Coverage Pointers - Volume XVIII, No. 4

Volume XVIII, No. 4 (No. 460)

Friday, August 12, 2016


A Biweekly Electronic Newsletter


Hurwitz & Fine, P.C.

1300 Liberty Building

Buffalo, NY 14202

Phone: 716-849-8900

Fax: 716-855-0874


Long Island Office:

535 Broad Hollow

Melville, New York 11747

Phone: 631-465-0700

Fax: 631-465-0313

© 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. Almost every call we get includes the word “situation”.  Have one?  Call me on my direct line at 716-849-8942 or call the main number, 716-849-8900 and ask for any of our talented team members.


Back in the day (and I was around back in the day), the summers were quiet.  We didn’t have trials in July and August.  Instead, we spent our time catching up on depositions, and had time to relax a bit.  Those days are gone.  While there are now trials 12 months a year in many of the New York counties, it’s rare that there is the freedom to catch one’s breath during the summer.  This year is no exception.  We’ve been back and forth to NYC with regularity as mediations at NAMS and JAMS abound.  The mediation system seems to have replaced the judicial system and I know how many of my colleagues around the country agree that we miss trying cases like we did once before.


We must find a way to preserve the critically important civil jury trial.


The appellate courts do slow down with at least a couple of courts, the Court of Appeals and the Appellate Division, Fourth Department, virtually shuttered during the summer months.  Accordingly, our issue is a little light on cases, but not because we are not covering them all.


Ann Evanko:  Buffalo Business First, Women of Influence-- Lifetime Achievement Award:


Allow me to publically honor and congratulate my friend, classmate, managing partner and Firm President, Ann Evanko, on being named by Buffalo Business First as not only a Women of Influence but as a recipient of their Lifetime Achievement Award.  Atta Lawyer! 


Mediation: Representation or Neutral Services Available:


Just a thought about mediation:


There are times, more often recently than not, when insurers wish to resolve complex insurance coverage disputes without the expense and costs of trial and without the risk of potentially adverse judicial precedent.  We have encouraged the mediation and/or arbitration of complex insurance coverage claims and our office can assist insurers and insureds in bringing reasoned resolution to coverage disputes.


Often, it is the lack of resolution of an insurance coverage dispute that has stopped the settlement of an underlying personal injury, construction or property damage claim, dead in its tracks.  If we can help you in this regard, there are a number of ways for us to do so.


A number of us, Steve Peiper, Agnes Wilewicz, Jen Ehman and your Editor, spend a lot of time representing insurers at mediations throughout the state and beyond.  As an example, I was in NYC on Monday of this week doing just that, helicoptered in at the last minute to present anti-subrogation issues that defense counsel could not argue because of the ethical obligations to the client, the named insured.  Steve did the same thing on a CD claim, being brought in to argue the coverage issues while the line adjuster handling the defense took care of the substantive defense issues along with defense counsel.


Coverage Mediation:


Another area of our practice is coverage mediation and I serve as a mediator as well, to resolve disputes between and among carriers.  Why spend the money and the time to litigate these questions when resolution by mediation [or arbitration] can bring closure to hotly contested matters in relatively short order for substantially reduced costs?


I have been handling complex insurance coverage matters for over 35 years.  For over 28 years I have served as an Adjunct Professor of Insurance Law at the Buffalo Law School and frequently serve an expert witness in insurance coverage matters throughout the United States, Canada and in the London market.  I am a Certified AAA Neutral, former President of the Federation of Defense & Corporate Counsel, and am the past chair of the FDCC's Insurance Coverage Section.


What I try to do is to bring 35+ years of experience, scholarship, practicality and common sense to the table.


For information, contact Dan Kohane (that’s me) at [email protected]  or 716.849.8942.


There’s No Coverage Like Snow Coverage.  Just Published:


Snowplow Contracts and Ongoing Operations, American Bar Association, Section of Litigation, Insurance Coverage by Dan D. Kohane, Jennifer A. Ehman, and Alyssa J. Jones.




Co-sponsored by the NYSBA Torts, Insurance & Compensation Law Section (TICL) and New York Insurance Association, Inc. (NYIA)


Join insurance industry professionals and their counsel for a unique program involving direct interaction between some of New York’s top insurance and defense attorneys and the industry they serve. Law School for Insurance Professionals is a full-day seminar where coverage and defense attorneys share their knowledge and experience with insurance professionals from around the State. This course does not carry MCLE or CE credit. Attendees will receive a certificate of attendance.


Attend to receive insights and updates on current legal issues that the savvy insurance professional won’t want to miss.


New York City | September 15, 2016

NYS Insurance Fund | 199 Church Street, New York, NY 10007


Buffalo | September 16, 2016

University at Buffalo School of Law | O'Brian Hall (Room 104), Buffalo, New York 14260

[I serve as local chair of this program]


Albany | September 16, 2016

New York State Bar Center | One Elk Street, Albany, NY 12207


Long Island | September 22, 2016

Touro Law School | 225 Eastview Drive, Central Islip, NY 11722


Time: 9:00 am-4:20 pm (lunch is included)


Cost including lunch and program book:.


  • Registration fee: $105

  • Group rate (5 or more from the same company): $95 each

  • 10% discount for New York Insurance Association (NYIA) or TICL Section members ($94.50 individual, $85.50 group rate)

  • Law Student: $15




By Phone: (800) 582-2452 (M-F, 8am-5pm).

Please mention the event code for your location: NYC (TICLIPNY16) | Buffalo (TICLIPBU16) | Albany (TICLIPAL16) | Long Island (TICLIPLI16)


Questions? Contact [email protected]  or call Kathy Plog at (518) 487-5681.


Program Agenda:


8:30-8:55am                       Registration

8:55-9:00am                       Welcome and Announcements

9:00-9:50am                       Claims Investigations                             

9:50-11:00am                     Interactive Presentation with an Expert Engineer: Homeowner's Insurance

11:00-11:10                        Break

11:10am-12:05pm              Claims Handling Practices

12:05-1:05pm                     Networking Lunch (included)

1:05-2:00pm                       The Construction Site Accident

2:00-2:55pm                       Premises Liability         

2:55-3:05pm                       Break

3:05-4:15pm                       Interactive Presentation: Verdict, Value, and Settlement: How Much is This Case Worth?

