Coverage Pointers - Volume XVI, No. 22

Dear Coverage Pointers Subscribers:

It’s how the calls begin. “I have a situation…” If you have a situation, we love situations. 

Welcome to the 425th issue of Coverage Pointers, serving the insurance and legal community since July 1999.

I bring you greetings from Ponte Vedra, Florida, the home of the 74th Annual Meeting of the Association of Defense Trial Attorneys (ADTA).  Participation in the sisterhood and brotherhood of defense lawyers and defense organizations is one of the most delightful parts of my professional work life.  The relationships that are developed from interaction with members of the FDCC, ADTA, IADC and DRI as well as other organizations make us all better at what we do.

Since it’s a toss-up between and among good CLE, a beautiful beach and writing a long cover note, I may be brief, I am sure you will forgive me.

Baby in the House:

Jennifer Ehman has brought a new daughter in her family and ours.  Details below in Steve’s letter.  Congratulations.

Another Interesting Array of Opinions:

Our current issue is attached with cases on parking lot exclusions, late notice in uninsured motorist cases, inter-spousal exclusions and much, much more.  Steve offers a record number of first party case reviews in his column.  Don’t miss them.

For our new subscribers, you will learn that we intersperse century-old newspaper stories and historical tidbits in each of our cover letters.

One Hundred Years Ago: Armenian Genocide:


This from:  Armenian Genocide Facts – April 24, 1915:

The Armenian Genocide of 1915 refers to systematic massacre of around 1.5 million Armenians in 1915, which was carried out by Turkish Government (Ottoman Empire).

The conflict between Armenians and Turks goes back years. Armenia came under Ottoman rule during the 15th and 16th centuries. The Armenians being Christians were treated very badly and as second class citizen by the Turks who were Muslims. They were overtaxed, subjected to brigandage, kidnapping and forced to convert to Islam. Christians in Ottoman were not treated as equals to Muslims. Christian religious practices could be punished by law.

The genocide was organized by army officers’ movement known as The Young Turks, which was assembled around 1908. Unlike Hitler or Stalin’s ideological reasons for doing so, the Young Turks were different. They had political reasons for their mass murder. Propaganda at that time accused the Armenian people of being saboteurs and a pro-Russian “fifth column” because of they were on Germany’s side and losing in World War I.

Not only were Armenians who were in the Ottoman Army killed and their property confiscated, 300 leading Armenian officials and community leaders were arrested on April 24, 1915 to be executed later. This is why Armenians commemorate this great tragedy on April 24th every year. This day is generally known to be the start of the Armenian Genocide and what followed in the coming months and years was the systematic massacre of up to 1.5 million Armenians. The goal of the Ottoman Empire was to eliminate all Armenians.

Turkey denies that genocide ever happened and claims they lost just as many people on their side. There have been numerous attempts to pass a resolution in the US to officially recognize the genocide; however, due to the US ties with Turkey, the congress has never approved such a bill. Passing such a bill would mean loosing of a good ally in the region. US has military bases in Turkey.

There are 21 countries that have officially recognized the Armenia Genocide as of 2012, including France, Argentina and Sweden. 43 US states have also recognized the genocide.


Dear Subscribers:

Spring is in the air and busy parents are trying to get their children to all their sports commitments.    My wife and I are busy running our two young sons to T-ball and spring soccer, as well as Taekwondo. Fun but sometimes exhausting. It is nice to feel the sun although tonight the temperature is dipping down into the mid-30s.

The Appellate Courts issued a few brief but interesting decisions since our last issue. In one of them, the issue raised was an employer’s vicarious liability for an employee who commits a tort. In that case, a valet who worked for a car dealership got into an accident while driving a competitor’s vehicle at a promotion staged by the dealer in which there was testimony they encouraged the employees to drive the competitors’ vehicles to compare to the new Mercedes that they would be selling.   In another case, the defendants own expert submitted that two years later, plaintiff suffered from 65% limitation in the range of motion in her back, leading to an issue of fact as to whether she suffered a serious injury. In the third, defendants’ experts established entitlement to summary judgment by establishing plaintiff’s forehead scar was “barely visible” and mostly  healed, which plaintiff failed to refute with a recent picture of the scar.

Until next time,

Robert Hewitt

[email protected]

A Century Ago:  Simple Not Enough:

The Indianapolis Star
Indianapolis, Indiana
24 Apr 1915

Verdict Is Displeasing,
So Jury Just Adds $1,300

An objection made by a lawyer in Superior Court, Room 3, yesterday probably will cost his clients about $1,300.  The objection was to the verdict of a jury, which had figured that the defendants in the suit owed the plaintiff $1,870 on a promissory note for $2,000.  The court had instructed the jury to return a verdict for the full amount of the note, if any sum was due, and, if the plaintiff owed the defendants anything, to offset the sum against the face of the $2,000 note.

When Judge Rochford asked if there was any objection to the jury’s first verdict, and one of the lawyers said there was, the jury was ordered back to correct its verdict. The jury made the correction by adding $1,900 to its first verdict.  The suit was filed by Lura Leggo against Richard, Harriet and Thomas R. Leggo.  They said she owed them $1,495, which should be deducted from the $2,000 note on which she sued.  The note she held originally had been given to her and Thomas R. Leggo, who at the time of the transaction was her husband.  The jury first figured that she was entitled to only one-half of the face of the note and interest.  This however, was contrary to the court’s instructions.  Judge Rochford said that, had there been no objections by either side to the verdict as the jury first returned it, the jury probably would not have been sent back to the jury room to correct its verdict.  The objections, although from those against whom the jury had found, was sufficient to cause the jury to be given an opportunity to change its finding, he said.  The jury found the interest amounted to more than $600. 

