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Coverage Pointers - Volume XVII, No. 17

Volume XVII, No. 17 (No. 447)

Friday, February 12, 2016

 

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

 

www.hurwitzfine.com

© Hurwitz & Fine, P. C. 2016
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 love situations. 

 

There is great stuff in today’s issue.  We offer a stellar number of reviews, including two Court of Appeals decisions which were handed down on Thursday of this week.  The Selective case involves deductibles and spurious claims of bad faith, and is reported in the issue attached.  The second high court case expands premises liability for landowners in NYC.  This is not a coverage case but one of significant interest to downstate readers. Review carefully the summary by our guest columnist, Dave “Labor Law Pointers” Adams.

 

All is well at H&F.  We wish you a Happy Valentines Day and a Happy Presidents’ Day.

 

Congratulations to Steve Peiper, Now Co-Chair of the Coverage Team:

 

I will take this opportunity to announce a leadership promotion on our Coverage Team. 

 

Steve Peiper has been the lead attorney on our first party team for several years,  Besides that, he has been a leader in our office, providing guidance to our clients and skill training to our younger lawyers.  We’ve watched Steve’s growth with delight, and the firm recognizes it.

 

We are delighted to announce his promotion to Co Chair of our Insurance Coverage Team.  We salute him for his leadership and contributions to our firm.

 

President’s Day:

 

We celebrate the birthday of Presidents this week as well as the arrival of Valentine’s Day.  Those who hang around here regularly know that I am a presidential historian by avocation.

 

For those who love Presidential biographies as much as I do, here is my ever-growing list of biographical works I’ve read on US Presidents. Latest readings included the Meachem book on George H.W, Bush, Thomas Jefferson and the Tripoli Pirates  and a related work:  Rebel Yell, The Violence, Passion and Redemption of Stonewall Jackson.   I’m currently reading Dead Presidents: An American Adventure into the Strange Deaths and Surprising Afterlives of Our Nation's Leaders (Carlson) with Alexander Hamilton (Chernow) on deck (yes, I know, he wasn’t a President):

 

  • His Excellency, George Washington (Ellis)

  • John Adams (McCullough)

  • ·Thomas Jefferson, the Art of Power (Meachem); Thomas Jefferson and the Tripoli Pirates: The Forgotten War That Changed American History (Kilmead)

  • James Madison: A Biography (Ketcham)

  • The Last Founding Father: James Monroe and a Nation's Call to Greatness (Unger)

  • John Quincy Adams (Unger)

  • Andrew Jackson-- American Lion (Meacham)

  • Martin Van Buran (Widmer)

  • William Henry Harrison (Collins)

  • John Tyler (May)

  • A Country of Vast Designs – James Polk (Merry)

  • Zachary Taylor (John S.D. Eisenhower)

  • Millard Fillmore (Finkelman)

  • The Expatriation of Franklin Pierce (Boulard)

  • James Buchanan (Baker)

  • Team of Rivals (Goodwin) and The Impeachment of Abraham Lincoln (Carter) and Killing Lincoln (O'Reilly)

  • History of the Impeachment of Andrew Johnson (Ross)

  • Ulysses S. Grant in War and Peace (Brands)

  • Fraud of the Century: Rutherford B. Hayes, Samuel Tilden, and the Stolen Election of 1876 (Morris)

  • Destiny of the Republic: A Tale of Madness, Medicine and the Murder of a President -- Garfield (Millard)

  • Chester Alan Arthur (Karabell)

  • Grover Cleveland (Graff)

  • A Compilation of Messages and Papers of the President - Benjamin Harrison

  • The President and the Assassin: McKinley, Terror, and Empire at the Dawn of the American Century (Miller)

  • Theodore Rex (Morris), Theodore Roosevelt (Autobiography), The Bully Pulpit (Goodwin), Bully Pulpit (Goodwin),  The River of Doubt: Theodore Roosevelt's Darkest Journey (Millard)

  • The Tea Party President by William Howard Taft and Charles Stanfield Davis

  • Woodrow Wilson (Brands)

  • Warren Harding (John Dean)

  • Calvin Coolidge, Man from Vermont (Fuess)

  • Herbert Hoover (Leuchtenburg)

  • Traitor to His Class -- FDR (Brands)

  • Citizen Soldier -- Harry Truman (Donald)

  • Eisenhower: Soldier and President (Ambrose) and Eisenhower, In War and Peace (Smith)

  • Kennedy (Sorensen)

  • The Path to Power -- LBJ (Caro), The Passage of Power (Caro)

  • The Conviction of Richard Nixon (Reston), Nixon, the Triumph of a Politician (Ambrose) Nixon, the Education of a Politician (Ambrose)

  • Write It When I'm Gone -- Ford  (DeFrank)

  • Jimmy Carter (Zelizer)

  • Dutch - Reagan (Morris) and Ronald Reagan (Sutherland)

  • George Herbert Walker Bush (Wicker); Destiny and Power (Meachem)

  • First in His Class (Bill Clinton) and My Life (Autobiography)

  • Decision Points -- George W. Bush (Autobiography)

  • The Bridge – Barach Obama – Remnick

 

Lincoln, Lincoln, I’ve Been Thinking:

 

February 12, 1916, would have been President Lincoln’s 107th birthday.  Using newspapers.com as a reference, the animosity relating to the Civil War a/k/a the War of Northern Aggression, died hard.  The term “Abraham Lincoln” was mentioned with respect in “Union State” newspapers numerous times (78 in Pennsylvania, 41 in Indiana, 23 in Illinois, 21 in New York, for example) while almost ignored in the papers from the Confederate states.  With the exception of 10 mentions in NC, the other states had only single digit or no references whatsoever.  This poem appeared in the Charlotte Daily Observer, 100 years ago today:

 

 

Abraham Lincoln
The Charlotte Observer

Charlotte, North Carolina

12 Feb 1916

 

Here was a man in whom pretense

And Sham were lacking quite;

When he was counsel for defense

One knew whose cause was right.

 

His tender heart was quick to feel

Sympathy when ‘twas due;

The same heart could become chilled steel,

If duty asked it to.

 

His giant’s brain, unversed in tricks

Of metaphysics, ran

On simple lines; in politics

He still was Abe the man.

 

We of the South don’t celebrate

In formal style this day;

But in all hearts both small and great

Abe Lincoln’s come to stay.

 

 

Want Ads – February 12, 1916:

 

Piano for Sale – I have a new piano of standard make which I will sell at a sacrifice and will accept a horse as part payment, balance in easy payments. Address J.G.T. Hotel Mazda (Great Bend, Kansas, Tribune)

 

Audrey’s Angle:

 

I want to extend a welcome to Pat Fay, Esq. who has joined our Coverage Team.  Pat will be representing clients in New York no-fault insurance coverage, arbitration, and litigation, as well as loss transfer arbitrations.  When I began my career here at Hurwitz & Fine, P.C. Pat was a paralegal and we worked together for a few years before she left to attend law school.  I am happy that Pat is back at Hurwitz & Fine and on our team practicing as an attorney.  In her brief time here, she has already been recognized by NY Super Lawyers as a Rising Star.  Please feel free to reach out to Pat regarding no-fault, APIP, and loss transfer questions.    

 

I am on the final year of my appointment as Chair of DRI’s Insurance Law Committee and have a lot planned for 2016.  The Insurance Law Committee’s next program is the Insurance Coverage and Claims Institute from April 6-8, 2016, in Chicago.  For the first time this year at this program the Wednesday afternoon session will be only for all registered in-house counsel and claims professionals.  It will be moderated and presented by only in-house counsel and claims professionals as well.  The topics of discussion on Wednesday are the primary/excess insurer relationship and managing the relationships between in-house counsel and outside counsel as well as independent counsel.  The Wednesday afternoon session is designed to be interactive and a format that permits in-house counsel and claims professionals after the presentation to network among peers.  If you are in-house counsel or a claims professional and are interested in attending this program please let me know as you may qualify for free registration.  Please note you are not required to be a DRI member to attend and in fact you could qualify for free registration if you are sponsored by a DRI member to attend this program.  For outside counsel, Wednesday will be the day for panel meetingS and a DRI Life Event to center yourself before the main program on Thursday.  Also, do not miss the two receptions for all attendees on Wednesday and the dine-arounds planned that evening.  Again, any questions regarding this program or if you need the brochure please email me at [email protected].

 

Audrey

Audrey A. Seeley

[email protected]

 

Want Ad – February 12, 1916:

 

For Sale or Trade: Barber shop and pool hall cheap, Apply 813 E.2d. (Daily Little Rock Arkansas, Gazette)

 

Wilewicz’ Wide World of Coverage:

 

Dear Readers,

 

Greetings from the snowy white North! We finally have been seeing some snow sticking here in Buffalo, making it feel like winter finally arrived. It has been so comparatively mild of late, I was beginning to doubt.

 

This week in the Wide World, we have a couple of interesting Federal Circuit cases dealing with both substantive and procedural issues. First, from the Fifth Circuit, what would have been a straight-forward, largely undisputed coverage issue, resulted in a detailed analysis of whether and when a District Court can abstain from deciding coverage cases if not all parties is at the table. In National Casualty v. A&J Transport, the Fifth Circuit went through the various factors involved in analyzing the federal abstention doctrine (ex. convenience, subject matter, judicial economy), when the carrier brought a DJ action but did not name the insured’s broker as a defendant. There, the insured did not contest coverage but argued that there should have been coverage, but for the broker’s negligence. Thus, they claimed, the broker should be in the litigation. Unfortunately, this would have killed diversity and required a remand back down to state court. Despite the reasoned step-by-step analysis, the Fifth Circuit ultimately held that, truly in the interests of everyone’s economy, if the coverage issue is undisputed and everyone agrees there is no coverage under the policy – there is no coverage under the policy. So they held.

 

From the Second Circuit, we have a chemical shipping case involving acrylonitrile, a colorless volatile liquid used in plastics manufacturing. If adulterated, it can turn yellow due to impurities and it loses value. In Zurich as subrogee of Vinmar v. Team Tankers, Vinmar had some acrylonitrile transported from Texas to South Korea. On the way, it turned yellow and they were not happy. They brought suit and the matter went into arbitration. Over the course of the hearings, one of the arbitrators was diagnosed with a brain tumor but he did not tell any of the participants. It was not until after the panel found against Vinmar did the diagnosis come to light (and thereafter the panel member passed away). Zurich/Vinmar appealed the award all the way to the Second Circuit, arguing that this lie of omission constituted corruption or misbehavior sufficient to overturn the award. The Second Circuit disagreed. Not only did Zurich/Vinmar properly lose on the merits, but the omission standing alone was simply not sufficient to overturn a panel’s decision. As my high school chemistry teacher used to say, “too bad, so sad, life is filled with pain.”

 

See you in a couple of weeks!

 

Agnes

Agnes A. Wilewicz

[email protected]

 

Legislative Ethics, a Century Ago:

 

The New York Times

New York, New York

12 Fed 1916

 

Assemblyman Shiplacoff Acquitted.