4:15-4:20pm                       Closing Remarks and Adjournment


Program Faculty includes Jen Ehman and Dan Kohane in Buffalo and Steve Peiper in Albany


DRI’s Northeast Regional Claims Conference


DRI’s Northeast Regional Claims Conference will be held at the Hilton Hartford in Connecticut on September 20, 2016.  This Conference was designed by the Insurance Law Committee in coordination with top Hartford-area carriers and insurance law experts to update insurance executives, in-house counsel, and outside counsel on crucial new authority impacting claims handling, coverage decisions, and risk exposure.  This Conference is for claims professionals as well as outside counsel. 


Date:       September 20, 2016

Place:      Hilton Hartford


See Jen Ehman’s letter below for more details.


Barnas on Bad Faith:


Hello again:


Tonight unfortunately will be our firm’s final softball game of the season.  Despite our valiant efforts, we currently sit two games out of playoff position with only one game left to play.  I am told this is an improvement based on years past, but I still would prefer not to be going home prior to the postseason.  Perhaps next year will be our year.


However, all things baseball are not necessarily going so poorly for your author.  As I write this letter my Blue Jays currently sit one game clear of Mr. Peiper’s Orioles atop the American League East standings going into a big weekend series against the Houston Astros.  I had the pleasure of going down to Houston last year to see the Blue Jays play a four game series at Minute Maid Park.  My travels and loyal fandom were rewarded with a four game sweep at the hands of the Astros.  Hopefully I can see the Jays finally put a win on the board against Houston when I go up to Toronto on Sunday for a game that also happens to be Blue Jays former pitcher trio bobblehead day, featuring Dave Stieb, Pat Hentgen, and, my all-time favorite baseball player, Roy Halladay.


This week’s column features two cases.  The first is a case out of California in which the court, after reviewing and analyzing an extensive amount of precedent, holds that an excess carrier may bring a cause of action for equitable subrogation or bad faith failure to settle against the primary carrier even if no excess judgment has been entered against their insured.  A settlement above the primary policy limits requiring payment by the excess carrier is sufficient. 


AXIS v. Stewart pertains to the coverage dispute arising out of a 2014 incident in which NASCAR driver Tony Stewart struck and killed Kevin Ward during an Empire Super Sprints race at Canandaigua Motorsports Park in Canandaigua, New York.  After Ward’s family brought a wrongful death action against Stewart, AXIS disclaimed coverage under the CGL policy it had issued.  Coverage under the AXIS Policy was limited by a Schedule of Events, which limited the coverage provided to 105 designated racing events.  Unfortunately for Stewart, the Canandaigua race was not one of the listed events.  Therefore, there was no coverage under the policy, and Stewart’s bad faith counterclaim was dismissed.


See you next time.


Signing off,



Brian D. Barnas

[email protected]


Polio – A Public Scourge:

The Kingston Daily Freeman

Kingston, New York

12 Aug 1916





By Telegraph to The Freeman


New York, August 12.—New cases of infantile paralysis during the 24 hours ending at 10 a.m. today numbered 167.  There were 42 deaths in the same period.  The hopes of physicians that the cool weather would check the epidemic have not been fulfilled as yet.


The health department announced that ten more persons who had recovered from the disease had come forward and offered to give blood serum for the treatment of those who are now ill.


Eight Cases in Philadelphia.


Philadelphia, Aug. 12.—Eight new cases of infantile paralysis were reported here today, making a total of 157 cases since July 1 and 34 deaths.  Two deaths from the disease were reported in Camden, N.J., this morning. 


Hewitt’s Highlights:


Dear Subscribers:


Good news. Despite the summer heat, the Appellate Courts issued a few decisions that we report on this time around.  In one case, the plaintiff could not rebut the prima facie case for summary judgment demonstrated by defendants. The reason? While his doctor indicated that there were limitations, he never set forth what objective tests he relied on in finding limitations of the range of motion to the cervical and lumbar spines. A better crafted affidavit would have likely defeated summary judgment. The courts frown on conclusory, unsupported statements. Which ties in to the next case, another case in which the Appellate Division found that the plaintiff’s expert made conclusory statements. In that case, the physician never examined the spine at all, and while he examined the knee, he did not set forth any limitations which would demonstrate that the accident caused the knee injury, and thus his conclusion that it did so was insufficient.


We have almost four weeks until school begins down here on Long Island so there is still plenty of summer here. Hope you are enjoying it.


Until next time,


Robert E. Hewitt

[email protected]



Private Hangings? – 100 Years Ago:


Times Herald

Olean, New York

12 Aug 1916




Have Them Appropriate to the Rooms

In Which They Are Hung


Pictures add a great deal to the beauty of a home if they are selected with taste and care.  They do not have to be expensive to be beautiful, many delightful reproductions of the works of the old masters being on sale nowadays at prices within the reach of the most modest pocketbook.


Before putting up a picture on your wall be sure that it has some meaning and some beauty.  Also it should be appropriate to the room it is to adorn.  For instance, family photographs have no place on the walls of a living room.  They are too intimate a decoration for a room in which strangers was well as friends are apt to be entertained.  Reserve family photographs for the bedrooms or a “den.”


Select for the living room landscapes, reproductions of still life, ideal heads and faces and good photographs of masterpieces.  Such pictures are not only instructive to the family, but they may form an interesting topic of conversation to the friends who are entertained in this room.


The music room of course should be adorned with good photographs of eminent composers and other musicians, while the library calls aloud for portraits of literary and other public men.


Jen’s Gems:




My family has been caught up in the Olympics since they started last week.  Ella (my four year old) spends her evening doing jumps and cartwheels asking me “that a cool move, mom?”  She also has started yelling to me every time she spots Michaels Phelps on television.  He is the only athlete she can identify.  But, since he picked up his 21st medal on Tuesday, if she is going to know one, he is a good one.    


Beyond that, I also wanted to let everyone know that for the second year, DRI’s Insurance Law Committee is hosting its regional program designed to update insurance executives, in-house counsel, and outside counsel on recent trends and crucial new authority relative to claims handling, coverage decisions, and emerging exposures. 


This one-day program will be held on September 20, 2016, in Hartford, Connecticut.  The program was developed by the Insurance Law Committee in concert with leading Hartford-area insurers to address issues important to insurers.  This year, program topics include: new technologies and the insurance industry, the erosion of the attorney-client privilege, trends in advertising and personal injury coverage, the impact of the new ALI Restatement of Liability Insurance, cyber liability, corporate witness depositions, issues arising from sports-related injuries, and mediation and ethical issues affecting insurers.  The full brochure, including agenda and speakers, is available here:


The conference will also feature two great networking opportunities for insurance professionals and outside counsel.  First, lunch will feature moderated table discussions about important topics and trends.  Second, there will be an extended networking reception at the conclusion of the conference.             


