Coverage Pointers - Volume XX, No. 10

Volume XX, No. 10 (No. 520)
Friday, November 2, 2018

A Biweekly Electronic Newsletter


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.

Just back from NYC  -- I would guess it is my 20th round trip with my good friends from JetBlue.  They are kind and generous folks and have nice planes and good red wine (only on the trip home, of course).  More travel coming up.  We continue to look to hire additional downstate and capital district attorneys in coverage and general litigation so if you know of anyone who wants to join a growing mid-size firm, one that has been plying its craft for 40 years with an expanding business base, have them contact the undersigned.

What an interesting array of cases in this week’s issue.  The other authors use their cover notes, below, to introduce the most interesting cases in their areas of coverage.  In my column, you will find a post-Burlington case and a forum non-conveniens dismissal (Quebec plaintiffs, Quebec defendants and Quebec law led to a case being bounced out of the New York courts and sent to Canada). You will find a “late notice” case under the “old” pre-prejudice case law (who would think that there are still cases around with pre-January 2009 policies). 


Extrinsic Evidence Considered Curtailing a Defense Obligation:

Most interesting, is Zurich v. ACE, an October 23rd decision out of the First Department.

Anyone who knows New York coverage law (and this is the rule, in most jurisdictions throughout the country), know this maxim:  an insurer cannot use extrinsic evidence to deny an insured a duty to defend, but must rely on the pleadings.  It can (and in some cases should) consider “facts” outside the complaint to broaden the defense obligation (but again, not to shrink it).

Along comes the Zurich case where the court looked beyond the words of the complaint to the underlying facts and determined that there could be no duty to indemnity and therefore, no duty defend.  The court worked around the allegations and reviewed other documentation.

Aggressive motion practice was successful. 


Hurwitz & Fine ranked a Tier One Firm by US News and World Report:

We just learned the U.S. News and World Report has listed seven firm practice area in its “Tier One rankings”: Insurance Law, Litigation – Labor & Employment, Health Care Law, Mediation, Personal Injury Litigation – Defendants and Tax Law.

Firms included in the 2019 Edition of “Best Law Firms” are recognized for professional excellence with consistently impressive ratings from clients and peers. Achieving a tiered ranking signals a unique combination of quality law practice and breadth of legal expertise. The 2019 rankings are based on the highest number of participating firms and highest number of client votes received on record. To be eligible for a ranking, a firm must have a lawyer recognized first in The Best Lawyers in America, which recognizes the top five percent of practicing attorneys in the U.S. Over 16,000 lawyers provided more than 1,125,000 law firm assessments, and almost 12,000 clients provided more than 107,000 evaluations.

Hurwitz & Fine also received Tier Two honors in Corporate Law, Elder Law, Employment Law - Management, Litigation - Municipal, and Product Liability Litigation - Defendants. In addition, Tier Three honors were received in the Commercial Litigation, Mergers, Acquisition Law, and Real Estate Law practice areas.

The 2019 Tier one national and metropolitan rankings will be featured in the “Best Law Firms” General Counsel Publication, which will be distributed in November to more than 30,000 in-house counsel, and in digital format to more than 60,000 private practice lawyers worldwide.


Be There or Be Square – The Best Insurance Program of the Year:

Insurance Coverage and Practice Symposium

November 29th – 30th
Sheraton New York Times Square Hotel
New York, NY

The DRI Insurance Coverage and Practice Symposium is the foremost educational event for insurance executives, claims professionals, and outside counsel who specialize in insurance coverage. This year’s symposium will once again offer an unparalleled opportunity to engage with a distinguished faculty of insurance industry leaders, experts, and coverage lawyers on emerging issues, recent court rulings, national trends, and the future of insurance coverage law. In addition, the symposium will provide exceptional networking events, as well as an opportunity to experience the wonder of New York City during the holiday season!

Jen and I will be there.  Hope to see you as well.  Click here for more information.

I am pretty sure that insurer reps who have not attended a DRI conference before can be sponsored for free admission.  Let me know if you’re interested.