           

Assemblyman Abraham I. Shiplacoff, representing the Brownsville section of Brooklyn, and the only Socialist member of the Legislature, was acquitted yesterday by the Court of Special Sessions in Brooklyn of a charge of malicious mischief.  Shiplacoff was arrested on Dec. 2 on the complaint of a conductor of a trolley car of the St. John’s Pace line in Brooklyn, after he broke a window of a pay-as-you-enter car.

 

Shiplacoff  (1877–1934) was born in Chernigov, Russia, immigrated to the United States in 1891. He worked under sweatshop conditions as a sewing-machine operator for seven years, and then taught at Brooklyn Public School 84. During this period he founded the William Morris Educational Club, in Brownsville, Brooklyn, and later part of the Socialist Party. He was a clerk in the customs service for a time.

 

An "old Socialist" devoted to the union movement, Shiplacoff held several union posts and served on the national executive committee of the Socialist Party, but due to his lack of skill as a tactician he did not establish himself in any one labor organization. He served as secretary to United Hebrew Trades for some years after 1910. As manager of the New York Joint Board of the Amalgamated Clothing Workers, he organized the tailors' general strike in 1920–21. He was president of the International Leather Goods Workers Union from 1927 to 1930. A magnetic speaker and a political aspirant who remained close to his community's feelings and needs, Shiplacoff was the first Socialist elected to the New York State Assembly. He represented his Brownsville (Brooklyn) district in Albany for two terms, 1915–18; in his second term he served as party leader. He was one of the Socialist leaders indicted for sedition under the Espionage Act in 1919, but the indictment against him was dismissed. Shiplacoff represented the 49th Aldermanic District in Brooklyn on the New York Board of Aldermen from 1919 to 1921. In 1929 he campaigned unsuccessfully for the post of Brooklyn Borough president. A park and playground in Brownsville were named for him in 1938.

 

Tessa’s Tutelage:

 

Dear Readers,

 

In what I can only imagine is an unusual circumstance, I am writing this letter several days before it is due.  A seasoned Coverage Pointers’ writer advised me that the editions would somehow always coincide with important life events.  The momentous occasion which caused my early submission could be none other than my first assignment as a bridesmaid in a destination wedding. So, as the weather gets a little colder here in Western New York, I will be headed to sunny Mexico.  

 

Nonetheless, this edition of Coverage Pointers brings you a rather interesting no-fault case from Nassau County which centers on the limits of an insurer’s duties to its insured. Additionally, I have reviewed a decision rendered by Arbitrator Brown which concerns lack of medical necessity and “end points” in treatment.  This is a fairly common topic of discussion however this nicely demonstrates the various burdens of proof triggered for the Respondent and the Applicant.

 

Until next time,

 

Tessa

Tessa R. Scott

[email protected]

 

Phillips Federal Philosophies:

 

Hello, All:

 

Just one Philosophy today, as I got caught up in a simple little case out of the Southern District that highlights exactly how courts can clearly and unambiguously contradict each other when interpreting clear and unambiguous language. We all suffer from this: it never ceases to amaze how the simplest sentence can spawn disparate interpretations.  For example, recently my veterinarian told me that, because of his pending appointment, Wally couldn’t have “any food after 9 p.m. on Monday night.”  A simple enough directive with which to comply.  However, my fat, furry, unemployed feline roommate argued – at 45 minute intervals starting at 12:05 a.m. – that the plain language of this injunction did not preclude the distribution of cheesy-poofs or overly processed tuna-flavored products in the early hours of Tuesday morning, regardless of the time set for his vet appointment or my alarm clock. 

 

In Liberty Mutual Fire Ins. Co. v Zurich American Ins. Co., the district court fell into a similar trap (just go with me on this segue) when considering an additional insured endorsement that defined the additional insured as “any person or organization with whom you have agreed, through written contract, agreement or permit, executed prior to the loss, to provide additional insured coverage….” Courts considering this phrase have resolved the issue differently, depending on which they found more important: to whom the promise was made or what exactly it was that was promised?

 

J.

Jennifer J. Phillips

[email protected]

 

 

Insurance Fraud Wasn’t Invented Yesterday:

 

St. Louis Post-Dispatch

St. Louis, Missouri

12 Feb 1916

 

RESTITUTION MADE BY MAN WHO

‘DIED’ TO GET INSURANCE

 

J.A. Brock Turns Over $2500

and Farm—Wife as “Widow”

Collected $10,000

 

CUBA, Mo., Feb. 12.—John Alvins Brock, who ostensibly perished in a barn fire last March, enabling his wife to collect $10,000 insurance money, turned over to the insurance companies yesterday afternoon $2500, all that remained of the money, and deeded to them all his property.  Brock’s estimate is that the property above encumbrances is worth $8500, which, with the $2500, would make $11,000 the amount turned over, but the insurance man doubts whether as much can be realized on the real estate as Brock thinks. 

 

During the conference, which took place at the People’s Bank, Brock, who had slept little since he was confronted and confessed his identity in Woodward, Ok., several days ago, collapsed and a physician was summoned.  A stimulant enabled him to finish the transaction.  Toward evening Brock drove back with his family to the farm six miles north of town, where he will stay until he finds another home.

 

The attachment suits which had been filed at Steelville will be dismissed.  Whether he and his wife will be prosecuted will depend upon the attitude of the insurance companies.

 

Barnas on Bad Faith:

 

Aloha Coverage Pointers Subscribers:

 

Welcome to the second edition of “Barnas on Bad Faith,” coming to you from Buffalo, New York where winter has made a reappearance.  I hope everyone enjoyed the Super Bowl, and I would like to congratulate Peyton Manning on winning his second Super Bowl.  Although a huge Bills fan, I have loved watching Peyton play since he entered the league, and if this is the end for him I can’t imagine a better way for such a great quarterback to go out.  For those of you who did not fare well in your Super Bowl squares, fear not, as March Madness is right around the corner.

 

This week, I bring you three bad faith cases.  The first is a February 11, 2016 decision from the New York Court of Appeals titled Selective Insurance Company of America v. County of Rensselaer.  While discussed in this space, the case actually presents three interesting issues.  The first issue was whether the County of Rensselaer’s strip searching of hundreds inmates over a period of four years constituted one or multiple occurrences under its liability policy.  The Court of Appeals also considered how attorney’s fees in a class action were to be allocated under the policy.  Regarding bad faith, the Court of Appeals evaluated whether the County met is burden of showing Selective acted in bad faith by agreeing to a settlement in the underlying case that resulted in the County paying all of the damages owed to the class members.  The County batted .333, winning on the allocation of attorney’s fees, but losing on the occurrence and bad faith arguments.

 

The second case discussed is a New York Appellate Division case called Kone v. Garden State Life Insurance Company.  The case was about a life insurance company’s alleged breach of contract and bad faith failure to pay proceeds under the policy.  The case is light on facts, but the court denied the insurer’s motion for summary judgment, and allowed the insured’s claims to go forward.

 

Things get tropical in our final case of this edition with a decision by the Supreme Court of Hawai’i in Anastasi v. Fidelity National Title Insurance Company.  Things go poorly for the plaintiff there when he makes a $2.4 million loan secured on a property with a forged deed.  Things get worse when his title insurance company assigns him a defense but does not pay his claim for over two years despite its apparent knowledge that the deed was forged.  The Hawai’i Supreme Court determined that there was an issue of fact regarding whether the insurer’s decision to continue the litigation and delay in paying the claim put its financial interests ahead of those of its insured.

 

I hope everyone has a lovely weekend, and that all of our readers remembered that Valentine’s Day is this Sunday.  Also a friendly reminder that NBA All Star weekend is coming to you this weekend live from Toronto, our friendly neighbors to the north.  See you next time.

 

Signing off,

 

Brian

Brian D. Barnas

[email protected]

 

 

Guest Columnist:  Dave “Labor Law” Adams:

 

Adams’ Assessment:

 

02/11/16         Sangaray v West River Associates
New York State Court of Appeals
Abutting Property Owner Liability Expanded

The Court of Appeals has provided us with a decision which expands the liability of property owners beyond the border of their land if their failure to maintain the sidewalk abutting their property is not maintained in a “reasonably safe condition” and such failure is a proximate cause of an injury producing fall by a plaintiff in the sidewalk adjacent to their property overturning the “location requirement” which was the law in the First and Second Departments.

 

Plaintiff was injured when he tripped over a portion of raised New York City public sidewalk.  The Administrative Code of the City of New York places the duty to maintain the sidewalk abutting their property in a reasonable safe condition and places liability on the property owner for any injury sustained due to their failure to maintain the sidewalk in a reasonable safe condition.  Here, the plaintiff sued two property owners in front of whose property the sidewalk ran.  West River moved for Summary Judgment based on the contention that the portion of the sidewalk where plaintiff fell abutted solely the property owned by Mercado.  Mercado opposed the motion providing an expert opinion that the defective portion of the sidewalk was 92% to 94% abutting the West River property and only 6% to 8% abutting the their property.

 

The trial court and the First Department agreed that the cause of action against West River should be dismissed, citing the 2011 First Department decision Montalbano v 136 W. 80 St. holding that for the property owner to be liable, the defect upon which the plaintiff fall must about the defendant’s land.  The Court of Appeals granted leave and heard the appeal.

 

The Court of Appeals found the First and Second Departments had “engrafted” into the Code a location requirement that they found inappropriate.  The Court found that the location of the fall was not the end of the inquiry.  That the Code imposed an obligation on landowners that did not stop at their property border, that their duty was to maintain their property in a reasonably safe condition, and that if their failure to do so resulted in an injury to an individual, that they could not escape liability for that injury simply due to the fact that the actual fall occurred steps from their property.  A property owner does not have a responsibility to repair a defect on the property of another, but that where the owner’s failure to repair the sidewalk abutting their property is a proximate cause, a substantial factor, in causing the injury producing fall, that they are not shielded from liability simply because the plaintiff fell on the sidewalk in front of a neighbor’s property as that would not support the purpose of the Code, to incentivize property owners to maintain the sidewalk abutting their property and create safer sidewalks for pedestrians. 

 

Peiper’s Pipings:

 

Short note this week from the weary traveler.  I bring you my good tidings from a Starbucks at the White Plains mall.  For those of you who are Peter King fans, I enjoyed a “grande, bold, redeye” whilst typing this.   We offer a varied group of offerings this week, but trust there is something in there for almost every first partier. 

 

I’ll leave you this week with an observation.  For years, I’ve read (and used) the term “situations” and how “we love em’”  I had always assumed this meant files…and yes, we love files, don’t get me wrong.   With increasing frequency, however, I am slowly learning what it means to truly love “situations.”  You don’t realize it until the call comes in, but I (err…we) really do enjoy working through a problem. The more convoluted the better.  It is the highest form of honor, and the highest form of professional satisfaction, to work with skilled, creative industry professionals and leading attorneys to develop, implement and see through to successful conclusion a true action plan that often is larger than the case at hand, or single “situation” – if you will.  It’s humbling to know you would consider calling us, and please know that we are appreciative of the opportunity to answer the call.

 

Happy long weekend --- for those of you lucky enough to have one.  See you in two weeks. 

 

Steve

Steven E. Peiper

[email protected]

 

Sensible Valentines ala 1916:

 

Fort Scott Daily Tribune and Fort Scott Daily Monitor

Fort Scott, Kansas

12 February 1916

 

VALENTINES ARE MORE SENSIBLE

 

MARKED ABSENCE OF TINSEL,

CELLULOID AND LACE NOTED.