Registration is complimentary for in-house counsel, claims executives and claim examiners currently employed by an insurance company or similar corporation.  This year, DRI has also extended the complimentary registration to corporate risk-managers.  The cost is $395 for outside counsel who register on or before August 21, 2016.  For more information including how to register, please visit the conference website at  Otherwise, you can call DRI directly at (312) 795-1101.


Hope to see you there.  Until next issue…



Jennifer A. Ehman

[email protected]


100 Years Ago This Week, Baseball Debut:


Duke Kelleher (Albert Aloysius Kelleher), a Princeton University graduate, came in to catch for the New York Giants in the late innings of the first game of a double-header against the Cubs.  The Giants were up by seven runs and the game ended with an 8-1 victory for the New York team.

Duke never got up to bat and never again played in a major league game.  I tried to track down more information on him, finding only that he was self-employed, registered for both WW I and WW II, he died at age 53 in Staten Island and is buried in a military cemetery in Long Island.  He was, however, something I will never be: a major league ball player.


Phillips Federal Philosophies:


Hello, All:


Just one case from me this week, although those hungry for more district court decisions should head on over to see Brian or Agnes, each of whom I believe is covering at least one from the federal trial level – proving that although the courts may slow down in the summer months, they certainly don’t stop.


In American Home Assurance Co. v. Allan Window Technologies, Ltd., the district court highlights how vague allegations in an underlying complaint increase the likelihood that a court will find that a duty to defend has been triggered.  Just like a vague assertion by teenage me that I was going “out nowhere special” exponentially increased the number of ways my mother could envision me getting into trouble.  Unjustly, of course; I was a perfect angel.


As always, thanks for reading.



Jennifer J. Phillips

[email protected]



Activism Pre-Suffrage – 100 Years Ago:


Democrat and Chronicle

Rochester, New York

12 Aug 1916





Hughes Is Praised by

Women’s Party in Conference

at Colorado Springs


Colorado Springs, Colo.:  Aug. 11.—The National Woman’s party in executive conference here to-day pledged itself to use its best efforts in the twelve equal suffrage states to defeat the Democratic candidate for president; congratulated the Progressive, Prohibition and Socialist parties upon their endorsement of suffrage for women by national action, and commended the position to Charles Evans Hughes, the Republican nominee.


The statement of policy was contained in three resolutions unanimously adopted setting forth the attitude of the party. 


The scope and policy of the National Woman’s party was discussed to-night by Miss Anne Martin, national chairman, addressing an open air meeting arranged to announce the election policy of the party during the forthcoming election.


“Our single plank,” said Miss Martin, “is suffrage first, the political freedom of women before the interests of any national political party.  We ask the women voters to know no party until all the women of this country are free.”


The record of the Democratic party, Miss Martin said, “is one of continued hostility and obstruction”.


“President Wilson and the Democratic party must inevitably lose the west through their unjust denials of freedom to half the people of this country.”


Tessa’s Tutelage:


Dear Readers:


Today is a pretty eventful day! It is our very last softball game of the season … and I am missing it! Tonight I am making my maiden voyage to Big Flats, New York for a court appearance.  I think it is probably the best excuse I have given for missing a game.  Here is hoping Brian can pick up the slack in my absence!


The past few weeks was not very active in the land of No-Fault, possibly the courts are busy squeezing the last little bit out of summer and do not want to think about no-fault benefits.  So, this week we have a case where a Plaintiff argues he didn’t meet his burden because the court failed to accommodate his disability.  The problem there? He never mentioned it.  The Court was not exactly persuaded and upheld the lower court’s finding that he had not met his burden.  Then we have an arbitration case where Arbitrator Brown considers the appropriateness of extending an insurance company’s timeframe for timely payment.  He found that a request for an NF-2 form did not extend this timeframe.


I hope you all have a wonderful weekend!



Tessa R. Scott

[email protected]



Should Banks Provide Insurance Services?  A Century Old Question:


The Wall Street Journal

New York, New York

12 Aug 1916




Among the amendments to the Federal Reserve Act embodied in a bill which has now passed the Senate on the favorable report of Senator Owen, Chairman of the Banking and Currency Committee, is one recommended by Comptroller of the Currency Williams, permitting country national banks located in any place of which the population does not exceed 5,000 inhabitants to act as agents for any fire, life or other insurance company by soliciting and selling insurance and collecting premiums on policies issued by such companies, under such rules and regulations as may be prescribed by the Comptroller of the Currency, and to act also as brokers or agents for others in making or procuring loans on real estate. 


It is hard to believe that this proposal is likely to be placed upon the statute books.  Nevertheless, it is appalling to think that any such radical departure in our banking laws should have been carried so far in the legislative halls of Congress.  It goes to show to what extremes the present administration, its exponents and officials, have carried their prerogatives in the desire to placate public sentiment.  For the above recommendation is palpably a sop to the small country banks by John Skelton Williams to compensate them for the increased expenses of running their banks under his administration and the curtailment of a certain income through the establishment of par check collections. 


It is to be hoped that the House will not so readily following the blandishments of Senator Owen and Comptroller Williams and will check in its incipiency this dangerous movement to extend the activity of banks into the realm of extraneous business.  Otherwise, where is such a movement to stop?  It is an obvious admission that the exactions of the present Comptroller’s office have driven the banks of the country into a position where it is next to impossible for them to extend their operations in legitimate fields.  Moreover, there is an unquestionable justification on the part of the small insurance brokers and agents in such districts to resent the intrusion of the national banks into their own spheres of occupation. 


Peiper’s Popping In:


We return from two weeks of isolation to a limited court docket.  However, after the hue and cry over my last note, I will not fill space by referencing Pokemon.  Apparently, our Editor has a rule that we must tie our bi-weekly missives to something insurance related.  News to me, but I won’t digress any further.  While I could surely fill my space opining on property damage and constitutional issues arising from the Pokemon scourge, alas I am keenly advised of how little people actually care.  So much for my public service announcements.


Returning, ever so reluctantly, to reality.  We have two interesting decisions for your review.  The first case addresses whether a clause which violates GOL 5-322.1, but also pre-dates that law, is enforceable.  The second addresses, among other things, the standard of proof one is required to demonstrate when disclaiming on the basis of concealment or fraud.  Unlike material misrepresentations under Insurance Law 3105, a carrier must establish intent when denying coverage on the basis of fraud in the Proof of Loss.  The Walker v Tighe decision which follows in this issue does nice job of explaining the obligation.  Recall, however, that a material misrepresentation need not be intentional.  The focus, as its description might suggest, is the materiality of the misstatement.


