Coverage Pointers - Volume XVII, No. 13

Volume XVII, No. 13 (No. 443)

Friday, December 18, 2015


A Biweekly Electronic Newsletter


Hurwitz & Fine, P.C.

1300 Liberty Building

Buffalo, NY 14202

Phone: 716-849-8900

Fax: 716-855-0874


Long Island Office:

535 Broad Hollow

Melville, New York 11747

Phone: 631-465-0700

Fax: 631-465-0313

© Hurwitz & Fine, P. C. 2015
All rights reserved

As a public service, Hurwitz & Fine, P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York State appellate courts.  The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers. 


In some jurisdictions, newsletters such as this may be considered Attorney Advertising.


If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.


You will find back issues of Coverage Pointers on the firm website listed above.


 Dear Coverage Pointers Subscribers:


Do you have a situation?  We’ve told you before and tell you again.  We love situations.  Hopefully, once you hang up the phone, your situation will be a fond and distant memory.


Welcome to the final edition of the 2015 calendar year.  The next issue will be dated January 1, 2016 and will come to you from Scottsdale.  This one comes from our home office in Western New York where we are basking in warmer temperatures than our friends in Arizona.  Not a flake of snow has fallen this season, shattering the previous latest snowfall record by about two weeks.


I thank you on behalf of our firm for the wonderful opportunities of service to our clients.  We look forward to many more together.


Our Christmas tradition continues below, with the yearly rendition of our tribute to Saint Nick and his quest for coverage for his mission.


As the year winds down, we provide you with our yearly count. The CP team reported on 565 decisions:  108 decisions appeared in my column, 139 in Rob’s Hints on Serious Injury, 94 in Margo’s Musing’s (soon to be returning in another form), 2 in  Audrey’s Angles,  69  in Steve’s Property and Potpourri, 37 in Agnes’ Wide World, 25 in Fitz’ Bits, 35 in Cassie’s Capital Connection, 29 from Jen’s Gems, 2 from Chris Potenza (our Asbestos maven) and another perfect 26 articles from Earl and his Pearls.


As our next issue comes out after Christmas has concluded, we take the time now to wish you the most peaceful of holiday seasons with a hope for what seems so elusive: peace on Earth and goodwill to humankind.  I will repeat my wish from last year’s final issue, take a moment to pray or hope or ask for a safer and quieter world, one where we do not fear to turn on the radio, or tune into CNN or look at news on the Web expecting to find the next act of terror or horror.


A State of Good Faith. The Count Continues:


In June of 1998, Bill Clinton was President, Sex in the City had its debut, George Pataki was Governor of New York, the Oklahoma City bomber conspirator Terry Nichols was sentenced to life in prison and Microsoft released “Windows 98”.  My daughter was 16, and my son was 13 (they are now 33 and 30 respectively).


Why do I digress?


That same month, in fact, on June 11, 1998, the highest court in the State, the Court of Appeals, handed down a decision in Smith v. General Accident, holding an insurer liable for bad faith.  That decision was the last time any appellate court in New York upheld a bad faith verdict against an insurer.  We report on this “count” every year.  It has been 17 years, 6 months and 7 days (or, if you prefer, 6399 days) since a New York appellate court found conduct egregious enough to constitute actionable bad faith.


The State of the Courts in New York:


For the industry, we can feel stress from the courts.  Additional Insured coverage has been expanded beyond its natural boundaries (especially in the First Department), close cases are more troublesome in most of the Departments, our highest court seems to be expanding, rather than contracting coverage when the opportunity presents and insurers are carefully choosing which cases to appeal.  Privilege issues are the most challenging, right now, as the policyholder bar seems dedicated to invading the sanctity of the attorney-client privilege and they are getting help from trial and appellate judges throughout the state.


Watch these cases carefully and talk to your good counsel about how to best protect your files from unnecessary and, we say, improper disclosure.  Who would have believed that insurers would be unable to get confidential advice from coverage counsel without the fear of those discussions being disclosed?  If your coverage counsel isn’t talking to you about this issue, bring it up and develop an appropriate protocol.


A Kind Heart – a Century Ago:



The Evening World

New York, New York

18 Dec 1915





Business Man Would Save Erring

One from Prison and Asks

Why State Didn’t?


Rather than see a young girl sent to prison as a thief on the eve of Christmas, Charles R. Steele, an insurance man of No. 200 Fifth Avenue, had written to Magistrate Naumer of the Adams Street Court, Brooklyn, and offered to take her into his home.


Edna Newbatt, twenty-two years old, was held for the Grand Jury Wednesday on a charge of stealing articles valued at $200 from the rooms of girls living in the Harriet Judson Memorial rooming house at No. 50 Nevins Street, Brooklyn.  The girl is now in Raymond Street Jail.


“If the State can afford to feed and shelter this young girl who has committed a theft,” Mr. Steele wrote Magistrate Naumer, “why could it not have assisted her before she committed the act?  I believe I would steal before I would starve and I think you would, too.  It would seem a pity, in this Christmas season, to send a young woman to prison, where she would be morally worse off when released.”


Mr. Steel offered to pay part of the girl’s wages as a maid to the persons who were robbed.  The Magistrate wrote him the case was now in the hands of District Attorney Cropsey. 


Did his kindness work?  Nah:


The Brooklyn Daily Eagle

Brooklyn, New York

31 Oct 1917




Edna Newbatt, who recently finished serving a two-year term for stealing from the rooms of the Harriet Judson Memorial of the Y. W. C. A., was arrested last night for stealing a hat from one of the big department stores on Fulton Street.  She went into the store with a huge paper bag, such as is used for the easy conveyance of the large hats that women wear.  The bag was inflated.  Detective Joseph Sherlock and Alice Gallagher of the store force saw her and followed her.  They caught her opening the empty bag and filling it up with a hat, price $4.95.  Detective Cunningham of the Poplar Street Bureau took her to court.


Edna pleaded not guilty but admitted her identity as the person who had been sent to jail in December 1915, for larceny.


“And I have been trying hard to be honest,” she said.


Magistrate Dodd held her in $500 bail for the Court of Special Sessions.  Lacking bail, she went back to the Raymond Street Jail.


In the 1920 census, we found Edna incarcerated at the Bedford New York prison at age 24.   We did find a picture of her hiking to Saratoga, while a student at Columbia University, in September 1922.  Ten years later, she was a governess for the Harold Korn (investment broker) family on the west side of Manhattan, still single.  She never married, dying at age 87 in Palm Beach.



Dear Subscribers:

There are some interesting cases this edition. One case reminds us that issues must be preserved for appellate review with the trial court or the Appellate Division will not consider them. In another case, although the person slipped on the steps of a bus, because it involved the use and operation of a bus, the plaintiff had to demonstrate a serious injury. In a final case, the fact that the plaintiff was young played a role in the court finding an issue of fact as to whether or not the disc herniation and range of motion was caused by the accident or was degenerative as defendants argued.


Merry Christmas to those celebrating the holiday. I think we all wish for peace on Earth and goodwill for all men and women.


Until next time,


Robert Hewitt

[email protected]



Speed Demons, 100 Years Ago:



Williamsport Sun-Gazette

Williamsport, Pennsylvania

18 Dec 1915





Shatters All Stock Records, Averaging

Nearly 54 Miles per Hour


Shattering practically every known stock pleasure car highway speed record for the distance of 100 of miles or more, A. E. Higgins, of Buffalo, N. Y., on November 7, drove a 1916 Cole Eight stock touring car from Buffalo to Geneva, N. Y., a distance of 107 miles, in one hour and 55 minutes, defeating the famous Black Diamond express, the prize train of the Lackawanna road, by fourteen minutes.  An average of 53.8 miles an hour for the entire trip was made including two stops and one delay necessitated by a detour.