Fitz’ Bits:

Dear Subscribers:

We are only a few weeks away from the New York State Bar Association Advanced Insurance Coverage Program, which will be held at five venues across New York State.  Syracuse and New York City programs will be held on May 8th, Buffalo and Melville on May 15th and Albany on May 29th.  The program will cover a variety of topics and also offers excellent networking opportunities.  I hope to see you!  Should you wish further information, you may visit the New York State Bar Association website or feel free to e-mail me at [email protected].

This week I bring you a Delaware decision finding that defective workmanship claims are not afforded coverage under a Commercial General Liability policy.  In Carithers, the 11th Circuit found the insurer was obligated to defend its insured for claims of faulty workmanship and so this issue continues to be litigated in courts across the country with differing results.

I also discuss a Texas decision addressing bad faith. In Tesoro Refining & Marketing Co., LLC v. National Union Fire Insurance Company of Pittsburgh PA, 2015 WL 1529247, a Texas court granted National Union’s motion for summary judgment on plaintiff’s claim for breach of the duty of good faith and fair dealing in a case arising out of a dispute over a Commercial Crime Insurance policy purchased by the plaintiff from defendant National Union.

And, finally, in Phoenix Insurance Company v. Cantex, Inc., the United States District Court in Colorado denied the insurer’s motion for a protective order in a claim seeking bad faith damages deriving from an underlying construction defect case.

                                                                                    Til next time,

                                                                                    Elizabeth A. Fitzpatrick
                                                                                    [email protected]

A Century Ago:  First No Run, No Hit Game in Federal League:

Pittsburgh Post-Gazette
Pittsburgh, Pennsylvania
25 Apr 1915



Star Slabman Passes First Three Men, But
Clever Fielding Pulls Him Out of Bad Fix. 
Crandall Only Other Man to Get On


(Special Telegram to The Gazette Times)

ST. LOUIS, MO. – Frank Allen, lefthander, former Brooklyn Dodger, entered the Baseball Hall of Fame today when he pitched the Rebels to a victory over Fielder Jones’ Terriers and let the local tribe down without a hit.  Four Terriers got to first and every one of them got on through the generosity of Allen who passed out four free tickets.

Allen’s wonderful exhibition of mound generalship came after he got away to a miserable start.  In the first inning he passed there Sloufeds, filling the bases, but excellent fielding by the seven men behind him pulled him out of the hole. After that he was never in danger, for, until the ninth, not another Terrier got near first.  In the final Allen passed Otis Crandall, batting for Bridwell.

Oakes and Kelley Star.

To Manger Oakes and Jim Kelley goes credit for assisting the lefthander to his achievement.  In the ninth Oakes made a wonderful grab of Drake’s terrific liner and in the sixth Kelley took Tobin’s long drive with his gloved hand while backed against the fence. 

Groom performed for Jones’ men and allowed the Rebels only five safe hits.  Konetchy’s triple and Hartley’s error in the seventh produced the first score, while Mowrey fetches the second in the ninth, his single, Miller’s boot, Koney’s sacrifice and Oakes’ long fly turning the trick. …

Peiper’s Production:

We follow up last week’s human interest story, with an announcement.  Last Tuesday, April 14th, Jen and her husband Mike welcomed Charlotte Pauline into the world.  Mom, Dad, and big sister (of whom you may have previously heard) are all very much smitten with the latest edition to the family.  While I have seen the child, I note that I was not offered an opportunity to hold said child.  Despite the fact that I managed to never drop my own children, we still marvel at Jen’s wise decision making in this instance. 

On to the column this week, and April 15th brought with it far more than the taxes this year.  A trifecta of first party decisions came out of the 1st and 2nd Departments, all of which are reviewed below. 

Despite the heavy slant of first party this week, we think it more useful to spend the remainder of our time discussing the Court’s decision in Amante.  In that case, the Court ruled that a subcontractor breached its agreement when it failed to procure the requested amount of liability coverage.  Apparently, the contract called for $5,000,000, and whatever was procured was far less.   The court did not comment on the measure of damages for failing to procure the requested amount of coverage, but it will be interesting to see if other cases follow suit. 

That’s it for this week.  I am told May is near, yet the snow on my car this morning tells a far different story.  Stay warm. 

Steven E. Peiper
[email protected]

One Hundred Years Ago Today:  Fly Boy Records:

The Brooklyn Daily Eagle
Brooklyn, New York
24 Apr 1915


Bellinger Breaks World’s Record
in Hydro-aeroplane.

Pensacola, Fla., April 24—A new world’s record altitude flight of 10,000 feet in a hydro-aeroplane was made here late yesterday by Lieutenant P. N. Bellinger, at the naval aeronautical station.

In one hour and twenty minutes Lieutenant Bellinger made his ascent, which, so far as official data shows, never had been equaled, and he took sixteen minutes gliding back to earth.  On June 13, 1913, Lieutenant Bellinger made the best previous record for an altitude flight in a hydro-aeroplane at Annapolis when he climbed to 6,200 feet.

Greater altitudes have been attained by aviators in aeroplanes not encumbered with a boat. 

A Century Ago:  What’s Love Got to Do With It?

San Bernardino News
San Bernardino, California
24 Apr 1915

Verdict In Lost Love Suit
Isn’t Legal, Court Says

LOS ANGELES, April 24.—Declaring that the $40,000 verdict recently awarded Maude Armfield in her $500,000 “lost love” suit against Bryant Howard, a San Diego society man, was obviously a miscarriage of justice, Judge Wilbur this afternoon granted a new trial to Howard.

The young woman, formerly a moving picture actress, declared she is the mother of a child by Howard.  She claimed the marriage ceremony she went through was illegal. 