A Century Ago – New York Gubernatorial Election:



New York Tribune

New York, New York

02 Nov 1918


Wall Street Picks

Whiteman, 2 to 1


It was estimated that at least $30,000 was wagered in Wall Street yesterday on the result of next Tuesday’s election in this state.  Governor Whitman continued to be a big favorite to become  the Democratic nominee, Percy Guard, stakeholder reporting one bet of $9,000 to $6,000 that Whitman would be reelected.  Smith supporters wanted 2 to 1 as a rule, and one bet of $5,000 to $10,000 was made on the Tammany favorite.   It was said that Stock Exchange firms were the heaviest bettors on the Republican candidate.

Editor’s Note: On Election Day, Democrat Al Smith won the election with 47.36% of the vote to Republican Charles Whitman’s 46.66.  10,000 votes out of two million cast for these two men made the different.  The Socialist Party candidate, Charles Ervin, received 5.71% of the vote, some 121,000+ votes with the Socialist Labor candidate and others receiving the rest.


Jen’s Gems:


It was good to see many of you the other week in San Francisco for DRI’s Annual Meeting.  And, for those that have not signed up yet, DRI’s Insurance Coverage and Practice Symposium is quickly approaching.  It is actually earlier this year and will take place November 29th through November 30th.  It remains one of my favorite programs to attend.  The content is always current, interesting and informative, and I love to visit New York City at Christmas time.  If you haven’t registered yet, the link is

I also wanted to comment on one of the cases I report on this week in my column, Colony Ins. Co. v. MYM Construction, Inc. v. Tutor Ins. Co.  This is a New York trial court decision, which is part of a growing number of decisions that we are seeing at all levels addressing what I will refer to as “super exclusions.”  Often, these exclusions will state that the carrier will not cover injuries to employees of any contractor or subcontractor on the jobsite.  These exclusions are then typically coupled with a provision amending the definition of “insured contract” to remove your typical hold harmless agreements, which appear in construction contracts.  The result is that there ends up being no insurance for the named insured’s employees or losses for any employee of another contractor or subcontractor on the site, and on top of that, there is no coverage for the employer for the separate tort claim seeking contractual indemnification or contribution. 

If you follow New York coverage law, you will know that courts in this state have repeatedly held that these types of provisions are enforceable despite arguments from insureds and other carriers that they are ambiguous or against public policy.  The strategic result we are now seeing is that instead of challenging these exclusions based upon the actual language, the challenges are now based upon violations of New York Insurance Law § 3420(d).  In other words, parties are complaining about the timeliness of the letters and/or whether they copied the correct parties.  As demonstrated by this decision, these are the challenges that are gaining more traction with the courts then challenges based upon the actual language.

The take away is that if you are a carrier using these types of endorsements, it is vital that the claims handlers know how to issue an enforceable disclaimer in New York.  If you would like a refresher, just shoot me a note and I can send you our “checklist.”

Until next issue…



Jennifer A. Ehman

[email protected]


Cars, Cars, Cars, 100 Years Ago


Buffalo Evening News

Buffalo, New York

02 Nov 1918





Half Million Motor Cars Is Total for

This Year


New York State now has a car for every twenty-three of its residents.  It leads the entire world in the number of its motor vehicles.  In 1917, 411,567 cars were registered in this state through the secretary of state’s office.  This year will find at its conclusion 500,000 cars traveling over our magnificent system of highways.  There are today over 350,000 passenger cars, 60,000 commercial cars, 2800 dealers, 136,000 chauffeurs and approximately 30,000 motor cycles in New York State, with resultant revenue of over $4,500,000.  Under our laws, the counties received back in 1917 the sum of $2,025,857.41, of which all but $800,266.08 became practically immediately available for the construction and maintenance of our roads.  The $800,266.08 reverted to New York City’s general fund and was applied in meeting the ordinary everyday expenses of the metropolis.


John’s Jersey Journal:

Sadly, there was no time to dress up for Halloween this year. Settling into the house took priority. Erin and I had a few trick-or-treaters though. Then we got bored and settled into to watching Netflix.