The race between the Cole Eight and the fast passenger train had been announced several days prior to the date scheduled for the run and people in all of the towns along the route were out to see the speeding auto as it passed through.  Several of the large eastern motion picture companies had operators stationed along the course and pictures were taken of the car and the train as they sped by.  The engineman in charge of the Black Diamond knew that his train had been pitted against the Cole Eight and pressed the monster locomotive to its utmost.  However, from the time the automobile and the train passed the city limits of Buffalo, which marked the actual start of the race, there was never a moment when the train could have been considered as a contender for the honors of the day. 

Editor’s Note:  If you wanted to buy a 1916 Cole 8 stock touring car, you could have one for $1785 (that’s about $39.666.67 in 2015 dollars).  Here’s an ad


Peiper’s Playground:


We close out 2015 with a bit of bang this year.   The Court of Appeals offers two very interesting opinions, with insightful dissenting opinions from Judge Stein. 


The first, Davis, summarized below, appears to expand a physician’s duty to warn of dangerous side effects to the general public.  It had been the law, and in most instances remains the law, that a doctor will not be liable to an unidentified, unnamed party with whom he or she never consulted.  However, in a case where a health care provider fails to warn of dangerous side effects, and the person receiving treatment injuries a third-party, the injured party may possess a viable claim against the provider.   In Davis, treating physician failed to warn a patient of side effects that impaired her ability to safely operate a car.  She did not, in fact, safely operate it, and the resulting crash gave rise to a suit against the Hospital and medical staff that provided treatment.    Massive expansion or reasonable result?  You be the judge. 


The other case, Pegasus, addresses the procedure for establishing sanctions in an ESI case.  Despite the Federal Rules recent amendment to stream line ESI discovery (and resulting sanctions), it appears that New York will continue to follow the Voom case from several years ago.  In another eloquent dissent, Judge Stein again splits from her colleagues.  This time, however, her split seemed to have arisen from the facts of the case, as opposed to legal interpretation (ala Davis).  Both cases, however, underscore Judge Stein’s independence, and willingness to set her own course. 


Finally, we note the recent amendment to the CPLR that strips trial courts of their ability to govern whether or not to accept previously undisclosed expert proof.  Up until December 11, 2015, most authority held that a trial court judge had the discretion of disregarding an expert affidavit if the expert had not been properly disclosed under Section 3101(d)(1)(i).  That is no longer the case, and now practitioners need not disclose their respective experts at the time of dispositive motions.  Expert disclosure prior to trial, however, remains unchanged.


That’s it for us this year.  Happy belated Hanukah to those of you who celebrated, and Merry Christmas to those of you who will celebrate. 


Happy New Year to all.  We’ll see you in 2016. 



Steven E. Peiper

[email protected]      


Chicago Police Department under Investigation – Today and 100 Years Ago:



The Lincoln Star

Lincoln, Nebraska

18 Dec 1915





Thompson Says He is Going to

Clean Up Chicago if it Costs

Him His Life


Chicago, Dec. 19.—Roused by a recent wave of crime including murders and numerous robberies and holdups nightly, Mayor William Hale Thompson today charged the Chicago police department with shielding criminals and grafting.


“I know the police department is absolutely rotten,” said the mayor.  “It is honeycombed with grafters.  I know holdup men; murderers and pickpockets known to the police are walking the streets everyday and are not arrested.  I would not be surprised to learn that in the department are men who have planned murder.


Mayor Thompson said he would immediately start wholesale cleaning up and rid the police department of crooks “even though it costs me my life.”

Editor’s Note:  Wow, it sounds like Mayor William Thompson was a real reformer!  Not.  In 1993, a panel of distinguished historians named Mayor Thompson the worst mayor and the most corrupt mayor in American history.  Why?  He was Al Capone’s man in City Hall.  Read more about it by clicking here.


Wilewicz’ Wide World of Coverage

Dear Readers,


This week in the Wide World, we bring you a couple of cases from near and far. From the Ninth Circuit we have Big 5 Sporting Goods v. Zurich. There, customers alleging violations of California’s Song-Beverly Credit Card Act sued the sports retailer in a class action; a statute bars companies who utilize credit cards from asking customers personal identification information, such as ZIP codes. Unfortunately, for Big 5, its policies included exclusions for damages arising from statutory violations. The Ninth Circuit found the various permutations of these exclusions to clearly preclude coverage for the class action. Noting that there was no common law right of recovery and that all of the plaintiffs’ claims arose either directly or indirectly from the statutory violation, there was no coverage for their claims.


Finally, from the Fifth Circuit, we have a coverage case stemming from the catastrophic Deepwater Horizon oil spill. In Cameron International v. Liberty, Liberty insured the manufacturer of the ill-fated blowout preventer at the oil rig. Cameron had a $500 million coverage tower in place, with a stack of policies that followed one after another. After thousands of suits were filed following the spill, Cameron, BP, and Transocean (the owner of the well and the owner of the rig, respectively) started to talk settlement. They came up with a deal where Cameron would pay BP half of its coverage stack in exchange for indemnification. However, of all the carriers, Liberty refused to participate and coverage litigation ensued. Long, long story short, Liberty argued that its “other insurance” clause meant that Cameron had to exhaust all potential sources of coverage before its policy came into play. The Court rejected that. Finding that the clause meant that the policy would be excess if other insurance “actually and presently applied”, the Circuit Court held that Liberty was on the hook for paying its share.


Happy Holidays to all! See you next year!



Agnes A. Wilewicz

[email protected]



The ChristmasTradition Continues:


Christmas Coverage
A Policy for Saint Nicholas

Dan D. Kohane
With apologies to Clement Moore (or less)

From our late December 2010 edition with thanks to the Christmas Elves: 
Tim Sullivan, John Intondi, Mike Perley and Rich Traub


T'was the night before Christmas, and all through the land,
Few coverage advisors were still in demand.
The policies still showed on both desk and on screen. 
My eyes only open with thanks to caffeine.


Most company's adjusters had left for the day; 
And most coverage lawyers had little to say.
It was surely the moment to turn out the light,
Shut down the computer, put work out of sight.


Then the phone started chirping, it startled my poise,
not the typical ring-tone, but an odd sounding noise.
It jingled like sleigh bells, instead of a "ding,"
I knew I must answer, despite everything.


A Christmas Eve caller? What could be the need?
But the sound of the music, would just not recede.
I was really not looking for Christmas Eve banter,
Imagine my shock when the caller was Santa!


"I need some advice, sir," said a somber Saint Nick,
"My Christmas Eve Policy is three inches thick."
I don't mean to bother, but I'm wrought with confusion
"I don't understand this new 'Gifting Exclusion.'"


"It carves out the nasties, the mean and the haughty.
It favors the good ones and leaves out the naughty. 
My coverage appears to have holes like Swiss Cheese,
I'm afraid if I'm sued, I will twist in the breeze."


"A products exclusion? A chimney one too?
Elf employment exception, I'm screwed through and through.
Just what is still covered? I sure am confounded,
With all of these issues, I fear that I'm grounded."


"With a sleigh full of sacks and reindeer at the ready,
I'm starting to feel just a tad too unsteady.
My belly has acid, my knees are a ‘quiver
With millions and millions of toys to deliver."


"I want you to help me, I fear a disclaimer.
This policy's scary; I need you to tame her.
We must surely save Christmas, for good girls and boys,
And Amazon won't refund "squat" on the toys.


The holiday challenged, I sure knew my mission
We needed to craft a new ISO edition
Santa needed an ally, a comrade, a fighter,
On the opposite side was a Grinch Underwriter.


I am sure you'd imagine how hard it would be
To secure for Saint Nick a late night policy,
Without coverage gaps, so that Santa could fly,
To save Christmas Day, we were destined to try.


The person in charge of the coverage for Nick,
Had left the shop early, was feeling quite sick.
Perhaps it was sadness, or guilt or just gumption,
He thought he'd killed Christmas, a well-placed assumption.


In order to soften his hardening heart.
We had to play coy, we had to be smart.
We needed to dazzle that Grinch with our guile,
To show him the risk was sure worth his while.


Worse yet, betwixt and between stood a broker,
A bloodsucker culled from the mind of Bram Stoker.
Through him we must go, around or about,
He'd bring pressure to bear, he's really got clout.