Headlines from This Week’s Issue, Attached:

Dan D. Kohane
[email protected]

  • Untimely Disclaimer Negated Effectiveness of Disclaimer
  •  “Parking Lot” Operations Exclusion Does Not Apply to Death Sustained When Employee Fell Into Manhole in Parking Lot, Since Manhole Was Part of Septic System and Not Part of Parking Lot Operations
  • Uninsured Motorist Who Did Not Know He Was Seriously Hurt, Had No Obligation to Ask for Identity of Driver or His Insurer.  In Other Words, “Not Ascertainable” Means “Didn’t Think It Was Important to Ascertain”
  • Statutory Inter-spousal Exclusion Only Applies to Direct Claim by Injured Spouse against Insured Spouse, Not to Cross Claims By Others


Robert E.B. Hewitt III
[email protected]

  • Well Healed and Barely Perceptible Forehead Scar Did Not Constitute Significant Disfigurement Under the Insurance Law
  • Issue of Fact As To Whether Employer Car Dealership May Be Held Liable For Employee Valet Who Had A Car Accident While Driving a Competitor’s Vehicle During a Promotion
  • Issue of Fact Found Where Defendants’ Own Experts Found Significant Limitations in Range of Motion Nearly Two Years After the Accident At Issue


Margo M. Lagueras
[email protected]


  • Denial Based On 45-Day Rule Upheld
  • No Facility Fee Owed If Facility Is Accredited Under Public Health § 230-d
  • MUA Performed To Left Hip And Pelvis Denied



  • Claim Untimely As Beyond 6-Year Statute Of Limitations
  • No-Show Denial Not Invalid For Failure To Set Forth Dates


Steven E. Peiper
[email protected]

  • Lack of Certificate of Occupancy Triggers O&L Exclusion in Business Interruption
  • One Peril = One Policy Limit for Pollution Claim
  • Persistence Pays Off – Despite Denial of Two Summary Judgment Motions and an Adverse Verdict at Trial the Appellate Division Finds that Plaintiff Was Entitled to Coverage for Burst Pipe
  • Unsatisfactory Policy Limit Results in Breach of Contract Under Trade Agreement


Elizabeth A. Fitzpatrick
[email protected]

  • No Coverage For Defective Workmanship
  • Motion for Protective Order Denied
  • No Bad Faith by Insurer under Commercial Crime Policy
  • Insurer Obligated To Defend Defective Workmanship Claim


Audrey A. Seeley
[email protected]

  • Not this week.

Cassandra A. Kazukenus
[email protected]

  • S3513/A6131            Extending Authorization for Certain Exemptions From Filing Requirements
  • S4074                        Authorized DMV To Study Registration Compliance And Establishes Penalties for Rate Evasion.


Jennifer A. Ehman
[email protected] 

  • Enjoying the new baby.


Earl K. Cantwell

[email protected]

  • CGL Liability Occurrence; Arguing About Single and Multiple Manifestations Until The Cows Come Home


That’s it for now.  The summer home is open on Lake Erie, Ontario, Canada.  Only a short 20 minute drive to the office.  Martini’s chilling at the drop of a hat.  Let me know when you’re nearby.

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
Audrey A. Seeley
Steven E. Peiper
Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

Taylor F. Gabryel
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

Taylor F. Gabryel

Jody E. Briandi, Team Leader
[email protected]

 Elizabeth A. Fitzpatrick
Diane F. Bosse

Index to Special Columns

Kohane’s Coverage Corner
Hewitt’s Highlights on Serious Injury
Margo’s Musings on No Fault
Peiper on Property and Potpourri
Fitz’ Bits
Audrey’s All Things Personal
Cassie’s Capital Connection
Keeping the Faith with Jen’s Gems
Earl’s Pearls

Dan D. Kohane
[email protected]

04/22/15       Suffolk County Sheriff's Department v. Sumitomo Marine
Appellate Division Second Department
Untimely Disclaimer Negated Effectiveness of Disclaimer
The insureds satisfied their burden of demonstrating their entitlement to judgment by establishing the untimeliness of the defendant's disclaimers. In opposition, the defendant failed to raise a triable issue of fact.  No other information available from the decision

04/21/15       Lancer Indemnity Company v. JKH Realty Group, LLC
Appellate Division, First Department
“Parking Lot” Operations Exclusion Does Not Apply to Death Sustained When Employee Fell Into Manhole in Parking Lot, Since Manhole Was Part of Septic System and Not Part of Parking Lot Operations
JKH Realty Group, LLC (“JKH”) owned a shopping center and had a Commercial General Liability policy issued by North Sea (“Lancer”) from July 31, 2009, to July 31, 2010. The policy provided coverage for bodily injury "arising out of . . . [t]he ownership, maintenance or use of the premises . . . and operations necessary or incidental to those premises." The policy excluded coverage for claims "arising out of . . . [t]he ownership, maintenance or use of [a specified parking lot] or any property located on these premises; [or] Operations . . . necessary or incidental to the ownership, maintenance or use of those premises" (hereinafter the parking lot exclusion).

In February 2010, an employee of one of the stores at the shopping plaza died after he fell through an allegedly defective manhole cover in the paved area behind the building and drowned in the leaching pool below. The insurer disclaimed coverage based on the parking lot exclusion, and then commenced this action for a judgment declaring that it is not obligated to defend or indemnify JKH in the underlying wrongful death action.

To negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular.  Here, the Supreme Court properly determined that the subject policy provides coverage for the underlying action.

Even assuming that the parking lot exclusion applies to the paved area in the rear of the building, JKH Realty demonstrated that the exclusion does not apply to the underlying claim. Since the allegedly defective manhole cover and leaching pool into which the decedent fell were part of the building's septic system, the decedent's claim arose out of operations necessary or incidental to the building, and not out of the "ownership, maintenance or use" of the rear parking lot. Thus, strictly construing the parking lot exclusion and reading it narrowly, it does not.

