Coverage Pointers - Volume XVIII, No. 1

Volume XVIII, No. 1 (No. 457)

Friday, July 1, 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.  I counted situations.  In the last two business days , eight calls came in where the someone wanted to brainstorm about a “situation”.  Six of them were current clients; two were non-client, Coverage Pointers subscribers. We welcome them all.

 

We wish you a glorious Fourth and an equally joyous Canada Day.

 

We welcome the newest members of the Coverage Pointers family, brand new friends I met at the PLRB Regional Adjusters Conference in Sacramento.  If you have a situation, call or write and share it with us.  In the meantime, enjoy Coverage Pointers, which you will find in your email box on alternating Fridays.  This is the cover letter and the publication is attached.

 

If you missed the Sacramento conference, and you’re from the mid-west, you can catch my presentation on risk transfer protocols:  Additional Insured and Contractual Indemnity at the PLRB Regional Adjusters Conference in St. Louis on September 7-8 or, for your east coast denizens, at the conference in Richmond VA on November 15-16.  For more information, click here.

 

Happy Birthday Coverage Pointers:

 

Finally, we are legal.  Today is our 18th birthday so we now have the right to enter into contracts, to vote and to be legally responsible for our professional relationships.

 

With this issue, we are delighted and proud to commence our EIGHTEENTH YEAR of publication.  Our first issue, published July 8, 1999, reviewed eight cases and had no columns, per se, just a summary of appellate decisions.  We have since advanced and matured the publication so that it is arranged by topic and has an array of wonderful authors who love to share their wisdom. Past issues are available on our website under the Newsletters tab.

 

We do consider our subscribers our family members.  So many have written to us over the years, either in response to a case summary, an historical tidbit or a reference to a family event and have expressed interest, concern and affection.  Thanks.  Keep those emails coming in and they are shared with our staff.  We love to hear from you.  We relish your feedback.  We learn from you. It inspires us to continue this labor of love.

 

Our philosophy is simple.  We bring you what you need to know in a Word format that allows easy cutting and pasting into claims files.  We avoid fancy legal jargon and try to summarize cases using terms that both claims professional and lawyers (or primary readers) can both understand.  We try to spot trends and development and offer practice pointers.  We want to empower you, not lecture to you.

 

Coverage Pointers is not the fanciest newsletter around.  We do not include photos and graphics.  We do not provide fancy typeset pdf glossy pages.   We do not brag about H&F being the best thing since sliced bread.  We recognize and congratulate lawyers and law firms from around the country on their good work on significant cases.  We encourage our authors to reach out to you and be a resource.

 

Thanks for those who have been with us for years and welcome to our newest family members.

 

Each issue covers decisions rendered within the two weeks previous.

 

Just a quick introduction of our publication staff and the columns currently offered, in the order presented in the attached issue:

  • Kohane’s Coverage Corner:  My column covers everything not otherwise reviewed by the other authors. Policies usually implicated in my summaries include: CGL, D&O, E&O, Auto (personal and commercial) – really any casualty policy out there.
  • Hewitt’s Highlights on Serious Injury: Rob Hewitt is resident in our Long Island office.  His bi-weekly summary is of New York State No Fault serious injury threshold cases.
  • Tessa’s Tutelage: Tessa Scott covers the “rest” of No Fault insurance, reviewing both arbitrator and court decisions.
  • Peiper on Property and Potpourri:  Steve Peiper reviews first part property and other first party coverage decisions (he and I share the occasional life and disability decision that may be rendered)  The Potpourri cases may not be coverage decisions but may be related tort opinions that have important impact.
  • Wilewicz’s Wide World of Coverage:  Agnes looks at coverage decisions from outside of New York that may be of special interest to our readers, with a focus on Circuit Courts and a penchant for environmental coverage cases.
  • Jen’s Gems:  Jen Ehman generally focuses on New York State Supreme Court coverage decisions. The Supreme Court is our trial court.
  • Barnas on Bad Faith: Brian Barnas reports on decisions in New York State and elsewhere, which reference extra-contractual liability.
  • Phillips’ Federal Philosophies:  Jen Phillips reviews federal court coverage decisions.
  • Earl’s Pearls:  Earl Cantwell writes an informative article on one interesting case that he may have happened upon, often a case that reflects a current trend in the industry.

 

A special thanks to my wife, Chris, who (a) has proofed this cover letter for many years and (b) has tolerated my Thursday night love affair with this publication.

 

In today’s issue, we bring you two asbestos decisions from our resident asbestos litigator, Chris Potenza, who reports in his own occasional column : Potenza’s Ever Spinning Word of Asbestos

 

Enjoy.

 

One Hundred Years Ago – WW I – The Battle of the Somme:

 

On July 1, 1916, the French and British begin the Battle of the Somme, which ended up being an unfortunate failure for allied forces.

 

Tessa’s Tutelage:

 

Dear Readers,

 

Last week our Hurwitz & Fine’s softball team took down the veritable Goliath, and number one team in the league! I must say, they were incredibly good natured in their loss, which I am sure came as a big surprise. With two wins under our belt, and countless losses, we have officially beaten our record from last year! As co-captain, I am hoping we can maintain our momentum this evening.  A win would be a wonderful start to the long weekend!

 

But, before the weekend commences here is a brief summary of the No-Fault cases that have been decided in the past two weeks. We start with  ALFA Med. Supplies, Inc. v Allstate Ins. Co. where the Court found that an affidavit, without personal knowledge of the office procedures for Complaints, was unpersuasive to demonstrate that the failure to timely appear and answer was due to a clerical error. In Liberty Mut. Ins. Co. V Raia Med. Health, P.C. the Court held that medical provider assignees are not entitled to no-fault reimbursement if they do not comply with applicable licensing requirements to perform that service. Interestingly, TC Acupuncture shows up twice this week.  In TC Acupuncture, P.C. v Tri-State Consumer Ins. Co. the Court held that Assignor's Subjective Complaints Of Pain Cannot Overcome The Objective Medical Tests.  In TC Acupuncture, P.C. v Tri-State Consumer Ins. Co. the court found that even where a Master arbitrator decided a matter with the wrong burden of proof, the decision was not subject to a vacatur.

 

I hope you have a wonderful long weekend planned with your friends and families!

 

Tessa

Tessa R. Scott

[email protected]

 

Speaking of Baseball -- Baseball Debut:  100 Years Ago --  Not a Wright Fielder:

 

Ceylon “Cy” Wright (August 16, 1893 – November 7, 1947) had his major league debut a century ago, yesterday.  The initial reports were positive.

 

The Tennessean

Nashville, Tennessee

1 Jul 1916

 

White Sox Move Up.

 

CHICAGO, June 30.—The White Sox went into third place today by virtue of another victory over Detroit 5 to 2 while Washington was losing.  Von Kolnitz, the new Chicago third baseman, twisted a leg in the fourth and made room for Ceylon Wright, a Chicago amateur, who made a favorable impression. 

 

But alas, Wright’s bat and glove led to a brief career.  He played eight games in Major League baseball for the Chicago White Sox in 1916, all at shortstop.  In those eight games, he was at bat 18 times without a hit, walked once, struck out seven times and committed five errors.  And so he was sent down to the minors a few months later.

 

Times Herald

Olean, New York

5 Oct 1916

 

White Sox Sell Wright

 

Ceylon Wright, the Chicago semi-pro who filled in with the White Sox during the time Manager Rowland’s infield was shot to pieces, has been sold to the Charleston club of the South Atlantic league, according to announcement from Chicago. 

 

His “other job” was as a bank teller for the Federal Reserve Bank in Chicago.  Married young, he and his wife Laura had no children.  He died at age 48 in the Windy City.  But he did something very few of us can brag about – he played in the Bigs.

 

Audrey’s Angles:

 

Summer is here and with it prime opportunities for education for you and your team right from the comfort of your desk or conference room!

 

DRI’s Insurance Law Committee is holding a three part Insurance Law 201 webcast in July starting at 2:00pm EST. 

 

They are scheduled for July 13th, 20th, and 27th each running for 90 minutes with the ability to ask the faculty questions.  You can either purchase the webcasts individually at $150.00 per site or all three for the value of $300.00. 

 

This series will cover the following topics:

 

  • Navigating Thorny Issues with Consent Judgments and Settlement of Coverage Claims - July 13, 2016. This program will focus on the traps that can sometimes arise when coverage litigation reaches its final stages and settlement is imminent, as well as the dangers that can arise from consent judgments in certain jurisdictions. The presenters will address hypothetical situations and real world problems where consent judgments can create significant ethical and practice considerations for even the most experienced practitioner. The program will also provide issue spotting for problems that can arise in the context of the settlement of coverage litigation. Faculty: Rina Carmel and Elaine Pohl.
  • The Latest Developments in Bad Faith Litigation - July 20, 2016. The presentation will focus on strategies for combating and avoiding bad faith claims during the claims handling process and spotting potential issues early in that process. Strategies for minimizing bad faith exposure will also be touched upon, in addition to how jurisdictional nuances can drastically change the potential for bad faith exposure. Faculty: James Bryan and Scott Seaman.
  • Effectively Navigating Allocation and Trigger Issues - July 27, 2016. This webcast will focus on the myriad of issues coverage counsel must address when evaluating potential trigger of insurance coverage and allocation issues. The webcast will address the various theories behind “triggers” of coverage (manifestation, exposure, injury-in-fact, continuous) and allocation (pro rata, all sums), including a brief historical overview of the evolution of the various theories. The webcast will also address the effect that different kinds of insurance policies and differing language in similar policies can have on a trigger and allocation analysis. Faculty: Patrick Omilian and Donna Willis.

 

I hope you will register today.  If you have any questions do not hesitate to email me at [email protected].

 

Have a great Fourth of July.

 

Audrey

Audrey A. Seeley

[email protected]

 

Labor Law Pointers:

 

Dave Adams and his Band of Renown publish a monthly newsletter covering the strange and frightening world of scaffolding and construction site accidents.  If you haven’t subscribed, you are headed for a fall …. Contact Dave at [email protected] and tell him that Dan, Dan the Coverage Man, sent you.

 

Phillips Federal Philosophies:

 

Hello, All:

 

I’m hoping everyone has fun plans for the holiday weekend or, even better, a relaxing lack of plans for the next few days.  I myself am off to Nashville for the first time, as what could be a better celebration of the 4th than the pursuit of boots, blues, and bourbon (in moderation, of course)?