"It's Santa," we'd say, "who'd sue him for cash?" 
"Another broker can get us a better deal in a flash.
We'll go to the market if a deal can't be made;"
The Grinch saw his bonus beginning to fade.


From the cream of the crop, a new team we'd assemble,
To get Santa bound and to weaken his tremble.
We'd send out the e-mail, we'd tweet and we'd twitter
We needed to find the best of the litter.


The other apt choice, as the time slipped on by,
Was to use those fine people, to make him comply.
By plane and by car, by boat and by train.
We beckoned this family to join in refrain.


And gather they did, first a few then a score,
Lawyers and brokers, claims folks and more
More than a choir, it was surely a throng,
Together they gave voice to a beautiful song.


And they reached that man's spirit, his heart and his soul,
And in no time at all, they'd accomplished their goal.
"Give me my pen", the Grinch yelled to his clerk.
I knew then and there that our ploy it had worked.


"Exclusions begone! Limitations not there!
We'll provide him his coverage, no need to beware."
And so it was written, and Santa could jet,
And Christmas was saved, the best Yuletide yet.


On cold winter night, when you're hearing his jingle,
When the children are sleeping and in comes Kris Kringle,
Remember that coverage protected his flight, 

Happy Christmas to all, and to all a good night.


Fitz’ Bitz:


Dear Subscribers:


It is hard to believe that we are a week away from Christmas and at the end of another year.  It has been an extremely busy time, as everyone rushes to resolve matters that can be resolved before year’s end or, at least, to meet any deadlines before next week, as the last two weeks of December are likely the quietest of the year. 


I have been fortunate to provide several training sessions over the past several weeks, one on the always fascinating topic of additional insured coverage and another, a national webinar for PLRB on the also fascinating topic of coverage for intentional acts or, more appropriately intentional injuries, which is the focus that most jurisdictions take in analyzing the intentional act and assault and battery exclusions.  For any of our readers who participated in the sessions, I hope you found them worthwhile.


As you know, I have focused my Fitz Bits column on emerging trends over the past several months, including issues related to cyber security and data breaches, coverage issues presented by services such as Uber and Lyft, as well as coverage for drones.  Speaking of drones, this week, the FAA announced a registration process for owners of small unmanned aircraft (UAS) weighing more than .55 pounds and less than 55 pounds.  The registration is a statutory requirement, whereby any owner of a small UAS, who previously operated an unmanned aircraft exclusively as a model aircraft must register no later than February 19, 2016.  The FAA expects hundreds of thousands of model unmanned aircraft to be purchased during the holiday season.  According to an FAA administrator, “registration gives us the opportunity to educate these new airspace users before they fly so they know the airspace rules and understand they are accountable to the public for flying responsibly.”  We can expect to continue to see the number of drones increase and, of course, the increased usage will most certainly result in accidents presenting some interesting coverage issues.


I have also discussed in prior columns the development of driverless vehicles, which is expected to significantly diminish the number of automobile accidents and will certainly alter underwriting for automobile policies, as well as the number of lawsuits and the nature of automobile litigation.  In the future it is likely that automobile lawsuits will have a significant, if not exclusive, focus on products liability. 


In a recent article in Industry Week the focus was on driverless trucks.  According to the article, it is expected that autonomous trucks are a sure thing with the question being whether a driver will occupy those autonomous vehicles or not.  A drastic reduction in accidents is expected as a result, since according to data collected by the Federal Motor Carrier Safety Administration and the National Highway Traffic Safety Administration, 87% of crashes involving large trucks, in which the large truck was determined to be at fault, were caused by drivers.  We will be watching these and other developing technologies in 2016 and beyond.


Happy Holidays to all and all the best in 2016.


 Til next time,



Elizabeth A. Fitzpatrick

[email protected]


The End of the Federal League of Baseball:


The Charlotte News

Charlotte, North Carolina

18 Dec 1915





Articles of Agreement Call for Tinker to Manage Cubs and

Jones to Manage the Cards—Bresnahan and

Huggins to Become Club Owners --- Many New

Magnates to Join O. B. Ranks.


By Associated Press


New York, Dec. 18.—Approval of the tentative baseball peace plan having been given by representatives of the National, American and Federal Leagues, the details of the treaty were considered in a conference here today of the members of the National Commission with a committee from the Federal League.


Seek Dismissal of Suit


Meanwhile the negotiators are awaiting the result of efforts which it is understood were to be made in Chicago to obtain the consent of Judge Landis to dismiss the suit brought by the Federal League against organized baseball. A question was raised in the negotiations here whether it would be legal or in contempt of Judge Landis to sign a peace treaty while the legal action was still pending before him. 


Will Care for Fed Players


Once Judge Landis consent is obtained, it is understood that the National Commission and the Federal League committee have the authority to adjust details and sign the peace agreement.  Aside from the mergers of the National and Federal league clubs in Chicago and St. Louis, one of the most import clauses in the agreement, it is authoritatively stated, is a provision that 72 of the Federal League players who now have contracts with the Federal League shall be fully protected by organized baseball.  According to the same authority other Federal League players will be given ten days notice. 


Jen’s Gems:




It is hard to believe that next week is already Christmas.  Every year I promise myself that I will start my shopping early, and every year I end up doing most of it two days prior to Christmas.  It is amazing how this date is on the calendar every year and yet it still feels as if it sneaks up. 


In terms of my column this week, I report on a case out of Supreme Court, New York County whereby the insurer moved to stay an uninsured motorist arbitration due to evidence that the offending vehicle was actually insured.  I know we frequently say this, but it is always important to remember that under Article 75 of the CPLR, if the insurer believes that there is a legal (rather than factual) reason to defeat a claim for UM benefits, it must make an application to stay arbitration, in court, within 20 days of receipt of the demand. 


I hope everyone has a wonderful holiday. 


Until next issue…



Jennifer A. Ehman

[email protected]





We need to remind you that what you are reading is our cover letter.  The newsletter itself is attached and contains a lot more information about the cases that are headlined below, including a link to almost every decision discussed.   



In This Week’s Issue (attached):



Dan D. Kohane

[email protected]


  • Tenant’s Policy Covered Landlord for Fall on Sidewalk Adjacent to Rented Premises

  • Additional Insured Coverage not Available Because  Endorsement Only Provided that Status if Named Insured was Required by Written “Insured Contract” to Provide Coverage; This was Not an Insured Contract


Robert E.B. Hewitt III

[email protected]


  • Defendants Failed to Address the 90/180-Day Category Set Forth In Plaintiff’s Bill of Particulars

  • Defendant Made a Prima Facie Case By Submitting Medical Evidence that the Injuries to Plaintiff’s Spine Did Not Constitute A Serious Injury

  • Although Plaintiff was Precluded From Testifying at Trial the Appellate Division Held that She Still had the Ability to Demonstrate Her Case Through Other Evidence and Therefore Summary Judgment in Favor of the Defendants was Unwarranted

  • Defendant’s Medical Expert Found Limitations in Range of Motion and Failed to Explain His Belief That the Limitations Were Self-Imposed

  • Defendant Failed to Preserve Sole Issue for Appeal For Appellate Review As It Was Not Raised in the Trial Court

  • Plaintiff Had to Demonstrate a Serious injury When He Slipped Off the Edge of the Platform of a Bus When Boarding Since It Arose out of the Use or Operation of a Bus

  • Severe Limitations to Range of Motion and A Disc Herniation Raised an Issue of Fact Particularly Where Plaintiff was Relatively Young



Steven E. Peiper

[email protected]


  • Legislative Update :  Change to Summary Judgment Proof

  • Court Provides More Guidance on the Process for Seeking Sanctions for Loss of ESI

  • Court Expands Physician’s Liability for Failure to Warn of Side Effects of Treatment to Unidentified, Unnamed Members of the General Public



Elizabeth A. Fitzpatrick

[email protected]


  • Facebook Discovery Restricted

  • Equitable Contribution Permitted




Agnes A. Wilewicz

[email protected]


  • Ninth Circuit Holds That Statutory Violations Exclusions Categorically Bar ZIP Code Collection Class Action Against Insured, Where All Claims Arose From Alleged Statutory Violation

  • In Deepwater Horizon Coverage Case, The Fifth Circuit Holds That Insurer’s Other Insurance Clause Did Not Preclude Recovery Despite Insured’s Possible Indemnification From Other Party



Jennifer A. Ehman

[email protected]


  • Court Orders Hearing to determine whether Offending Vehicle was Uninsured at the Time of the Accident



Earl K. Cantwell

[email protected]


  • Important Ruling on Construction Defect Not Covered “Property Damage”


From the H&F and Kohane families, our warmest wishes for the holiday season.  We hope you had a Chanukah filled with the light of hope and that your Christmas is merry and bright.  Happy New Year and let’s hope for a more peaceful world for all of us and a special wish for the many in our nation and around the world who struggle every single day.