 

HAVE THEM NOW FOR ADULTS

 

Little Folders as Remembrances for

the Adults—Bank Book for Cupid’s

Accounts a Novelty

 

Monday will be St. Valentine’s Day, and the dealers who hand these little tokens of love say that the sale of them this year has been very good, fully up to what it has been during past years.

 

Valentines, like many other things, are growing more sensible.  The manufacturers are now making very few of the comic valentines, which in past times in many instances fell little short of being positively insulting, and the manufacture of celluloid valentines seems, also, to have almost ceased, as there are on display this year very few of the delicate appearing celluloid creations, which were once so popular with the younger folks.

 

Most of the valentines carried by the dealers now are far more artistic and dainty than they formerly were.  The manufacturers are now making valentines for adults, to be sent in the manner of Christmas cards, and for much the same purpose, to be tokens of remembrance and esteem.

 

HEWITT’S HIGHLIGHTS:

 

Dear Subscribers:

 

Low temperatures not felt in nearly thirty years are coming to Long Island and our Melville office this weekend. The real feel is supposed to be negative twenty with an actual temperature of four. Brrr. However, I will be leaving for sunny (I hope) Florida with my family to see Mickey Mouse and company next week, which is all my five and six year old boys can talk about, as it is their first trip there. So I will be escaping some of the cold. Hopefully wherever you are you are staying warm.

 

Because they love us so, as a Valentine’s Day present the Appellate Divisions have issued quite a few decisions on the serious injury threshold this time around. In one case, the defendants bizarrely submitted with their motions for summary judgment expert reports that found significant range of motion limitations. Not surprisingly, the Appellate Division found an issue of fact as to whether a serious injury existed. Several cases remind plaintiff’s that a very minor limitation in range of motion is not enough to meet the threshold. Another case holds that even if a plaintiff suffers persistent pain and an extensive course of treatment for more than 90 days out of a 180 day period, that he still must show that he was unable to engage in his usual and customary activities for the requisite period in order to qualify under the 90/180-day category.  Finally, other cases, including a split decision by the Appellate Division, hold that plaintiff’s expert must explain away findings of degeneration and pre-existing injuries and cannot just ignore them.

 

Hope you have a Happy Valentine’s Day.

Until next time,

 

Rob
Robert Hewitt

[email protected]  

Valentine’s Day – A Century Ago:

The York Daily
York, Pennsylvania

February 12, 2016

ST. VALENTINE’S DAY

 

Falls Monday—Love Tokens Increase

Burdens of Mail Men

           

The festival of St. Valentine, which has ever been associated with the Dan Cupid and his pranks and which in these modern days puts great burdens on partial employees, falls Monday.  Many stores of the city, during the past several weeks have been offering all kinds of attractive novelties and creations for those persons who observe the pretty custom of sending remembrances to their loved ones on St. Valentine’s Day.

 

Postmaster E. C. Peeling has made arrangements for handling the increased volume of mail.  These arrangements are similar to those which were employed to handle and dispatch the heavy Christmas mail.  There was considerable increase in the amount of mail handled at the post office yesterday.  Greater increase is anticipated today and Monday.

 

Within recent years the custom of sending little favors to the sick and infirm on Valentine day has grown considerably.  Besides highly embellished cards and other written tokens of consolation many of the sick on Monday will receive gifts of flowers, fruit and other delicacies from their friends as valentine tokens of affection. 

 

Highlights of Today’s Issue, Attached:

 

KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

 

  • Under Arizona Law, Subcontractor Was Not Using Vehicle When Non-Employees Were Unloading It
    Coverage Denied Based on Razor’s Edge

  • Where Homeowner Kills Claimant with Baseball Bat to the Head, No Obligation to Indemnify Insured for Incident

 

HEWITT’s HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW

Robert E.B. Hewitt III
[email protected]

  • Plaintiff Responsible for Accident Where She Violated Defendant’s Right of Way When She Changed Lanes without Looking

  • Defendants Submitted A Physician Report That Found Significant Range of Motion Limitations and Attributed Them to the Accident Thus Leading to an Issue of Fact

  • Despite a Long History of Pre-Existing Injuries Due to Work Related Accidents Plaintiff Demonstrated an Issue of Fact through Her Surgeon’s Opinion That Knee Injury Was Traumatically Induced and Causally Related to the Accident

  • A Divided Court Found That Plaintiff’s Expert Failed To Explain the Defendant’s Experts Findings of a Degenerative Condition Based on Multiple Prior Accidents

  • Jury Entitled to Make Determinations of Credibility in Rejecting Plaintiff’s Expert’s Opinion Regarding Serious Injury

  • Plaintiff Can Demonstrate Issue of Fact by Demonstrating a True Medical Dispute between His Expert’s Opinion and Defendant’s Expert’s Opinion

  • Plaintiff’s Expert Must Quantify or Qualify the Restrictions to the Range of Motion of the Cervical Spine or His Opinion Will Fail to Raise an Issue of Fact

  • Minor Limitations in Range of Motion In Plaintiff’s Shoulder Insufficient as a Matter of Law to Demonstrate Serious Injury

  • Persistent Pain and Extensive Course of Treatment Not Enough To Demonstrate a 90/180-Day Category of Injury without Evidence Plaintiff Was Unable to Engage In the Usual and Customary Activities during that Time Period

  • Persistent Pain and Extensive Course of Treatment Not Enough To Demonstrate a 90/180-Day Category of Injury without Evidence Plaintiff Was Unable to Engage In the Usual and Customary Activities during that Time Period

 

TESSA’S TUTELAGE
Tessa R. Scott

[email protected]

 

Arbitration:

 

  • Can There Be An “End Point” In Treatment When The EIP Still Feels Pain?

 

Litigation:

 

  • Insurance Company Does Not Have a Duty to Its Insured Outside the Four Corners of the Contract

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

  • Where Structure Does Not Actually Fall Down, Collapse Coverage is Not Triggered

  • Property Damage Recovery is Limited to That Property Which was Actually Damaged

  • Doing What You’ve Always Done, Gets You What You’ve Always Gotten…Malpractice.  Copying Old Insurance Applications Lands Broker, Agent, Carrier All in Hot Water

  • Or Means or; Not and…Court holds that Medicare Payments Satisfy Deductible Amounts

 

WILEWICZ’S WIDE WORLD OF COVERAGE

Agnes A. Wilewicz

[email protected]

 

  • Fifth Circuit Holds District Court Improperly Abstained From Coverage Action, Where Coverage Issues Were Undisputed and Could Be Decided, Despite Arguably Necessary Parties Missing From Litigation

  • Arbitrator’s Failure to Disclose Brain Tumor, Diagnosed during Arbitration Proceedings, Did Not Constitute Corruption or Misbehavior Sufficient to Overturn Findings, Says Second Circuit

 

JEN’S GEMS

Jennifer A. Ehman

[email protected]

 

  • Absence of Privity Precludes Additional Insured Coverage

  • Motor Vehicle Exclusion in Homeowners Policy Inapplicable to Claim Where Underlying Plaintiff Fell from the Named Insured’s “High Lift” While Pruning a Tree

 

 

BARNAS ON BAD FAITH

Brian D. Barnas

[email protected]

 

  • Insurer Did Not Act in Bad Faith by Reaching a Settlement that Made the Insured Liable for all Damages Recovered by Class Members.  Policy Deductible Language Ruled the Day.

  • Appellate Division Upholds Denial of Insurer’s Motion for Summary Judgment Dismissing Bad Faith and Breach of Contract Claim

  • Insurance Company’s Delay in Paying its Insured Raised a Genuine Issue of Material Fact as to Whether it Demonstrated a Greater Concern for its Monetary Interest than for the Insured’s Financial Risk.

 

 

PHILLIPS’ FEDERAL PHILOSOPHIES

Jennifer J. Phillips

[email protected]

 

Ambiguity in Clear and Unambiguous Additional Insured Language.

 

EARL’S PEARLS
Earl K. Cantwell
[email protected]

 

State Insurance Regulation Trumps ERISA

 

That’s all for now.  We love to hear from you.

Dan

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:           www.hurwitzfine.com

LinkedIn:                   www.linkedin.com/in/kohane

 

 

 

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


NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

 

ASSOCIATE EDITOR

Audrey A. Seeley

[email protected]

 

ASSISTANT EDITOR

Jennifer A. Ehman

[email protected]

 

INSURANCE COVERAGE TEAM
Dan D. Kohane, Chair
[email protected]

 

Steven E. Peiper, Co-Chair

[email protected]
 

Michael F. Perley

Audrey A. Seeley

Jennifer A. Ehman

Patricia A. Fay

Agnieszka A. Wilewicz

Jennifer J. Phillips

Brian D. Barnas

Diane F. Bosse

Joel R. Appelbaum

 

FIRE, FIRST-PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]

 

Michael F. Perley

Robert E. Hewitt, III

Jennifer J. Phillips

Brian D, Barnas

 

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader
[email protected]

 

Jennifer A. Ehman

 

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]

 

Diane F. Bosse

 

Topical Index

Kohane’s Coverage Corner

Hewitt’s Highlights on Serious Injury

Tessa’s Tutelage
Peiper on Property and Potpourri

Wilewicz’s Wide World of Coverage

Jen’s Gems

Barnas on Bad Faith
Phillips’ Federal Philosophies

Earl’s Pearls

 

KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

 

02/10/16       Jenkins v. Shaull 

Appellate Division, Second Department

Under Arizona Law, Subcontractor Was Not Using Vehicle When Non-Employees Were Unloading It
Show Support Group, LLC (“SSG”) was hired as a subcontractor to supply audio/visual equipment at a Volkswagen car show in the Roosevelt Field Mall in Nassau County. Jenkins, an employee of a nonparty, was working at the job site and unloading tables and chairs from a tractor trailer when he fell and struck his back on a metal beam inside the tractor trailer, causing injuries. The tractor trailer was insured by Great West Casualty Company (“Great West”) and the defendant Moving Performance, LLC, was the named insured under the policy of insurance. The insurance policy at issue afforded liability coverage to anyone using the tractor trailer with the insured's permission, with certain exceptions.

 

Jenkins sued SSG, to recover damages for personal injuries. SSG commenced a third-party action against Great West, seeking a judgment declaring that Great West was obligated to defend and indemnify it in the underlying action. The third-party complaint alleged that the plaintiff and the defendant Charles Shaull, neither of whom was employed by SSG, were in the process of unloading the tractor trailer when the accident happened.

 

Arizona law applied by stipulation.

 

Under Arizona law, SSG was not an insured under the terms of the policy, as SSG was not using the tractor trailer with the insured's permission at the time of the accident, and SSG and its employees would not have qualified as insureds under the policy in any event. Therefore, Great West was not obligated to defend and indemnify SSG in the underlying action.

 

02/10/15       Zakheim v. Leading Insurance Services, Inc.
Appellate Division, First Department

Coverage Denied Based on Razor’s Edge

The complaint and the bill of particulars in the underlying action allege that plaintiff was injured at a nail salon insured by Leading when the pedicurist cut plaintiff's foot with, as she variously described it, a razor blade, a razor-like implement, an illegal instrument or an unauthorized pedicure tool, in violation of a regulation of the Division of Licensing Services for Hairdressing and Cosmetology. Leading disclaimed coverage on the basis of a policy exclusion for bodily injury arising out of the violation of a statute, rule or regulation, and, in this action, established prima facie that it was not obligated to provide coverage, based on the pleadings in the underlying action.