 

And summer with all its celebrations is just speeding by.  In anticipation of the upcoming summer Olympics, this week’s case takes us to Brazil by way of the Southern District of New York and the International Chamber of Commerce in New York City.  In Alstom Brasil Energia e Transporte Ltda. v. Mitsui Sumitomo Seguros S.A., the district court considered whether an insurer, pursuing an alleged tortfeasor based on its right of subrogation following indemnification of its insured, is bound by an arbitration clause in the contract between the tortfeasor and its insured.  The district court did not, however, give any odds on who would be the gold medal winner of the Mens’ 400 meter race in Rio.

 

As always, thanks for reading.

 

J.

Jennifer J. Phillips

[email protected]

 

Into the Cooler, 100 Years Ago:

 

Times Herald

Olean, New York

1 Jul 1916

 

STOLE TWO KEGS OF BEER

FROM COOLER LAST NIGHT

 

Michael Haugn reported to the police this morning that his beer cooler in North Olean on Pine street was broken into during the night and two kegs of beer stolen. The thieves broke two locks to reach the amber fluid and went away without closing the door.

           

The police entertain the theory that the work was done by tramps who came in over the Erie railroad. 

 

Peiper’s Ponderings:

 

At the time we went to press last issue, the ongoing Uber battle was unresolved.  By the time you likely read last issue, however, we all had learned that the case had died on the vine.  While I am past (mostly) the need to hail a late night ride home, finding a taxi in Upstate NY can be a difficult task.  It is suggested that Uber, which already operates in NYC and 475 other cities around the world, could fill that void.  From Albany to Buffalo, and in between, Uber/Lyft fans will have to await at least one more year. 

 

The Senate and Assembly both drafted bills which would have approved the ride share services.  However, a dispute over insurance minimums tabled a final decision until next Summer.  The Senate Bill required drivers to maintain $1,000,000 of insurance when providing rides, and a minimum policy of 50/100 when driving while awaiting a call.  The Assembly bill required $1.5 million in coverage when providing rides, and set mandatory minimums for down time at 100/300.  It appears that the dispute over the mandatory minimums is ultimately what killed passage this year. 

 

For those of you interested, NY law mandates minimum personal automobile coverage of 25/50.  Thus, the proposed Senate bill would have doubled the coverage required by Uber drivers.  The Assembly bill would have increased mandatory minimums for Uber drivers fourfold. 

 

In case you are wondering, the mandatory minimum for taxi cabs during the same down time is 25/50.  There are other issues regarding verification of drivers, and background checks, that remain hot issues in the Uber debate in NY and around the country.  However, make no mistake, the primary hold up on Uber in NY is the insurance issue, and it figures to be front and center again next year.

 

As for our issue this week, while the Summer Slowdown indeed approaches we’ve got a few interesting offerings.  The Second Department’s decision involving Mass Mutual is a worthwhile read.  In it, an insured’s negligent misrepresentation claim against a broker fails where the Court noted the policy clearly contradicted the agent’s advice.  Essentially, the Court ruled that you can’t have detrimental reliance upon a statement that is contradicted by actual policy terms.  If 100% of people read their policies 100% of the time, I can see it.  I will admit, sheepishly, that I do actually review my policies.  Do you? 

 

That’s if for now.  Happy 4th of July. 

 

Steve

Steven E. Peiper

[email protected]

 

Child Prodigy – A Century Ago:

 

The Kingston Daily Freeman

Kingston, New York

1 Jul 1916

 

Best Record in 134 Years

 

Paul Van Anda of New York City was recently graduated from Exeter Academy with the highest record in 134 years.  Roxmor is claiming a share of the praise inasmuch as young Van Anda had spent many of his summers in its invigorating climate.  His father, managing editor of the New York Times, owns a bungalow in Roxmor Colony. 

 

Editor’s Note (Based on Curiosity):  Just an FYI, Roxmor Colony was a ritzy getaway in the Town of Shandaken at the northern border of Ulster County, NY.  

 

What happened to young Paul?  He did pretty well, indeed, including following in his father’s New York Times footsteps for a while:

 

New York Times

January 23, 1982

 

PAUL VAN ANDA, 82, A LAWYER

           

Paul Van Anda, an estate and corporation lawyer, died Thursday in Salt Lake City while preparing for a skiing trip in nearby Snowbird, Utah. Mr. Van Anda, who lived in Upper Nyack, N.Y., was 82 years old.

 

Mr. Van Anda was a director of The New York Times Company from 1955 to 1967. He was the son of the late Carr V. Van Anda, who was managing editor of The New York Times from 1904 to 1932.

 

He had joined the law firm of Cadwalader, Wickersham & Taft after graduating from Harvard Law School in 1923. Later, he became a partner at Spence, Hotchkiss, Parker & Duryea. In 1956, he joined Satterlee Browne & Cherbonnier. From 1962 until his retirement in 1980, he was counsel to the law firm of Burlingham Underwood & Lord. He argued before the Securities and Exchange Commission and the Federal Trade Commission. He also was a director of the Dexter Folder Company and the Lee Rubber and Tire Corporation.

 

Mr. Van Anda attended Phillips Exeter Academy and on his graduation had received six prizes for academic excellence, including three scholarships for study at Harvard. He was the first student at the academy to earn a perfect mark in every study. He earned his undergraduate degree at Harvard College.

 

A sportsman, Mr. Van Anda began skiing as a youth and frequently skied in this country and overseas. For the last five years, he took part in a helicopter skiing program in the Cariboo Mountains in Canada.

 

Mr. Van Anda was also a veteran mountain climber who scaled Mont Blanc at Chamonix and other peaks, including the Matterhorn.

 

HEWITT’S HIGHLIGHTS:

 

Dear Subscribers:

 

This edition comes to you as summer begins and the courts often begin to slow down in issuing appellate decisions. However, on the serious injury front, we have a number of new cases that remind us of a few points. Several of the cases include denials of motions for summary judgment by defendants for the 90/180-day category, a common area where the court finds an issue of fact. It is very important to pin down the plaintiff at a deposition as to exactly what their limitations were during that time frame. Also, it is helpful if the doctor who does the independent medical examination opines on what limitations would have existed and for how long. Also, the Appellate Courts keep noticing when the defendant’s own doctor finds range of motion limitations. Therefore, if the defendant’s own doctor finds any significant limitations, an issue of fact will surely be found, unless the doctor can credibly tie it to degeneration or prior incidences. Finally, in one of the cases, a police report was allowed in because both parties relied on it even though it would otherwise be hearsay. The same has been true as to unsworn medical reports and records. So remember, if one party relies on it, the other party will be able to do so as well.

 

Hope you are enjoying the summer.

 

Until next time,

 

Rob
Robert Hewitt

[email protected]

 

This Diamond Ring Doesn’t Shine for Me Anymore:

 

The Kingston Daily Freeman

Kingston, New York

1 Jul 1916

 

HUNDREDS WALKED ON DIAMOND RING.

 

Valuable Sparkler Lay on Broadway Sidewalk for Hour After Owner Had “Washed His Hands” of it—Gem Finally Restored.

 

How several hundred persons kicked over a $500 diamond ring in front of the Macmol oil station at 789 Broadway near Albany avenue is a story going the rounds.  A Kerhonkson undertaker tanked up at the station and went on his way.  Some hours thereafter the proprietor of the station received a frantic call over the telephone asking if he had found anything like a ring near the oil tank as the caller believed he must have wiped the ring off his finger in some oily waste when cleaning his hands after getting his oil supply.  The proprietor went out post haste and found the sparkler jammed into a crack in the sidewalk by the heels of passersby.  Needless to say the ring was restored and the oil supply staff is looking forward to smoking up at the expense of the loser. 

 

Wilewicz’s Wide-World of Coverage:

 

Dear Readers,

 

The last few weeks I’ve been racking up those airline miles – Chicago, then Manhattan, then Long Island all in less than a week. They don’t call our group the frequent coverage fliers for nothing.

 

This week, we have a couple of interesting Second Circuit decisions for your reading pleasure. First, in Hartford v. Hanover, we had a relatively straight forward priority of coverage analysis: where one policy said it would contribute with other coverage, while the other said that it was excess over all other coverage. The court held that the language of the latter evidenced an intent to be excess and non-contributory. Since the former policy contemplated contribution with others, it was on a lower tier. The power of language at its best.

 

Next, in Narragansett Electric v. Century, the Second Circuit issued a very brief decision on an environmental coverage case. There, in short, the court held that the carrier had no duty to defend where the allegations of the complaint, taken as a whole, did not plead a “sudden and accidental release of pollutants”. Rather, since the release was intentional and took place over a series of decades, it was anything but sudden and accidental. Thus, the carrier was off the hook for what had been a $9M judgment. 

 

Finally, in a bit of a tag-team effort, Brian Barnas and I present you with the recent decision in Farm Family v. Cedar Lane Construction. This is a property damage case that he and I worked on, with great success and we are very happy to share it with you. In this case, the insured was a construction company which was sued for negligence when the barn that they had worked on collapsed under the weight of snow. Given the extent of the damages, the carrier tendered its $300k policy and wanted to walk away.

 

However, the claimant’s counsel would not let the insurer off quite that easily. The damages totaled over $600k, so the claimant argued that the barn collapse was actually two occurrences under the policy. Two occurrences would equal two policy limits, right? The rationale was admittedly clever – since the barn started to fall down on one day, then a few days passed before the rest of the barn fell, two occurrences resulted. Such was the argument anyway. Fortunately, the Albany court did not buy it (as we argued they shouldn’t and wouldn’t). One barn, one allegation of negligence, one claim, one occurrence. It is an excellent decision, if we do say so ourselves, so it is worth the read. Enjoy. N.b. Brian wrote the summary, but as it is a lower court decision, it can be found under Jen Ehman’s column in the attached banner edition.

 

See you all in a couple of weeks!

 

Agnes

Agnes A. Wilewicz

[email protected]

 

Being Prosecuted to the Fullest Extent of the Law – 100 Years Ago:

 

The Ogden Standard

Ogden, Utah

1 Jul 1916

 

AUTO DRIVERS ARE

FINED BY THE CITY COURT

 

For driving an automobile to which 1916 state license numbers had not yet been attached, from a private garage in the residence district of the city, to a downtown repair shop, Floyd Knight was fined $3 in the municipal court his morning.