Dan D. Kohane
Hurwitz & Fine, P.C.

1300 Liberty Building
Buffalo, NY 14202    

Office: 716.849.8942

Cell:     716.445.2258
Fax:      716.855.0874

E-Mail:  [email protected]
H&F Website:





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

Dan D. Kohane
[email protected]



Audrey A. Seeley

[email protected]



Jennifer A. Ehman

[email protected]


Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley

Elizabeth A. Fitzpatrick

Audrey A. Seeley

Steven E. Peiper

Jennifer A. Ehman

Agnieszka A. Wilewicz

Diane F. Bosse

Joel R. Appelbaum


Steven E. Peiper, Team Leader
[email protected]

Elizabeth A. Fitzpatrick

Audrey A. Seeley, Team Leader
[email protected]


Jennifer A. Ehman


Jody E. Briandi, Team Leader
[email protected]

 Elizabeth A. Fitzpatrick

Diane F. Bosse


Topical Index

Kohane’s Coverage Corner

Hewitt’s Highlights on Serious Injury
Peiper on Property and Potpourri

Fitz’ Bits

Wilewicz’s Wide World of Coverage

Keeping the Faith with Jen’s Gems
Earl’s Pearls


Dan D. Kohane
[email protected]


12/15/15       Tower Insurance Company v. Leading Insurance Group

Appellate Division, First Department

Tenant’s Policy Covered Landlord for Fall on Sidewalk Adjacent to Rented Premises

The lease agreement between Tower’s named insureds, as landlords, and their ground-floor tenant obligated the tenant to indemnify and hold harmless landlords for any damages arising out of its use of the demised premises or the streets and sidewalks "adjacent thereto," as well as to maintain the sidewalk and curb, keeping it clear at all times, and free from snow and ice. The insurance policy issued by Leading to the tenant provided that the landlords were "also an insured, but only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to you [the tenant]." It is clear from the lease agreement that the use of the sidewalk was included in the scope of the demised premises.


The court concluded that Leading’s additional insured endorsement covered claims arising out of a defect in the sidewalk. Even if the lease did not address the sidewalk explicitly, the additional insured endorsement would give the landlords coverage for accidents occurring outside the demised premises, including on abutting public sidewalks.


The coverage provided to the landlords as additional insureds under defendant's policy was primary to the coverage provided to them as named insureds under plaintiff's policy. A comparison of the "Other Insurance" clauses in the two policies shows that plaintiff's policy states that it is excess over another policy providing primary coverage for which the insured has been added as an additional insured, while defendant's policy does not.

Editor’s Note:  Attaboy Max.


12/09/15       American Insurance Company, etc. v. Schnall

Appellate Division, Second Department

Additional Insured Coverage not Available Because  Endorsement Only Provided that Status if Named Insured was Required by Written “Insured Contract” to Provide Coverage; This was Not an Insured Contract Brooklynbaca leased the first floor of a building in Brooklyn, where it operated a restaurant. It has a CGL and Business Property policy from American Insurance Company (“AIC”). The owner of the building in which the restaurant was located was insured by American West Insurance Company (“AWIC”).


Brooklynbaca contracted with Scientific Fire Prevention (“Scientific”) to install a cooking exhaust duct in the restaurant (“Installation Contract”). Brooklynbaca and Scientific entered into a separate contract pursuant to which Scientific agreed to service the exhaust duct by periodically removing grease (“Service Agreement”). The Service Agreement, but not the Installation Contract, contained an insurance procurement provision in favor of Scientific. Sometime after Scientific installed the cooking exhaust duct, there was a fire in the restaurant kitchen.


AIC paid benefits to Brooklynbaca under the policy and then started a subrogation action against Scientific (and others). Similarly, AWIC paid benefits to its insured, the building owner and started a subro action against Scientific and Brooklynbaca.


Scientific asserted cross claims against Brooklynbaca in that action, inter alia, seeking contractual and common-law indemnification and alleging breach of a contract to procure insurance. Scientific also commenced a third-party action against AIC asserting a cause of action for a judgment declaring that Scientific was entitled to a defense and indemnification in that action under the insurance policy issued by AIC to Brooklynbaca.


The Appellate Division found that coverage extends only to named entities . . . or individuals defined as insured parties under the relevant terms of the policy.  Here, Scientific was not expressly named as an additional insured on the subject policy. Further, Scientific did not otherwise qualify as an additional insured under the terms of the policy because Scientific did not meet the policy's definition of an additional insured.



In that respect, the additional insured endorsement of the subject policy expands the definition of "insured" to include any organization that the named insured was "required by a written insured contract to include as an insured." The Service Agreement required Brooklynbaca to include Scientific as an additional insured on its policy. However, that agreement did not qualify as an "insured contract," as that term was defined in the policy, because there was no provision in the Service Agreement pursuant to which Brooklynbaca assumed any tort liability on the part of Scientific or any other party.


Likewise, Scientific's cross claim seeking contractual indemnification was dismissed since neither the Installation Contract nor the Service Agreement contained any clause under which Brooklynbaca expressly or impliedly agreed to indemnify Scientific.


The lower court was mistaken in granting that branch of Brooklynbaca's cross motion to dismiss Scientific's cross claim alleging breach of a contract to procure insurance. In its motion, Brooklynbaca argued only that the fire investigation reports conclusively established that the fire was caused, not by Scientific's negligent servicing of the cooking exhaust duct under the Service Agreement, but by its negligent installation of the duct under the Installation Contract, which did not contain an insurance procurement provision. Contrary to Brooklynbaca's contention, at this stage of the proceedings, it cannot be said that the fire investigation reports conclusively proved, beyond "significant dispute," that only Scientific's work under the Installation Contract was implicated in the action.


Robert E.B. Hewitt III

[email protected]


12/16/15       Colon v. Lopez

Appellate Division, Second Department

Defendants Failed to Address the 90/180-Day Category Set Forth In Plaintiff’s Bill of Particulars

The Appellate Division reversed the Supreme Court’s grant of defendant’s summary judgment motion and reinstated the action. The Appellate Division found defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The papers submitted by the defendants failed to adequately address the plaintiff's claim, set forth in the bill of particulars, that he sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d). In light of the defendants' failure to meet their prima facie burden, it was unnecessary for the Court to determine whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact. The decision contained no details.


12/16/15       Lacombe v. Castellano

Appellate Division, Second Department

Defendant Made a Prima Facie Case by Submitting Medical Evidence That the Injuries to Plaintiff’s Spine Did Not Constitute a Serious Injury

The Appellate Division reversed the Supreme Court’s grant of defendant’s summary judgment motion and reinstated the action. The Appellate Division found defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The defendants submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine did not constitute a serious injury under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d) and that, in any event, the alleged injuries were not caused by the subject accident.  In opposition, however, the Appellate Division found plaintiff raised a triable issue of fact as to whether he sustained serious injuries to the cervical and lumbar regions of his spine under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d), and as to whether the alleged injuries were caused by the accident. No further details were given.