 

In opposition the insured argued that razor blades are not prohibited the regulations since the reg only limits the use of a razor while it bans use of a “credo knife". The insured argued that this was not a credo knife but that argument directly contradicts the sworn statements in plaintiff's verified pleadings and deposition testimony.

 

02/05/16       Leo v. New York Central Mutual

Appellate Division, Fourth Department

Where Homeowner Kills Claimant with Baseball Bat to the Head, No Obligation to Indemnify Insured for Incident

The facts come out in the dissenting opinion by the Fourth Department’s new Presiding Justice, Gerald Whalen.

 

The decedent, Anthony, was killed in a violent altercation with Leo.  Leo was charged with manslaughter in the second degree, but later acquitted.  The decedent’s estate commenced a wrongful death action, alleging intentional, reckless and negligent conduct.

 

Leo was insured under a homeowners policy with New York Central Mutual (“NYCM”).  Because of the allegations in the complaint, NYCM provided Leo with a defense but disclaimed any obligation to indemnify him on the grounds that the incident was not a covered occurrence, defined in the policy as an "accident," and that the policy excluded coverage for bodily injury that was "expected or intended" by plaintiff.

 

Leo then commenced a declaratory judgment and the court below granted summary judgment in favor of the insurer.

 

The dissenting justice opined that there was a question of fact as to whether or not the conduct alleged constituted an accident.  "In deciding whether a loss is the result of an accident, it must be determined, from the point of view of the insured, whether the loss was unexpected, unusual and unforeseen".  The dissent argued that if the resulting damage could be viewed as unintended by the [factfinder,] the total situation could be found to constitute an accident".

 

Here was a discussion of the conduct alleged:

 

 

Here, it is undisputed that plaintiff caused decedent's death by striking him in the head with a baseball bat. Plaintiff presented evidence, however, that for a number of years his relationship with decedent had been acrimonious and at times volatile. Plaintiff also presented evidence that, on the day of the incident, decedent advanced toward him menacingly with a metal pipe, swung the pipe at him and grazed the top of plaintiff's head. Plaintiff further testified that he did not intend to injure decedent, but rather swung the baseball bat in reaction to the aggressive acts of decedent.

 

Viewing the transaction as a whole, I conclude that there is a triable issue of fact whether, despite the evidence of intentional behavior on plaintiff's part, decedent's death was an accident.  With respect to the exclusion, the dissenting justice thought that there are triable issues of fact whether plaintiff "expected or intended" the harm to decedent.

Editor’s note:  Hurrah.  Some things just ain’t an accident.

 

HEWITT’s HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW

Robert E.B. Hewitt III

[email protected]

 

02/10/16                 Peluso v. Martinez

Appellate Division, Second Department

Plaintiff Responsible for Accident Where She Violated Defendant’s Right of Way When She Changed Lanes without Looking

The Appellate Division affirmed the Supreme Court’s grant of defendant’s summary. The case involved a car crash on State Route 9, South Road, in Poughkeepsie, when a vehicle operated by the plaintiff and a vehicle owned by the defendant Alice Greigo and operated by the defendant Claudia Martinez collided as they were both headed northbound. Relying on the deposition transcripts of the parties, the Appellate Division held that even when viewed in the light most favorable to the plaintiff, Defendants established, prima facie, that the actions of the plaintiff were the sole proximate cause of the collision. The transcripts established that the plaintiff failed to see the defendants' vehicle, which was in the middle lane, as she attempted to merge into the middle lane from the left lane. The transcripts established, prima facie, that the plaintiff violated Vehicle and Traffic Law § 1128(a), and that Martinez, who had the right-of-way and virtually no time to react to the plaintiff's vehicle coming into her lane, was not at fault in the happening of the accident. 

 

02/10/16                 Richard v. Thomas

Appellate Division, Second Department

Defendants Submitted A Physician Report That Found Significant Range of Motion Limitations and Attributed Them to the Accident Thus Leading to an Issue of Fact

The Appellate Division affirmed the order of the Supreme Court which denied defendant’s motion for summary judgment. The facts are as follows: On March 31, 2011, the plaintiff and the defendant Sean Thomas were involved in a motor vehicle collision at the intersection of Ralph and Church Avenues, in Brooklyn. The tractor-trailer driven by Thomas was owned by the defendant S & T Transport, LLC. In July 2011, the plaintiff commenced this action to recover damages for her injuries. In her bills of particulars, the plaintiff alleged injuries to the cervical and lumbar regions of her spine, and to both knees. She also alleged that she sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d). The defendants moved for summary judgment dismissing the complaint on the ground that they were not liable for the accident, and on the ground 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 Supreme Court denied the defendants' motion for summary judgment "on liability and threshold."

 

The Appellate Division held that defendants failed to meet their burden of showing they were not at fault for the happening of the subject accident. It noted that in support of their motion, the defendants submitted transcripts of the plaintiff's deposition testimony, in which the plaintiff testified that the tractor-trailer driven by Thomas sideswiped the driver's side of her car while she was waiting to make a right turn. The defendants also submitted transcripts of Thomas's deposition testimony, in which he stated that the accident happened because the plaintiff attempted to overtake him on his right. In light of these conflicting accounts as to how and why the subject accident occurred, the Appellate Division found that the evidence submitted by the defendants failed to establish, prima facie, that Thomas was not negligent in the operation of his vehicle.

 

The Supreme Court also properly declined to award summary judgment to the defendants on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). The defendants submitted, among other things, the affirmed report of a physician who measured the plaintiff's range of motion and found significant deficits, and concluded that the plaintiff's spine and right knee injuries were caused by the accident. The defendants' submissions failed to eliminate triable issues of fact as to whether the plaintiff sustained serious injuries to the cervical and lumbar regions of her spine, and to her right knee, or whether she sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d).

 

02/09/16                 Hazel v. Colon

Appellate Division, First Department

Despite a Long History of Pre-Existing Injuries Due to Work Related Accidents Plaintiff Demonstrated An Issue of Fact Through Her Surgeon’s Opinion That Knee Injury Was Traumatically Induced and Causally Related to the Accident

The Appellate Division affirmed the denial of summary judgment. The Appellate Division found that Defendants correctly contend that they addressed plaintiff's claim of a serious injury in the 90/180-day category and established prima facie that plaintiff did not sustain a serious injury of that type by submitting evidence that the injuries she allegedly sustained were not caused by the motor vehicle accident. Plaintiff's own medical records showed that she had preexisting injuries to her cervical and lumbar spines resulting from earlier work-related accidents, and defendants' orthopedic surgeon opined that plaintiff's right knee injury was degenerative and not traumatic in nature.

 

However, in opposition, the Appellate Division held that plaintiff raised a triable issue of fact as to causation in connection with the injury to her right knee. During surgery, her treating orthopedic surgeon observed injuries to her right knee that were traumatically induced and causally related to the accident. Plaintiff was entitled to rely upon the surgeon's postoperative report, because the report was referenced and relied upon by defendant's experts.


02/09/16                 Franklin v. Gareyua

Appellate Division, First Department

A Divided Court Found That Plaintiff’s Expert Failed To Explain the Defendant’s Experts Findings of A Degenerative Condition Based on Multiple Prior Accidents

The Appellate Division affirmed the grant of summary judgment but there was a dissenting opinion which will lead to an automatic right to appeal. Plaintiff's appellate brief did not challenge the Supreme Court's determination that defendants made a prima facie showing that plaintiff did not suffer a serious injury to his left shoulder as a result of the motor vehicle accident at issue. Defendants submitted the affirmed reports of a radiologist and orthopedic surgeon, who opined that the conditions present in his left shoulder were degenerative in nature and unrelated to any trauma. Defendants also submitted plaintiff's own medical records, which found arthrosis and no traumatic injury.  Specifically, the doctor opined in a radiological report to plaintiff's treating orthopedic surgeon that the post-accident X-ray of plaintiff's left shoulder showed neither evidence of a fracture or other focal osseous abnormality” nor any evidence of "dislocation." In addition, an MRI report to plaintiff's treating orthopedic surgeon by another doctor opined that the post accident MRI of the left shoulder, while it revealed "mild AC joint arthrosis and malalignment of the AC joint" and mild bursitis, showed "no evidence of fracture, dislocation, or bone marrow abnormalities to be suspicious for bone contusions, stress fractures, or acute trabecular microfractures." The majority found that the plain import of the reports by the doctors both of which were prepared at the request of plaintiff's treating orthopedic surgeon and are included within his own medical records — is that the X ray and MRI of his left shoulder showed no evidence of traumatic injury but only of degenerative conditions such as arthrosis and bursitis.

 

In opposition, the majority of the Appellate Division found that plaintiff failed to raise a triable issue of fact as to causation. His treating orthopedist did not refute or address the findings of preexisting degeneration and lack of traumatic injury, set forth in the reports by Dr. Lang and Dr. Lyons contained in plaintiff's own medical records, nor did the treating doctor explain why degeneration was not the cause of the left shoulder injury. Given that Dr. Lang and Dr. Lyons plainly reported that no evidence of traumatic injury was found in the x ray and MRI of the left shoulder, the majority found it was immaterial that their reports did not use the word "preexisting" to describe the degenerative conditions that were detected.

 

The majority believed the dissent did not deal with the aforementioned opinions of Dr. Lang and Dr. Lyons in plaintiff's own medical records. The majority noted it appeared to be the dissent's view that the support in plaintiff's medical records for the shoulder injury having a degenerative origin are of no moment because plaintiff's medical expert, in his affirmation prepared for this litigation, offered a "diagnosis [that] . . . contrasts significantly with the one proffered by defendants' experts." However, the majority found the dissent offered no support for its view that there is a "factual disagreement" between the defense experts and plaintiff's expert (Dr. Rose) on the diagnosis of the shoulder injury, as opposed to its etiology. In fact the majority accused the dissent of simply assuming that the defense experts' diagnosis of osteoarthritis of the AC joint and chronic impingement syndrome were inconsistent with the presence of tears to the labrum and rotator cuff, which was Dr. Rose's diagnosis. It found nothing in the record supporting the assumption that the conditions diagnosed by the defense experts do not result in tears to the labrum and rotator cuff.

 

The dissent on the contrary would have held that plaintiff provided sufficient evidence to raise a question of fact as to whether the injuries were the product of a degenerative condition or causally related to the accident. According to the dissent, Plaintiff alleged injuries to his left shoulder following a rear-end collision in which defendants' automobile struck his vehicle while he was stopped at a red light. A day after the accident, plaintiff sought treatment with an orthopedic surgeon, Dr. Louis C. Rose, to whom he complained of shoulder, neck, and back pain. During his initial evaluation, in addition to finding range of motion limitations in plaintiff's left shoulder, Dr. Rose also noted tenderness of the AC joint and a rotator cuff insertion with impingement. Plaintiff informed Dr. Rose that he had no previous orthopedic injuries and had been active before the accident. When plaintiff's symptoms worsened, Dr. Rose ordered an MRI, which revealed malalignment of the AC joint with impingement and tendon bursitis. After reviewing the results of the MRI, Dr. Rose recommended that plaintiff undergo arthroscopic surgery. During the procedure performed by Dr. Rose, he observed and took intraoperative photos showing an internal derangement of the left shoulder with a partial tear of the glenoid labrum, a tear of the rotator cuff, and hypertrophic synovium with acromioplasty.