04/21/15       Alam v. Motor Vehicle Accident Indemnification Corporation
Appellate Division, First Department
Uninsured Motorist Who Did Not Know He Was Seriously Hurt, Had No Obligation to Ask for Identity of Driver or His Insurer.  In Other Words, “Not Ascertainable” Means “Didn’t Think It Was Important to Ascertain”
In a claim for uninsured motorists, the claimant met his burden of demonstrating that the subject accident was one in which the identity of the owner and operator of the subject motor vehicle was not ascertainable through reasonable efforts.  He was hit by a car as he headed to his mosque.

Petitioner was injured after being struck by a vehicle while crossing the street as he headed to his mosque for a prayer service. The driver pulled over, exited the vehicle, and approached petitioner. In response to the driver's multiple inquiries, claimant told the driver that he was fine, so the driver left without exchange of information.

Petitioner testified, without opposition, that he did not believe he was seriously hurt in the moments after the accident. Petitioner's testimony that he felt pain in his left foot in the immediate aftermath of the accident does not necessarily compel a different result. His failure to seek immediate medical attention only confirms his initial belief that he was not significantly hurt. Because petitioner did not believe he was seriously hurt, it was reasonable that he did not ask the driver for identifying information at that time. Matter of Riemenschneider [Motor Veh. Acc. Indem. Corp.], 20 NY2d 547, 549-551 [1967]).

Once he knew he was seriously injured, petitioner undertook reasonable efforts to ascertain the identity of vehicle owner or operator.
Editor’s Note: That’s a silly decision.  The policy language refers to not ascertainable and not: I didn’t think it was important to ascertain it.  However, it is consistent with the 1967, 4-3 decision of the Court of Appeals in the Reimenschneider decision where the high court held, over strong dissent: 

If a person sustains an injury and is not aware of it, the effective time when identification becomes important is when the injury manifests itself.

04/15/15       Metropolitan Group Property v. Kim
Appellate Division, First Department
Statutory Inter-spousal Exclusion Only Applies to Direct Claim by Injured Spouse against Insured Spouse, Not to Cross-Claims by Others
Sue Kim (“Sue”) was injured in a two-car accident that occurred in Pennsylvania. Sue was a passenger in an automobile driven by her husband, the defendant Young S. Kim (“Young”), and the other vehicle involved in the accident was operated by Glick. Sue commenced an action in Pennsylvania against Young, Glick, and Beiler, who owned the property at the intersection where the accident occurred. Glick asserted a cross claim against Young, who is insured by the Metropolitan.

Pursuant to Insurance Law § 3420(g), "in the absence of an express provision in an insured's policy, a carrier is not required to provide insurance coverage for injuries sustained by an insured's spouse".  This was designed to prevent inter-spousal fraud and there is an exception in the statute when there are claims by others against the driver spouse.

Thus, Metropolitan must defend Young in the cross-claims asserted by Young.
Editor’s Note:  Absolutely the right decision.

Robert E.B. Hewitt III
[email protected]

04/23/15                 Foster v. Novic  
Appellate Division, First Department
Well Healed and Barely Perceptible Forehead Scar Did Not Constitute Significant Disfigurement under the Insurance Law
The Appellate Division unanimously affirmed the grant of summary judgment to defendants where they submitted an affirmed report from a plastic surgeon that described the scar on plaintiff’s forehead as “well healed” and “barely perceptible” and included a photograph confirming this fact. Their neurologist also opined that the scar was “hardly visible.”  Plaintiff failed to raise an issue of fact in response because she failed to submit a recent photograph of the scar to rebut plaintiff’s showing.

04/15/15                 Zwibel v. Midway Automotive Group
Appellate Division, Second Department
Issue of Fact As To Whether Employer Car Dealership May Be Held Liable For Employee Valet Who Had A Car Accident While Driving a Competitor’s Vehicle During a Promotion
The Appellate Division affirmed the denial of defendants’ summary judgment motion. This is an unusual case in which defendant Henderson was employed as a valet by defendant Helms Bros, a Mercedes-Benz dealership. On the day of the accident, Mercedes-Benz was holding a program to introduce its employees to a new vehicle model. As part of this program, employees of the dealership were given the opportunity to test drive the new model and similar models of competitors to compare the vehicles. At the time of the accident, the valet was driving a competitor’s vehicle.

The valet’s employer moved for summary judgment on the basis that the valet was acting outside the scope of his employment, on the theory he was not employed to drive a competitor’s vehicle.  As the Appellate Court noted, under the doctrine of respondeat superior, an employer can be held vicariously liable for the torts committed by an employee within the scope of employment. The Court noted that an act is considered to be within the scope of employment if performed while the employee is engaged generally in the business of his employer or if it can be generally said to be necessary or incidental the job. An employer cannot be liable for its employee’s tortuous conduct if the employee was acting solely for personal motives unrelated to the furtherance of the employer’s business at the time of the incident.

The Appellate Court found an issue of fact. The employer failed to make a prima facie case for summary judgment as the valet testified that his supervisor at his job directed him and his fellow valets to test-drive the competitors’ vehicles.

The Court also found that the employer failed to meet its prima facie burden of showing that plaintiff did not sustain a serious injury since they failed to address her claims that she sustained a serious injury to the lumbar region of the spine under either the permanent consequential limitation of use or significant limitation of use categories of the insurance law.

04/14/15                 Susino v. Panzer
Appellate Division, First Department
Issue of Fact Found Where Defendants’ Own Experts Found Significant Limitations in Range of Motion Nearly Two Years After the Accident at Issue
Appellate Division affirmed the denials of summary judgment by the lower court. The Appellate Court found issues of fact as to both liability and as to whether plaintiff suffered a serious injury.

