law, then a UCL claim can lie.

Here, Yanting Zhang commenced an action against her CGL insurer, California Capital Insurance Company (“California Capital”), alleging breach of contract, breach of implied covenant of good faith and fair dealing and a UCL violation.  In regard to the UCL violation, Zhang alleged that California Capital engaged in unfair or deceptive advertising when it promised to provide timely coverage for a compensable loss, yet allegedly had no intention of paying the true value of its insureds’ covered claims.  The insurer contended that Zhang could not maintain a UCL claim because she was impermissibly attempting to plead around Mordai-Shalal’s bar against private actions for unfair insurance practices.  The trial court agreed, but the Court of Appeals reversed holding that Zhang’s false advertising claim was a viable basis for her UCL claim. 

The Court began with a review of the UCL, which defines unfair competition as, among other things, any unlawful business act or practice or unfair, deceptive, untrue, or misleading advertising.  The Court explained that since the phrase “any unlawful” was used in the definition, it therefore borrows rules from other laws and makes violation of those laws independently actionable.  Yet, it is possible that an action can violate the UCL even if not prohibited by another law.  Further, fraudulent practices, including false advertising, are an alternate ground for relief.

The UCL also affords specific relief that does not take the place for tort or contract actions.  The UCL limits a prevailing party to injunctive relief and restitution.  Further, under Proposition 64, the UCL was further limited as to who had standing to maintain an action.  Proposition 64 requires a party to demonstrate an injury in fact and loss of money or property as a result of unfair competition.  In addition, a party must file a class action order to represent others interests.

The Court noted that while Moradi-Shalal prohibited a third party from maintaining a UIPA cause of action, it left intact first party bad faith actions.  Thus, there is no bar to common law fraud and bad faith actions.  Likewise, the bad faith action does not duplicate a UCL claim, which the Court recognized was the concern in Moradi-Shalal, since UCL claims cannot award damages.

The Court held that Zhang’s Complaint alleged false advertising and insurance bad faith which provide grounds for an UCL claim independent from any alleged violation of UIPA.  Accordingly, Zhang’s UCL claim was permissible.

Cassandra A. Kazukenus
[email protected]


Amendment to CPLR §3103 Expanding Who May Seek Protective Order

CPLR §3103(1)(a) seeks to prevent abuse of the discovery mechanisms available in litigation by providing certain parties the opportunity to obtain a protective order denying, limiting, conditioning or regulating the use of any disclosure device.  Previously, the only parties allowed to seek a protective order were the parties to the litigation or the person from whom the discovery is sought.  This legislation expanded the list of people who may seek a protective order to include those who are the subject of the discovery sought. 

For example, if a subpoena is issued to an accountant seeking information about a client who is not a party to the litigation, this change will allow the accountant as well as the non-party client to seek a protective order as well.

This legislation was signed into law by Governor Cuomo on July 31st, and it is to become effective immediately even in active litigation.


Legislation Seeking To Enhance Regulatory Efficiency And Efficacy

This legislation creates a new section of the Insurance Law (Insurance Law §302) which allows the superintendent of the Department of Financial Services to participate in supervisory college.

Insurance Law §302 allows a superintendent to participate in a supervisory college in order to determine compliance with the Department’s regulatory powers.  The superintendent may:

  • Initiate the establishment of a supervisory college;
  • Clarify the membership and participation of other supervisors in the college;
  • Clarifying the function of the college and the role of other regulators, including the establishment of a group-wide supervisor;
  • Coordinating the activities of the college; and
  • Establishing a crisis management plan.


Each Article 15, 16, and 17 insurer that is subject to a supervisory college will be liable for and will pay the reasonable expenses of the superintendent’s participation in a supervisory college, including reasonable travel expenses.  Additionally, a supervisory college may be convened as either a temporary or permanent forum for the communication and cooperation of the regulators charged with supervision of insurers.

This legislation was also signed into law by Governor Cuomo on July 31st. 

Katherine A. Fijal
[email protected]

08/01/13       Petco Animal Supl. Stores, Inc. v. Ins. Co. of North America.
United States Court of Appeals Eighth Circuit – Minnesota Law Applied
Products Warranty Condition Precedent to Coverage
On May 20, 2007, an aquarium heater malfunctioned at Medtronic plant and started a fire.  Medtronic sued PETCO, from whom it had purchased the heater, seeking approximately $1,800,000 in damages.  PETCO tendered the defense of the action to the Insurance Company of North America [“ICNA”].  ICNA denied the claim.