 

Based upon his treatment of the plaintiff over a two-year period, commencing immediately after the accident, his own independent review of the MRI results, the intraoperative findings that he observed firsthand, and unimproved range of motion, Dr. Rose concluded, with a reasonable degree of medical certainty, that the left shoulder injuries were causally related to the rear-end impact of the car accident. Thus, the dissent found the diagnosis rendered by plaintiff's expert contrasts significantly with the one proffered by defendants' experts creating an issue of fact. While defendants' medical professionals diagnosed osteoarthritis of the AC joint and opined that the surgical findings and symptomatology were consistent with chronic impingement syndrome, Dr. Rose diagnosed tears to the labrum and rotator cuff. Because plaintiff’s expert ascribed the injuries to a different, yet equally plausible explanation (i.e., the accident), the dissent felt plaintiff created a triable issue of fact as to whether the accident caused a serious injury to his left shoulder. It found speculative the defense experts' diagnoses of a degenerative condition because of what the dissent deemed the complete failure to reference or diagnose any tears. The dissent also felt the plaintiff submitted objective medical evidence demonstrating that the onset of symptoms and range of motion limitations only occurred immediately after the accident, and have since not abated, which generally supported his expert's opinion that the accident caused the injuries.

 

02/05/16                 McMillian v. Burden

Appellate Division, Fourth Department

Jury Entitled to Make Determinations of Credibility in Rejecting Plaintiff’s Expert’s Opinion Regarding Serious Injury

The Appellate Division reversed the decision of the trial court to set aside the jury verdict which had found a lack of a serious injury. The facts are as follows: Plaintiffs Maurice McMillian and Teartha McMillian commenced this action asserting direct and derivative causes of action based on injuries sustained by Maurice while he was a passenger in a vehicle being operated by Mimeux M. Burden, a defendant in the action commenced by Maurice and Teartha, and the plaintiff in a separate action against James E. Grant (defendant), who was driving the vehicle that rear-ended the vehicle operated by Mimeux. The two actions were joined for trial, and the jury found that neither Maurice nor Mimeux had sustained a serious injury pursuant to Insurance Law § 5102 (d). The Supreme Court granted plaintiffs' motions to set aside the verdict as against the weight of the evidence and determined as a matter of law that both Maurice and Mimeux had sustained a serious injury. The Appellate Division noted that it had difficulty reviewing the matter because the court failed to set forth its reasoning for setting aside the verdict and determining, as a matter of law, that both Maurice and Mimeux sustained a serious injury. The Appellate Division found the court essentially disregarded the deference owed to a jury and made a determination of serious injury as a matter of law, and yet it failed to specify what category or categories of serious injury Maurice and Mimeux sustained. The Appellate Division noted that the Court would have had to have found the evidence so preponderated in favor of the plaintiff that it could not have been reached on any fair interpretation of the evidence, and that the jury was to have great deference in its role of evaluating credibility. Here, the Appellate Division found the court erred in setting aside the jury's verdict inasmuch as the jury was entitled to credit the testimony of defendant's witnesses and reject the testimony of plaintiffs, holding that even assuming, arguendo, that plaintiffs established a prima facie case of serious injury, the jury was entitled to reject the opinions of plaintiffs' physicians

 

02/04/16                 Torres v. Etilee Taxi, Inc.

Appellate Division, First Department

Plaintiff Can Demonstrate Issue of Fact By Demonstrating a True Medical Dispute Between His Expert’s Opinion and Defendant’s Expert’s Opinion

The Appellate Division partially reversed the grant of summary judgment to defendants. The Appellate Division held that defendants established, prima facie, that plaintiff did not suffer any serious injury to his cervical spine, lumbar spine or right shoulder by submitting the affirmed reports of a neurologist, orthopedic surgeon, and radiologist who found no evidence of acute traumatic injury in those body parts, that plaintiff had a full range of motion in those body parts, and that the bulging discs in plaintiff's spine were the result of longstanding degeneration. Defendants also demonstrated that plaintiff did not suffer a serious injury to his lower jaw through the affirmation of a dentist who found no evidence of acute traumatic injury, no pain in the temporomandibular joints, clicking, crepitus, or deviation, and opined that there was nothing to suggest that the accident caused any injury to plaintiff's lower jaw.

 

However, in opposition, plaintiff raised an issue of fact as to his claim of serious injury to his cervical and lumbar spine. Plaintiff submitted the affirmation of his treating doctor who observed substantial limitations in plaintiff's cervical and lumbar range of motion, both shortly after the accident and persisting after treatment, personally reviewed the MRIs of those parts, and opined that the injuries were traumatically induced by the accident, especially in light of plaintiff's age and lack of prior complaints of pain in those body parts. However, plaintiff failed to raise an issue of fact as to his alleged serious injuries to his right shoulder and lower jaw. His doctor found only tendinosis and slight limitations in range of motion in plaintiff's right shoulder, which are insufficient for purposes of Insurance Law § 5102(d). However, as usual, if plaintiff establishes at trial that his spinal injuries constitute serious injuries within the meaning of the Insurance Law, he can recover damages for all injuries proximately caused by the accident, even those that do not meet the serious injury threshold.

 

02/03/16                 Terranova v. Acosta

Appellate Division, Second Department

Plaintiff’s Expert Must Quantify or Qualify The Restrictions to the Range of Motion Of the Cervical Spine Or His Opinion Will Fail To Raise An Issue of Fact

The Appellate Division affirmed the Supreme Court’s granting of the defendant's motion for summary.  The Appellate Division held that the defendant met his 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 defendant submitted competent medical evidence establishing, prima facie, that the alleged injury to the cervical region 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). The affirmed report by the plaintiff's expert failed to raise a triable issue of fact because, while the expert opined that the plaintiff suffered significant limitations in the range of motion of the cervical spine, he failed to adequately quantify or qualify those restrictions. For the same reasons, the plaintiff failed to establish his prima facie entitlement to judgment as a matter of law on the issue of whether he sustained a serious injury as a result of the subject accident.

 

02/02/16                 Lee v. Lippman

Appellate Division, First Department

Minor Limitations in Range of Motion In Plaintiff’s Shoulder Insufficient as a Matter of Law to Demonstrate Serious Injury

Grant of Defendant’s motion for summary judgment is affirmed by the Appellate Division. The Appellate Division held that defendant made a prima facie showing that plaintiff did not suffer a permanent or significant limitation in use of her cervical spine, lumbar spine, or right shoulder as a result of the motor vehicle accident. Defendant submitted an orthopedic surgeon's report finding normal range of motion in each part, and the report of a radiologist who opined that the MRIs of plaintiff's spine and right shoulder showed degenerative changes unrelated to the accident. The orthopedist was not required to address causation, and the radiologist's opinion was not arbitrary.

 

In opposition, the Appellate Division held that plaintiff failed to raise a triable issue of fact. Plaintiff's experts provided only a conclusory opinion that plaintiff's injuries were caused by the accident, without addressing the preexisting degenerative conditions documented in plaintiff's own medical records, or explaining why her current reported symptoms were not related to the preexisting conditions. Further, plaintiff's doctor found only minor limitations in the range of motion of her spine upon a recent examination, and he diagnosed only minor changes in the shoulder, which is insufficient to demonstrate a serious injury involving significant or permanent limitations in use.

 

01/28/16                 Stevens v. Bolton

Appellate Division, First Department

Persistent Pain and Extensive Course of Treatment Not Enough To Demonstrate a 90/180-Day Category of Injury without Evidence Plaintiff Was Unable to Engage In the Usual and Customary Activities During that Time Period

The Appellate Division reinstated plaintiff’s claim of a significant limitation of use of the right shoulder, and otherwise affirmed the dismissal of the action. It found that Defendant established prima facie that plaintiff did not sustain a "permanent consequential" or a "significant" limitation of use of the right shoulder through the report of her orthopedist, who found equal ranges of motion in the injured right shoulder and the uninjured left shoulder and no functional impairment of the right shoulder. Defendant established prima facie that there was no injury to plaintiff's right elbow or spine by submitting an orthopedist's report of normal ranges of motion and negative clinical test and an MRI report by plaintiff's own radiologist finding desiccation in the spine and no herniations in the cervical spine

 

The Appellate Division held that Plaintiff failed to raise a triable issue of fact as to a "permanent consequential limitation" of her shoulder, since the slight limitation in range of motion in one plane found recently by her orthopedic surgeon was minor. However, plaintiff raised a triable issue of fact as to a "significant limitation" of use of her shoulder by submitting evidence of limitations in range of motion contemporaneous with the accident and her surgeon's report opining that there was a tear in the shoulder that was causally related to the accident, contrary to an earlier MRI that did not reveal that condition. Plaintiff failed to raise a triable issue of fact as to her claimed elbow injury since she did not submit any objective evidence of injuries to the elbow, the unaffirmed medical reports failed to compare the measurements recorded in range of motion testing to normal values, and her orthopedic surgeon found a normal range of motion during his recent examination. Plaintiff failed to raise a triable issue of fact as to her claimed cervical and lumbar spine injuries, since her physicians did not address defendant's proof of preexisting degeneration, which was shown in her own MRI reports

 

The Appellate Division also held that defendant established that plaintiff sustained no 90/180-day injury by submitting plaintiff's deposition testimony that she missed less than 90 days of work Plaintiff contends that her medical proof showing persisting pain and an extensive course of treatment is sufficient to raise an issue of fact, but this evidence does not show that she was prevented from performing any of her usual and customary daily activities during the relevant period.

 

01/28/16                 Echhevaria v. Ocasio

Appellate Division, First Department

Persistent Pain and Extensive Course of Treatment Not Enough To Demonstrate a 90/180-Day Category of Injury without Evidence Plaintiff Was Unable to Engage In the Usual and Customary Activities During that Time Period

Appellate Division reinstated plaintiff’s claim that she suffered serious injuries involving significant limitations of use of the cervical and lumbar spine, and otherwise affirmed the grant of summary judgment.  The Appellate Division found that in opposition to defendants' prima facie showing of the lack of a serious injury, plaintiff failed to provide medical evidence reconciling the current findings of limitations in her spine's range of motion and the earlier findings of normal range of motion in the spine. Accordingly, the motion court correctly dismissed her claims of injuries involving "permanent consequential" limitations to the spine. However, plaintiff's medical evidence was sufficient to raise an issue of fact as to whether she suffered injuries involving significant limitation in use of her spin. The Appellate Division also found that the motion court correctly dismissed plaintiff's 90/180-day claim, given her deposition testimony that she returned to work immediately after the accident, and was not confined to bed or home during the relevant period.

 

TESSA’S TUTELAGE
Tessa R. Scott
[email protected]

 

Arbitration:

 

02/04/16       Buffalo Rehab Group PT v American Country Ins. Co.