As to liability, defendants and plaintiff offered competing testimony as to how the accident happened. Defendant testified that plaintiffs’ vehicle unlawfully crossed a double yellow line and passed one or more vehicles while colliding with his vehicle. However, plaintiff testified that the defendant driver failed to yield the right of way as he was exiting from a parking lot and negligently entered the road against the flow of traffic.

Defendant failed to establish prima facie that plaintiff did not sustain a serious injury as a result of the accident, since his own experts found significant limited ranges of motions in plaintiff’s cervical and lumbar spine with a 65% limitation in the range of motion in her back nearly two years after the accident.  While defendant’s radiologist opined that the MRI films of plaintiff’s cervical and lumbar spine showed only preexisting degenerative conditions, defendant also submitted other MRI reports finding disc bulges and herniations that plaintiff’s treating physician found causally related to the accident. Plaintiff also submitted the affirmed report of her radiologist who opined that the MRI findings were causally related to the accident, and the affirmed report of her treating physician who found continuing limitations in her range of motion and opined that her condition was caused by the accident and was permanent.

Plaintiff’s treating physician reported that she was totally disabled and unable to engage in any of her normal daily activities for at least four months after the accident. Defendant submitted no evidence refuting plaintiff’s claim that she was disabled from performing her usual and customary activities for at least 90 of the first 180 days following the accident.


Margo M. Lagueras
[email protected]


03/31/15       Jerry J. Tracy, Physician PLLC v Geico Ins. Co.
Erie County, Arbitrator Gillian Brown
Denial Based On 45-Day Rule Upheld
Applicant submitted a bill for reimbursement for MUA performed on May 19, 2014.  Applicant argued that the parcel containing the bill was delivered to Respondent on July 5, 2014, the 45th day.  In support, Applicant submitted a print-out of a screen shot from the US Postal Service’s web site showing that a parcel addressed to Respondent was mailed on July 3, 2014,and available in the PO Box on July 5th, 2014.  The screen shot also indicated a tracking number. 

Respondent’s denial states that the bill was dated June 30, 1014 and was received on July 14, 2014, beyond the 45-days allowed for timely submission.  In support, Respondent submitted a photocopy of the envelope it claims was actually received on July 14th.  The tracking number was not the same as indicated on the screen shot.  The Arbitrator noted that while there was no clear answer, as between the two, he found the actual envelope submitted by Respondent to be the more credible evidence and he therefore upheld Respondent’s denial.

03/30/15       Jerry J. Tracy, Physician PLLC v Allstate Prop. & Cas. Ins. Co.
Erie County, Arbitrator Gillian Brown
No Facility Fee Owed If Facility Is Accredited Under Public Health § 230-d
The claim presented was for the facility fee for MUA performed on three days.  Respondent’s denial was based on a fee schedule argument and also on a peer review finding lack of medical necessity.  Applicant’s counsel, while conceding that the holding in Avanguard would be applicable to this facility, he argued that it should not be applied because Avanguard is a Second Department holding and the facility at issue is in the Fourth Department.  The Arbitrator disagreed and denied the claim as not reimbursable under no-fault.  However, he noted that, given that the claim was only for the facility fee, there was no need during this hearing to consider either the fee schedule or the medical necessity of the procedure.  (GEICO v Avanguard Med. Group, PLLC, 2015 NY Slip Op 01413 [2d Dept 2015]).

03/26/15       Jerry J. Tracy, Physician PLLC v Geico Ins. Co.
Erie County, Arbitrator Mona Bargnesi
MUA Performed To Left Hip and Pelvis Denied
The EIP was involved in an accident in February 2013 and alleged injuries to her neck, back, right should and right hand.  MRIs performed in March revealed a bulge at C5-6 and a small herniation at L5-S1.  An MRI performed in April 2013 revealed herniations at T2-3, T5-6 and T6-7.  The EIP consulted with several medical providers, underwent EMG/NCV testing, had epidural injections to L5-S1 and was considering elbow and wrist surgery.  On March 18, 2014, Dr. Owens stated that the acute phase of the EIP’s condition had passed.  On March 20, 2014, the EIP saw Applicant for the first time and the disputed MUA was performed on March 28, 29 and 30, 2014. 

A peer review was performed on May 9, 2014, and determined that the MUA performed was not medically necessary because the EIP did not report any left hip or pelvis injury and. Therefore, there was no need to perform MUA to those areas.  The Arbitrator agreed noting that Applicant evaluated the EIP only once and his report was inaccurate as he stated that the EIP did not was more injections or surgery, facts contradicted in the medical records.  Moreover, not only were there no complaints of pain in the left hip or pelvis, MUA was also performed to the left shoulder rather than to the right shoulder which was the location of reported pain.  As such, the Arbitrator found the peer review persuasive and upheld the denial.


03/16/15       A.M. Medical, PC v Continental Ins. Co.
Appellate Term, Second Department
Claim Untimely As Beyond 6-Year Statute Of Limitations
The six-year statute of limitations applicable to contract actions applies to first-party no-fault claims which accrue 30 days after the insurer’s receipt of the claim.  Here, the insurer received the disputed claim form was received on or before February 8, 2001.  Therefore, Plaintiff’s causes of action accrued on or before March 10, 2001, and an action commenced in June 2007 was untimely as a matter of law.

03/12/15       Quality Psychological Services, PC v Avis Rent-A-Car Systems, LLC
Appellate Term, Second Department
No-Show Denial Not Invalid For Failure to Set Forth Dates
Defendant denied because Plaintiff’s assignor failed to appear for two scheduled EUOs.  Defendant moved for summary judgment and Plaintiff cross-moved, arguing that Defendant’s claim form was defective because it did not set forth the dates of the scheduled EUOs in the claim form itself.  On appeal, the court affirmed the denial of Plaintiff’s cross-motion finding that Plaintiff did not allege that it did not receive a denial of claim from Defendant.  Furthermore, the denial attached to Defendant’s moving papers clearly stated that Plaintiff’s claim was denied because Plaintiff’s assignor failed to appear for two properly scheduled EUOs.  Contrary, to Plaintiff’s argument, the failure to set forth the dates for which the EUOs had been scheduled did not result in the denial of claim form being vague, conclusory or without merit as a matter of law. 