 

James Combe was fined an equal amount for operating a car, which he had just purchased without license numbers.  He explained to the judge that the numbers had been applied for, but not received.  In passing sentence, under the extenuating circumstances of the two cases, Judge Barker made plain that no breach of the state and city traffic laws would go unpunished and said that owners and operators must take that fact into consideration when operating their cars.

 

Mike Ryan stole a pair of shoes yesterday afternoon from a lower Twenty-fifth street shop.  He is to serve fifteen days in jail for the offense, having been arrested by Patrolman Walter Martin and adjudged guilty of petit larceny, by Judge Barker, who pronounced the sentence.

 

Martin Garcia, a plain drunk, was given a five-day jail sentence.  James Ryan, who was released from custody yesterday on a promise to immediately get to work for greater compensation that he had been receiving from the city, was sentenced to serve 10 days in jail, for breaking the promise and getting drunk.

 

John Carey was sentenced to serve 10 days or to pay a $10 fine.  He was arrested yesterday by Patrolman Brown and found guilty of disturbing the peace.   

 

Barnas on Bad Faith:

 

Hello again:

 

In this week’s letter I will be doing something new: issuing happy birthday greetings.  First, I want to wish a happy birthday to this publication, which is celebrating its eighteenth birthday.  Second, I want to wish a happy birthday to our country, which will be celebrating 240 years of independence on July 4th.  I hope everybody has fun plans for the long holiday weekend.  Finally, I want to wish a happy birthday to my father and grandfather who will be turning ages that shall not be disclosed on July 2nd and July 3rd

 

Once again I have no New York cases discussing extra-contractual liability to bring to you this week.  Two first party cases from Texas featuring extra-contractual claims are featured in this week’s column.  These cases essentially have the same message: if the insurer invokes and complies with the appraisal provision of the policy a claim for breach of contract and extra-contractual damages is unlikely to succeed.  In fact, under Texas Law, the insured is estopped from maintaining a breach of contract claim when the insurer makes a proper payment pursuant to the appraisal clause.

 

The Anderson case, from much closer to home in New Jersey, relates to an issue that has been highlighted multiple times in this space: discovery in the context of bad faith claims.  There, the court informs us that, while prior litigation documents demonstrating that an insurer has acted in an inconsistent manner in resolving claims where similar policies are involved may be relevant to bad faith claims, discovery requests still must be reasonably tailored and not unduly burdensome.

 

That’s all for now everyone.  Happy Fourth of July.

 

See you next time.

 

Signing off,

 

Brian

Brian D. Barnas

[email protected]

 

Highlights of This Week’s Issue:

 

 

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

 

  • The Question “# of Families” on Homeowners Application Means “Number of Separate Dwelling Units
    “Subsidence Exclusion” Bars Coverage
  • Question of Fact Raised as to whether Insured Knew of Accident so It could Give Notice.  Translated Transcript of Conversation between Insurance Investigator and Building Superintendent Not In Admissible Form to Establish Knowledge.
  • Perhaps Declaratory Judgment Action in One County Should be Consolidated with Similar Action in Another


HEWITT’s HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW
Robert E.B. Hewitt III

[email protected]

 

  • Defendant Failed to Show that There Was no Serious Injury Under 90/180-Day Category
  • Defendant Must Submit Competent Medical Evidence that Plaintiff Did Not Suffer a Serious Injury to Make a Prima Facie Case
  • Defendant Could Not Rebut Claim of 90/180-Day Injury Where Defendants’ Expert Offered No Opinion About Plaintiff’s Condition During the 90/180-Day Period
  • Defendant’s Failed to Address 90/180-Day Claim and Defendant’s Expert Found Range of Motion Limitations in Plaintiff’s Thumb
  • The Infant Plaintiff Who Ran Into the Street and Father Who Chased After Him Were Sole Proximate Causes of Accident
  • Plaintiff Wins on Liability Where Defendant Admitted He Made Illegal U-Turn But Defendant Has Right to Examine Plaintiff Who Put Physical Condition At Issue
  • A Tear in Meniscus Standing Alone Without any Limitations Caused by the Tear is Not Enough to Show an Issue of Fact
  • Plaintiff’s Expert’s Report Set Forth Quantified Findings of Limitations and Set Forth an Opinion Regarding Causation Sufficient to Cause an Issue of Fact
  • Plaintiff Failed to Demonstrate a Second Accident Caused any Exacerbation  of Prior Injuries

 

TESSA’S TUTELAGE
Tessa R. Scott

[email protected]

 

  • Simply Showing That There Was No Record Of The Complaint Was Not Enough to Show That It Was Overlooked, an Affiant Must Have Personal Knowledge of the Office Procedures For Handling Of That Type Of Document
  • Medical Provider Assignees are Not Entitled To No-Fault Reimbursement if They Do Not Comply With Applicable Licensing Requirements to Perform that Service
  • Assignor's Subjective Complaints of Pain Cannot Overcome the Objective Medical Tests
  • Even Assuming, Without Deciding, That the Master Arbitrator Applied the Wrong Burden Of Proof, The Award was Not Subject to Vacatur on That Ground

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

  • Expert Opinion of No Value where Conclusion was Premised upon an Inspection Conducted 3 ½ Years Post Loss
  • Claims For Detrimental Reliance against Agent Fail Where Purported Misstatement was Contradicted by the Clear Terms of the Policy
  • Once Jewelry was Removed from Bank Deposit Box, Sublimit and Sublimit Exclusions Applied

 

WILEWICZ’S WIDE WORLD OF COVERAGE

Agnes A. Wilewicz

[email protected]

 

  • Second Circuit Holds That Where One Policy Says It Will “Contribute” Over Other Policies, and Another Says It Is “Excess Over”, the Latter Is Excess and Does Not Have to Contribute
  • Second Circuit Finds No Duty to Defend Insured in Environmental Cleanup Case, Where There Was No Sudden and Accidental Release of Pollutants

 

JEN’S GEMS

Jennifer A. Ehman

[email protected]

 

  • Reinsurer Not Prejudiced By Late Notice of Probable Policy Exhaustion
  • Court Precludes Expert from Providing Testimony Contrary to the Position the Insurer took in the First of a Series of Bifurcated Trials
  • Collapse of One Barn over Three Days as the Result of Contractor’s Allegedly Negligent Construction Constituted One Occurrence

 

BARNAS ON BAD FAITH

Brian D. Barnas

[email protected]

 

  • Court Ordered Production of Prior Deposition Transcripts in Cases where Similar Bad Faith Claims were Asserted
  • Insurer who Invoked its Appraisal Right under the Policy and Paid the Claim did not Act in Bad Faith
  • Insureds’ Breach of Contract and Bad Faith Claims could not Survive Summary Judgment where Insurer Timely Investigated and Timely Paid the Claim

 

PHILLIPS’ FEDERAL PHILOSOPHIES

Jennifer J. Phillips

[email protected]

 

  • Stepping into the Insured’s Shoes

 

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

 

  • Auto Policy Exclusion Required To Be In Separate Endorsement

 

POTENZA’S EVER-SPINNING WORLD OF ASBESTOS

V. Christopher Potenza
[email protected]

 

  • A Foreseeable Decision on Foreseeability of Use of Third-party Asbestos Parts
  • Procedural Pitfall Derails Appeal in Procedural Wasteland

 

That’s all there is and there ain’t no more.

 

Do have a safe and relaxing holiday weekend.

 

 

Dan

 

Dan D. Kohane

Hurwitz & Fine, P.C.

1300 Liberty Building

Buffalo, NY 14202

 

Office:            716.849.8942

Mobile:           716.445.2258

Fax:                716.855.0874

E-Mail:            [email protected]  

Website:         www.hurwitzfine.com  

Twitter:           @kohane

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


NEWSLETTER EDITOR
Dan D. Kohane
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ASSOCIATE EDITOR

Audrey A. Seeley

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ASSISTANT EDITOR

Jennifer A. Ehman

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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

Potenza’s Ever-Spinning World of Asbestos

 

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

 

06/30/16       Almonte v.  CastlePoint Insurance Company
Appellate Division, First Department
The Question “# of Families” on Homeowners Application Means “Number of Separate Dwelling Units

Summary judgment was properly granted to CastlePoint, based on its determination that the premises contained a basement apartment rendering it a "three family" dwelling, as opposed to the "two family" designation that was listed on the insurance application. The question "# Families" on an insurance application means the number of separate dwelling units in the building.

CastlePoint also demonstrated, through the insureds' admission in a statement to CastlePoint's investigator and the investigator's inspection of the premises, that the home was a three-family dwelling, and thus not covered by the policy, rather than a two-family dwelling, which would be covered by the policy.

 

06/29/16       Rego Park Holdings, LLC v. Aspen Specialty Ins. Co.
Appellate Division, Second Department
“Subsidence Exclusion” Bars Coverage

Aspen Specialty Insurance Company (“Aspen”) issued a commercial general liability insurance policy to Anton Developers of Forest Hills regarding a property owned by the plaintiff Rego Park Holdings, LLC (“Rego”) Rego was an additional insured under the policy.

 

Construction work on Rego’s property allegedly caused certain damage to two neighboring properties, and Rego was named as a defendant in a consolidated action entitled Allstate Insurance Company v Rego Park Holdings, LLC.  Rego turned to Aspen for defense and indemnification under the liability policy. Aspen disclaimed coverage on the ground that a "Subsidence Exclusion Endorsement" in the policy excluded coverage for the damage that the plaintiffs allegedly caused to the two adjoining properties.