The appeal turns on whether the aquarium heater satisfied a condition precedent to coverage under the policy. The relevant portion of the policy, entitled “Products Warranty”, provides as follows:  “It is warranted, and a condition precedent to recovery hereunder, that Air Pumps, Heaters, Filters, Heating Stone, Heated Mat, Heated Bowl and Heated Bucket are UL/CSA approved and/or complied with the mandatory and/or voluntary safety standards of importing counties.”  The parties agreed that the heater was not UL/CSA approved, so ICNA was obligated to defend and indemnify PETCO only if the heater complied with the “mandatory and/or voluntary safety standards” of the United States.  The parties further agreed that the condition precedent is disjunctive, so PETCO satisfied the condition if the heater complied with either the mandatory or the voluntary safety standards of the United States.

The district court granted summary judgment for ICNA on the ground that PETCO failed to indemnify any mandatory or voluntary safety standard with which the heater complied.  For the following reasons the United States Court of Appeals for the Eighth Circuit [“Court”] affirmed.

PETCO argued that the phrase “voluntary safety standards” is ambiguous, and thus should be construed in favor of coverage.  PETCO took the position that a “voluntary safety standard” reasonably could be interpreted to mean a standard that is “optional”. 

The Court found PETCO’s interpretation to be unreasonable.          The Court noted that a contract must be interpreted in a way that gives all of its provisions meaning.  The Court pointed out that the voluntary safety standards of an importing country presumably are not enforceable by the government of the importing country if the manufacturer of the a product chooses not to comply with the standards; however, the parties to a contract can choose to require compliance with a standard that is otherwise optional, and they have done so here.

In analyzing the policy the Court determined that PETCO’s reading of the condition precedent would not be a condition at all and PETCO would be covered by the policy whether or not it chose to comply with a voluntary safety standard.

The Court held that when the condition precedent is read naturally, and in a manner that gives the condition meaning, the Products Warranty unambiguously requires that the heater comply with an external standard; and, PETCO has not identified any voluntary standard with which the heater complied.

In the alternative, PETCO argued that the heater complied with the mandatory standards of the United States relying on a statement from the guidelines of the United States Customs and Border Protection because Customs authorities would have seized the heater if it did not comply with the government’s mandatory safety standards. The Court disagreed noting that it was possible that no particular safety standard applies to aquarium heaters, or that the heater did not comply with an applicable standard and Customs failed to seize it.  The Court held that it was PETCO’s obligation under the policy to identify a mandatory safety standard with which the heater complied and it failed to do so.

Jennifer A. Ehman
                                            [email protected]    

08/07/13       Paris Suites Hotel, Inc. v. Seneca Ins. Co., Inc.
Supreme Court, Queens County
Waiver of Subrogation Provision Does Not Bar Contractual Subrogation Claim
This issue addressed by the court in this decision was the impact of an anti-subrogation provision in a construction contract.  Plaintiffs owned a hotel in Corona, New York.  As they contemplated renovating the structure, plaintiffs purchased a builders risk policy from defendant, Seneca Insurance Company.  The policy provided coverage for plaintiffs’ business income, building and fixtures during construction. 

While the building was undergoing construction, it suffered water damage during a storm.  Plaintiffs submitted a claim to Seneca.  For reasons not addressed in the decision, Seneca denied the claim. 

As a result, plaintiffs commenced this action seeking to recover under the policy for the loss allegedly caused by the storm and seeking to recover damages for an alleged violation of GBL §349.  Seneca then commenced a third-party action against the general contractor [GC] on the site. 

In an earlier decision by the court, it denied the GC’s motion to dismiss.  The GC had argued that because Seneca had never actually made payment it did not have standing to assert an equitable subrogation claim.  The court agreed, but held that Seneca could still assert a claim as a contractual subrogee, irrespective of nonpayment.  The GC then brought a new motion, which resulted in this decision, seeking summary judgment on that claim pursuant to a waiver of subrogation clause in the contract between plaintiffs and the GC. 

The relevant contract contained a Waiver of Subrogation clause which provided “[t]he Owner and Contractor waive all rights against (1) each other and any of their subcontractors, sub-subcontractors, agents employees, each of the other…for damages caused by fire or other causes of loss to the extent covered by property insurance obtained pursuant to Section 11.4 or other property insurance applicable to the Work…”  Section 11.4 required the Owner to purchase property insurance written on a builder’s risk, “all risk” or equivalent policy for the entire project at the site. 

The court held that the waiver of subrogation clause did not bar the claim because it applied only to the new work undertaken by the contractor.  The insurance called for by section 11.4.1 covered the new construction only, and the contract elsewhere makes clear that the term “the Work” used in connection with the phrase “other property insurance” essentially meant the new construction.  Since the plaintiffs made an insurance claim for damages to that part of the structure which pre-existed the new construction undertaken by the GC, the waiver of subrogation clause had no applicability to the existing first and second floors which were damaged. 