Arbitrator Brown

Can There Be An “End Point” In Treatment When The EIP Still Feels Pain?

The EIP was injured in a motor vehicle accident where she was the unrestrained rear-seat passenger in a vehicle which was struck from behind. The EIP states that she lost consciousness, and sustained a concussion, as well as headaches, neck and back pain. She was transported to a hospital, where X-rays and a CT scan of her head were done, and she was released the same day.

 

She began courses of various types of conservative care, including heat therapy, massage therapy, chiropractic treatment. MRI studies of her neck and spine were performed. She had injections administered to her lower back.

 

On 3/19/14, an independent medical examination was performed on the EIP by an orthopedic surgeon. The examining doctor concluded that the EIP had sustained cervical and lumbar spine strains/sprains and that both were resolved. He concluded that she had reached an "end result" in his specialty, orthopedics, and that no further orthopedic care was required, including physical therapy. This arbitration concerned reimbursement for physical therapy provided between 5/19/14 - 7/17/14.

 

Arbitrator Brown determined that the report at issue was sufficient to demonstrate that the EIP had reached an end-point in treatment.  In his report, the doctor acknowledged the causal relationship between the accident and the injuries, and administered a variety of range of motion and other tests which were, by his measurement, normal. The report contained clear evidence that there was no objective evidence that the patient required further orthopedic care, and based on his findings, he recommended no further treatment.

 

Upon a sufficient showing that there was no medical necessity for the physical therapy treatments, Applicant was called on to establish competent medical proof as to the medical necessity by a preponderance of the evidence. Arbitrator Brown found Applicant had satisfied that burden because the examining doctor’s report noted that he reviewed previous IME reports but offered no commentary on their findings.  This was a significant oversight because he did not comment on or dispute documentation that indicated improvement over the course of treatment.  Arbitrator Brown also indicated that where the EIP was continuing to express pain symptoms, the examining doctor should have addressed it in his report.

 

Litigation:

 

02/01/16       Bertucci v 21st Century Ins.

Supreme Court, Nassau County

Insurance Company Does Not Have a Duty to Its Insured outside the Four Corners of the Contract

Plaintiff was involved in an automobile accident in the State of New York. As a result of his injuries from this accident, the Plaintiff sought treatment with medical providers in New York. In addition, the Plaintiff forwarded a timely application for no-fault benefits to 21st Century. The Defendant, however, refused to pay any of the Plaintiff's medical bills arguing that the Plaintiff's car was principally garaged in New York State rather than in Pennsylvania and thus the Plaintiff violated the conditions of the Policy. About seven months from the date of his accident 21st Century issued a denial of the Plaintiff's entire claim for no-fault benefits, including for the payment of his medical bills, claiming that the Policy conditions were violated.

 

This action was commenced seeking damages based upon a claim of negligence and a claim for breach of contract including a claim for punitive damages. The Plaintiff claims that his medical treatment has been delayed because of the Defendant's non-payment of his medical bills, which, in turn has resulted in the aggravation and exacerbation of his injuries. Specifically, Plaintiff alleged that his health care providers would no longer continue treatment upon learning that 21st century would not pay for treatment.

 

Defendant moved for an Order of the Court dismissing the action on the basis that that Plaintiff failed to state a cause of action for either claim. Defendant argued that it was "under no legal duty to refrain from communicating with the Plaintiff's heath care providers regarding its intentions to not pay submitted bills" and that "any failure to pay health care providers is at most a simple breach of contract that is not actionable in tort."

 

The Court agreed stating “Here, the Plaintiff's attempt to assert a claim for negligence against the Defendant based upon its communications with his health care providers fails to withstand the Defendant's motion to dismiss. The law is settled. A claim for negligence requires the pleading of facts that impose a duty of care upon the defendant in favor of the plaintiff” The Court reasoned that the insurer had no duty to Plaintiff beyond the duty created by the four corners of the contract.

 

Thus, while the Plaintiff's attempt to enforce a claimed right to have the Defendant pay his medical bills may be valid under a contract theory, it does not form a basis for a negligence (tort) claim herein.

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

02/11/16       Squairs v Safeco National  Ins. Co.

Appellate Division, Fourth Department

Where Structure Does Not Actually Fall Down, Collapse Coverage is not Triggered

Plaintiff initiated this action after Safeco denied a claim for property damaged which was caused when four exterior posts were damaged by hidden decay and rot.  Safeco denied on the basis that the policy explicitly excluded coverage “wear and tear,” “wet or dry rot,” “settling” and “cracking.”  As this loss was clearly damaged caused by rot and deterioration, it followed that coverage was not triggered under the policy.

 

It appears that plaintiff attempted to save coverage by arguing that the policy’s limited grant of coverage for “collapse” was applicable.   However, plaintiff failed to recognize that the term “collapse” was defined in the Safeco policy as the “abrupt falling down or caving in of a building…”  Here, because the building did not fall down, it did not come within the limited grant of coverage afforded by the policy.

 

2/9/16           Nunes v Earth Relocation, Inc.

Appellate Division, First Department

Property Damage Recovery is Limited to That Property which was Actually Damaged

During Hurricane Sandy, plaintiff’s property sustained damage while in storage with defendant.  Although defendant was contractually obligated to procure insurance on this items it was storing, the Record reveals that no such insurance was purchased.  Plaintiff, however, was able to recover some items which were damaged, and subsequently moved them to a different location. 

 

While plaintiff was entitled to recovery for actual damage, the Appellate Division noted that it had not actually established the amount in question.  Rather, plaintiff simply relied upon its estimate of the replacement costs of all goods as referenced in their “insurance application.”  Because that number included an estimate of goods that were concededly not damaged, the Appellate Division remanded the matter for further proceedings to establish the “actual amount” of damage.

 

02/03/16       Lexington Village Condo v Scottsdale Ins. Co.

Appellate Division, Second Department

Doing What You’ve Always Done, Gets You What You’ve Always Gotten…Malpractice.  Copying Old Insurance Applications Lands Broker, Agent, Carrier All in Hot Water

If I had a dollar for everytime…

 

Lexington retained LIMS to serve as its real estate manager.  LIMS, in turn, requested its broker, Bagatta to obtain insurance for the Lexington properties which consisted of several buildings.  Bagatta was able to place coverage for several years, until the carrier with whom Lexington kept its coverage declined to write the risk.  Bagatta then sought coverage from Insurance Intermediaries (a MGA of Nationwide).  As part of that process, Bagatta completed an insurance application on behalf of Lexington.  To complete this process, Bagatta, of course, just looked at old applications, rather than speaking with his client.

 

Scottsdale bound coverage, but with a significant co-insurance clause.  After binding coverage, Intermediaries ordered an inspection of the premises through a third party vendor.   Not surprisingly, Lexington sustained a sizable fire loss in March of 2008 which was less than 9 months after coverage was bound. 
 

 

 

In Scottsdale’s subsequent investigation, it determined that the square footage of building #5 was woefully underreported in the application and in the inspection ordered by Intermediaries.  The result meant that Lexington absorbed a massive co-insurance penalty that was nearly 2/3’s of the loss. 

 

As part of the lawsuit, Lexington sought reformation of the policy and Scottsdale subsequently opposed and eventually moved for summary judgment. Interestingly, Scottsdale established that it would not have written the risk had it known more about the age, wiring and condition of the structures.  It’s application for summary judgment did not, however, indicate that it would have written the policy differently had it been provided with an accurate accounting of the square footage. 

 

Overland, the inspection company retained by Intermediaries, also moved for summary judgment dismissing the claims of negligence against it.  That motion was denied upon a question of fact.

 

Intermediaries was granted summary judgment, and dismissed from the case, where, as here, it established it did not owe a duty of care to Lexington.  As such, any cross-claims it asserted against Overland and Bagatta were moot. 

 

Bagatta apparently did not seek summary judgment.  I bet I know why!   

 

02/02/16       Tirana v AXA Equitable Life Ins. Co.

Appellate Division, First Department

Or Means or; Not and…Court holds that Medicare Payments Satisfy Deductible Amounts

Plaintiff commenced this action seeking recovery of deductibles that defendant AXA overcharged over a period of four years.  The policy in question contained a deductible that needed to be exceeded before coverage would trigger.  The “deductible amount” was $3,000 – or – the greater amount paid by other medical expense coverage.  The term “other medical expense coverage” includes payments made by Medicare.

 

Plaintiff argued that when Medicare paid in excess of $3,000 (2009 – 2012), the deductible was satisfied.   AXA argued it was entitled to the deductible – and – “other medical expense” coverage.  The court ruled in favor of the plaintiff, and held that the term “or” meant either $3,000 or that amount from “other medical expense.”  Moreover, even if there was an ambiguity in the deductible clause, the Court ruled that such ambiguity would be construed against AXA, thus leading to coverage in any event. 

 

WILEWICZ’S WIDE WORLD OF COVERAGE

Agnes A. Wilewicz

[email protected]

 

02/04/16       National Casualty Co. v. Alice Gonzalez, d/b/a A&J Transport

United States Court of Appeals, Fifth Circuit

Fifth Circuit Holds District Court Improperly Abstained From Coverage Action, Where Coverage Issues Were Undisputed and Could Be Decided, Despite Arguably Necessary Parties Missing From Litigation

National Casualty had issued a commercial auto policy to A&J Transport. This policy covered a single tractor/trailer and had a hundred-mile operation radius. When the insured vehicle was in an accident approximately 190 miles from the scheduled base of transportation, National Casualty disclaimed coverage to A&J. Incidentally; the insured did not dispute the fact that the accident took place outside of the coverage area. Rather, they argued that the policy should have provided coverage since A&J had discussed increasing the radius, and increasing the premium, with its broker. The policy just was not amended prior to the accident. The insurer thus filed a declaratory judgment action against the insured, seeking a declaration of coverage.

 

While A&J conceded that this policy did not cover the claim, they argued that National Casualty’s Federal Court action could not proceed without the broker and other necessary parties. Notably, including those parties would destroy diversity jurisdiction and require the DJ to proceed in state court.

 

In the first instance, the District Court of the Northern District of Texas agreed with the insured. Granting A&J’s motion to dismiss, the court dismissed the case for failure to join necessary parties, noted that it would abstain from deciding the matter on jurisdictional grounds and, since diversity was gone as a result, sending the matter down to the state court. However, on appeal, the Fifth Circuit took a different approach. While they analyzed the district court’s ruling de novo, they also streamlined the issues. First, the court noted, there are six factors to consider when deciding whether to abstain from exercising jurisdiction: 1) assumption by either court of jurisdiction over a res (i.e. a thing); 2) the relative inconvenience of the forums; 3) the avoidance of piecemeal litigation; 4) the order in which jurisdiction was obtained by the concurrent forums; 5) whether and to what extent federal law provides the rules of decision on the merits; and 6) the adequacy of state proceedings in protecting the rights of the party invoking federal jurisdiction.

 

While the Circuit Court analyzed each of these factors, they determined that most weighed against abstention: 1) there was no “res” or thing, such as property, at issue; 2) it was equally convenient to litigate the matter in either court; 3) again, since no “res” was at issue, just contract interpretation, this “factor weighs only lightly in favor of abstention”; 4) priority is not measured exclusively by who was first to file, but timing of potential adjudication is important; 5) though this was a diversity action and not a federal-question one, at most this factor was neutral in the analysis; and 6) there was no real issue as to whether the state court proceedings would adequately address the rights of the parties, so this factor was neutral as well.