Steven E. Peiper

[email protected]

04/15/15       Ira Stier, DDS, P.C. v Merchants Insurance Group
Appellate Division, Second Department
Lack of Certificate of Occupancy Triggers O&L Exclusion in Business Interruption Coverage; Four Year Delay in Disclaiming Excused Where Insured Suffered No Prejudice
Plaintiff converted a Single Family Home into a dental office, and procured a Business Owners Policy from Merchants.  The BOP provided limited business interruption coverage.  The policy would not, however, provide coverage for business interruption where the cessation was caused by the enforcement of an ordinance or law.

In inspecting the premises the date after a vandalism loss, the Building Inspector recognized that the insured did not possess a valid Certificate of Occupancy.  It took 11 months for the correct COI to be issued, and the business was not operational throughout that time period. 

The Appellate Division agreed that the lengthy interruption was caused by the enforcement of ordinance and law, and affirmed Merchants denial.  It is noted that the Merchants denial was upheld even though it was not issued until four years after the loss.  Because the insured was not prejudiced by the delay, the Court ruled there was no basis to estop Merchants from relying upon the policy defense.

04/15/15       L&D Service Station, Inc. v Utica Mutual Ins. Co.
Appellate Division, Second Department
One Peril = One Policy Limit for Pollution Claim
Utica issued a Business Owners Policy to L&D which covered their operations as a filling station.  The policy excluded pollution losses, except for losses which were occasioned by mechanical breakdown.  When mechanical breakdown caused the loss, the policy provided for a limited coverage extension of $100,000. 

L&D submitted a claim for a petroleum leak from an onsite storage tank, and Utica denied it on the basis that the loss did not result from a mechanical breakdown.  During motion practice, Utica argued that the matter was not covered, but if it was then coverage was limited to one policy term.  L&D, on the other hand, argued that the loss was covered, and fell within two policy terms thereby creating $200,000 in coverage.

On summary judgment, the Trial Court ruled that a question of fact precluded both sides from prevailing on the mechanical breakdown issue.  Where the issue of coverage could not be determined, the Trial Court opined that the issue relative to which policies were triggered was premature and likewise denied both parties motions on that issue. 

On appeal, the Appellate Division ruled that as the triggering of policies was a contractual issue it was ripe for resolution.  In finding for Utica on that issue, the Court noted that the policy was only triggered by a “peril” that occurred during the policy period.  As there was only one peril (arguably the mechanical breakdown), it followed that only one policy could be triggered thus limiting the coverage available to $100,000. 

04/15/15       Anghel v Utica Mutual Ins. Co.
Appellate Division, Second Department
Persistence Pays Off – Despite Denial of Two Summary Judgment Motions and an Adverse Verdict at Trial the Appellate Division Finds that Plaintiff Was Entitled to Coverage for Burst Pipe
Plaintiff’s premises were damaged by flood after a frozen pipe burst.  Utica denied the claim on the basis that it did not cover damages caused by frozen pipes; unless the pipe was part of a sprinkler system.  Plaintiff twice moved for summary judgment seeking coverage, and twice their motion was denied.  The trial resulted in a verdict favoring Utica as well.

On appeal, the Court noted that plaintiff had met her burden for coverage by establishing a policy existed at the time of loss that a loss occurred, that timely notice of the loss was provided, and that the loss fell within the scope of the policy.  Plaintiff’s motion was supported, in part, by an expert who opined that the pipe in question was part of the sprinkler system. 

In opposition, apparently, Utica’s expert did not opine on the pipes connection (or lack thereof) to the sprinkler system, and therefore Utica did not raise an issue of fact.

04/15/15       Amante v Pavarini McGovern
Appellate Division, First Department
Unsatisfactory Policy Limit Results in Breach of Contract Under Trade Agreement
Plaintiff sustained injury when he fell into an excavated pit while accessing a jobsite which was controlled by Pavarini and AB Green.  Since the pit clearly presented an elevation risk, it fell within the scope of Labor Law 240(1).  Further, because plaintiff was not previously warned of the pit (so he could not ignore the warnings), it followed that there was no basis for a sole proximate cause defense.

At the time of plaintiff’s motion, Pavarini/AB Green also moved for common law indemnification against a contractor at the jobsite, Interstate.  However, where it could not be established that Interstate excavated the pit the Court held that Pavarini/AB Green’s motion should be denied.  In addition, the Court also found question of fact relative to Pavarini/AB Green’s potential negligence in failing to adequately illuminate the premises and/or control access to the site. 

Notwithstanding its opinion on Pavarini/AB Green’s own potential share of fault, the Court did grant their motion for contractual indemnity against another contractor, Scalamandre.  Apparently, the clause was broad enough to encompass the loss (although the Court did not reference its wording).   Pavarini/AB Green also established a breach of contract claim against Scalamandre for failing to provide the appropriate amount of coverage.  The Court advises that the trade contract required $5,000,000 in coverage, and Scalamandre procured far less. 