Take Away:  In reading this decision, I just cannot get past the court’s prior finding that Seneca can maintain a claim against the CG as subrogee of plaintiffs when it didn’t pay any money.   Doesn’t this defeat the concept of subrogation?

08/06/13       Castlepoint Ins. Co. v. Fried
Supreme Court, New York County
Court Upholds Late Notice Denial Where Insured Was Aware of Leak and Damage to Adjoining Property Shortly After It Began; Belief that Tenant Was Responsible Was Not a Reasonable Excuse
This decision arises out of a claim by Madison that its property was injured due to alleged water and sewage leak at an adjoining property between March 25, 2008 and February 11, 2009, owned by Josef Fried.  At the time of the alleged leak, Fried was insured under a policy of insurance issued by Castlepoint.

Notice of the claim was allegedly first received by Castlepoint on October 5, 2009, seven months after the occurrence started, via receipt of a copy of the underlying summons and complaint forwarded by Fried’s insurance broker to CastlePoint.  An investigator was then retained to investigate the water leak.  After speaking with Fried, the investigator concluded that he had been aware of the accident on the date it began.  The investigation further revealed that violation notices were issued to Fried by the NYC Department of Buildings related to the claim as far back as October 2008.  In light of this information, Castlepoint disclaimed on grounds including, but not limited to, late notice.

As this was a prejudice case, Castlepoint asserted that it had no duty to defend or indemnify Fried.  It relied on deposition testimony that Fried knew of the leak and the flooding on the day in question.  Also, the owner of the adjoining property notified Fried of the flooding the same day of the occurrence. 

In opposition, Fried asserted that he had a reasonable belief in non- liability.  He argued that he believed the Laundromat in his building, not he, was responsible for the water leak.  Fried also maintained that he first became aware of the claim about water leaking to the building when he received the Summons and Complaint. 

The court ultimately found that Fried’s excuse for the delay was not reasonable.  Fried’s claim of non-liability was unreasonable given the utter lack of investigation on his part as to the cause of the water damage.  For a sophisticated owner of property to rely on his tenant to resolve the damage caused to the adjoining property was not reasonable. 

Lastly, while Fried challenged the timeliness of the disclaimer, the court found that where the disclaimer was sent 30 days after receipt of notice, and following an investigation into issues not readily apparent on the face of the Summons and Complaint, the disclaimer was timely. 

Bad Faith

08/02/13       Madison v. Nationwide Mutual Ins. Co.
United States District Court, W.D. Kentucky
Carrier in Kentucky Did Not Act in Bad Faith When It Took UM Claim to Judgment
Plaintiff was involved in two separate motor vehicle accidents.  The first occurred in March 2009 and the second in August 2009.  In the second accident, the tortfeasor responsible for the accident was uninsured.

The attorney representing plaintiff in both accidents sent Nationwide a letter detailing plaintiff’s claims arising out of the August accident and providing an estimate for lost wages.  Notably, plaintiff’s lost wage claim was approximately two and half times greater than the estimate provided to Nationwide in relation to the March accident. 

The first settlement offer made was $2,000.  This offer was rejected, and instead of countering, plaintiff filed an action in state court against the second tortfeasor and Nationwide.  The claims specialist handling the matter estimated settlement value between $10,000 and $14,000.  Upon assignment, he reached out to plaintiff’s counsel concerning settlement, but due to issues related to the lost wage claim, the matter could not be settled, and it was agreed that such negotiations would be revisited after discovery. 

After discovery was completed, Nationwide raised its offer to $10,000.  Plaintiff rejected the offer and countered with a demand of $95,000.  Notably, this was the first demand made in the case.  A few weeks later, Nationwide raised its offer by $10,000.  After several back and forth offers/counter demands, going into trial, Nationwide was up to $35,000 and plaintiff’s final demand was $75,000.  At trial, plaintiff was awarded $50,000.  He then commenced this action seeking punitive damages.

To support an award of punitive damages, the threshold in Kentucky is “intentional misconduct or reckless disregard of the rights of an insured or claimant.”  Plaintiff alleged that Nationwide’s bad faith was evidenced by two broad categories of conduct.  First, Nationwide’s “settlement conduct” was undertaken in bad faith.  Second, its “post-judgment conduct” related to the payment of the judgment was allegedly evidence of bad faith. 

In considering the first claim, the court rejected plaintiff’s assertion that the claims adjuster ignored the lost wage calculations conducted by Nationwide’s PIP investigator; had a fixed settlement authority that was unrelated to the value of the case; and disregarded the valuation placed on the case by the attorney retained by Nationwide. 

The court found that plaintiff, who was a commissioned salesman, ignored the complicated nature of his lost wage claim.  It also noted the fact that plaintiff provided a variety of different estimates of his monthly wages.  Thus, the lost wage claim was “fairly debatable” given the numerous disputes surrounding it. 