 

Ultimately the Fifth Circuit held that the lower court’s dismissal was wrong. There was no significant basis for abstention. Indeed, “considerations of judicial economy are dispositive under the present circumstances; the case is ready for resolution and there is no genuine dispute about the scope of coverage under the Policy. A&J Transport did not oppose National Casualty’s motion for summary judgment. Rather, it conceded that the accident took place outside the coverage area and requested the district court grant National Casualty’s motion for summary judgment as to the policy of insurance radius of operation at one-hundred (100) miles. There is no reason to delay this ruling. Because the accident ‘is not covered by the terms of the insuring agreement’, we render judgment in National Casualty’s favor”. (Internal citations omitted).

 

01/28/16       Zurich American Ins. Co., as subrogee of Vinmar International v. Team Tankers, A.S. and Eitzen Chemical USA

United States Court of Appeals, Second Circuit

Arbitrator’s Failure to Disclose Brain Tumor, Diagnosed during Arbitration Proceedings, Did Not Constitute Corruption or Misbehavior Sufficient to Overturn Findings, Says Second Circuit

Zurich initiated this appeal, as subrogee of its insured Vinmar International, in response to an arbitration award that did not come out in its favor.

 

In terms of background of the claim, in 2008 Vinmar had charted a tanker ship to move a large quantity of a chemical called acrylonitrile (ACN) from Texas to South Korea. ACN is a versatile raw material that is colorless in its most valuable form. It begins to yellow when it comes in contact with other chemicals, which is evidence of its change in composition and this change reduces its market value. Vinmar was planning to find a buyer upon arrival in Korea, but the market for ACN tanked (as it were) while the ship was at sea, so they decided to keep the material in storage. Weeks later, Vinmar tested the chemical and found that it had yellowed beyond acceptable quality standards.

 

In accordance with its charter agreement, Vinmar initiated an arbitration proceeding, wherein it alleged that the transport of the chemical was what caused its deterioration. The arbitration panel ruled that Vinmar was not entitled to relief for three reasons: 1) it had not made out a prima facie case that the ACN was damaged while on board; 2) even if they had, the transport company had shown that it had exercised due diligence in transporting the cargo; and 3) Vinmar had failed to prove its damages in any event. In turn, Vinmar sought to overturn the arbitration decision on the merits, but also in part because they subsequently learned that a member of the arbitration panel had been diagnosed with a brain tumor during the proceedings but had not informed any of the parties. Vinmar argued that this failure to notify anyone constituted “corruption” or “misbehavior” sufficient to warrant further review pursuant to the Federal Arbitration Act.

 

The Second Circuit categorically rejected all of Zurich/Vinmar’s arguments. As to the merits of the decision, the Court found no “manifest disregard of the law”, as was the relevant standard. The underlying decision was detailed and clear, with no evidence showing such manifest disregard. As for the argument that the arbitrator’s failure to disclose his illness somehow constituted “corruption” or “misbehavior”, the Court was not convinced. There was simply no basis for such finding. While the arbitrator may arguably have violated a private arbitral rule in the omission, that alone, without more, could not be considered “corruption” or “misbehavior”. Thus, with no ground upon which to stand, the award would not be vacated and the Circuit Court affirmed the District Court’s decision on that point.

 

Almost as an aside, the Circuit Court did differ from the District Court’s finding to one extent. They found that the lower court had erred in awarding the prevailing party fees and costs associated in seeking to confirm this award, since the contract between the parties permitted damages in the event of a breach. However, the Circuit Court found “By its terms, this provision authorizes a fee award against a party that breaches the charter agreement, as part of the non-breaching party’s damages. There was no finding below, nor indeed any suggestion, that the petitioner shipper breached the charter agreement.”

 

 

JEN’S GEMS

Jennifer A. Ehman

[email protected]

 

01/22/16       Downing St. Devs., LLC v. Harleysville Ins. Co.

Supreme Court, New York County - Judge Doris Ling-Cohan, J.S.C.

Absence of Privity Precludes Additional Insured Coverage

This action was brought by the owner and general contractor of a construction site seeking additional insured status under a sub-subcontractor’s policy of insurance issued by Harleysville. 

 

The court upheld Harleysville’s denial.  The additional insured endorsement in the Harleysville policy required direct contracting with the named insured.  Since there was no privity of contract between Harleysville’s named insured and either the owner or general contractor, the claims against Harleysville failed.  The court also rejected the argument that Harleysville’s denial was untimely.  Citing to National Abatement Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 33 A.D.3d 570, 571 (1st Dept. 2006), the court noted that “[a]n additional insured endorsement is an addition, rather than a limitation, of coverage.”  And, if the claim falls outside the policy’s coverage, the insurer is not required to disclaim. 

 

01/07/16       Farmers New Century Ins. Co. v. Wysocki

Supreme Court, Suffolk County – Judge Andrew G. Tarantino, Jr., A.J.S.C.

Motor Vehicle Exclusion in Homeowners Policy Inapplicable to Claim Where Underlying Plaintiff Fell from the Named Insured’s “High Lift” While Pruning a Tree

On August 12, 2012, Hector Chaperton-Herrara sustained injury when he fell approximately 30 feet from the raised portion of a machine commonly called a “high lift.”  He was injured while assisting Wysocki in pruning and/or removing a tree at Wysocki’s residence. 

 

The question considered by the court was whether this incident was covered under Wysocki’s homeowners’ policy issued by Farmers.  Farmers denied coverage pursuant to the following language:

 

Section II – EXCLUSIONS

1.       Coverage E – Personal Liability and Coverage F – Medical Payments to Others do not apply to “bodily injury” or “property damage”:

 

***

          f.        arising out of:

                    (1)      the ownership, maintenance, use, loading or unloading of motor vehicles or all other motorized land conveyances, including trailers, owned or operated by or rented or loaned to an “insured”;

 

***

                    This exclusion does not apply to:

         

***

                    (2)      A motorized land conveyance designed for recreational use off public roads, not subject to motor vehicle registration and;

                              (a)      Not owned by an “insured” or

                              (b)      Owned by an “insured” and on an “insured location”;

                    (3)      A motorized golf cart when used to play golf on a golf course;

                    (4)      A vehicle or conveyance not subject to motor vehicle registration which is:

                              (a)      Used to service an “insured’s” residence;

                              (b)      Designed for assisting the handicapped; or

                              (c)      In dead storage on an “insured’s location”;

 

In analyzing this language, the court began with the proposition that the “high lift” was a motorized land conveyance.  Thus, the question then became whether the exception to the exclusion applied.  The court, relying on Platek v. Town of Hamburg, noted that the insured has the burden of proving an exception to an exclusion. 

 

First, the court determined that pursuant to the VTL the “high lift” was not a “motor vehicle” and it was not being used on a public highway; thus, it was not required to be registered. 

 

The court next considered whether it was being “used to service” the named insured’s residence.  This phrase was not defined in the policy.  The insurer contended that the lift was also used by Wysocki in constructing his new residence and in turn it was intended to be used for heavy construction and not as a vehicle that would “service” a residence.  In response, Wysocki submitted evidence that he was using the lift in a manner unrelated to construction at the time of the accident and instead was using it to maintain the amount of growth on his property. Wysocki lived in a rural area and his property included two structures and approximately two and one-quarter acres of land. 

 

The court found that Wysocki met his burden of proving that the exception applied, and plaintiff was unable to raise a triable issue of fact.  Merely stating that a “high lift” was not commonly used to service a residence was not sufficient. 

 

Accordingly, the court found that the exception to the exclusion applied, and Wysocki was entitled to coverage for the claim.  In addition, as Farmers brought this declaratory judgment action and placed Wysocki in a defense posture, he was entitled to recover of the attorney’s fees incurred in the defense of this matter.

 

 

BARNAS ON BAD FAITH

Brian D. Barnas

[email protected]

 

02/11/16       Selective Insurance Company of America v. County of Rensselaer

New York Court of Appeals

Insurer Did Not Act in Bad Faith by Reaching a Settlement that Made the Insured Liable for all Damages Recovered by Class Members.  Policy Deductible Language Ruled the Day.

This case arose out of the County of Rensselaer’s policy of strip searching all people who were admitted into its jail, regardless of the type of crime the person was alleged to have committed.  Believing the County’s policy was unconstitutional, Nathaniel Bruce and other named arrestees commenced a class action suit in 2002 against the County in federal court.  Selective issued a liability insurance policy to the County from 1999-2002.  The Policy defined personal injury as “injury … arising out of … [h]umiliation or mental anguish [or] … violation of civil rights protected under 42 USC [§] 1983.”  The Policy also defined an occurrence as an event, including continuous or repeated exposure to substantially the same general harmful conditions, which results in … personal injury … by any person or organization and arising out of the insured’s law enforcement duties.  Importantly, Selective’s obligation to pay damages only applied to the amount of damages in excess of any deductible, and the deductible amount applied to each occurrence.  The deductible was $10,000 in 1999, 2000, and 2001 and $15,000 in 2002.

 

The County tendered its defense in the class action to Selective.  Selective retained counsel to represent the County, who purportedly were experts in class action suits.  Ultimately Selective’s counsel and the County agreed to settle the case instead of challenging the class certification, as Selective informed the County that there was no viable defense.  However, the Bruce plaintiffs missed several filing deadlines, and their case was dismissed on procedural grounds.  The Bruce plaintiffs appealed, and their counsel filed a second, similar class action soon thereafter.  Eventually the two actions were consolidated in federal court.

 

Selective’s counsel and the County agreed to settle both actions.  Bruce received $5,000, and all other class members received $1,000.  Attorney’s fees were set at $442,701.74.  When the County refused to pay Selective anything more than a single deductible payment, Selective commenced an action, arguing that each class member was subject to a separate deductible.  The County moved to dismiss, arguing that the single deductible payment was the only amount due.  Selective cross-moved for summary judgment and the County opposed.  The County also asserted that Selective exercised bad faith by settling the underlying action without challenging the class certification and then contending that because the harm to each class member is a separate occurrence, the County was responsible for a deductible payment for each class member.

 

Supreme Court determined that a separate deductible applied, and the Third Department affirmed.  The Court of Appeals, in a unanimous decision authored by Justice Abdus-Salaam, held that the improper strip searches of the arrestees over a four-year period constituted separate occurrences under the unambiguous definition of occurrence in the Policy.  Justice Abdus-Salaam reasoned that the definition of occurrence did not permit the grouping of multiple individuals harmed by the same condition, and a civil class action suit based on the strip search policy did not fall within one of four large-scale events that constitute one occurrence described in the Policy.

 

Turning to the bad faith claim, the Court of Appeals concluded that the County failed to meet its high burden of demonstrating that Selective acted in bad faith in negotiating the underlying settlement.  It rejected the County’s argument that Selective acted in bad faith by not challenging the class action certification and reaching a settlement that made the County liable for all the damages recovered by the class members.  The Court recited the standard for bad faith in New York, which is that an insured must establish that the insurer’s conduct constituted a gross disregard of the insured’s interest – that is, a deliberate or reckless failure to place on equal footing the interests of its insured with its own interests when considering a settlement offer.  The court concluded that the County did not meet this standard because Selective hired competent attorneys to defend it and played an active role in the negotiation.