On the training front, we are approaching the upcoming Law School for Claims Professionals.  If you’re in the Capital District (that’s Albany, NY for your folks in Des Moines) on September 16th, please consider checking it out.  We’d love to see as many faces as possible.   


That’s it for now.  Happy Friday.



Steven E. Peiper

[email protected]

Editor’s Note:  Still have no idea what, how or why is Pokemon.


A Hero – 100 Years Ago:


Honolulu Star-Bulletin

Honolulu, Hawaii

12 Aug 1916





DETROIT, July 26.—The feature of today’s baseball game between Detroit and Washington was the demonstration of the crowd when Harry Heilmann appeared on the field.  The young Pacific coast boy, who came to Detroit from San Francisco, dived into the Detroit river yesterday and saved the life of a woman who had been precipitated into the water by an automobile backing off a pier.  Heilmann was given an ovation and the youngster responded by playing a good game and making a timely hit. 

Editor’s Note:  His name sounded familiar to me…


This from the Baseball Hall of Fame site about our hero:

“People nowadays just don’t realize how great a hitter Harry was,” Hall of Famer Ty Cobb said. “Next to Rogers Hornsby, he was the best right-handed hitter of them all.”


Though somewhat overshadowed because he shared the outfield in Detroit with Ty Cobb, Heilmann was one of the greatest players of his generation. He played 17 years in the big leagues, ending his career with a .342 batting average, surpassed only by Rogers Hornsby and Ed Delahanty for the right-handed career batting average record. Heilmann won four batting titles and hit .403 in 1923 to lead all of baseball.


Heilmann struggled to hit at first and then took half of 1918 off because he entered the Navy in World War I. Upon returning to baseball in 1919, Heilmann found his swing, hitting .300 for the first time in his career. Heilmann would take advantage of the end of the dead ball era and truly break out in 1921, however. With Ty Cobb taking over as manager, Heilmann moved from first base to right field and his hitting took off. Heilmann won his first batting title that season, hitting .394 with a career-high 139 RBI. Heilmann became the first righthander to win the American League batting title since Napoleon Lajoie in 1910.


As Heilmann established himself as one of the game’s biggest stars, the Tigers’ outfield became one of the best in the history of the game. Heilmann and Cobb were joined at first by Bobby Veach, who led the AL in RBI three times, and later by Hall of Famer Heinie Manush.


Heilmann made a habit of winning batting titles every other year, taking the crown in 1921, 1923, 1925 and 1927. But as quickly as it had started for Heilmann, it was over. Arthritis in his wrists hampered him, though he continued to post good statistics, the pain became too much. He didn’t play in 1931 before attempting a failed comeback in 1932.


Heilmann retired for good after 17 seasons in the big leagues. He died believing he was already in the Hall of Fame. While Heilmann was on his deathbed, Cobb told his former teammate that he had been inducted into Cooperstown, but he wasn’t. Heilmann died in 1951 at the age of 56 and was elected to the Hall of Fame in 1952.



Wilewicz’ Wide World Of Coverage:


Dear Readers,


Just a quick missive for you all this week, as I jet off to meet friends coming in from Ireland so that I can show them around our great border town. Thus, in this abbreviated version of the Wide World of Coverage, we present just one case, and this time a lot closer to home than usual.


From the Southern District of New York, we have a case that was reconsidered after the Court of Appeal’s recent decision in Viking Pump. (See our May 6th issue from earlier this year: CP Volume XVII, No. 23.) If you recall, Viking Pump was an asbestos-related coverage decision wherein the court held that all sums and vertical exhaustion applied where excess policies contained non-cumulation provisions. In this week’s Liberty Mutual v. Fairbanks decision, the Southern District was asked to reconsider its determination that pro-rata allocation applied, in light of Viking Pump’s new precedent. Unfortunately, however, the non-cumulation clause in Liberty’s policy stated that it was limited to “the same occurrence”. This is critical because discovery was not yet complete and it was as yet unknown how many occurrences were at issue. Thus, the Southern District punted and withheld application of the provision pending further development of the facts (though they conceded all sums would apply if the claims were all the same occurrence). Always love those environmental coverage law decisions, don’t you?


See you all in a couple of weeks!



Agnes A. Wilewicz

[email protected]


This Week’s Highlights from Attached Issue:



Dan D. Kohane
[email protected]


  • Direct Action against Carrier to Enforce Judgment against Policy Reinstated

  • Injured Party Not Bound by Coverage Decision if it was Not a Party to Lawsuit When Coverage Determined Not to Exist


Robert E.B. Hewitt III

[email protected]


  • Defendant Made Prima Facie Cause of Lack of Causation Which was Rebutted by Plaintiff

  • Plaintiff Cannot Establish an Issue of Fact with Affidavit from Physician Which Does Not Identify Objective Tests Utilized to Test Range of Motion

  • Plaintiff’s Expert’s Opinion of Serious Injury Was Conclusory When He Never Examined Plaintiff’s Spine and Never Noted Any Limitations to Plaintiff’s Knee


Tessa R. Scott
[email protected]



  • Evidence that a Hearing Disability Prevented Participating in the Trial Must be Preserved in the Record




  • An Insurance Company Cannot Delay Payment of a Claim by Request of a NF-2 form



Steven E. Peiper

[email protected]


  • Denial’s for Concealment/Fraud in a Proof of Loss Require Demonstration of Insured’s Intent

  • Contracts that Pre-Date GOL § 5-322.1, are Not Void Where They Contemplate Indemnity for One’s Own Negligence



Agnes A. Wilewicz

[email protected]


  • Southern District Holds that It Cannot Interpret Non-Cumulation Clause without First Deciding Number of Occurrences, where Clause Application is Limited to “The Same Occurrence”




Jennifer A. Ehman

[email protected]


  • No reported coverage decisions from the lower courts.



Brian D. Barnas

[email protected]


  • An Excess Judgment is not Required for an Excess Carrier to bring an Equitable Subrogation Action against a Primary Carrier based on its Bad Faith Failure to Settle within the Primary Policy’s Limits

  • Classification Limitation Limiting Coverage to Specific Races Precluded Coverage for Lawsuit Arising out of Unlisted Race



Jennifer J. Phillips

[email protected]


  • Duty to Defend Against Vague Allegations


Earl K. Cantwell
[email protected]



  • What Triggers an Excess Insurer’s Duty?