Luckily, we have insurance cases from New Jersey to keep life interesting. We have several cases from the New Jersey Appellate Division. The first case is rather unique. The claimant was injured while playing with the hydraulic lift gate on a Chevy box truck. At the time of the injury, there was no auto insurance on the vehicle. As such, the claimant made some creative arguments trying to find coverage under the business’ general liability (“GL”) policy.

The GL policy had a limited giveback for losses involving an automobile. The GL policy provided bodily injury claims arising out of the operation of a “cherry picker and similar devices used to raise/lower workers” if those devices are “permanently attached to an automobile.” The policy also provided coverage for bodily injury claims arising out of the use of “mobile equipment.” “Mobile equipment” being defined as “solely land vehicles” used exclusively at the insured’s premises.

The claimant first argued that there was coverage under the GL policy claiming that a hydraulic lift gate is similar to a cherry picker. This argument was rejected because the lift gate’s manual warned against using it as a personnel lift. The claimant also argued that truck with the lift gate was mobile equipment—i.e., a land vehicle being used exclusively at the insured’s premises. This argument also failed. The Court saw through this argument as trying to get around the “auto” exclusion. The Court found that the truck was an “auto” because it was designed for use on public roads. In addition, the truck was not “mobile equipment.” It was used for deliveries after the accident and auto insurance was purchased for the vehicle the day after the accident.

The second case is a broker/producer liability case. An insurance producer was sued for negligent misrepresentation of insurance. The producer had issued a certificate of insurance to the plaintiff indicating that plaintiff was an insured under the relevant policies. That was true. The claim against the producer was that they misrepresented the “level” of coverage. The particular policy provided coverage on a primary basis only when required by contract. The plaintiff’s contract, which plaintiff drafted, did not require insurance on a primary basis. Therefore, the plaintiff had coverage under the policy, but on an excess basis.

The Court ruled that there was no negligent misrepresentation. Negligent misrepresentation requires reliance. However, none of the plaintiff’s employees had ever read the certificate of insurance, and therefore, could not have relied upon it. As such, the Appellate Division bounced the lawsuit.  This case is a good reminder that if you want someone else to buy you insurance on a primary basis, ask for it in the contract.

If either of these cases pique your interest, the cases are discussed in greater detail in the attached issued.

Still no movement on the New Jersey bad faith bill. I check every week.



John R. Ewell

[email protected]


Fine for Quackery:


Akron Evening Times

Akron, Ohio

02 Nov 1918





Judge Ahern Friday sustained the verdict in the case of Fred Shaw of Cuyahoga Falls who was arrested on an affidavit filed by Assistant Prosecutor Spencer, charging him with unlawfully practicing medicine without a certificate from the State Medical board. Shaw was arrested on March 6th last, and tried before Probate Judge Slusser, who found him guilty and imposed a fine of $200. The fine was suspended until the appeal before Judge Ahern could be heard.

Shaw, it is said, expected to try for a doctor’s certificate but in the meantime had been treating patients by using electricity in the performance of his healing powers. Shaw was represented by Attorney A. C. Holloway.


Peiper on Property and Potpourri

The beginning of November brings with it both good and bad news.  More on that in a bit.  First, we’d be remiss if we didn’t make mention of an interesting decision out of the First Department in this week’s column.  Increasingly, or seemingly so, insurers are including mandatory arbitration clauses.  Arbitration streamlines the litigation process, removes it from an increasingly significant backlog and delay in appellate courts, and promotes finality among the litigants.  That, of course, is the idea.  It is not, however, always the result.  In the American International case, an arbitration panel entertained additional submissions and reconsidered its opinion after issuing a final arbitration decision and award.  Not surprisingly,  upon reconsideration the panel reversed its previous decision and rendered a final, final decision and award.