 

The Court of Appeals also considered how attorney’s fees were to be allocated.  It noted that the policy was silent on how to allocate attorney’s fees in a class action, and therefore was ambiguous on that point.  Accordingly, the Policy was interpreted in favor of the insured, and all of the attorney’s fees were allocated to the named plaintiff rather than distributed among the class members.

Editor’s Note:     Kudos to Attorney Richard Galbo for his superb handling of a very challenging motion and appeals.            

 

02/04/16       Kone v. Garden State Life Insurance Company

Appellate Division, First Department

Appellate Division Upholds Denial of Insurer’s Motion for Summary Judgment Dismissing Bad Faith and Breach of Contract Claim

 

This was an action brought by the plaintiff, Bilal A. Kone against Garden State Life Insurance Company.  Plaintiff alleged causes of action for breach of contract and bad faith arising out of the defendant’s failure to pay the proceeds of a life insurance policy.  Defendant moved for summary judgment, which was denied by the lower court.  The Appellate Division affirmed the denial.  It held that the record did not permit a determination as a matter of law that the plaintiff failed to present the defendant with due proof of the insured’s death as required by the life insurance policy.

 

02/04/16       Anastasi v. Fidelity National Title Insurance Company

Hawai’i Supreme Court

Insurance Company’s Delay in Paying its Insured Raised a Genuine Issue of Material Fact as to Whether it Demonstrated a Greater Concern for its Monetary Interest than for the Insured’s Financial Risk.

The plaintiff, Anastasi, had over twenty years of experience in real estate transactions.  In 2005 he made a loan to Nagy in the amount of $2.4 million that was secured on a property located in Oahu.  Before making the loan, Anastasi performed a due diligence investigation into the property.  He reviewed a document from the tax assessor’s office that indicated Stickney owned the property.  At the time, the property was owned by a trust.  Stickney was the trustee and Rand was the beneficiary.  It was Anastasi’s belief that arrangements were being made so that Nagy could acquire title to the property unencumbered. 

On April 25, 2005, Nagy executed a $2.4 million mortgage.  On June 1, 2005, a warranty deed was apparently signed by Stickney, which purported to deed the property from Stickney to Nagy.  Both the mortgage and the warranty deed were recorded. 

 

Fidelity issued Anastasi a title insurance policy on the property for $2.4 million.  The title insurance policy provided that Fidelity would defend Anastasi in litigation in which any third party asserted a claim adverse to the title or interest as insured.  It also permitted Fidelity to pursue litigation to final judgment before having to determine and pay losses.

 

Stickney and Rand filed a complaint to quiet title against Nagy and Anastasi in November 2005, alleging that Stickney’s signature was forged on the warranty deed.  Anastasi was served with the complaint on January 5, 2006, and Fidelity received notice the next day.  Fidelity issued a reservation of rights, but assigned defense counsel to Anastasi.  Fidelity retained its own attorney to provide coverage advice.  In February 2006, Fidelity’s coverage counsel sent a letter to claims counsel and Anastasi’s assigned counsel detailing strong evidence showing that the deed was forged.

 

Plaintiffs filed for summary judgment, which was granted.  Before the time to appeal ran, claims counsel sent a memorandum to assigned counsel.  The memorandum stated that, although an appeal would likely succeed, it would be a pyrrhic victory since the validity of the deed could not be established.  Accordingly, claims counsel did not recommend filing the appeal.  Nonetheless, the appeal was filed.  Subsequently, the parties entered into a stipulation for dismissal of claims.

 

In April 2008, Anastasi filed a complaint against Fidelity alleging breach of contract and bad faith.  Fidelity finally paid Anastasi $2.4 million under the policy in August of that year.  In March 2010, Fidelity filed a motion for summary judgment on Anastasi’s bad faith claim.  Assigned counsel, in support of Fidelity’s motion, testified that she was defending Anastasi, and Fidelity was not directing the defense.  In opposition, Anastasi asserted that Fidelity unreasonably delayed paying him under the policy by directing assigned counsel to continue litigation and pursue an appeal even after it learned that the warranty deed was forged.

Fidelity’s motion for summary judgment was granted, but the judgment was vacated on appeal.  The Hawai’i Supreme Court declined to express any opinion as to whether Fidelity’s actions constituted bad faith.  However, it concluded there was a genuine issue of material fact as to whether Fidelity met the enhanced standard of god faith. 

 

The court noted that insurers have an enhanced standard of good faith when defending insureds under a reservation of rights under Hawai’i Law.  The insurer must: (1) thoroughly investigate the accident; (2) retain competent defense counsel with the understanding that the insured is the client; and (3) refrain from engaging in any action that would demonstrate greater concern for the insurer’s monetary interest than the insured’s financial risk.  Fidelity knew within four months of receiving the claim that the warranty deed was forged, but it delayed paying Anastasi under the policy for over two years.  Thus, the court upheld the decision of the lower court, which found that there was a genuine issue of material fact as to whether Fidelity demonstrated a greater concern for its monetary interest than for the insured’s financial risk in violation of the enhanced standard of good faith.  In arriving at its conclusion, the court rejected Fidelity’s arguments that the enhanced standard of good faith should not apply to title insurers, and that Fidelity should have been allowed to pursue litigation to final judgment based on provisions of the policy.

 

The court also found there was a genuine issue of fact as to whether assigned defense counsel allowed Fidelity to direct her professional judgment in representing Anastasi.

 

PHILLIPS’ FEDERAL PHILOSOPHIES

Jennifer J. Phillips

[email protected]

 

02/04/16       Liberty Mutual Fire Ins. Co. v. Zurich American Ins. Co.

Southern District of New York

Ambiguity in Clear and Unambiguous Additional Insured Language

The insurance coverage dispute at issue in Liberty Mutual stems from construction work at New York City’s St. George Ferry terminal in Staten Island. Employees injured on the site commenced a lawsuit against the City, which owned the site, and Conti of New York, LLC, the general contractor.  Conti, which had a general liability policy issued by Liberty Mutual, subcontracted with NASDI for the project, with the relevant contract obligating NASDI to obtain insurance naming both Conti and the City as additional insureds. NASDI obtained a commercial general liability insurance policy from Zurich American listing NASDI as the named insured and the additional insureds as “[a]ny person or organization with whom you have agreed, through written contract, agreement or permit, executed prior to the loss, to provide additional insured coverage…”

 

Following the employees’ suit, although Zurich American conceded that Conti was an additional insured under the policy, it argued that the City was not, inasmuch as there was no written agreement between NASDI and the City, only between NASDI and Conti. In resolving the declaratory judgment action in favor of Liberty Mutual and holding that the City was an additional insured, the district court found that the above quoted additional insured language “is not so restrictive as to limit coverage to only the person or organization with whom [NASDI], the named insured, contracted.”  Instead, NASDI agreed in its written contract with Conti to obtain insurance covering the City also as an additional insured, thereby coming within the scope of the policy’s language.

 

Editor’s Note: The Southern District focused on what NASDI promised -- to have the City named as an additional insured – rather than to whom it made the promise.  The district court nonetheless acknowledged that at least two trial courts have reached a contrary result based on the same or similar language. See Murnane Bldg. Contrs., Inc. v. Zurich Am. Ins. Co., 33 Misc.3d 1215(A) (N.Y. Sup Ct. 2011); Zoological Soc. of Buffalo, Inc. v. Carvedrock, LLC, No. 10 cv 35, 2014 WL 3748545 (W.D.N.Y. 2014). The district court declined to follow these cases because “they add a requirement of direct contractual privity between the named insured and the purported additional insured that did not exist in the policy language.” 

 

However, the courts in Murnane and Zoological did not find a privity requirement, they found instead a prepositional phrase.  Specifically, these courts focused on the endorsement’s definition of an additional insured as the party “with whom” the insured contracted.  As the Western District noted in Zoological Soc. of Buffalo, “if, for example, the word ‘for’ were substituted for the word ‘with’ -then the [non-contracting party seeking insured status] might have a stronger argument. However, the Court must interpret the endorsement as it is written.” This plain language argument is the one that has gotten more traction in the New York State Appellate Division.  Indeed, as previously highlighted in Coverage Pointers, the Second Department has already held in AB Green Gansevoort, LLC v. Peter Scalamandre & Sons, Inc. that similar language in an additional insured endorsement requires that there be an express written agreement between the named insured and the party seeking additional insured status for that party to be considered an additional insured.  Thus, the district court’s decision in Liberty appears out of sync with the New York law it was required to apply.

 

EARL’S PEARLS
Earl K. Cantwell
[email protected]

 

09/04/15       Fontaine v. Metropolitan Life Insurance Co.

Seventh Circuit

State Insurance Regulation Trumps ERISA

It is not often that cases come out interpreting the federal ERISA statute, and more infrequent still when a court finds that ERISA does not govern its universe.  It is even rarer for a court decision to find that the federal ERISA statute is inferior or subject to State law.  However, that is exactly what happened in this case in which the Seventh Circuit applied an Illinois insurance regulation that requires benefit determinations to be judicially reviewed under a non-deferential “de novo” standard.

 

Ms. Fontaine was an attorney who developed vision problems and made a long-term disability claim with MetLife.  The insurance company denied the claim finding that she did not meet the policy definition of “disabled”, and this determination was affirmed after an internal administrative appeal.  Ms. Fontaine sued MetLife in the Northern District of Illinois alleging wrongful denial of benefits under ERISA.  MetLife argued that its decision was entitled to a deferential review under the well-known ERISA “arbitrary and capricious” standard.  However, the District Court rebuffed MetLife on the basis of an Illinois insurance regulation that prohibits such terms in health and disability insurance policies.  The District Court applied a de novo standard of review, and ruled that she was disabled and entitled to insurance benefits.  MetLife appealed, arguing that ERISA pre-empted the state law, and that its determination was not “arbitrary and capricious”.

 

The Seventh Circuit affirmed the District Court in holding that ERISA did not pre-empt the Illinois insurance regulation prohibiting discretionary review clauses such as the one in this disability policy.  Technically, the Court ruled that ERISA pre-empts state laws that “relate” to an employee benefits plan, but not necessarily state laws that “regulate insurance”.  In this case, the regulation was deemed to regulate insurance and was therefore not subject to ERISA pre-emption.  In support of its decision, the Seventh Circuit sited similar decisions in the Ninth and Sixth Circuits holding that ERISA did not pre-empt similar state laws and regulations in Michigan and Montana.

 

This case is interesting because it is not often that ERISA is not found to be all- encompassing within the sphere of employee benefits.  It is also not usually the case that ERISA is held to be subject to state law. 

 

It would appear that this decision is limited to state laws or regulations that deal strictly with insurance such as health and disability insurance policies, and would not relate to ERISA pre-emption with respect to retirement and pension benefits.  However, one can envision cases involving benefits such as annuities, whole life insurance, and similar financial products that are both insurance and an employee benefit, and the question would be whether ERISA and its “arbitrary and capricious” standard of review will prevail as opposed to some other standard of review under state law. 

 

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