That’s all for now.  Next week I travel to New Jersey to celebrate my mother’s 95th birthday.  To life, to life, L’Chaim.




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]  


Twitter:           @kohane




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

Dan D. Kohane
[email protected]



Audrey A. Seeley

[email protected]



Jennifer A. Ehman

[email protected]


Dan D. Kohane, 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

Howard B. Altman

Diane F. Bosse

Joel R. Appelbaum


Steven E. Peiper, Team Leader
[email protected]


Michael F. Perley

Robert E. Hewitt, III

Jennifer J. Phillips

Brian D, Barnas


Audrey A. Seeley, Team Leader
[email protected]


Jennifer A. Ehman


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


Dan D. Kohane
[email protected]


08/10/16       Persaud v. Everest National Insurance Company

Appellate Division, Second Department

Direct Action against Carrier to Enforce Judgment against Policy Reinstated
This was a Direct Action case, with the plaintiff, Persaud, seeking to enforce a judgment against the former defendant, now judgment debtors, liability insurance company.


Persaud (“injured plaintiff”) was hurt when he fell from a balcony while performing electrical work for Sooklall and his company Future Home Builders, Inc. (“Future Home”).  He sued, among others, Sooklall and Future Home, Future Home's insurer, Everest disclaimed coverage on the ground of late notice. The plaintiffs subsequently obtained a default judgment against Sooklall and Future Home in the principal sum of $20 million.


The injured plaintiff commenced this action pursuant to Insurance Law § 3420(a)(2) to recover the unsatisfied judgment. Everest moved to dismiss the complaint pursuant to CPLR 3211(a)(1) and (7). The plaintiffs did not submit opposition to the motion, and, in an order entered April 1, 2014, the Supreme Court granted Everest's motion to dismiss the complaint.


Subsequently, the plaintiffs moved, in effect, to vacate the order entered April 1, 2014, and, thereupon, to deny Everest's motion. The court granted the plaintiff's motion, vacated its prior order entered April 1, 2014, and, thereupon, denied Everest's motion to dismiss the complaint. Everest appeals.


The Second Department found that plaintiffs established a reasonable excuse for their default based upon a detailed claim of law office failure and a potentially meritorious opposition to the motion. On the substance, upon vacatur of its prior order, the Second Department held that the evidence relied upon by Everest to establish that it did not receive timely notice of the underlying claim did not constitute documentary evidence.  Everest did not refute the plaintiffs' factual allegations, conclusively establishing a defense as a matter of law.


The court is required to accept the factual allegations of the complaint as true, for the purpose of a motion to dismiss on the pleadings.


08/04/16       Hermitage Insurance Company v. 186-190 Lenox Road, LLC

Appellate Division, First Department

Injured Party Not Bound by Coverage Decision if it was Not a Party to Lawsuit When Coverage Determined Not to Exist

On or about January 30, 2009, Smith was injured in a slip and fall on property owned by defendant 186-190 Lenox Road, LLC (“Lenox”). Lenox had obtained a liability policy from plaintiff Hermitage which covered the date of the accident.


In January 2012, Smith sued Lenox for the injuries and commenced a personal injury action against Lenox. Hermitage received its first notice of the accident by email dated June 11, 2012. Hermitage disclaimed eight days later and then in August, commenced this Declaratory Judgment Action to confirm its disclaimer.  Lenox and Smith were named as defendants.  Neither appeared and Hermitage moved for a default judgment.


Smith opposed, arguing that (i) she was not properly served, and (ii) even if she was, the action as against her should be dismissed as abandoned, since Hermitage did not move for a default judgment within one year of her failure to answer. Smith did not oppose Hermitage's request for a default judgment against Lenox. Lenox did not oppose the motion.


Supreme Court granted the motion for a default judgment against Lenox. As to Smith, "the motion was denied and the complaint [was] severed and dismissed as abandoned." The court then: "ORDERED, ADJUDGED and DECLARED, that Plaintiff HERMITAGE ... has no duty to defend or indemnify ... LENOX ... against the claims being made by Cynthia Smith ...."


Smith lacks standing to appeal from an order granting a default judgment against Lenox, which failed to appear or answer the complaint and failed to oppose the motion for a default judgment.  Although Smith, as a named party, could have opposed Hermitage's position on coverage, she elected to seek dismissal on procedural grounds. Thus, having been granted the relief she sought on her own behalf, and having failed to offer any substantive opposition to Heritage's claim of untimely notice or to oppose Heritage's request for a default judgment against Lenox, Smith was not aggrieved by that portion of the order that declared that Heritage was not obligated to defend and indemnify Lenox in the underlying action.


Is the decision binding on Smith?  The court says “no”.  If Smith gets a judgment against Lenox and commences a direct action, she still has the right to litigate the coverage issues.  She is not an aggrieved party because the action against her was abandoned and her rights not adjudicated.

Editor’s Note:  Interesting case, indeed.  For those who wonder whether it is important to include the injured party or others as defendants in a declaratory judgment action (your author always does), this confirms the importance of that inclusion (otherwise, they are not bound by the decision).


Basically, the finding of abandonment was equivalent to never having sued Smith, the injured party.  Accordingly the court held, she was not aggrieved and therefore not bound by the determination against the insured, Lennox, that it was not entitled to coverage.


Robert E.B. Hewitt III

[email protected]


08/10/16       Kim v. Hook

Appellate Division, Second Department

Defendant Made Prima Facie Cause of Lack of Causation Which was Rebutted by Plaintiff

No facts are given. The Appellate Court held that the defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. Each defendant submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine and to his left shoulder were not caused by the subject accident In reversing the grant of summary judgment, the Appellate Division held that In the plaintiff raised a triable issue of fact as to whether the alleged injuries to the cervical and lumbar regions of his spine and his left shoulder were caused by the accident. Demonstrating a prima facie case is not enough.


08/03/16       Bayk v. Martini

Appellate Division, Second Department

Plaintiff Cannot Establish an Issue of Fact with Affidavit from Physician Which Does Not Identify Objective Tests Utilized to Test Range of Motion

The defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The defendants submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine did not constitute serious injuries under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d). What was submitted is not identified.


In opposition, the plaintiff failed to raise a triable issue of fact as to whether the alleged injuries to the cervical and lumbar regions of his spine constituted a serious injury under the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d). The plaintiff submitted an affirmed report from his treating physician, who concluded that the cervical and lumbar regions of the plaintiff's spine sustained range-of-motion limitations as a result of the subject accident. However, the affirmed report fails to identify the objective tests that were utilized to measure range of motion and, thus, does not support the limitation. Accordingly, the plaintiff failed to raise a triable issue of fact.