 

Exclusions from coverage in an insurance policy are to be accorded strict and narrow construction. Accordingly, an insurer seeking to rely on a policy exclusion bears the burden of establishing that the exclusion is stated in clear and unmistakable language, is "subject to no other reasonable interpretation," and applies in the particular case. Aspen established that its policy did not insure the Rego for any damage to the two adjoining properties caused by the plaintiffs or their subcontractors. The language of the endorsement was susceptible of no other reasonable interpretation:

 

By the way, the exclusion read as follows:

 

"This policy does not apply to any liability for Bodily Injury,' Personal Injury,' disease or illness, including death, or Property Damage' or loss of, damage to, or loss of property, directly or indirectly arising out of, caused by, resulting from, contributed to or aggravated by the subsidence, settling, sinking, slipping, falling away, caving in, shifting, eroding, mud flow, rising, tilting, bulging, cracking, shrinking, or expansion of foundations, walls, roofs, floors, ceilings, or any other movements of land or earth, regardless of whether the foregoing emanates from, or is attributable to, any operations performed by or on behalf of any insured. The foregoing applies regardless of whether the first manifestation of same occurs during the policy period or prior or subsequent thereto.

 

It is further agreed that there is neither coverage nor defense under this policy for any claims, loss, costs, or expense arising from allegations against any insured resulting from or contributing to or aggravated by subsidence as described in the first paragraph of this endorsement".

 

06/29/16       Osorio v. Bowne Realty Associates, LLC

Appellate Division, Second Department
Question of Fact Raised as to whether Insured Knew of Accident so it could Give Notice.  Translated Transcript of Conversation between Insurance Investigator and Building Superintendent Not In Admissible Form to Establish Knowledge.

On September 16, 2007, the Osorio fell from a fourth floor window of a building owned by Bowne Realty Associates, LLC (“Bowne”). In September 2010, Osorio sued Bowne and Bowne provided notice of the commencement of the action to its insurer, Mt. Hawley. The following month, Mt. Hawley disclaimed coverage based on late notice of claim. Thereafter, Bowne commenced this third-party action seeking, inter alia, a declaration that Mt. Hawley had a duty to defend and indemnify it in the main action.

 

Where an insurance policy requires that notice of an occurrence be given as soon as practicable, notice must be given within a reasonable time in view of all of the circumstances. Absent a valid excuse for a delay in furnishing notice, failure to satisfy the notice requirement vitiates coverage. However, circumstances may exist that will excuse or explain the insured's delay in giving notice, such as lack of knowledge that an accident has occurred. It is the insured's burden to show the reasonableness of such excuse.

 

Here, Mt. Hawley established its prima facie entitlement to judgment as a matter of law by demonstrating that Bowne did not provide notice of the accident until approximately three years after it occurred.  However, Bowne raised a triable issue of fact as to whether the delay in giving notice was reasonable. In this regard, Bowne submitted the affidavits of its manager and director of operations, both of whom stated that they did not know about the accident until they received the summons and complaint.

 

The translated transcript of a taped conversation between Bowne's building superintendent and an investigator for Mt. Hawley, which was not verified or certified, was inadmissible and, in any event, did not conclusively resolve the issue of when Bowne first acquired knowledge of the accident.

 

06/28/16       Liberty Surplus Ins. v. Harleysville Ins. Company of New York
Appellate Division, First Department
Perhaps Declaratory Judgment Action in One County Should be Consolidated with Similar Action in Another

This case was commenced as a declaratory judgment action.  Apparently, in a lawsuit pending in Kings County, similar issues were raised in a third party action.  Accordingly, the carrier sought to dismiss this action because of the pendency of the other lawsuit.


HEWITT’s HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW
Robert E.B. Hewitt III
[email protected]

 

06/29/16                 Lominicki v. Briere

Appellate Division, Second Department

Defendant Failed to Show that There Was no Serious Injury under 90/180-Day Category

No facts are given. The Appellate Court held the defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The defendants failed to show, prima facie, that the plaintiff did not sustain a serious injury under the 90/180-day category of Insurance Law § 5102(d).

 

06/29/16                Jung v. Motaleb

Appellate Division, Second Department

Defendant Must Submit Competent Medical Evidence that Plaintiff Did Not Suffer a Serious Injury to Make a Prima Facie Case

No specific facts are given in the opinion. The Appellate Court held that the defendants submitted competent medical evidence establishing, prima facie, that the alleged injury to the plaintiff's left shoulder 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). In opposition, however, the plaintiff raised a triable issue of fact as to whether she sustained a serious injury to her left shoulder 

 

06/23/16       Seepersaud  v. L.& M. Bus. Co.

Appellate Division, First Department

Defendant Could Not Rebut Claim of 90/180-Day Injury Where Defendants’ Expert Offered No Opinion about Plaintiff’s Condition during the 90/180-Day Period

Defendants failed to meet their prima facie burden as to plaintiff's 90/180-day claim. The Appellate court noted defendants' experts did not examine plaintiff until over three years after the accident and did not offer an opinion concerning her condition during the relevant period. Nor did defendants submit other evidence, such as medical records or deposition testimony, to disprove plaintiff's claim that she was confined to home and disabled from work during the relevant 180-day period Defendants also failed to offer evidence showing a lack of a causal connection between plaintiff's claimed physical injuries and the accident. In view of defendants' failure to meet their initial burden on the 90/180-day claim, plaintiff's opposition did not have to be reviewed.

Editor’s Note-It appears many serious injury motions are lost by defendants on the 90/180-day category for failure of the defendants’ expert to specifically opinion on whether there should have been any limitations during that period. Further, at deposition, the plaintiff must be pinned down as to what specific limitations she had during that period, if a motion is going to be successful.

 

06/22/16                Tagliarino v. Staub

Appellate Division, Second Department

Defendant’s Failed to Address 90/180-Day Claim and Defendant’s Expert Found Range of Motion Limitations in Plaintiff’s Thumb

The Appellate Division held defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The papers submitted by the defendants failed to adequately address the plaintiff's claim, set forth in his bill of particulars, that he sustained a medically determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts which constituted his usual and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident. Moreover, one of the defendants' experts found significant limitations in the range of motion of the plaintiff's left thumb.

Editor’s Note: Many more motions than one would think get tripped up by defendant’s own expert finding significant range of motion limitations.

 

06/22/16       Ali v. Paul

Appellate Division, Second Department

The Infant Plaintiff Who Ran Into the Street and Father Who Chased After Him Were Sole Proximate Causes of Accident

Plaintiff was waiting on a sidewalk with his son, the infant plaintiff, for a pedestrian signal to change to walk, when the infant plaintiff suddenly ran into the street. The plaintiff allegedly ran after his son and was struck by the defendants' bus. The defendants presented evidence to establish a prima facie case on liability in their summary judgment motion that the infant plaintiff suddenly ran into the street at a location other than at an intersection, directly into the path of the defendants' vehicle. The plaintiff ran after the infant plaintiff and pushed him out of the way of the bus, leaving the defendant driver unable to avoid contact with the plaintiff. This evidence established, prima facie, that the actions of the infant plaintiff and the plaintiff were the sole proximate cause of the accident. In opposition, the plaintiffs failed to raise a triable issue of fact.

 

06/22/16       Cruz v. Skeritt

Appellate Division, First Department

Plaintiff Wins on Liability Where Defendant Admitted He Made Illegal U-Turn But Defendant Has Right to Examine Plaintiff Who Put Physical Condition at Issue

Plaintiff made a prima facie showing of his entitlement to judgment as a matter of law on the issue of liability. He submitted evidence showing that defendant driver made an illegal U-turn, in violation of Vehicle and Traffic Law § 1163(a), and collided with plaintiff's car within seconds and before plaintiff had any opportunity to avoid the collision. Defendant driver's admission in the police accident report that he had made an illegal U-turn and had collided with plaintiff's car is admissible, since defendants also relied upon the report and waived any hearsay or authentication objection. Defendant driver's affidavit, to the extent he claimed that plaintiff struck his car after the turn was complete, was insufficient to defeat plaintiff's motion as to liability, because defendant does not articulate any way in which plaintiff was at fault. However, the grant of summary judgment on the serious injury issue was premature, since defendants had not had an opportunity to conduct any discovery concerning the extent or causation of the injuries. Since plaintiff placed his physical condition in issue, defendants have the right to examine him 

 

06/08/16       Green v. Domino’s Pizza LLC

Appellate Division, First Department

A Tear in Meniscus Standing Alone Without any Limitations Caused by the Tear is not Enough to Show an Issue of Fact

Defendants made a prima facie showing that plaintiff did not sustain a permanent consequential or significant limitation of use of his right knee, left shoulder, or left ankle by submitting the report of their orthopedic expert, who found no significant limitations and negative clinical results, and opined that plaintiff had a resolved shoulder strain, a resolved ankle sprain, and that any injury to his right knee had resolved.  In addition, defendant submitted a radiologist's report finding that the MRI of plaintiff's right knee was normal and showed no evidence of traumatic or acute injury causally related to the accident.

 

In opposition, plaintiff failed to raise an issue of fact as to whether he suffered any serious injury to his left shoulder or left ankle, since his orthopedic surgeon's affirmation concerning a recent examination did not address those injuries and his uncertified and unaffirmed medical records were inadmissible.

 

As for the right knee, the affirmation of plaintiff's orthopedic surgeon stated only that he had performed arthroscopic surgery two years earlier, but provided no opinion as to causation and no findings of permanent or significant limitation of use. His unaffirmed reports, if considered, show that tears in the meniscus were found during surgery, but do not provide any opinion as to causal relationship or any findings of quantitative or qualitative limitation of use. A tear of the meniscus, standing alone, without any evidence of limitations caused by the tear, is not sufficient to raise a triable issue of fact. Further, plaintiff failed to explain his cessation of treatment about nine months after the accident, until the examination by his surgeon two years later, since he acknowledged that Medicaid would have covered additional physical therapy after his no-fault benefits ended. Nor did plaintiff offer any medical evidence to explain why the hospital records he submitted show that he had full range of motion and no swelling in the right knee when examined after the accident.

 

06/17/16       Boroszko v. Zylinski

Appellate Division, Fourth Department

Plaintiff’s Expert’s Report Set Forth Quantified Findings of Limitations and Set Forth an Opinion Regarding Causation Sufficient to Cause an Issue of Fact

Plaintiffs commenced this action seeking damages for injuries allegedly sustained by Plaintiff in two separate motor vehicle accidents. In January 2009, plaintiff was involved in an accident when defendant Zylinski exited a parking lot onto the street and collided with the passenger side of plaintiff's vehicle. In January 2011, plaintiff was involved in another accident when she was rear-ended while stopped at a red light by a vehicle operated by defendant Michael A. Peca. As relevant on appeal, plaintiffs alleged that, as a result of the accidents, plaintiff "sustained[,] aggravated[,] and/or exacerbated" injuries to her cervical and lumbar spine under the permanent loss of use, permanent consequential limitation of use, and significant limitation of use categories of serious injury as defined in Insurance Law § 5102 (d).