12/16/15       Lee v. Barnett

Appellate Division, Second Department

Although Plaintiff Was Precluded From Testifying At Trial the Appellate Division Held That She Still Had the Ability to Demonstrate Her Case through Other Evidence and Therefore Summary Judgment In Favor of the Defendants Was Unwarranted

The Appellate Division reversed the Supreme Court’s grant of defendant’s summary judgment motion. The defendants' separate motions for summary judgment dismissing the complaint insofar as asserted against each of them based upon the plaintiff's failure to comply with so much of the order entered April 7, 2014, as precluded her from testifying at trial if she failed to appear for her deposition by a date certain is denied. The lower court entered an order precluding plaintiff from testifying at trial and plaintiff failed to appear for her deposition.  The Appellate Division held that to avoid the adverse impact of the conditional order of preclusion, the plaintiff was required to demonstrate a reasonable excuse for her failure to comply with the order and a potentially meritorious cause of action but the  plaintiff failed to demonstrate a reasonable excuse for her failure to appear for her deposition or a potentially meritorious cause of action inasmuch as she failed to submit competent medical evidence demonstrating that she sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject automobile accident. Therefore, the plaintiff was precluded from testifying at trial. 


However, the Appellate Division also held that, while a preclusion order may serve as a basis for summary judgment dismissing the complaint, a preclusion order alone does not necessarily compel dismissal.  The Appellate Court held that the defendants demonstrated only that the plaintiff was precluded from testifying at trial. They did not demonstrate that the plaintiff was precluded from offering other evidence with respect to the issue of liability or her injuries. The defendants failed to establish that without the plaintiff's testimony, she would be unable to make out a prima facie case. Accordingly, the Appellate Division held the defendants were not entitled to summary judgment dismissing the complaint.


12/16/15       Miller v. Ebrahim

Appellate Division, Second Department

Defendant’s Medical Expert Found Limitations in Range of Motion and Failed to Explain His Belief That the Limitations Were Self-Imposed

The Appellate Division reversed the Supreme Court’s grant of defendant’s summary judgment motion and reinstated the action.  The Appellate Division held that the defendants failed to meet their prima facie burden of demonstrating that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. One of the defendants' experts found significant limitations in the range of motion in the lumbar region of her spine and he failed to adequately explain and substantiate his belief that the limitations were self-imposed. Since the defendants failed to meet their prima facie burden, it was unnecessary to determine whether the papers submitted by Miller in opposition were sufficient to raise a triable issue of fact.

12/16/15       St. Hiliare v. BKO Express, LLC

Appellate Division, Second Department

Defendant Failed to Preserve Sole Issue for Appeal for Appellate Review As It Was Not Raised In the Trial Court

The Appellate Division affirmed a jury verdict that plaintiff sustained a serious injury under the insurance law and awarded plaintiff $495,000. The appellants' sole contention, that the jury verdict finding that the plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident was not based on legally sufficient evidence, is unpreserved for appellate review, as the appellants did not raise that issue in the trial court.


12/16/15       Ocasio v. New York City Transit Authority

Appellate Division, Second Department

Plaintiff Had To Demonstrate a Serious injury When He Slipped off the Edge of the Platform of a Bus When Boarding since It Arose out of the Use or Operation of a Bus

The Appellate Division sustained the Supreme Court’s grant of defendant’s summary judgment motion and reinstated the action. The plaintiff alleges that he fell while attempting to board a bus owned and operated by the defendant New York City Transit Authority (hereinafter the NYCTA) when his foot slipped off the edge of the entrance platform of the bus. He alleges that the platform was too high for him to safely step onto the bus, and that the bus driver was negligent in failing to lower the bus into a kneeling position so that he could board.  The Appellate Division found that contrary to the plaintiff's contention, the Supreme Court properly determined that he was required to establish that he had sustained a "serious injury" within the meaning of Insurance Law § 5102(d), since it is clear that the accident arose out of the "use or operation" of the bus. 

Furthermore, the NYCTA established its prima facie entitlement to judgment as a matter of law by submitting the plaintiff's deposition testimony and the affirmed medical report of its examining physician, which demonstrated that the plaintiff did not sustain a serious.  In opposition, the plaintiff failed to raise a triable issue of fact.


12/08/15       Giuffre v. Bulgues

Appellate Division, First Department

Severe Limitations to Range of Motion and a Disc Herniation Raised an Issue of Fact Particularly Where Plaintiff Was Relatively Young

The Appellate Division modified the Supreme Court’s grant of defendant’s summary judgment motion and reinstated the action as to plaintiff’s claims of "permanent consequential" and "significant" limitations of use of his lumbar spine as to plaintiff Giuffre, and otherwise affirmed the decision. Plaintiffs allege that, as the result of a motor vehicle accident that occurred in June 2011, they both suffered serious injuries to their cervical and lumbar spines, Giuffre underwent a laminectomy and partial discectomy in 2014 that resulted in scarring, and Baz also suffered scarring of her knees. Defendants established prima facie that plaintiff Giuffre did not suffer a serious injury by submitting a radiologist's report finding no evidence of cervical spine injury and a lumbar spine herniation attributable to preexisting degenerative disc disease. In addition, they submitted reports of an orthopedist and neurologist who found no permanent or significant limitations and a plastic surgeon who found no disfiguring scars.


In opposition, Giuffre raised an issue of fact as to his lumbar spine claims by submitting the reports of his orthopedic surgeon, who found severe limitations in range of motion and averred that a lumbar spine MRI performed in 2012 and surgery revealed a herniated disc, which he opined was causally related to the accident. Particularly in light of Giuffre's relatively young age at the time of the accident, that was sufficient to raise an issue of fact as to causation. Although the surgeon did not examine Giuffre until over a year after the accident, plaintiffs submitted evidence corroborating Giuffre's testimony that he received physical therapy during the year following the accident and an MRI report prepared about one month after the accident that also showed a lumbar herniation. Thus, Giuffre provided sufficient evidence to raise an issue of fact as to a causal connection between the accident and his lumbar spine injury. However, Giuffre's physician offered no opinion as to any causal connection between the accident and his claimed cervical spine injury, and the Appellate Division found there was no competent evidence in the record of any treatment of the cervical spine. Nor did Giuffre provide any evidence to refute the showing that his scarring was not disfiguring.


As for plaintiff Baz, defendants submitted the reports of their radiologist, who found no injuries, and their orthopedist and neurologist, who found normal range of motion. In opposition, Baz failed to present any evidence of cervical spine injury. Further, she presented no competent evidence of any medical treatment contemporaneous with the accident to raise an issue as to a causal connection between the accident and her claimed injuries). She presented no evidence of disfiguring scars. Defendants established prima facie that plaintiffs did not sustain a serious injury under the 90/180-day category through plaintiffs' bill of particulars, which did not include a 90/180-day claim, and deposition testimony. In opposition, plaintiffs failed to submit competent medical evidence sufficient to raise an issue of fact.







Steven E. Peiper

[email protected]


Legislative Update :  Change to Summary Judgment Proof

As of December 11, 2015, CPLR § 3212(b) now provides that a Court must consider expert affidavits submitted in support of, or opposition to, a dispositive motion.  Previous authority had suggested that in order for a party to support its motion for summary judgment with expert evidence, it should have first disclosed the identity of the expert via 3101(d)(1)(i).  Whether to accept the expert evidence was left to the discretion of the trial court. 


The recent amendment strips away the trial court’s discretion.  Now, so long as the expert opinion is sufficiently supported at the time of the motion, the fact that there was no expert disclosure is irrelevant.  Specifically, the Section 3212(b) now provides, in relevant part:


…Where an expert affidavit is submitted in support of, or opposition to, a motion for summary judgment, the court shall not decline to consider the affidavit because an expert exchange pursuant to subparagraph (i) of paragraph (1) of subdivision (d) of section 3101 was not furnished prior to the submission of the affidavit… 


The new rule applies immediately, and will govern all motions for summary judgment made on or after December 11, 2015.


12/16/15       Pegasus Aviation I, Inc. v Varig Logistica S.A.