07/28/16       Hernandez v. Cespedes

Appellate Division, First Department

Plaintiff’s Expert’s Opinion of Serious Injury Was Conclusory When He Never Examined Plaintiff’s Spine and Never Noted Any Limitations to Plaintiff’s Knee

Appellate Division held defendant established entitlement to judgment as a matter of law by showing that plaintiff did not suffer a serious injury to her cervical spine, lumbar spine, or right knee as a result of the motor vehicle accident at issue. Defendant submitted the affirmed reports of an orthopedist and a neurologist, showing no significant limitations, negative clinical results, and a resolved sprain and contusion. Defendant also submitted a radiologist's affirmed report which found, upon review of the MRI scans, no evidence of any disc bulges or herniations in the spine, no recent or acute posttraumatic or causally related disc changes, and only preexisting degenerative changes in the knee.


In opposition, plaintiff failed to raise a triable issue of fact. She provided no medical findings of resulting limitations in use of her spine or right knee, shown by either quantified range of motion testing or by a qualitative assessment of her limitations compared with normal function. Plaintiff's orthopedic surgeon never examined her spine, and, although he performed diagnostic arthroscopic surgery on her right knee, he failed to set forth any findings of limitations in the knee, either before or after the surgery. In light of the absence of evidence of limitations, the orthopedist's conclusory opinion that the accident caused the right knee injury was also insufficient. Furthermore, the unaffirmed MRI reports, which were the only objective evidence submitted by plaintiff concerning her claims of spinal injury, are inadmissible because they are unsworn, and were not relied upon by defendant's experts.



Tessa R. Scott
[email protected]



07/28/16       Mathews v Allstate Ins.

Appellate Term, Second Department

Evidence that a Hearing Disability Prevented Participating in the Trial Must be Preserved in the Record

Plaintiff commenced this small claims action to recover assigned first-party no-fault benefits in the sum of $953.77. At trial, plaintiff testified that he had performed testing on the patient, based on a referral from an orthopedic surgeon, without having inquired as to whether the testing was medically necessary. He submitted a claim to defendant for $1,135, but only $181.23 of that claim had been paid, leaving a balance due of $953.77. Defendant's expert witness testified that there was a lack of medical necessity for the services. Following the trial, the City Court dismissed the action in a judgment entered June 10, 2014.


In a small claims action, a court's review is limited to a determination of whether “substantial justice has been done.” Moreover, especially in small claims matters, decisions regarding credibility and fact are given substantial deference, as a trial court's opportunity to observe and evaluate the testimony and demeanor of the witnesses affords it a better perspective from which to assess their credibility.

The issue at trial was whether the services in question were medically necessary. The City Court apparently accepted defendant's expert witness's testimony and implicitly found that defendant had satisfied its burden of demonstrating that the services were not medically necessary. It was then plaintiff's burden to prove, by a preponderance of the evidence, that the services rendered were medically necessary. As plaintiff failed to satisfy his burden, the City Court did not err in dismissing the action.


Plaintiff attempted to explain his inability to meet his burden by arguing that he had a hearing impairment which prevented him from fully participating at trial, and that the City Court made no accommodations for his impairment.  The court was not persuaded because the record was devoid of any indication that plaintiff had a hearing impairment or that he had requested an accommodation for it.

Accordingly, the decision was affirmed.




7/28/16         Eastern Niagara Hospital v Allstate Insurance Com

Arbitrator Gillian Brown

An Insurance Company Cannot Delay Payment of a Claim by Request of a NF-2 form

This claim arose from a motor vehicle accident which occurred on 3/17/11. The injured party received treatment at the claimant hospital. Bills were timely sent, respondent received a UB-04, and on 4/6/11 and again on 5/6/11, respondent sent a "verification request" advising that the claim would be delayed pending receipt of "claimant's completed and signed Application of Benefits (NF2)." The claim has not been denied.


Pursuant to no-fault law, insurance companies are required to either pay or deny a claim for benefits within 30 days of receipt of the claim. However, the 30-day period may be extended where the insurer makes a request for additional information within 15 business days of its receipt of the claim, and an insurer is not obligated to pay or deny a claim until all demanded verification is.


Claimant argued that respondent should have requested an NF-5 but did not do so. It argued that had it requested an NF-5 rather than an NF-2 its delay in this matter would have been appropriate, but that under these circumstances it was not.  Respondent would have been within its rights to request an NF-5 or an NF-4 form. The latter contains all medical records and a certification that the records sent are the only records available. Respondent chose instead to send a letter delaying the claim until receipt of a "signed no-fault application.



Arbitrator Brown agreed with claimant and supported his decision with the decisions of his fellow arbitrators and the New York State Department of Financial Services Circular Letter no 1 (2015) which determined that a respondent’s request for a NF-2 form was not proper. Accordingly, Arbitrator Brown determined that Respondent had improperly delayed payment based on its request for an NF-2 form.



Steven E. Peiper

[email protected]


08/10/06       Walker v Tighe

Appellate Division, Second Department

Denial’s for Concealment/Fraud in a Proof of Loss Require Demonstration of Insured’s Intent

Plaintiff sustained a fire loss in 2012, and subsequently presented a claim for coverage to State Farm.  State Farm apparently denied the claim on the basis that the policy only covered a dwelling that was a “one, two, three or four family” domicile.  It was State Farm’s contention that the insured property did not fall within the scope of the policy.  In addition, it appears that State Farm also denied the claim on the basis of fraud in the Proof of Loss. 


State Farm eventually moved for summary judgment on both issues.


The trial court denied State Farm’s motion with regard to the size of the insured property.  In affirming the trial court, the Appellate Division noted the State Farm policy did not limit its coverage to the aforementioned dwellings.  The Second Department also found a question over whether the insured property actually did qualify as a “one, two, three or four family dwelling.” 


The Appellate Division also affirmed the trial court’s denial of State Farm’s motion based upon fraud.  In reaching its holding, the Court acknowledged that the policy requires good faith and fair dealing from both the insured and the carrier.  Where an insured intentionally “applies fraudulent statements” coverage will be appropriately extinguished.  However, the carrier must establish the policyholder’s intent to misrepresent the extent of his or her loss.  Here, as a triable issue of fact existed as to the plaintiff’s intent, it was held that State Farm did not meet its burden.