Elizabeth A. Fitzpatrick
[email protected]

03/30/15       Westfield Insurance Co. v. Miranda & Hardt Contracting & Building Services, LLC, 2015 WL 1477970
Superior Court, Delaware
No Coverage for Defective Workmanship
The Superior Court of Delaware, in a coverage dispute arising from a lawsuit alleging defective and faulty workmanship, found the insured’s Commercial General Liability policy did not afford coverage.  The policy included standard language obligating the insurer to pay damages for property damage caused by an occurrence.  Property damage was defined as physical injury to tangible property and loss of use of tangible property that is not physically injured, while occurrence was defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. 
The insurer contended that there was no occurrence, as the claims were for defective workmanship.  The insured argued that it was entitled to an inference that there was no defective workmanship based upon its denial of the allegations and arguing that defective workmanship had not been proven in the underlying lawsuit since it denied such allegations.  Citing prior Delaware decisional law, noting that they were not concerned with the validity of the allegations for purposes of the coverage dispute, the court concluded that there was no coverage for property damage that resulted from the insured’s own defective workmanship or property damage that resulted from the work of another.  The court thus granted Westfield’s motion for summary judgment.

04/14/15       Phoenix Insurance Company v. Cantex, Inc., 
United States District Court, District of Colorado
Motion for Protective Order Denied
The coverage dispute arose in the context of an underlying construction defect case pending in Arizona.  The plaintiffs defended the insured under a reservation of rights and then filed a declaratory judgment action.  Verdicts in the underlying action were entered, totaling over $10,000,000.  The claims against the insurer were assigned to the claimants.

Cantex served a Rule 30(b)(6) deposition notice seeking various documents, including underwriting reserves and reinsurance.  The carriers objected to many of the topics demanded, including those involving drafting, marketing, negotiating, underwriting, issuing, producing and signing the policies, topics on reserves and reinsurance and/or interpretation of the insurance policies.  The claims against the insurers included allegations of bad faith, including failing to fairly investigate, creating pretextual reasons to deny coverage, failing to promptly provide a reasonable explanation as to the basis of the denial and misrepresenting the facts of the underlying litigation so as to avoid coverage. 

The court did not address whether the evidence requested by Cantex would ultimately be admissible, but rather whether the requested information was reasonably calculated to lead to admissible evidence.  In doing so, the court concluded that the requested discovery was reasonably calculated to lead to admissible evidence.  The motion for a productive order was thus denied.


04/07/15       Tesoro Refining & Marketing Co., LLC v. National Union Fire Insurance Company of Pittsburgh PA, 2015 WL 1529247
United States District Court, Western District of Texas
No Bad Faith by Insurer under Commercial Crime Policy
The coverage dispute in Tesoro arose from a dispute over a Commercial Crime Insurance policy purchased by Tesoro Refining from National Union.  Tesoro is an independent refiner and marketer of petroleum products.  They began selling fuel to a petroleum distributor on credit and ultimately, when the credit balance had grown to approximately $45 million, Tesoro became concerned about the distributor’s ability to pay down the outstanding debt.  There was correspondence between the parties regarding the outstanding debt and by September of 2008, the account balance had reached $88.9 million.  Shortly thereafter, a document purporting to be a new $24 million letter of credit was created, but when plaintiff presented the letter of credit to the bank, they were informed it was not valid.  They stopped selling fuel to the distributor and brought suit against them for breach of contract.  There was evidence suggesting that the letter of credit documents were forged.

A claim was submitted by the plaintiff under a provision of the policy covering certain losses due to forgery or alteration.  National Union issued a denial of the claim.  Thereafter, plaintiff submitted an amended claim covering losses due to employee theft.  This was also denied.

Thereafter, plaintiff brought the breach of contract and breach of the implied covenant of good faith and fair dealing action against Travelers. Applying Texas law, the court found that there was no coverage available under the policy and thus, the plaintiff’s motion for partial summary judgment was denied.

Addressing the bad faith claim, the court initially found that plaintiff had not shown and, in fact, did not argue, that defendant failed to timely investigate its claim.  Plaintiff’s contention was premised upon the allegation that defendant engaged in a pretextual investigation calculated to result in a denial of coverage.  The court, however, noted that an insured cannot establish a claim for bad faith without offering evidence that the insurer’s liability on the claim had become reasonably clear or that there was no reasonable basis for denying the claim.  They found that here defendant had a reasonable basis for denying plaintiff’s claim, since the act of their employee in falsifying and forging documents, indicating that the petroleum distributor’s account was adequately collateralized, was not “theft” as defined under the policy.  The court also found that the plaintiff had not identified any act by the defendant that caused it injury beyond defendant’s denial of the claim.  They thus granted defendant judgment as a matter of law on the bad faith claim.

04/07/15       Carithers v. Mid-Continent Casualty Company
United State Court of Appeals, 11th Circuit
Insurer Obligated To Defend Defective Workmanship Claim
Applying Florida law, the court addressed the proper trigger for determining when property damage arising from latent construction defects occurred, i.e., was it the date of the actual damage rather than on a later date when the property damage was discovered or could have been discovered with reasonable inspection.

The Carithers owned property in Florida and, as assignees of the insured general contractor, brought an action against the Commercial General Liability insurer to recover a $90,000 judgment in their favor, which had resulted from an underlying suit for construction defects and resulting property damage.  The court first addressed the issue of during what time period the damage occurred, finding that such occurred in 2005.  Thereafter, after concluding that the CGL’s coverage for property damage did not include the defective work of a subcontractor, they noted it did include damage to other property caused by the defective work of a subcontractor.  They thus determined that a faulty electrical system caused property damage to the electrical appliances, that the incorrect application of exterior brick coating caused property damage to the brick, that the use of inadequate adhesive and an inadequate base in the installation of tile caused property damage to the tile and that the incorrect construction of a balcony, which allowed water to seep into the ceilings and walls of the garage leading to wood rot, caused property damage to the garage. 