With regard to the second contention, the claims adjuster testified during depositions that his settlement authority across the board was capped at $35,000.  While not referenced by the court, it is likely that any settlement over $35,000 would require upper level approval.  The court found that plaintiff failed to present any evidence that the fixed settlement authority limited or otherwise influenced Nationwide’s attempts to settle the case.  

With regard to the third contention that Nationwide disregarded the actual value of the case, plaintiffs relied on a report to the carrier, in which defense counsel valued pain and suffering at $50,000.  In response to questioning about this value, the claims adjuster indicated that he considered the value, but elected to conduct his own valuation of the case based on all information in the claims file.  As the jury only awarded $10,000 for pain and suffering, it was not outrageous for Nationwide to discount the pain and suffering claim. 

Plaintiff further argued that Nationwide made “lowball” settlement offers.  Nationwide made a final offer of $35,000, and the jury returned a verdict for $50,000.  The court declined to agree with plaintiff that the final offer was substantially less than the verdict.  Disparity between a jury’s award and an insurer’s offer alone is insufficient to establish bad faith.

Lastly, the court considered Nationwide’s actions post-judgment.  It declined to extend Kentucky’s unfair claims settlement practices statute to actions post judgment.  The court reasoned that where a UM claim proceeds to judgment and a dispute arises as to how that judgment should be paid, that dispute no longer involves settlement conduct. 

07/22/13       Dunn v. Scottsdale Ins. Co.
United States District Court, M.D. Pennsylvania
Under Pennsylvania Law, Differing Expert Opinions Undermines Bad Faith Claim
Plaintiffs, on behalf of their business, submitted a claim to Scottsdale for coverage related to water damage and resulting fungus and rot.   After receiving the claim, Scottsdale retained an independent adjuster to inspect the property.  The adjuster, Steve Geller, determined that the damage was caused by a poorly installed roof which had opened around the seams and allowed water into the interior. 

Following the denial coverage, plaintiffs commenced this action alleging breach of the insurance contract; bad faith; and unjust enrichment.  Defendants moved for summary judgment.

While finding a question of fact on the breach of contract claim, the court dismissed the bad faith cause of action.  The plaintiffs also argued that the defendant acted in bad faith in fulfilling its obligations under the Policy.  To succeed on a bad faith claim, a plaintiff must demonstrate “(1) that the insurer lacked a reasonable basis for denying benefits; and (2) that the insurer knew or recklessly disregarded its lack of reasonable basis.”  Mere negligence, however, is not sufficient to establish a bad faith claim.

At the core of the parties’ dispute was whether storm conditions damaged the roof allowing water in or whether the roof was not properly sealed when the storm arrived.  Although the parties presented experts with differing opinions as to causation, neither side alleged that the reports were in anyway unfounded or based on some critical misperception of the plaintiffs’ building so as to render the opinions unsound.  Moreover, the plaintiffs did not dispute that the defendant's initial denial was based on Mr. Geller's report.  As such, the plaintiffs could not make out the first element of a bad faith claim, that “the insurer lacked a reasonable basis for denying benefits.”


Earl K. Cantwell

[email protected]


State and Federal Courts continue to struggle with the question of whether construction defect claims may be covered by a contractor’s CGL liability policy.  A majority of courts have ruled in the negative, usually on the bases that a construction defect is not an accident or covered “occurrence”, and sometimes that the alleged claim does not fit the definition of “property damage”.  A new twist to the analysis occurred in Scottsdale Insurance Co. v R.I. Pools, Inc., 2013 WL 1150217 (2d Cir. 2013) which considered the effect of a “subcontractor’s work” policy exception on this issue.

Several of the pool company’s customers sued for flaking and deteriorating concrete.  The pool company had installed the pools, but subcontracted with three other companies to supply and inject the concrete into the forms.  The pool company’s CGL policy excluded damages caused by its own work, but made a possible exception for damages caused by work done by a subcontractor.
Scottsdale brought a declaratory judgment action seeking a ruling that it had no obligation to defend and indemnify the pool company.  The District Court in Connecticut granted the insurance company’s motion for summary judgment, finding that Scottsdale had no duty to defend or indemnify the pool company because the allegedly faulty workmanship could not be considered an “accident” covered under the policies.

The Second Circuit reversed saying the trial court had not considered the policy exception for subcontractor’s work.  The appellate court said that the trial court’s analysis essentially read the subcontractor exception out of the policies.  Scottsdale had paid defense costs before filing the declaratory judgment action.  The Second Circuit vacated and remanded the judgment, and denied Scottsdale’s request for reimbursement for defense costs it had already expended.

This case represents a new twist in also looking at policy exclusions and exceptions in searching for possible coverage for construction defects under a contractor’s CGL policy.

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