 

On appeal, plaintiff limited her appeal to the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102 (d), and therefore abandoned the other remaining category of serious injury alleged in their bills of particulars. Further, plaintiff conceded that plaintiff suffered no serious injury to her cervical or lumbar spine following the first accident in January 2009. They contend that plaintiff's lumbar spine injury did not exist until the second accident in January 2011 and that her cervical spine injury qualified as serious under the statute only upon aggravation or exacerbation as a result of the second accident in January 2011

 

Plaintiff contended that the Peca defendant failed to meet the initial burden of establishing that plaintiff did not have any serious injury following the second accident that arose from aggravation or exacerbation of her preexisting injuries and/or conditions.  However, the Appellate Division found she had met her burden. In support of their motion, Peca submitted hospital records from the date of the second accident, which established that, although plaintiff reported neck and back pain and was ultimately diagnosed with a sprain in those areas, her physical examination demonstrated "[n]o true pain along her cervical spine," her cervical spine X rays showed no fracture, she was given pain medication, and she was discharged. Moreover, while plaintiff's radiology report showed no visible pathologic prevertebral soft tissue swelling, it did show "moderate multilevel degenerative disc disease with moderate degenerative changes throughout the cervical spine." In addition to various other medical records, the Peca defendants also submitted an affirmed report of a physician who reviewed plaintiff's records and conducted a physical examination of her, as well as an affirmed report of a radiologist who reviewed plaintiff's MRI records. The physician and the radiologist opined that plaintiff's complaints following the second accident were the same as those prior to that accident, that plaintiff's MRIs and X rays—which showed degenerative changes—were unchanged after the second accident, and that there was no evidence of posttraumatic injuries to plaintiff's cervical or lumbar spine following the second accident

 

The physician documented limited range of motion in plaintiff's cervical spine upon his examination of her. However, a December 2010 chiropractic record that the physician reviewed showed that plaintiff had essentially the same levels of decreased range of motion just weeks before the January 2011 accident, and thus established that there was no aggravation or exacerbation of plaintiff's condition as a result of the second accident. To the extent that plaintiffs relied on a September 2000 record showing that plaintiff had full range of motion, such reliance was misplaced given the length of time between the prior record and the January 2011 accident, the evidence of various other accidents and injuries suffered by plaintiff during the intervening time period, and the more recent testing showing nearly identical range of motion deficits just before the second accident. Peca defendant thus established that plaintiff did not suffer aggravation or exacerbation of any preexisting injury or condition, and that she did not have any serious injury following the second accident.

 

Although plaintiff's orthopedist, who first examined plaintiff 10 months after the second accident and provided an affirmation on her behalf, opined that plaintiff had measurable limitations in her range of motion, he failed to refute the opinion of the Peca defendant’s examining physician that plaintiff had not sustained any additional limitation causally related to the January 2011 accident by, for example, comparing plaintiff's pre- and post-accident range of motion. Although the orthopedist reviewed an April 2009 MRI, he failed to explain how the January 2011 accident aggravated the alleged injuries sustained in the January 2009 accident, and thus failed to raise a triable issue of fact whether such injuries qualified as serious under the statute.

 

Inasmuch as the parties' submissions establish, as a matter of law, that plaintiff did not suffer any serious injury following the January 2011 accident resulting from aggravation or exacerbation of her preexisting injuries and/or conditions, plaintiffs' theory of liability against the Praxair defendant, i.e., that the January 2009 accident contributed to plaintiff's purported serious injuries following the second accident, necessarily failed


06/16/16       Burgos v. Diop

Appellate Division, First Department

Plaintiff Failed to Demonstrate a Second Accident Caused any Exacerbation of Prior Injuries

Defendants established prima facie that plaintiff did not suffer a "permanent consequential" or "significant" limitation of use of his shoulders as a result of the accident by submitting their orthopedist's report finding full range of motion and negative clinical test results, and their radiologist's report finding that the MRI films of the shoulders showed only preexisting degenerative conditions and no acute traumatic changes.

 

In opposition, plaintiff raised an issue of fact as to whether he sustained an injury involving "significant" limitation of use in the shoulders by submitting his orthopedic surgeon's report, which set forth quantified findings of limitations in range of motion, and findings of positive impingement signs in the months preceding the shoulder surgeries, and noted observations of tears during the arthroscopic surgeries. His orthopedic surgeon also sufficiently addressed the causation issue, as his opinion that there was a causal relationship was based on his own treatment of plaintiff, review of plaintiff's MRI records, and observations during the surgeries, as well as the history provided by plaintiff 

 

 

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

 

06/20/16       ALFA Med. Supplies, Inc. v. Allstate Ins. Co.

Appellate Term, First Department

Simply Showing That There Was No Record of the Complaint Was Not Enough to Show That It Was Overlooked; an Affiant Must Have Personal Knowledge of the Office Procedures for Handling that Type of Document

Defendant-insurer failed to offer a reasonable excuse to adequately explain its two-year delay in answering the complaint in this action seeking to recover first-party no-fault benefits.

 

The affidavit of defendant's claim representative, who was employed in defendant's office in Hauppauge, New York, averred that there was no record of the summons and complaint in defendant's computer system. However, the affiant failed to demonstrate personal knowledge of the office procedures put in place by defendant in connection with the handling of a summons and complaint received at defendant's office in Lake Success, New York

 

As such that affidavit was insufficient to show that the failure to timely appear and answer was due to a clerical error.

 

06/22/16       Liberty Mut. Ins. Co. v Raia Med. Health, P.C.

Appellate Division, Second Department

Medical Provider Assignees are Not Entitled to No-Fault Reimbursement If They Do Not Comply with Applicable Licensing Requirements to Perform That Service

The defendant Raia Medical Health, P.C. (hereinafter RMH), which was owned by the defendant Joseph A. Raia (hereinafter together the appellants), allegedly billed the plaintiffs for medical services rendered to injured parties who had assigned their no-fault insurance benefits to RMH. In November 2013, the plaintiffs commenced this action for declaratory relief and to recover damages for fraud and unjust enrichment, alleging, inter alia, that RMH was ineligible to recover no-fault benefits, since it was not wholly owned and controlled by licensed physicians and was engaged in fee splitting with unlicensed individuals.

 

The plaintiffs moved to preliminarily enjoin, among others, RMH, its agents, servants, employees, and all persons acting on its behalf from "filing, commencing and/or instituting against plaintiffs any new actions, arbitrations or other proceedings seeking reimbursement for no-fault benefits," and "staying all currently pending actions, arbitrations or other proceedings instituted by and/or on behalf of [RMH] against plaintiffs involving reimbursement for no-fault benefits."

 

The Supreme Court granted the preliminary injunction sought by the plaintiffs and denied the appellants' cross motion.  It should be noted that to obtain a preliminary injunction, a movant must demonstrate, by clear and convincing evidence, (1) a likelihood of success on the merits, (2) irreparable injury if a preliminary injunction is not granted, and (3) a balance of equities in his or her favor.

 

Here, the plaintiffs demonstrated a likelihood of success on the merits on their declaratory judgment causes of action.  No-fault carriers are required to reimburse patients or, as in this case, their medical provider assignees for basic economic loss, unless they fail to meet any applicable New York State or local licensing requirement necessary to perform such service in New York. As it is required by NY State law that professional service corporations be owned and controlled only by licensed professionals, appellants did not meet the applicable standards entitling them to reimbursement. Thus, the plaintiffs' submissions demonstrated a likelihood of success on the merits.

 

Further, under the circumstances of this case, the plaintiffs demonstrated the likelihood of irreparable injury absent the granting of the preliminary injunction, based on the large number of actions and arbitrations, and the risk of inconsistent results.

 

Lastly, the plaintiffs established that the balance of the equities was in their favor. Accordingly, the Supreme Court properly granted that branch of the plaintiffs' motion which was for a preliminary injunction against RMH.

 

06/27/16       TC Acupuncture, P.C. v Tri-State Consumer Ins. Co.

Appellate Term, First Department

Assignor's Subjective Complaints of Pain Cannot Overcome the Objective Medical Tests

Defendant made a prima facie showing of entitlement to partial summary judgment dismissing plaintiff's no-fault claims for services rendered July 12, 2010 through August 31, 2010, by demonstrating that it timely and properly denied the claims based on the June 17, 2010 independent medical examination (IME) report of its examining doctor, which set forth a sufficient basis and medical rationale for the conclusion that there was no need for further acupuncture treatment.

 

Plaintiff's opposition consisting of an attorney's affirmation unaccompanied by any medical evidence or other competent proof was insufficient to raise a triable issue as to medical necessity. The assignor's subjective complaints of pain cannot overcome the objective medical tests detailed in the affirmed report of defendant's examining doctor.

 

Triable issues remained, however, in connection with plaintiff's claims for services rendered July 1, 2010 through July 8, 2010. While the record reflected that defendant properly paid a portion of the submitted claims pursuant to the workers' compensation fee schedule, triable issues remained with respect to the claims denied outright by defendant. Defendant's position that the charges billed under CPT Code 97039 were not reimbursable because plaintiff was not licensed to provide physical medicine modalities did not persuade the Court.  The Court concluded that defendant's submissions were insufficient to demonstrate that the claims were properly denied in accordance with Physical Medicine Ground Rule 11.

 

Thus the Order was modified by reinstating plaintiff's claims for first-party no-fault benefits for services rendered July 1, 2010 through July 8, 2010.

 

06/28/16       TC Acupuncture, P.C. v Tri-State Consumer Ins. Co.

Appellate Division, First Department

Even Assuming, Without Deciding, That the Master Arbitrator Applied the Wrong Burden of Proof, The Award Was not Subject to Vacatur on That Ground

Respondent commenced arbitration against petitioner insurance company (Tri State) for reimbursement of bills for alleged health care services rendered by respondent to Alexander Oneal. Petitioner asserted that it could withhold payment because respondent was fraudulently incorporated.