08/04/16       In re New York City Asbestos Litigation

Appellate Division, First Department

Contracts that Pre-Date GOL § 5-322.1, are Not Void Where They Contemplate Indemnity for One’s Own Negligence

In a very interesting asbestos/Labor Law decision, plaintiff was awarded a verdict against LILCO (predecessor of National Grid) at a Labor Law § 200 trial. Apparently, the jury found that LILCO/National Grid specified means and methods of handling asbestos laden materials which resulted in plaintiff’s injury. 


Of particular interest is the fact the Court also reviewed an indemnity agreement between LILCO and O’Connor.  Although the indemnity agreement contemplated LILCO’s being indemnified for its own negligence, the Court ruled that since the document pre-dated General Obligations § 5-322.1 the clause was not invalid.  Accordingly, although the clause, as written, was void under current New York law, the Court applied the law on the date of execution as opposed to application.


In addition, the Court noted that National Grid was entitled to recovery of its fees incurred in defense of plaintiff’s allegations.  National Grid was not permitted to recover costs incurred in prosecuting its cross-claim for indemnity against O’Connor. 



Agnes A. Wilewicz

[email protected]


08/06/16       Liberty Mutual Insurance Company v. The Fairbanks Company

United States District Court, Southern District of New York

Southern District Holds that It Cannot Interpret Non-Cumulation Clause without First Deciding Number of Occurrences, where Clause Application is Limited to “The Same Occurrence”

This decision is light on facts and heavy on case law, but the underpinning is that Liberty insured Fairbanks Company from 1974 to 1982 under successive GL and umbrella policies. Fairbanks was eventually sued for a number of asbestos claims, and sought coverage. Long story short, the issue in this case was what kind of allocation should be applied where Liberty’s policies contained a non-cumulation clause. In particular, the clause here provided:


If the same occurrence gives rise to personal injury ... which occurs ... partly within any annual period of this policy, then each occurrence limit and the applicable aggregate limit or limits of this policy shall be reduced by the amount of each payment made by the company with respect to such occurrence, either under a previous policy or policies of which this is a replacement, or under this policy with respect to previous annual periods thereof.


In March of this year, the Southern District held that the policies were subject to pro-rata allocation such that Liberty was only liable for years it was on the risk. However, in May the New York Court of Appeals issued the Viking Pump decision which held that all sums allocation and vertical exhaustion applied. (See our May 6th issue from earlier this year: CP Volume XVII, No. 23.) Thus, Fairbanks moved for reconsideration of the earlier decision in light of this new precedent.


First, the court recognized the fact that Viking Pump was precedent that now applied. In re-analyzing the allocation method in this case however, the Southern District did not get far. Since the plan language of the provision stated that it was limited to “the same occurrence”, it was necessary to determine the number of occurrences at issue here. Yet, discovery was not complete in the action and the number of occurrences was unknown. Thus, the court wrote that while the “Liberty non-cumulation clauses must be enforced under Viking Pump, even where policies are subject to an all sums allocation, see 27 N.Y.3d at 259, but the preconditions for their enforcement have not been established in the record at this time.”




Jennifer A. Ehman

[email protected]


No reported coverage decisions from the lower courts.



Brian D. Barnas

[email protected]


08/05/16       Ace American Insurance Company v. Fireman’s Find Insurance Company

California Court of Appeal, Second Appellate District

An Excess Judgment is not Required for an Excess Carrier to bring an Equitable Subrogation Action against a Primary Carrier based on its Bad Faith Failure to Settle within the Primary Policy’s Limits

In 2010 John Franco was working on a film set when a special effects accident caused him to suffer serious injuries.  In 2011, Franco and his wife sued Warner Brothers and related entities for damages and loss of consortium.  Warner Brothers was insured under a primary insurance policy with Fireman’s Fund with a $2 million limit and an umbrella insurance policy with Fireman’s Fund with a $3 million limit.  Warner Brothers also had an excess policy with Ace American with a $50 million limit.


Fireman’s Fund defended the Franco lawsuit.  In 2012 the Francos made a settlement offer within the limits of the Fireman’s Fund policies.  According to Ace American, those demands were reasonable given the evidence.  However, Fireman’s Fund denied the offer, and later in 2012 Fireman’s Fund settled the case for an amount in excess of its limits.


Ace American sued Fireman’s Fund for equitable subrogation and breach of the covenant of good faith and fair dealing based on Fireman’s Fund’s refusal to settle the claim within its policy limits. 


The issue presented in the case was whether Ace American could sue Fireman’s Fund for equitable contribution and bad faith even though there was no judgment against their insured above Fireman’s Fund’s policy limits.  Fireman’s Fund argued that an excess insurer may only sue if there has been a judgment against the insured in excess of the primary policy.  In the Franco case there was no judgment because the case settled.  In opposition, Ace American argued that a judgment in excess of the primary policy is not required as long as the insured – and by extension, the excess carrier – is required to pay an amount beyond the primary policy as a result of the primary insurer’s bad faith refusal to settle.


The Second Appellate District concluded that an excess judgment is not a required element of a cause of action for equitable subrogation or breach of the duty of good faith and fair dealing.  If the excess insurer has contributed to a settlement in excess of the primary policy’s limits due to the bad faith failure to settle of the primary insurer it can seek to recover the excess amount from the primary insurer.


07/29/16       AXIS Insurance Company v. Stewart

United States District Court, Northern District of New York

Classification Limitation Limiting Coverage to Specific Races Precluded Coverage for Lawsuit Arising out of Unlisted Race

On August 9, 2014 Tony Stewart struck and killed Kevin Ward during an Empire Super Sprint Event being held at Canandaigua Motorsports Park in Canandaigua, New York.  Stewart, Ward, and twenty-two other drivers were participating in the race when Stewart and Ward’s race cars made contact, wrecking Ward’s vehicle.  Thereafter, the race track came under a yellow caution flag, understood by the drivers as a signal to slow down and move away from Ward’s wrecked vehicle.  While the remaining drivers continued to race, Ward exited his car, walked down the track on foot, and was fatally injured when Stewart’s race car struck him.  Ward brought a wrongful death action against Stewart.


Tony Stewart Racing Enterprises had CGL, excess, and commercial automobile policies of insurance with AXIS.  The relevant CGL policy contained two important endorsements.  The first was a Schedule of Events endorsement, which listed 105 specified events.  The endorsement provided that coverage under the CGL policy only applied to the 105 listed events.  The race in which Stewart struck Ward was not a listed event. 