After discussing other Florida law, they determined that, according to these cases, faulty workmanship or defective work that has damaged the otherwise non-defective completed project has caused physical injury to tangible property within the meaning of the policy.  However, “there is a difference between a claim for the costs of repairing or removing defective work, which is not a claim for property damage, and a claim for the costs of repairing damage caused by the defective work, which is a claim for property damage.”  Ultimately, they found there was no coverage for property damage to the bricks, the tile and mud base, but there was coverage for the cost of repairing the balcony.


Audrey A. Seeley
[email protected]

Not this week.

Cassandra A. Kazukenus
[email protected]

S3513/A6131          Extending Authorization for Certain Exemptions From Filing Requirements
In 2011, legislation was enacted allowing certain types of insurance to be written without DFS prior approval of rates and forms when it is sold to large commercial policyholders.  It is set to expire June 30, 2015 and December 31, 2016.  This bill seeks to make the exemptions permanent.  The exemptions are found in Article 63 of the Insurance Law, and they will not be altered by this legislation. 

The new bill also amends the requirement that a policy form that has not previously been filed must be filed for informational purposes.  Previously the filing had to occur within 3 days, but this bill seeks to change it to 15 business days after the first delivery of a policy using the form. 

S4074           Authorized DMV to Study Registration Compliance and Establishes Penalties for Rate Evasion.

There is no companion Assembly bill at this time.  The proposed legislation would require the Department of Motor Vehicles to undertake a study to determine whether motor vehicles are registered within the time frames required, and what the estimated loss of income to the state and local governments is when residents fail to do so.  Additionally, the study should review whether New York residents are failing to obtain a New York State driver’s license within the mandated 30 day period and the resulting loss of income from such failures.

The commission will be required to report the findings to the Governor and the New York State legislator within one year of the effective date of this legislation.



Jennifer A. Ehman
[email protected]

Enjoying the new baby.

Earl K. Cantwell

[email protected]

12/15/14       Penn National Mutual Casualty Insurance Co. v. John D. St. John
CGL Liability Occurrence; Arguing About Single and Multiple Manifestations Until The Cows Come Home
The recent case of Penn National Mutual Casualty Insurance Co. v. John D. St. John, 2014 Pa. LEXIS 3313 (December 15, 2014) involved an interesting claim alleging defective plumbing work which impaired the health of a herd of dairy cows.  In April 2004, cows at the dairy farm began to suffer health and reproductive problems, and the problems progressed over the next four years.  In March 2006, the farm owners discovered a defective weld and piping that allowed wastewater to infiltrate the herd’s drinking system.  The farm owners alleged that LPH Plumbing and Heating, which completed installation of the new plumbing system in July 2003, performed defective work which caused the problems.  A jury eventually found LPH liable for $3.5 Million. 

Penn National argued it was responsible for LPH’s liability under only the first of four CGL policies it carried with LPH.  LPH had one umbrella policy and three one-year policies, each with $1 Million policy limits that ran from the date of project completion, July 1, 2003 through July 2, 2006.

The trial court applied the “first manifestation rule” where an occurrence triggers coverage under a CGL policy when the negligent act first manifests itself and puts a reasonable person on notice of damage to personal property.  It ruled that the underlying events constituted one single occurrence which occurred in April 2004 when negligent installation of the plumbing system became apparent to the farm owners due to decreased milk production.

The farm owners argued that the “gradual progression” of the health problems affecting the herd between April 2004 and March 2006 constituted multiple or continuing property damage that triggered all of the policies.  An intermediate appeals court affirmed the trial court’s decision, but one dissenting judge did concur with the owners that the full effects of the negligence and “occurrence” were not apparent or known prior to the end of the first CGL policy period in July 2004.

On appeal to the Pennsylvania Supreme Court, the farm owners admitted that there was only one occurrence (the negligent plumbing work), and appeared to accept some application of the first manifestation rule, but argued about when the effects of the negligent act first manifested.  Penn National asserted that manifestation was April 2004 upon the first observation of decreased milk production.  The farm owners argued that other health problems occurred gradually, and that the full effects of the damage did not manifest themselves until March 2006 when significant physical health problems were then observed in the herd. 

The Pennsylvania Supreme Court agreed with Penn National that the CGL policies plainly stated that coverage was triggered when bodily injury or property damage occurs during a policy period.  The policies contain no language requiring the actual cause of the injury to be identified as a requirement to coverage being triggered.  The Court cited several cases that identified initial manifestation of injury as the coverage trigger.  The Supreme Court affirmed the trial court’s findings that the injurious effects of the negligent plumbing work first became apparent in April 2004, and coverage was triggered only under the first Penn National policy in effect from July 1, 2003 to July 1, 2004. 

A dissenting opinion at the Supreme Court would have held otherwise, arguing that an “occurrence” could mean continuous or repeated exposure as opposed to a one time discrete finite event.  The dissenting judge pointed out that other jurisdictions have applied a “multiple trigger theory” or a “continuous occurrence theory” in similar situations.

This case is a good example of the analysis which needs to be undertaken when multiple policies, policy periods, and “time on the risk” are implicated in a claim.  The policy definitions, policy periods, coverage events, coverage definitions, and then any exclusions or limiting language need to be examined as a whole to see what coverage is triggered at what period of time and affects what primary or excess/umbrella policies. 

The courts here held, not without dissent at the appellate levels, that there was one occurrence that first manifested in April 2004 when milk production initially declined which triggered coverage only under the 2003-2004 policy.  The dissenting opinions argued that the policy definition of occurrence could be “continuous or repeated exposure” which ostensibly occurred 2004-2006.  However, this did not prevent the courts from adopting an “initial manifestation of injury” as the coverage trigger.

The case confirms the importance of determining what the actual occurrence is with respect to a presented claim, and what damages are claimed over what period of time, to determine whether the claim falls within the policy period, embraces covered damages, and may implicate other earlier, later, or excess/umbrella policies.

Newsletter Sign Up