 

After a hearing, an arbitrator awarded respondent full reimbursement, and found that Tri State failed to meet its burden of providing clear and convincing evidence showing that respondent was fraudulently incorporated. On appeal, the master arbitrator affirmed the arbitration award and rejected Tri State’s argument that its burden of proof on its cause should have been preponderance of the evidence.

This Court found that the Supreme Court erred in vacating the master arbitrator's award on the ground that the master arbitrator mistakenly applied the wrong burden of proof to petitioner's defense. The Court concluded “Even assuming, without deciding, that the master arbitrator applied the wrong burden of proof, the award is not subject to vacatur on that ground.”

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

06/30/16          71 Street Lexington Corp. v Albert Waitman, M.D.

Appellate Division, First Department

Expert Opinion of No Value where Conclusion was Premised upon an Inspection Conducted 3 ½ Years Post Loss

On May 21, 2010, the irrigation system on defendant’s penthouse terrace overflowed and allegedly caused damage to plaintiff’s building.  Plaintiff alleges that the cause of the overflow stemmed from defendant’s failure to maintain the irrigation system and keep its drains free from debris.  Noting that evidence established that it was defendant’s obligation to maintain, and the fact that the drain was clogged with pine needles, the trial court granted plaintiff’s motion.

 

On appeal, the Appellate Division agreed and also noted that defendant’s main theories in opposition were insufficiently supported by their retained expert.  To that end, the Court noted that opinion testimony related to proper maintenance of the drains was not probative where, as here, the expert’s investigation was 3 ½ years after the loss.  Further, defendant’s expert’s references to NYC Plumbing Codes were not properly supported with a “foundational basis.” 

 

06/22/16          Lasner v Massachusetts Mut. Life Ins. Co.

Appellate Division, Second Department

Claims for Detrimental Reliance against Agent Fail Where Purported Misstatement was Contradicted by the Clear Terms of the Policy

Plaintiff purchased, through is insurance agent Mr. Guggino, a disability insurance policy with Mass Mutual.  The policy provided that if plaintiff was unable to work as a dentist he was entitled to receive disability benefits under the policy until the anniversary date of his policy after his 65th birthday.  In addition, the policy was appended with a Rider that indicated plaintiff was entitled to benefits for life if he could not work as a dentist or “or any other job or business.” 

 

Plaintiff was injured to such an extent that he could not continue as a practicing dentist.  He, in turn, received benefits up until the anniversary date of the policy after his 65th birthday, at which time Mass Mutual discontinued any benefits.  Plaintiff sued and suggested that the Rider granting lifetime benefits applied, notwithstanding the fact that he had found work in sales.  In the alternative, plaintiff sued Mr. Guggino. 

 

Mass Mutual moved for summary judgment based upon the plain language of the policy, and its request for relief was granted and affirmed.  At the same time, plaintiff moved to amend his Complaint to assert a claim for negligent misrepresentation against Mr. Guggino.  Apparently, plaintiff argued that he was advised by the agent that he had lifetime disability benefits under the Mass Mutual policy.  Guggino opposed the motion to amend on the basis that even if he had made such a statement, plaintiff’s receipt and review of the Mass Mutual policy would have made it clear that there was no coverage after the age of 65 where, as here, plaintiff was employed. 

 

In overturning the trial court, the Appellate Division agreed that it was not reasonable to find that plaintiff detrimentally relied upon a statement made by Guggino which was directly contradicted by the actual terms of the policy at issue.  Accordingly, the motion to amend should have been denied and Mr. Guggino’s motion for summary judgment granted.

 

06/22/16          Marbury v. Chaucer Syndicates Ltd.

Appellate Division, Second Department

Once Jewelry was Removed from Bank Deposit Box, Sublimit and Sublimit Exclusions Applied

In this case, the Second Department affirmed the trial court’s decision granting summary judgment to certain insurers (collectively “Carriers”) in a coverage dispute involving a scheduled personal jewelry collection insurance policy they had issued to the insured.  The Carriers moved for summary judgment on the basis of a $750,000 Sub-Limit in the $2.5 million policy issued to the plaintiff/insured. The $750,000 Sub-Limit applied to items not located in, or that had been removed from, the plaintiff’s named bank safe deposit box in the policy where all the items were insured for $2.5 million. However, the $750,000 Sub-Limit contained an exclusion that barred coverage for “loss of or damage to jewellery or watches unless such items are: (i) being worn or (ii) being carried by hand under the personal supervision of the insured or (iii) deposited in a bank or locked safe, unless the insured is staying at an hotel or motel when such items are kept in the principal safe of the hotel or motel.”

 

According to the trial court’s decision of June 23, 2014, plaintiff delivered two insured jewelry items to a dealer for the purposes of inspection by a potential buyer. Plaintiff removed the items from her person while she waited for the dealer in her car, and admitted that she ceased to carry the items when she handed them to the dealer in a bag.  Plaintiff had no control over the dealer’s use of the items, and there was no written consignment agreement. There was also no agreement as to when the dealer would have to return the items, the specific price that the items would be sold at, and the amount of the dealer’s commission.

 

After a period of several months, the dealer allegedly did not return the items to plaintiff. Plaintiff then filed a complaint with the police against the dealer, which was subsequently voided on the ground that it was a civil dispute. Plaintiff subsequently filed an insurance claim with the Carriers that alleged a covered loss of the items occurred when she delivered them to the dealer.  The Carriers denied the plaintiff’s insurance claim on the basis of the exclusions to the Sub-Limit. The Plaintiff sued the Carriers under two causes of action for breach of contract and specific performance of the contract.

 

The trial court held that, based upon the Record, the exclusion in the Sub-Limit applied, the loss was not covered under the policy, and the Carriers were entitled to summary judgment dismissing the causes of action for breach of contract and specific performance. The trial court determined that plaintiff was not wearing the jewelry items at the time of the loss, ceased to carry the items when she gave them to the dealer, and did not personally supervise the dealer when he was carrying the items.  The trial court also rejected plaintiff’s argument that the policy was ambiguous.

 

In affirming the trial court, the Appellate Division, Second Department, held that the policy was “unambiguous” and that the evidence submitted by Carriers (as described above) demonstrated that the plaintiff’s “alleged loss was excluded from coverage.”

 

Editor ’s Note – Attafirm to the folks at White, Fleishner & Fino, LLP who earned this result.  Nice work.

 

WILEWICZ’S WIDE WORLD OF COVERAGE

Agnes A. Wilewicz

[email protected]

 

06/29/16       Hartford Underwriters Insurance Company v. Hanover Insurance Company

United States Court of Appeals, Second Circuit

Second Circuit Holds That Where One Policy Says It Will “Contribute” Over Other Policies, and Another Says It Is “Excess Over”, the Latter Is Excess and Does Not Have to Contribute

At issue in this case was a priority of coverage analysis between two policies. Hanover’s policy stated that it was excess over any other coverage, “whether primary, excess, contingent or on any other basis”. It also stated that it had no duty to defend “if any other insurer has a duty to defend” and that it would pay on a loss only if that loss “exceeds” what other insurance would pay. On the other hand, Hartford’s policy contemplated contribution with other excess coverage. It said that it would contribute with other coverage “on the same basis, either excess or primary”.

 

Short story short, the Second Circuit found that the Hanover policy was excess and non-contributory based upon this language. Hartford had argued that the language of the other insurance provisions was essentially identical, thus necessitating that they cancel each other out for priority purposes. The court rejected that. Moreover, even assuming that they did cancel each other out, thereby placing the policies on the same tier, the Hartford’s reference to contribution was its death knell. If both policies referenced contribution, that would have been one thing. But, that’s not what the policies said.

 

06/23/16       The Narragansett Electric Company v. Century Indemnity Company

United States Court of Appeals, Second Circuit

Second Circuit Finds No Duty to Defend Insured in Environmental Cleanup Case, Where There Was No Sudden and Accidental Release of Pollutants

The Narragansett Electric Company (“NCE”), insured by Century, was sued in connection with cleanup costs incurred as a result of NCE’s disposal of waste materials at a site in Massachusetts over the course of 50 years. Century disclaimed coverage for the claim, as it was not “sudden and accidental” release of pollutants and simply not covered under its policy. Interestingly, the insured conceded that the damage arising from its contractually arranged disposal of the waste was not covered. However, they argued that since the complaint against them alleged sudden and accidental release of pollutants, there was coverage for those events.

 

The Second Circuit disagreed with the insured. The crux of the matter was the intentional release of pollutants over the course of decades. This could not be read as a “sudden and accidental” event. “Reading the complaint as a whole”, the court wrote, “any property damage alleged in this case plainly arose out of the NEC’s intentional disposal of wastes on the Mendon Road site. Because the release of pollutants into the environmental was not “sudden and accident”, the Commonwealth’s complaint does not trigger Century’s duty to defend.”

 

JEN’S GEMS

Jennifer A. Ehman

[email protected]

 

06/17/16       Granite State Ins. Co. v. Clearwater Ins. Co.

Supreme Court, New York County

Judge Ellen M. Coin

Reinsurer Not Prejudiced By Late Notice of Probable Policy Exhaustion

Granite State issued excess coverage non-party Kaiser Aluminum & Chemical Corporation, effective April 1, 1981 to April 1, 1982 (“the Policy”).  This policy was just one of dozens of policies issued by AIG companies to Kaiser between 1971 and 1985. 

 

Granite State also entered into an agreement with Clearwater for a reinsurance participation in the Policy (“the certificate”).  Clearwater, at some point, then entered into retrocessionaire contracts (i.e., policies of reinsurance on reinsurance policies), which covered, among other polices, the certificate.

 

Hundreds of thousands of bodily injury claims were brought against Kaiser as a result of exposure to asbestos.  Granite State and that AIG companies settled with Kaiser agreeing to pay the Kaiser trusts up to the AIG companies’ products limits, in quarterly installments over 10 years.  Payment was made using a “horizontal bathtub methodology.”  In other words, payments were allocated to the policies with the lowest limits first.  As a result, no dollars were allocated to any higher policies until all lower layer policies were exhausted. The settlement was approved in 2006, but Granite State did not bill Clearwater under the certificate until 2010, when payments first began to be allocated to the claims under the Policy.  No specific or formal notice of the probable exhaustion of the Policy had ever been made to Clearwater up to that point. 