Reargument/reconsideration is nothing new in trial courts.  Indeed, the CPLR contains a provision for this exact mechanism.  For arbitration, however, the award should be final.  Finality, again, is a benefit of arbitration.  In the end, the Appellate Division intervened and overturned the reconsidered, re-rendered decision from the arbitration panel.  The arguments for, and against, the decision are quite interesting though, and we’d encourage you to review it as your interest dictates.

Now for the bad.  Our home shop is beautiful downtown Buffalo.   Close neighbors to the Buffalo Bills who masquerade in Orchard Park; just to our south.  The Bills are not good.  It has been a decade since their last Monday night appearance, and several decades since they’ve actually belonged on Monday Night Football.  1994, in fact, was the last time they actually won a game on the big stage.  They should not return for another decade. By the way, how long ago is 1994.  Boyz II Men had the number one song, and someone born on that date has now slept the equivalent of approximately 8 years.  Or…about half of the seasons the Bills have slept through over the past two decades.   

The very next day, the zig to the Bills’ zag occurred.  The University at Buffalo Bulls pulled an anti-Bills moment.  Yes they won, but the anti-Bills moment occurred when they actually completed a forward pass.  In fact, they completed several forward passes.  The forward pass was made legal, by the way, in 1906…just a few years earlier than the last time the Bills won on Monday Night Football. In any event, the Bulls (the anti-Bills) are 8-1 and receiving votes in the AP Top 25 poll.  They have a legitimate chance of going 11-1 in the regular season.  The Bills may not win 11 games in many seasons.

Call us about the Bulls, not the Bills.  Okay?

That’s it for this week.  In the meantime, “horns up.” 



Steven E. Peiper

[email protected]


End of World War I in Sight:


The Brooklyn Daily Eagle

Brooklyn, New York

02 Nov 1918





Durham, N. H., November 2—Former President Taft in an address to 1,000 members of the Students’ Army Training Corps, at New Hampshire College today, predicted that Germany would surrender unconditionally in from one to six months.  He assured the students that even if they did not go overseas, the moral effect of their entrance into service would be felt no less strongly.


Hewitt’s Highlights: 

Dear Subscribers:    

I hope you had a wonderful and scary Halloween. My one son dressed up as Bowser, Mario’s enemy. My other son was Mario riding Yoshi which involved a fan inflating the costume. Since he could not sit down in it, he needed a second costume for school, or so he convinced me. That was Spider-Man’s enemy venom. My wife was a demon and I was Jack Skellington, the Pumpkin King from Nightmare Before Christmas. They quit trick or treating after two hours. I remember going at least four. Kids today!

On the serious injury front, we have several cases A twenty percent range of motion limitation in the cervical spine was considered enough to find an issue of fact. A Plaintiff was denied a motion to reargue where his physician’s report alleging aggravation of a pre-existing injury was not submitted on the motion for summary judgment and its absence was unexplained. A motion to set aside a jury verdict as against the weight of the evidence was denied as the jury was entitled to choose between competing experts. Finally, a plaintiff’s expert failed to address the defendant’s expert’s opinion that the injuries were degenerative in nature, such that the motion for summary judgment for the defendants was granted.

See you next edition. Happy Veterans Day to any veterans who read the column.


Robert Hewitt

[email protected]


Turkey Capitulates:


Buffalo Morning Express and

Illustrated Buffalo Express

Buffalo, New York

02 Nov 1918





Articles of agreement drawn up with Ottoman government are equal to unconditional surrender and include the opening of Dardanelles, surrender of the fleet and all fortifications of nation.


Wilewicz’ Wide-World of Coverage:

Dear Readers,

The weather up here has turned to a cold wet mush, while the fleeting joy of Halloween is now over, and I’m not feeling so great, so let’s dive right into the exciting world of coverage. Suffice it to say that my daughter had no fewer than three costumes yesterday (camo for school, a pirate for giving out candy, and a Christmas present for trick or treating). She sure loves her holidays, and has already asked more than once when Christmas décor can come up – no earlier than the day after Thanksgiving, I believe is the correct answer. One season at a time.