Court of Appeals

Court Provides More Guidance on the Process for Seeking Sanctions for Loss of ESI

Plaintiff commenced the instant lawsuit seeking to recover losses due to a breach of certain lease agreements by Varig.  After the alleged breach, but before the lawsuit, Varig was purchased out of Brazilian bankruptcy court by MP Volo.  Apparently, a dispute between existing shareholders of Varig and the new purchasers resulted in MP Volo being “frozen out” of Varig’s operations for approximately 9 months.  However, it is undisputed that MP Volo was in full control of the company as of April 1, 2008.


Plaintiff initially commenced this lawsuit in Florida in February of 2008.  However, Pegasus voluntarily discontinued that action, and commenced it anew in New York in October of 2008.  By January of 2010, a dispute over discovery erupted.  At the first discovery conference, it was revealed that Varig had no document retention policy from 2000 through 2008.  Moreover, it was revealed that significant computer crashes in February of 2009 and March of 2009, resulted in almost all data from that time period being lost.  Finally, Varig reported that it tried to recover the data, but that its efforts were unsuccessful.  The discs, from which the data was attempted to be recovered, were also destroyed and otherwise not available. 


Pegasus, not surprisingly, moved for discovery sanctions based upon Varig and MP Volo’s inability to institute a litigation hold of ESI and protect ESI from destruction.  The trial court ruled that MP Volo was “in control” of Varig at the time of the losses, and further that MP Volo was grossly negligent in failing to institute a litigation hold to cover both MP Volo and Varig.  As a result, the Court struck Varig’s Answer, and also indicated that Pegasus was entitled to an adverse inference charge against MP Volo at the time of trial.  


On appeal, the Appellate Division ruled that MP Volo was, in fact, negligent, but that its actions did not rise to “gross negligence.”  Further, the court noted that Pegasus failed to establish the relevance of the lost information.  As such, the Appellate Division held that the adverse inference charge was too great a sanction on MP Volo.   As part of that ruling, the Court noted that failure to institute a litigation hold letter was not, per se, an indication of gross negligence. 


In a concurring opinion, Justice Andrias concluded that MP Volo’s actions did not rise to the level of gross negligence.  However, rather than dismiss sanctions outright, Justice Andrias would have remanded the matter to the trial court for further proceedings on the appropriate penalty.  


Finally, Justice Richter held that the failure to take any steps to preserve ESI was emblematic of “gross negligence.”  Accordingly, it was her dissenting opinion that the trial court’s decision should have been affirmed.


On appeal, Justice Pigott, writing for the majority, concluded that failure to institute a litigation hold does not, per se, constitute evidence of “gross negligence.”  Rather, it is but one of several factors that need to be weighed.  The Court went on to hold that the trial court’s determination that MP Volo exercised sufficient control over Varig to trigger a duty on its part was appropriate on the Record presented.  Further, the Court also noted that the Appellate Division’s holding that MP Volo’s actions constituted “negligence” only should not be disturbed. 


Accordingly, the Court appeared to adopt Justice Andrias’ opinion to the extent that it remanded the matter to the trial court for further determination “as to whether the negligently destroyed information was relevant to Pegasus’ claims.”  If so, the Court instructed the trial court to then fashion an appropriate sanction (if one was warranted).


In a stark dissent, Judge Stein (joined by Judge Rivera) again split from her colleagues.   Judge Stein first referenced the First Department’s holding in Voom HD Holdings which set up the test for spoliation of ESI.  In Voom, the Court shall impose sanctions if it is established that (1) the party had control over the information; (2) the party destroyed the material with a “culpable state of mind”; and (3) the evidence destroyed was relevant. 


Judge Stein argued that MP Volo was grossly negligent in its failure to preserve ESI.  Further, because, in her opinion, destruction caused by gross negligence is sufficient to presume relevance, the matter should have been remanded to the Appellate Division for determination of what sanction was appropriate.


In support of the dissent’s position, Judge Stein noted the accepted definition for “gross negligence” is “the failure to exercise even slight care.”  While a determination of whether someone is gross negligent is usually a question of fact, on the instant Record Judge Stein makes the extra step of finding it against MP Volo as a matter of law. 

Further, once a finding of “gross negligence” is made, the dissent argued that a finding of relevancy necessarily follows.  It then becomes a rebuttable presumption, and the burden for the rebutting it falls upon the party from whom discovery is sought.  Where there is no presumption, it is the requesting party’s obligation to establish relevancy.  Thus, in the instant case, the dissent argues that matter should be presented to the Appellate Division where MP Volo can attempt to rebut the presumption that it destroyed relevant information.  At that point, the dissent also charges that the Appellate Division should have been directed to fashion the appropriate sanction. 


12/16/15       Davis v South Nassau Communities Hosp.

Court of Appeals

Court Expands Physician’s Liability for Failure to Warn of Side Effects of Treatment to Unidentified, Unnamed Members of the General Public

Plaintiff commenced the instant action after he was struck by an automobile operated by Lorraine Walsh.  Ms. Walsh was returning to her home after being seen at South Nassau by doctors who were employed with the Island Medical Physicians practice.  Apparently, Ms. Walsh presented with extreme discomfort.  The physician and physician assistant from Island treated Ms. Walsh with an intravenous cocktail of Dilaudid and Ativan.  One of the treatment’s side effects was to impair Ms. Walsh’s ability to safely operate a motor vehicle.  Unfortunately, no one at the hospital or Island managed to tell Ms. Walsh that her ability to safely drive was very likely impaired. 


On her trip home, Ms. Walsh crossed over a double yellow line and collided with a bus that was being operated by plaintiff.  Plaintiff, in turn, commenced the instant action against Ms. Walsh, as well as the hospital, the treating physician, and his physician’s assistant.  It was alleged that the hospital and treating staff owed a legal duty to the general public to warn their patients of potentially hazardous side effects which arose from the provided treatment. 


The Hospital and Island defendants moved to dismiss the matter for failure to state a cause of action based, principally, upon a lack of duty.  The motion was granted, and the Appellate Division affirmed on the basis that the providers “duty of care” extended only to their patients.


In reviewing the matter, the Court of Appeals began by noting that precedent historically has declined to extend a legal duty to unknown, unidentified third parties.  In contrast with the authority reviewed by the Court, Judge Fahey concluded that in the instant matter the defendants “relationship” with Ms. Walsh placed them in the best position to protect “against the risk of harm.”  When further compared with a number of “balancing factors” which the course must weigh, the Court ultimately concluded that the Hospital and the defendants from Island owed a duty of care to Mr. Davis. 


In support of its conclusions, the Court noted that there would be no added cost to the defendants.  Indeed, it is their obligation, already, to warn the patient of potentially dangerous side effects.  Further, the Court instructed that it was only a duty to warn Ms. Walsh of the side effects.  The defendants were under no duty to prevent Ms. Walsh from leaving.  Finally, the Court went out of its way to say that the decision did not expand general “duty” principles.  Rather, it was limited to situations in these factual scenarios.


In addition, the Court also concluded that the failure of the defendants to warn sounded in a medical malpractice cause of action.  It was not merely a negligence claim where, as here, the result of the failure to warn bore a “substantial relationship” with medical treatment.


In a spirited dissent, Judge Stein (joined by Judge Abdus-Salaam) argued that the majority abandoned established precedent.  Judge Stein noted that the Court had historically, and consistently, refused to extend a legal duty to an unnamed, unidentified group of people.  By imposition of a duty beyond the doctor/patient relationship, Judge Stein argued that a physician is now open to exponentially greater exposure. 


Moreover, even if the legal duty could have been expanded, Judge Stein noted that the balancing test referenced by the majority actually mandated dismissal of the plaintiff’s action.  The dissent argued that the “societal costs of imposing a duty upon physicians…greatly outweighs the potential benefit.”  Because physicians are already required warn patients of side effects, expanding potential liability to third-parties does not create any additional benefit to the protection of society.   The dissent further notes that rather than creating a benefit, this expansion of a legal duty will have a chilling effect on treatment of sick individuals.  Where, as here, a physician is potentially exposed to liability from a third-party, it is posited that he or she may become reticent to proscribe treatment.