 

Clearwater denied the claim asserting that Granite State unreasonably delayed informing Clearwater of the likelihood the Policy limits would be reached causing Clearwater to be substantially prejudiced when Granite State called for payment under the certificate.  Clearwater cited certificate language requiring Granite State to “notify [Clearwater] promptly of any event or development which [Granite State] reasonably believes might result in a claim against [Clearwater] under the [certificate]…” Clearwater submitted that Granite State knew for years of the probable exhaustion. 

 

In response, Granite State asserted that even if it were shown that its notice to Clearwater was late, Clearwater’s disclaimer was, in turn, untimely.  Granite State also argued that an insurer pleading late notice must establish prejudice, and Clearwater could not do so.

 

The court began its analysis by considering the choice of law as between New York and California.  The court found that California law explicitly recognized that a reinsurer can obtain “constructive notice” of a potential claim; whereby, New York law does not allow for constructive notice of reinsurance claims. 

 

The court noted that the Policy was issued in California and the certificate was issued out of Clearwater’s office in San Francisco.  While the certificate specified no loss location for Clearwater’s performance, the court presumed that Granite State would make presentation of such evidence of a loss at the office which issued the certificate.  Accordingly, it found that California law should be applied.      

 

Applying California law, it was determined that Clearwater did not waive its right to rely on late notice as there was no misconduct shown or detrimental reliance by the insured.  And, while California law allows constructive notice, here, the court found no documents in Clearwater’s possession which were sufficient to put it on notice of the likely exhaustion of the Policy so as to involve Clearwater.  Thus, Granite State did not promptly notify Clearwater of the claim as required.

 

Next, the court considered whether Clearwater was prejudiced by this late notice.  Clearwater claimed that in 2006 and 2007 it entered into “commutation” agreements with its retrocessionaire, in which the parties terminated the retrocession contracts in exchange for a stipulated amount.  Clearwater claimed that had it know of the exposure it would have commuted the retro contract so as to cover the Kaiser losses under the certificate.  Relying on a decision from the Ninth Circuit, the court found that the failure to make a commutation was a “collateral matter” and not sufficient to establish prejudice so as to relieve an insurer of its liability under an insurance contract. 

 

Clearwater then raised additional issues arguments.  It contended that Granite State submitted no evidence that it made any of the required payments.  Rather, the payments were allegedly made by other entities related to Granite State.  The court found Clearwater’s reading of the certificate too simplistic.  Evidence had been established that the payments were actually made, and that was sufficient.  Clearwater then submitted that Granite State breached the warranty of retention.  The certificate provided that Granite State would retain $5,000,000 of the $35,000,000 policy limit.  Clearwater established that it did not retain any portion of the risk because it entered into an inter-pooling agreement with the other AIG companies pursuant to which 100% of the liability was transferred and assumed by other companies.  The court found that payment of the retention amount was a condition precedent to Clearwater’s payment, and discovery was needed on same. Lastly, Clearwater argued that Granite State’s billings were unsupported, and that it failed to demonstrate that the amounts allocated under the Policy were actually covered by the Policy.  While some reinsurance certificates contain a “follow the settlements” clause or intent, the court found that this particular certificate did not.  It did however contain a following form clause, but absent from that particular language was any directions binding the reinsurer to the cedent’s allocations.  As a result, the court determined that Clearwater could challenge Granite State’s allocations of insurance proceeds to the underlying claims on a theory that Granite State could not prove that the losses it allocated to the certificate were actually covered by it.  The court determined that a trial was needed to determine same.  Accordingly, the court found questions of fact precluding summary judgment. 

 

03/30/16       Keyspan Gas E. Corp. v. Munich Reinsurance Am., Inc.

Supreme Court, New York County

Judge Saliann Scarpulla

Court Precludes Expert from Providing Testimony Contrary to the Position the Insurer took in the First of a Series of Bifurcated Trials

Plaintiff brought this action seeking excess coverage for the cost of environmental cleanup of seven manufactured gas plants located in Queens and Long Island.

 

By way of background, prior to this motion, the court had already held a trial concerning excess coverage at two of the seven plants.  A second trial was scheduled to begin shortly relative to three additional sites.  In anticipation of the first trial, Century moved seeking an order that it was not responsible for any property damage that occurred outside its policy periods, and a declaration that any covered costs should be allocated pro rata over the entire period during which property damage at each site occurred.  The basis was Century’s assertion that neither party could produce evidence as to how much property damage occurred within a given period.  The court granted the request. 

 

Three months prior to the start of the second trial, Century disclosed a new expert who would opine that he could estimate the amount of property damage that took place at the site within Century’s policy periods.  Plaintiff opposed the disclosure as untimely. 

 

Citing the Commercial Division rules, the court noted that the “note of issue and certificate of readiness cannot be filed under the completion of expert disclosure.”  Century’s disclosure of its new expert came more than two years after the close of expert discovery and the filing of the notice of issue.  Century argued, however, that the expert’s testimony should not be precluded because it does not present a new theory, and it would agree to an adjournment of the trial to permit plaintiff to develop a rebuttal report. 

 

The court declined to adjourn the trial, instead finding that the proffered expert testimony was entirely new and untimely.  In the expert’s report, he opined that he could discern the amount of property damage that occurred during each period, which was directly contrary to the position Century took throughout the action.  Accordingly, plaintiff’s motion to preclude was granted.  The court also noted that the action was bifurcated into three separate trials for purposes of efficiency and consistency, not to provide the parties with the opportunity to conduct new discovery and present new experts whose testimony was inconsistent with the testimony of experts previously submitted.

 

06/20/2016    Farm Family Casualty Insurance Company v. Cedar Lane Construction, LLC

Supreme Court, Albany County

Judge Richard Platkin

Collapse of One Barn over Three Days as the Result of Contractor’s Allegedly Negligent Construction Constituted One Occurrence

Farm Family issued an insurance policy to Cedar Lane that provided liability coverage for bodily injury and property damage of $300,000 per occurrence.  Occurrence was defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  In or about January 2009, Cedar Lane constructed a large barn for the defendants on farm property located in Steuben County.  According to the defendants’ licensed engineer, the barn’s supporting poles were of insufficient strength and lacked sufficient bracing.

 

On February 2, 2011, the area the farm was located in experienced a winter storm event, including rain, snow, and heavy winds.  That day a portion of the barn collapsed, causing damage to the defendants’ property.  According to the defendants’ engineer, the wind and snow on February 2, 2011 were substantial factors in bringing about the collapse and the remainder of the barn was at risk of collapse because the support poles had insufficient strength and bracing.

Winter storm conditions persisted over the next three days.  Despite the defendants’ best attempts to shore up the structure of the barn, the remainder of the barn collapsed on February 5, 2011, causing additional losses.  It was undisputed that new precipitation and strong wind gusts contributed to the second collapse.

 

The Defendants claimed that the barn collapse constituted two “occurrences” under the policy, which would potentially entitle them to an additional $300,000 under the policy.  Farm Family brought a declaratory judgment action seeking a declaration that the barn collapse was one occurrence.

 

Supreme Court agreed with Farm Family that the barn collapse constituted one occurrence and granted summary judgment in its favor.  The court, applying the “unfortunate events” test, ruled that the two collapse incidents arose out of continuous or repeated exposure to substantially the same general harmful conditions: Cedar Lane’s alleged negligence in constructing the barn without structural support and bracing sufficient to withstand winter storm conditions persisting over a multi-day period.  The two collapses occurred within a matter of days under the same, or very similar, circumstances.  As a result, the court determined the continuum between the two collapses was unbroken.

 

The court also rejected the defendants’ argument that the alleged failure of Cedar Lane to shore up the barn after the first collapse was an intervening event sufficient to break the causal chain between the two collapses.  It noted that the defendants’ own expert stated that the barn was at risk of collapsing after the first incident due to unbraced support poles.
Editor’s Note:  Send a note to Agnes ([email protected]) if you want a copy of this decision, so far, unreported.

 

BARNAS ON BAD FAITH

Brian D. Barnas

[email protected]

 

06/27/16       Continental Casualty Company v. J.M. Huber Corporation

United States District Court, District of New Jersey

Court Ordered Production of Prior Deposition Transcripts in Cases where Similar Bad Faith Claims were Asserted

From approximately 1969 to 1994 Continental and Transportation issued insurance policies to JM Huber.  Some of these policies were subject to retrospective premiums that required the policyholder to pay premiums based on actual claims and/or losses the policyholder suffered that were covered.

 

Continental and Transportation billed JM Huber $33,629.00 in March 2012, $737,116.00 in March 2014 and $741,408.00 in October 2014.  JM Huber did not receive any responses to its requests for explanations regarding the calculation of the bills.  Continental and Transportation sued JM Huber based on its failure to pay the bills.  JM Huber asserted a counterclaim for bad faith.

 

During the litigation, JM Huber sought documents from prior litigation involving premium calculations and retrospective premiums.  Specifically, it asked for pleadings, deposition transcripts, dispositive motion briefing, and expert reports generated in prior litigation since January 1, 2005 wherein any party asserted claims for breach of contract or bad faith regarding retrospective premiums.

 

Considering the request, the court reasoned that the requested documents were relevant.  Prior litigation documents demonstrating that an insurer has acted in an inconsistent manner in resolving claims where similar policies are involved may be relevant to bad faith claims.  However, the court agreed that the request was overly broad and unduly burdensome.  Accordingly, the court ordered Continental and Transportation to produce non-privileged transcripts of depositions taken of employees, representatives, and/or agents responsive to the request.

 

06/21/16       Anderson v. American Risk Insurance Company, Inc.

Court of Appeals of Texas, First District

Insurer which Invoked its Appraisal Right under the Policy and Paid the Claim did not Act in Bad Faith

Anderson’s residence in Texas was covered by an ARIC homeowner’s insurance policy.  During a storm on June 12, 2012, a tree fell through the roof of her home causing damage.  After the incident, she immediately reported the claim to ARIC.  Three days later an ARIC agent inspected the property and estimated the total loss at $58,784.05.  The inspector recommended issuing an initial payment of $47,505.79 and a completion payment of $8,778.26.

 

ARIC made a series of payments to Anderson from June to September 2012.  During that time, Anderson was renting an apartment, and she claimed she accrued late fees because ARIC was slow to reimburse her.  In November 2012, Anderson sent ARIC a demand letter seeking $300,000 to settle her claim: $200,000 for damage, $25,000 for mental anguish, and $75,000 for attorney’s fees.  Anderson eventually brought a suit against ARIC alleging breach of contract and bad faith claims.