Now, in the wide world of coverage, we have but one case out of the Second Circuit this week. In Madelaine Chocolate Novelties v. Great Northern Insurance Company, the issue was whether two anti-concurrent clauses in a policy created an ambiguity. In short, after the insured suffered considerable Hurricane Sandy losses, they sought coverage. Their policy contained both a windstorm endorsement and a flood exclusion, both of which contained anti-concurrent language. Unfortunately for the carrier, however, while the flood exclusion might otherwise have barred coverage, the two provisions read together did not meet the standard of “clear and unmistakably” written language that an exclusion must have in order to be upheld. Since ambiguities, in any contract not just an insurance policy, must be read against the drafter, the court ended up finding coverage. It’s a very brief decision; see the link in the attached edition.

Until next time!


Agnes A. Wilewicz

[email protected]


Public Control of Trolleys Under Consideration:


Democrat and Chronicle

Rochester, New York

02 Nov 1918





New York, Nov. 1.-- Public ownership of street rail as a solution of present “unprecedented conditions” was advocated before the American Electric Railway Association meeting here to-day by Richard McCulloch, president of the United Railways Company, of St. Louis, while John J. Stanley, of Cleveland, president of the organization and Thomas N. McCarter, of Newark, N.J., chairman of the committee on conference with the national government, urged higher fares as essential to continued operation of the lines.

Mr. McCarter, presenting a report for his committee, declared that rates must be increased sufficiently to meet the higher cost of producing service, that public utilities must be relieved, during the war, of non-essential and unproductive requirements, such as paving and undergrounding of wires, yhat means must be devised to enable utility companies to meet obligations and that assistance must be provided to enable the operators to finance unavoidable extensions of service demanded by the nation’s war program.  


Barnas on Bad Faith:

Hello again:

As a prominent member of the fall fan club the last couple of weeks here in Buffalo have been difficult.  My favorite season of the year has turned into a seemingly never-ending sequence of cold, cloudy, rainy day after cold, cloudy, rainy day.  Where are the crisp, bright fall afternoons that I wait all year for?  This is all the more depressing because winter is just around the corner.  At least it looks like the weather should be good for this Sunday when us Bills fans will once again be subjected to watching Nathan Peterman play quarterback for our football team.

I have a rare in-state bad faith decision from the Appellate Division, Third Department.  In the Parentis case, a medical malpractice case hit for an $8.6 million dollar verdict.  The primary insurer and excess carrier had a combined $2.3 million in coverage.  In the subsequent bad faith case, both carriers pointed the finger at the other as to why the case didn’t settle.  The court determined that it was up to the jury to resolve the conflicting accounts provided by each insurer and determine who was responsible for the failure to settle.  The case has an interesting set of facts, including a lengthy discussion about settlement discussions between the time of a jury note asking for more information about the underlying plaintiff’s damages and when the verdict was ultimately rendered.  It’s worth a read.

We also have a guest column from Kevin J. Willging from Travelers about the Florida Supreme Court’s recent decision in Harvey.  Again, this case is a potential game changer for Florida bad faith.  Given this, we think it’s important to share Kevin’s perspective on the case, and suggest that you pay particular attention to the end where he provides some practical and legal lessons to be taken from the decision.  Special thanks to Kevin for allowing us to publish his write up.

I’m off to Chicago next week/weekend for the wedding of a dear friend.  I hope that the weather is better in the Windy City.

Have a nice weekend.

Signing off,



Brian D. Barnas

[email protected]


Object Matrimony:



Buffalo Courier

02 Nov 1918


Widower, middle-aged, wishes to meet Protestant lady over thirty.  No general delivery; flirts save stamps. Object matrimony.  Address Merchant 7, Buffalo Courier.

Editor’s Note:  Love that – flirts save stamps.


Off the Mark:

Dear Readers,

I hope everyone had a good Halloween.  The weather was perfect (60’s) on Long Island, and my kids had a great time collecting candy and wearing their costumes.  My oldest was a Ravenclaw wizard and my youngest wore a blow-up costume that looked like an alien was behind him holding him in the air.  He got a lot of laughs and a lot more candy.  Now they are learning about taxation as my wife and I are “taxing” their candy.  We like candy too!