The second endorsement was a Participant Legal Liability – Motorsports endorsement.  It provided coverage for participant legal liability for a claim brought against the insured for bodily injury by a participant while participating in a motorsports contest of exhibition.  Excluded from this coverage were any claims brought by one racing vehicle driver against another.  Importantly, “participant legal liability” was defined as bodily injury to a participant “while practicing for or participating in any event sponsored by you.”


Stewart tendered the defense of the Ward action to AXIS who denied coverage based on the Schedule of Events endorsement and driver to driver exclusion.  AXIS commenced a declaratory judgment action, and Stewart interposed a bad faith counterclaim.  The Court concluded that the exclusion did not apply, but there was no coverage based on the Schedule of Events endorsement.


In evaluating the applicability of the driver to driver exclusion, the court concluded that the Ward action did not even fall within the insuring agreement for Participant Legal Liability coverage.  The Canandaigua race was not an event sponsored by Stewart as required for an occurrence to fall within the insuring grant for participant legal liability.


However, the court concluded that the Schedule of Events endorsement precluded coverage.  The court held that the Schedule, which was a classification limitation limiting the scope of coverage in the first instance, was not ambiguous.  There was no coverage for the Ward incident because the race during which the accident occurred was not included in the Schedule as an event to which coverage under the AXIS policy applied.


Stewart’s bad faith counterclaim was dismissed based on the court’s finding in favor of AXIS.



Jennifer J. Phillips

[email protected]


08/02/16       American Home Assurance Company v. Allan Window Technologies, Ltd.

Southern District of New York

Duty to Defend Against Vague Allegations

The plaintiff insurer commenced this action seeking declarations that it had no duty under an owner-controlled insurance program (“OCIP”) policy to defend or indemnify an enrolled contractor in an underlying action.  The underlying complaint, brought by the property owner, alleged causes of action for breach of contract, breach of warranty, and contractual indemnity against the enrolled contractor associated with the contractor’s installation of window wall systems and vent windows for a residential condominium building. 


The OCIP Policy provided coverage for “insured contracts” where the damages stemmed from “property damage” caused by an “occurrence.”  The relevant contract provided that the enrolled contractor would indemnify the underlying plaintiff for all “losses, claims (including, but not limited to, those alleging . . . damage to property of third parties), causes of action,  . . . arising out of or in connection with : (i) . . . damage or injury to, or loss or destruction of, property (including tools, equipment, plant and the buildings at the Project Site and adjacent locations, but excluding the [Project] itself), including the loss of use resulting therefrom sustained or purported to have been sustained as a result of the performance of the [Project].”


The insurer moved for summary judgment, arguing first that, under New York law, an “occurrence” of property damage under a commercial general liability policy cannot exist where a general contractor’s negligent acts affected only the property owner’s economic interest in the building.  Accordingly, the insurer argued that the relief sought in the underlying complaint was “only for costs associated with the repair or replacement of the window wall systems and vent windows constructed by [the enrolled contractor].”  In other words, because there were no allegations of damage to some other property, independent of the contractor’s work product, there was no “occurrence” within the meaning of the Policy.


The district court disagreed, noting that where a complaint contains facts or allegations that bring a claim “even potentially within the protection purchased, the insurer is obligated to defend.” The court found that the allegations in the underlying complaint were sufficiently vague such that it was “entirely possible that some or all of the claims alleged in the Underlying Complaint are for tort damage caused to third-party property, distinct from [the contractor’s] work product.”  Accordingly, the insurer could not claim that there was no interpretation of the underlying complaint that would not trigger the insurer’s duty to defend, as required to meet the insurer’s burden to meet in order to succeed on the summary judgment motion.


The district court further found that the insurer could not rely on a “professional services” exclusion, inasmuch as that exclusion did not encompass services within “construction means, methods, techniques, sequences and procedures employed by [the contractor] in connection with [its] operations in [its] capacity as a construction contractor.”  Accordingly, the insurer’s motion for summary judgment was denied.


Earl K. Cantwell
[email protected]


01/26/16       Old Republic Insurance Co. v. Stratford Insurance Co.

New Hampshire

What Triggers an Excess Insurer’s Duty

A tractor trailer was involved in a collision.  The owner purchased a policy from Old Republic, and the lessee of the rig purchased a separate policy from Stratford.  In the underlying injury case, Old Republic sought Stratford’s assistance in paying the defense costs, which request was rejected on grounds that Stratford believed it had no duty to share in defense or indemnification costs because its policy was excess to the Old Republic policy.  Old Republic brought a declaratory judgment action arguing that Stratford, as a co-primary insurer, had a duty to provide coverage and pay a portion of defense costs (and presumably any indemnity award). 


The District Court ruled that Old Republic was a primary carrier, and that the Stratford policy was excess coverage.  However, the District Court interpreted New Hampshire law to require an excess insurer to provide a defense, thereby concluding that Stratford had an obligation to share equally in the defense costs.  As happens with these things, both parties were unhappy and appealed to the First Circuit, and with respect to the duty to share defense costs, the First Circuit found the issue to be not settled under New Hampshire law, and certified that question to the New Hampshire Supreme Court for a decision. 


The decision of the New Hampshire Supreme Court, as delivered to the First Circuit, was that the excess insurer’s duty to defend is triggered only when the primary insurer’s coverage is exhausted.  This is ostensibly a “majority rule” among the states that have considered the issue based upon a presumed intent of the primary and excess insurers to provide different levels of coverage as part of an overall risk management program.  The Court also made note that excess policies would normally be priced and purchased to reflect presumed reduced expenditures that an excess insurer would most likely incur.  The Supreme Court distinguished earlier New Hampshire law relied upon by the District Court by explaining that case addressed allocation and defense costs between co-primary insurance companies, and not a real dispute between a primary and an excess carrier. 


The first lesson of this case is that courts can and do frequently disagree and even arrive at conflicting results, and that is when appeals courts have to weigh in on the issues.  For example, in this case, both parties were disappointed with the District Court decision resulting in appeals to the First Circuit.


Unless there is a federal statute or question involved, the federal courts are tasked with applying state law.  In instances where state law is unsettled or has not been determined, the federal courts may certify questions to the highest court in the relevant state for a determination, particularly if the outcome under state law is questionable, or the federal court is reluctant on its own to change state legal policy.


This case is also interesting because of the partial explanation of the holding being that excess policies are generally priced and sold to reflect reduced defense costs and indemnity payments.  This is one of the first if not only cases in my experience where a court, let alone an appeals court, cared at all about the actual realities of pricing, selling, or underwriting insurance policies.

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