 

During the course of the litigation, ARIC invoked the appraisal right under the policy.  The court appointed a neutral appraiser who estimated the loss at $75,289.90.  Thereafter, ARIC paid Anderson the difference between the appraisal award and what it had previously paid to her.

 

ARIC moved for summary judgment on Anderson’s breach of contract and bad faith claims and was successful.  The court concluded there was no breach of contract because ARIC fulfilled its obligations under the contract by invoking and completing the appraisal process and tendering payment.

 

The court also dismissed the extra-contractual claims.  The bona-fide dispute between Anderson and ARIC regarding the value of the claim was insufficient to establish bad faith.  Further, there was no evidence that ARIC failed to timely investigate the claim.

 

06/20/16       Gutierrez v. State Farm Lloyds

United States District Court, Southern District of Texas

Insureds’ Breach of Contract and Bad Faith Claims could not Survive Summary Judgment where Insurer Timely Investigated and Timely Paid the Claim

Plaintiffs claimed their property was damaged as a result of a hail storm.  On or about April 23, 2012, Plaintiffs reported an insurance claim to State Farm.  State Farm had the property inspected on May 14, 2012, and estimated the amount of the loss at $5,409.15.  That same day, State Farm issued Plaintiffs a check for $2,295.56 after applying recoverable depreciation and deductible.  On August 28, 2012, Plaintiffs informed State Farm that the repairs to their property were complete.  State Farm released the recoverable depreciation to Plaintiffs in the amount of $2,163.59 on August 30, 2012 and closed Plaintiffs’ claim.

 

Thereafter, on April 19, 2014 Plaintiffs filed a lawsuit against State Farm alleging breach of the insurance contract and extra-contractual claims.  State Farm, after removing the case to federal court, invoked the appraisal provision of the policy.  On November 15, 2015 State Farm received an appraisal award signed by the appraisers for Plaintiff and State Farm.  On November 24, 2015 State Farm tendered payment for the amount of the appraisal award.

 

State Farm moved for summary judgment on the breach of contract claims and the extra-contractual claims.  The court noted that, under Texas Law, an insured is estopped from maintaining a breach of contract claim when the insurer makes a proper payment pursuant to the appraisal clause. 

 

The court also rejected Plaintiffs’ argument that State Farm breached the contract because Plaintiffs’ did not receive depreciation withheld from payment of the appraisal award.  The contract required Plaintiffs to complete repairs within 180 days to receive withheld depreciation on the appraisal award.  Plaintiffs did not inform State Farm it was satisfied with its handling of the claim until 2014 when it filed the lawsuit.  Thus, Plaintiffs’ own inaction prevented them from recovering the withheld depreciation.

 

The court also dismissed the extra-contractual claims.  It noted that, under Texas Law, an insured’s bad faith claims must fail as a result of the court’s resolution of the breach of contract claim in the insurer’s favor, unless the insured can demonstrate acts or omissions that caused an injury independent of those that would have resulted from wrongful denial of policy benefits.  In this case, State Farm timely investigated the claim and timely issued payment of the appraisal award.  In addition, State Farm had no reason to believe Plaintiffs were unsatisfied with its handling of the claim for almost two years.  Furthermore, Plaintiff’s allegations amounted to little more than a coverage dispute.  Thus, the extra-contractual claims were dismissed.

 

 

PHILLIPS’ FEDERAL PHILOSOPHIES

Jennifer J. Phillips

[email protected]

 

06/20/16       Alstom Brasil Energia e Transporte Ltda. v. Mitsui Sumitomo Sequros S.A.

Southern District of New York

Stepping into the Insured’s Shoes

This dispute resulted from a shipment of steam generation units from an American supplier to a Brazilian aluminum refiner.  Due to ruptures within these units, the aluminum refiner suffered a fire, causing substantial property damage and lost profits.

 

The aluminum supplier was insured by the respondent Insurer in this case, and the Insurer paid out a multi-million dollar settlement to its insured on this claim.  The Insurer then commenced an action against the American supplier in Brazil to recover its indemnity payment.  The American supplier moved to dismiss the Brazilian action and, invoking a clause in its supply contract with the insured aluminum refiner, served a demand for arbitration before the International Chamber of Commerce.  An arbitration was held, at which the Insurer contested jurisdiction, but the tribunal found that jurisdiction was proper and dismissed the Insurer’s claim against the American supplier on the merits.

 

The American supplier petitioned to have the arbitration award confirmed, and the Insurer moved before the district court to dismiss the petition for lack of jurisdiction.  Because the Insurer was not a signatory to the arbitration agreement, the district court conducted an independent review of the issue, found that the application of U.S. federal arbitration law was appropriate, and under such “clearly established” principles, an “insurer-subrogee stands in the shoes of its insured.”  Therefore, in pursuing its insured’s contract claim against the American supplier, the Insurer “was bound by the arbitration clause that would have bound [the insured].”

 

In so concluding, the district court first rejected the Insurer’s attempt to reframe its claim against the American supplier as one sounding in tort rather than contract.  Specifically, the Insurer “indemnified [the insured] for damages arising from [the American supplier]'s delivery of defective piping in a power plant that [the American supplier] contracted to deliver. There were no third parties involved; only the parties to the . . . supply contract. [The Insurer]'s characterization of the contract dispute as a tort is an invention to serve an argument.”

 

The district court also rejected the Insurer’s argument that Brazilian law governs and, under such law, a subrogated party does not have to arbitrate.  In addition to its initial finding that federal arbitration applied under the relevant choice of law rules, the court also found that, in any event, Brazilian law was not settled in the Insurer’s favor on this issue. 

 

Accordingly, and after resolving additional procedural issues, the district court confirmed the award of the arbitral tribunal.

 

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

 

01/19/16 Dairyland Insurance Co. v. Mitchell

Connecticut Supreme Court

Auto Policy Exclusion Required To Be In Separate Endorsement

Mr. Mooney was riding as a passenger in his own car driven by a Mr. Atherton when Mr. Mooney was killed in a crash. His Estate sued on his behalf, and Dairyland Insurance brought a declaratory judgment action arguing that Mr. Mooney was precluded from coverage for claims of bodily injury as a named insured.  The Estate argued that Connecticut insurance law required any such exclusion to be set forth separately from the policy in an endorsement that specifically named excluded individuals.  This argument ultimately carried the day.

 

The Estate argued that the exclusion, which was located in the body of the policy, was void and unenforceable, and therefore Dairyland had to defend and eventually indemnify for Mr. Mooney’s death.  The Trial Court entered judgment in favor of the insurance company ruling that the exclusion did not violate the state statute, which ruling was reversed by the Connecticut Supreme Court. 

 

The Supreme Court ruled that the exclusion was invalid because it was not set forth in an endorsement separate from the policy itself.  The statute required, in relevant part, that the policy would require coverage of the named insured and relatives residing in the household unless any such person was specifically excluded by endorsement.  The Supreme Court ruled that this exclusion was not set forth in a separate endorsement, citing that a policy endorsement as well that the purpose of the statute is to require such exclusions to be set forth in conspicuous fashion.  Therefore the entry of summary judgment in favor of Dairyland Insurance was reversed.

 

This case emphasizes the import of tailoring not only policy language but the form of the policy to satisfy individual state insurance laws and regulations.  If the named insured had been included in a separate endorsement, there is every indication it would have been enforced by the courts in this case.  After all, the purpose of liability insurance is to defend and indemnify actions and suits brought against named insureds by third parties.

 

Individual state requirements may also require that certain exclusions, warnings, limitations on coverages, or obligations of the policyholder be stated “conspicuously” such as by separate endorsement, large or bold print, or even by certain required language dictated by statute or insurance regulations.

 

POTENZA’S EVER-SPINNING WORLD OF ASBESTOS

V. Christopher Potenza
[email protected]

 

06/28/16       Dummit/Suttner v. Crane Corp.

New York State Court of Appeals

A Foreseeable Decision on Foreseeability of Use of Third-party Asbestos Parts

In these two consolidated appeals, one arising from a $32 million verdict in New York City and another from a $3 million verdict in Buffalo, a valve manufacturer challenged the New York common law doctrine that a manufacturer has a duty warn against the danger inherent in using the manufacturer's product together with a product designed and produced by another company. The decision hinged on whether it was foreseeable that third-party asbestos containing gaskets and insulation would be used with the otherwise “bare metal” product.  Credit to Crane for giving it the old college try, but regrettably the Court of Appeals, consistent with its prior decisions, affirmed that Crane had a duty to warn the reasonably foreseeable users of its valves that the synergistic use of the valves and third-party asbestos- containing products could expose them to carcinogenic asbestos dust.

 

06/28/16       Konstatin v Tishman Liquidating Corporation

New York State Court of Appeals
Procedural Pitfall Derails Appeal in Procedural Wasteland

In most cases, it’s tough to see a case decided on a procedural error by the opposing attorney.  That feeling is only heightened in the world of asbestos litigation in which the CPLR is typically thrown out the window and cases are managed by their own set of local rules set by judges who preside over volumes of asbestos cases, the majority of which involves gravely ill plaintiffs.  Depositions are conducted with little to no notice and often before a complaint or any relevant discovery is served.   Terminable plaintiffs are given expedited trial dates.  Trial dates are moved and shuffled on the fly.  If asbestos dockets were not managed in this way, and without cooperation from defendants in bending and plying the typical rules of the CPLR, then these cases could languish for years and a dying plaintiff may never see his or her day in Court. 

 

That is what makes this decision so troubling to someone practicing in this arena.  The cases of seven mesothelioma plaintiffs were consolidated for trial. 

 

This fact is distressing enough, but not the focus of the decision.  The defendants jointly objected to this consolidation, which was denied.  Prior to trial, 5 of these 7 cases settled and only 2 went to verdict.  On appeal, the defendant contested the appropriateness of the joinder of the two cases for trial.  The Court of Appeals held that the issue of consolidation was unpreserved for review because the moving defendant only objected to the consolidation of the original seven cases, and did not renew their objection to the consolidation of just the two remaining cases that ultimately went to verdict. 

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