Elizabeth A. Fitzpatrick

[email protected]


12/17/15       Forman v. Henkin

Appellate Division, First Department

Facebook Discovery Limited

After a state of decisions regarding the discovery of social media postings by a plaintiff, which primarily focused on Facebook postings, the First Department recently revisited the issue.  In the bodily injury lawsuit, the plaintiff alleged that while riding one of defendant’s horses, the stirrup broke causing her to lose balance and fall to the ground.  She alleged that she sustained cognitive and physical injuries which have limited her ability to participate in social and recreational activities.  At her deposition she testified that she maintained and posted to Facebook prior to the accident, but deactivated the account at some time thereafter.


The defendant sought an order compelling plaintiff to provide an unlimited authorization to obtain her Facebook records, including all photographs, status updates and instant messages.  The trial court granted the motion to the extent of directing the plaintiff to produce all photographs of herself privately posted on Facebook prior to the accident that she intended to introduce at trial, all photographs of herself privately posted on Facebook after the accident that did not show nudity or romantic encounters and authorizations for Facebook records showing each time she posted a private message after the accident and the number of characters or words in those messages.  Plaintiff appealed that decision.


After reviewing the scope of CPLR §3101 which provides that there shall be full disclosure of all matter materials necessary in the prosecution or defense of an action, the Court noted that they have consistently applied settled principles applicable to paper discovery requests to request seeking a party’s social media information.  The Court cited to its decision in Tap v. New York State Urban Development Corp. wherein it denied the defendant’s request for an authorization for plaintiff’s Facebook records, finding that the mere fact that the plaintiff used Facebook was an insufficient basis to provide the defendant with access to the account.  Vague and generalized assertions that information in the plaintiff’s social media sites might contradict the plaintiff’s claims of emotional distress have also been found an improper basis for disclosure.  The Court also noted that other departments consistent with well-established case law governing disclosure have required some threshold showing before allowing access to a party’s private social media information.  Applying these principles, the Court thus vacated the portions of the motion Court order directing plaintiff to produce photographs of herself posted on Facebook after the accident that she did not intend to introduce at trial, as well as authorizations related to plaintiff’s private Facebook messages, and found only that photographs of herself posted on Facebook either before or after the accident that she intended to use at trial must be produced. 


Justice Saks issued a lengthy dissent opining that the traditional discovery process may be used equally well where the defendant seeks disclosure of information in digital form.  “The demand, like any valid discovery demand, would have to be limited to reasonably define categories of items that are relevant to the issues raised.


He continued by noting that following a search for documents responsive to the requested documents, and barring privilege issues, the response of relevant documents would be turned over or the appropriate authorization provided.  We can expect these types of disputes over accessibility to a plaintiff’s social media platforms to continue.


10/23/15       Underwriters of Interest Subscribing to Policy No. A15274001 v. Probuilders Specialty Insurance Co. (2015 WL 6437698)

Fourth District, Division 1, CA

Equitable Contribution Permitted

The coverage action arose following the settlement of an underlying construction defect claim in which it was alleged that Pacific Trades Construction and Development, Inc. was liable for damages to multiple separate single family homes caused by construction defects.  Underwriters had issued a commercial general liability policy insuring Pacific Trades and, in addition, Pacific Trades was insured under policies issued by Probuilders, which provided indemnification for many of the same risks encompassed by Underwriters’ policy.


After Pacific Trades was identified in a lawsuit, it notified both Underwriters and Probuilders of the suit.  Underwriters undertook its defense and thereafter upon tendering the matter to Probuilders, they denied any obligation to afford defense, pointing to language within their policy that obligated them to afford defense “provided that no other insurance affording a defense against such a suit is available to you.”


The case settled with Probuilders contributing $270,000 to the approximate $1 million settlement.  Thereafter, Underwriters filed suit against Probuilders seeking equitable contribution for some of the defense costs paid by Underwriters in connection with the defense of the underlying action.


In addition to arguing that the action was untimely, Probuilders also claimed that Underwriters refused to supply Probuilders with billings from the attorneys that formed the basis of the monetary amounts it sought.  Underwriters cross-moved for summary judgment claiming that the “escape” clause in its policy which it relied upon in refusing to contribute to the defense is routinely disregarded by California courts.  It also argued that the action was timely because it was brought less than two years after it made its final payment toward the attorney fees that formed the basis for its equitable contribution action. 


After discussing the concept of equitable contribution, which permits reimbursement to the insurer that paid on the loss for the excess it paid over its proportionate share of the obligation, the court noted the California court’s disregard of such escape clauses, explaining “other insurance clauses that attempt to shift the burden away from one primary insurer wholly or largely to other insurers have been the object of judicial distrust.  Public policy disfavors escape clauses whereby coverage purports to evaporate in the presence of other insurance.  Partly for this reason, the modern trend is to require equitable contributions on a pro rata basis from all primary insurers regardless of the type of other insurance clause in their policies.  (Citations omitted)  The court, thus, found that the trial court erred in giving effect to the escape clause and found Probuilders responsible for its equitable share of the defense costs achieved, rejecting the other arguments raised by Probuilders in its effort to avoid contribution.




Agnes A. Wilewicz

[email protected]


12/07/15       Big 5 Sporting Goods Corp. v. Zurich American Insurance Company and Hartford Fire Insurance Company

United States Court of Appeals, Ninth Circuit

Ninth Circuit Holds That Statutory Violations Exclusions Categorically Bar ZIP Code Collection Class Action against Insured, Where All Claims Arose From Alleged Statutory Violation

California-based sporting retailer Big 5 was sued in a consumer class action that challenged the company’s practice of collecting ZIP codes from customers in connection with transactions. Such data collection is illegal in California, as prohibited by statute. The Song-Beverly Credit Card Act (California Civil Code section 1747.08) prohibits retail companies that accept credit cards from requesting personal identification from customers in connection with purchases.


Big 5 had secured insurance policies from Zurich and Hartford. However, those policies included variations of exclusions that precluded coverage for claims arising from statutory violations. The Zurich’s policies’ Statutory Violation Exclusion expressly barred coverage for personal and advertising injury arising directly or indirectly out of any action or omission that violates any statute, ordinance or regulation that prohibits or limits the sending, transmitting, communicating, or distribution of material or information. The Hartford’s policy contained two applicable exclusions: 1) Right of Privacy Created by Statute, which similarly barred coverage for personal and advertising injury arising out of the violation of a person’s right of privacy created by statute or federal act; and 2) Distribution of Material in Violation of Statutes, which barred coverage for personal and advertising injury arising directly or indirectly from any action or omission that violates or is alleged to violate any statute that prohibits or limits the sending, transmitting, communicating, or distribution of material or information.


In analyzing whether these exclusions applied, the Ninth Circuit found that they categorically did. All of the underlying plaintiffs’ claims (all “garden variety ZIP code cases”) stemmed from the alleged violation of Song-Beverly, which was “undeniably a statute”. Big 5’s attempt to frame the underlying claims as also sounding in common law and California constitutional right of privacy claims was too rejected by the Circuit Court. Finding no precedential support to the insured’s argument, the Court instead cited to the legislative history of Song-Beverly and the intent for the statute to create an exclusive statutory remedy. In order words, for this fact scenario, there simply was no common law or other right to recovery. Somewhat stingingly, the Court went on to state “Big 5’s ‘claims’ are not just lacking merit. Under settled California law, they are not even recognized as cognizable causes of action, a statute one step below ‘unmeritorious’. Allowing Big 5’s fact pattern to rise to the level of a claim would require an insurance company to insure and defend against non-existent risks”.


11/19/15       In Re: Deepwater Horizon – Cameron International Corp. v. Liberty Insurance Underwriters Incorporated

United States Court of Appeals, Fifth Circuit

In Deepwater Horizon Coverage Case, the Fifth Circuit Holds That Insurer’s Other Insurance Clause Did Not Preclude Recovery despite Insured’s Possible Indemnification from Other Party

This case stems from the catastrophic oil spill in the Gulf of Mexico involving the Deepwater Horizon/BP oil rig that took place in the spring of 2010. Here, a coverage dispute arose between Cameron International Corp. and its liability insurer Liberty. Cameron had manufactured the critical blowout preventer at issue in the spill and Liberty insured them for potential losses associated with it. After the spill, Cameron settled with BP, the well owner, and sought benefits from Liberty to help cover the costs. Liberty refused to pay for a number of reasons and Cameron started suit against the carrier for recovery.


Long story short, anticipating potential liabilities, Cameron entered into an agreement with BP (the owner of the oil well) and Transocean (the owner of the Deepwater Horizon drill) wherein Cameron would be indemnified by Transocean, which in turn was indemnified by BP. Cameron also created an insurance “tower” of $500 million in coverage from various carriers. Those policies covered the risk that Cameron might incur as the blowout preventer’s manufacturer. The first $25 million was to be covered by one carrier, the next $25 million by another carrier, and so on. Liberty sold its $50 million to come into play between the first $100 million and $150 million in losses. That policy included a subrogation clause that provided that if Cameron could recover from another party some or all of the losses paid under the policy, Cameron would transfer those rights to Liberty.


After the spill, and thousands of lawsuits later, the parties began to discuss settlement. They ultimately agreed that BP would indemnify Cameron in exchange for $250 million, on the condition that Cameron’s carriers agree to waive their subrogation rights and Cameron agreed to waive its indemnification rights against Transocean. Among all of Cameron’s insurers, Liberty was the only one to object to the settlement and declined to offer its $50 million limit. They did not agree to a settlement that waived their subro rights and the insured’s indemnification rights. They also asserted the argument that their policy’s Other Insurance Clause had not yet been triggered since Cameron had not yet exhausted its legal remedies against Transocean (i.e. their indemnification constituting “other insurance”), so Liberty’s policy had yet to come into play. Despite attempts to recraft the settlement documents to assuage Liberty’s concerns about subrogation, the parties could not agree and Cameron initiated suit against Liberty.


The policy’s Other Insurance Clause provided that “if other insurance applies to a ‘loss’ that is also covered by this policy, this policy will apply excess of such other insurance. The policy also provided that “other insurance” was defined as “any type of self-insurance, indemnification or other mechanism by which an insured arranges for funding of legal liabilities”. Liberty argued that this meant that if “other insurance” potentially applied to the loss, Liberty’s policy would be excess to that insurance. Cameron argued that the policy would only be excess to other insurance if that other insurance “actually and presently applies”. Thus, the Court wrote “because Transocean refused to indemnify Cameron, Liberty was obligated to pay the policy benefits”.


The Court found Cameron’s interpretation to be “reasonable and Liberty’s is not. The plain language of the clause supports Cameron’s reading. Liberty’s policy is excess only if other insurance ‘applies,’ present tense”. It did not mean that all potential other sources of funds had to be exhausted before reaching Liberty’s. The Court wrote, “In short, we do not read the Other Insurance Clause to require that Cameron exhaustively litigate other potential sources of coverage before Liberty’s payment obligation is triggered.” Since the settlement documents did preserve Liberty’s right of subrogation, Liberty’s remedy was to pay its policy to Cameron and then seek recovery from Transocean for indemnification. Accordingly, the Court found that Liberty had breached the insurance contract in this case.




Jennifer A. Ehman

[email protected]


11/30/15       Matter of Hartford Cas. Ins. Co. v. Helms

Supreme Court, New York County

Court Orders Hearing to determine whether Offending Vehicle was Uninsured at the Time of the Accident

The Hartford moved to permanently stay the uninsured motorist arbitration demanded by Lisa Helms or, in the alterative, temporarily stay the arbitration pending a hearing to determine if insurance coverage existed for the vehicle at issue and joining the proposed additional respondents, State Farm and the allegedly negligent driver.


The court explained that an insurance carrier seeking to stay arbitration of an uninsured motorist claim has the burden of demonstrating that the offending vehicle was actually insured at the time of the accident.  The burden then shifts to the carrier to demonstrate that it never issued a policy or that it properly cancelled the policy or validly disclaimed coverage.


In this case, the court granted the temporary stay as there were questions of fact as to whether State Farm cancelled the policy insuring the offending vehicle and thus, whether the offending vehicle was uninsured at the of the accident.  The Hartford made a prima facie showing that the offending vehicle was insured by State Farm through the submission of a policy accident report containing the vehicle’s insurance code.  In response, State Farm submitted evidence that it cancelled the policy prior to the accident via a notice of cancellation and proof of mailing.  However, the court found that it could not, based on the record before it, determine whether the cancellation complied with VTL § 313 or whether State Farm reinstated the policy prior to the accident.  Accordingly, it was ordered that a hearing would be conducted to determine those issues. 


Earl K. Cantwell
[email protected]


06/11/15       American Home Assurance Co. v. SMG Stone Co. Inc.

Northern District of California

Important Ruling on Construction Defect Not Covered “Property Damage”

In many respects, California is heavily involved in construction defect litigation and related coverage issues, and a recent ruling in California relieved two insurance companies of any obligation to defend and indemnify with respect to claims of alleged faulty tile installation in a condominium development in Los Angeles.  The District Court granted summary judgment to American Home Insurance Co. and Insurance Company of the State of Pennsylvania.


A developer hired Webcor Construction to build a 54 story hotel and luxury condominium in downtown Los Angeles.  Webcor subcontracted installation of stone floor tiles to SMG Stone Co.  Eventually, fractures in the floor tiles were discovered and many had to be removed and replaced, with the remediation also requiring removal and replacement of drywall and the concrete sub floor.  The developer initiated an arbitration proceeding against Webcor, the general contractor, and SMG Stone Co.  Webcor paid $8 Million to settle the dispute, including $7 Million paid by its insurer.  SMG and another contractor subsequently sued Webcor for non-payment of services.  In a cross claim, Webcor sought recovery of sums expended to repair, replace, and remediate SMG’s allegedly defective work.  These claims were tendered for defense to the insurance companies who denied coverage and filed a declaratory judgment action. 


On competing cross-motions for summary judgment, the District Court did conclude that fracturing of the stone tiles caused by allegedly defective installation was the result of an insured “occurrence”.  However, the Court ruled there was no obligation to defend or indemnify because the fracturing of the floor tiles did not constitute “property damage”, which the policies defined as physical injury to tangible property, including resulting loss of use of that property, or loss of use of tangible property that is not physically injured.  The Court applied the rule from California cases which consistently hold that coverage does not exist where the only property “damage” is the defective construction itself, and damage to other adjoining or existing property has not occurred.


The Court rejected an argument that the damage to the concrete subfloors and interior walls during removal and reinstallation constituted the requisite “physical injury” and “property damage”.  The damage to the subflooring and drywall did not result from the defective floor tile installation itself.  Rather, the damage was the result of the remediation of the defective floor tile and under California law remediation work does not constitute “property damage”.


This case represents a new entry in the continuing log of decisions, regulations, and statutes trying to determine whether and when a contractor’s CGL policy may become liable for a construction defect.  Some cases rule that a true construction defect cannot be an accidental “occurrence” because, even if in error, the act of defective construction itself is not an accident but purposeful activity.  However, in this case, the Court held that the defective installation of the floor tile could have been a defined and covered “occurrence”.


Many states by case law or regulation have ruled that CGL coverage for a construction defect does not apply when the only “property damage” is to the defective construction itself.  This is held not to be defined property damage, and there is a further policy argument that a CGL policy should not be used to essentially serve as a performance bond or warranty by a contractor.  Some States and cases have allowed coverage for construction defects under a CGL policy if and when there is damage to other unrelated property or building members and structures which are not strictly speaking part of the construction, but in such cases, coverage may be limited to that loss or damage.  This Court did not have to reach this analysis under California law because it held there was no other related property damage other than damage to the construction (floor tiles) itself.


This issue also implicates many other CGL policy provisions, definitions, and exclusions, with the exclusion for “liability assumed by contract” also prominently coming into play in many decisions.

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