Unfortunately, my search for interesting construction defect cases came up empty.  As always, I will continue to look out for new cases to report on.

Until next time …



Brian F. Mark
[email protected]


Object Matrimony:



San Francisco Chronicle

2 November 1918


Wanted – by lonely English woman, romance over the telephone; object matrimony.  Phone Maysie Franklin 1114.

Editor’s Note:  Ahh, romance over the telephone!


Wandering Waters

Welcome to another issue of Wandering Waters. I hope all of you have had a wonderful week.

What an exciting start to the NBA season.  After struggling to find his shot to start the season, Klay Thompson of the Golden State Warriors erupted for 14 made three-point field goals.  The Chicago Bulls could not do anything to stop Klay Thompson.  Whether he was open or guarded with tight defense, Klay Thompson made almost every shot he took this past Monday night.  His hot shooting earned him the new record for the most three-point field goals made in a single game.

While the Warriors are off to a great start, the Lakers are struggling to find consistency.  As of now, the Lakers’ defense is the largest culprit for the recent struggles.  Through the first few games of the season, the Lakers appear unable to make consistent defensive stops, which is a hallmark of any great team.  While you never can count out a LeBron-led team, the Lakers need to find some consistency on defense or run the risk of falling further behind in a loaded Western Conference.   

With that being said, this week we have one case from the United States District Court, Eastern District of New York.

Until next time …



Larry E. Waters

[email protected]


Tragic Accident:


Wreck of Interurban in Brooklyn Tunnel: 98 Bodies Recovered

Sheboygan (WI) Press

02 November 1918


New York, November 2 – Ninety eight bodies had been taken early today from the wreck of the Brighton Beach Interurban train which jumped the track in a tunnel to Brooklyn last night during the homeward bound rush-hour. More than 100 were injured. Col. T.S. Williams, president of the Brooklyn Rapid Transit company and other officials appeared before District Attorney Harry E Lewis today at an investigation, which may lead to homicide indictments being asked of the grand jury…

Editor’s Note:          While indictments were handed down, all of the defendants were acquitted or had the indictments dropped.  According to Wiki, The accident placed more pressure on the BRT to remove wooden equipment from routes that operated through tunnel sections or in subways, though this use was already limited. Wooden cars returned to use in the tunnel for another nine years, and cars of partial wooden construction remained in elevated service until 1969.

Additional safety devices were added to the subway and elevated system over the years, including more effective dead-man's controls to halt runaway trains, and signaling and automatic trackside devices called trippers or train stops to reduce the likelihood of trains operating too fast for conditions.

The three motorized cars involved in the wreck—lead car 726, fourth car 725, and final car 1064—were repaired and returned to service. The severely damaged trailers, 100 and 80, were scrapped; car 80 was cut up during the wreck cleanup.

In the wake of the tragedy, the majority of Malbone Street, under which the tunnel was located, was renamed Empire Boulevard, a name it still bears today. A detached one-block section of the street in Crown Heights, Brooklyn still bears the original "Malbone Street" name. The Malbone Street tunnel in which the wreck occurred continued in daily passenger operation for 40 years, although it was no longer part of the main line after 1920. The tunnel today is part of the Franklin Avenue Shuttle, but is not used in regular service.


Boron’s Benchmarks:

Dear Subscribers:

Oh how I hate to see October go.  And it is taking precious daylight with it.  When we “fall back” one hour in New York this weekend, we’re in for a long stretch of days that turn into weeks that turn into months where it will be depressingly dark outside every day as we leave work.  Talk about “continuous or repeated exposure to substantially the same general harmful conditions”.  You’re probably thinking to yourself, “Gee, thanks, Debbie Downer, for bringing down my mood.”  (Many of you are also probably hearing the “wah-wah” sound effect in your head, while thinking that thought…)

Oh, my.  Did I just feel a vibration coming back to this IP address from yours?  It happened when you went back and re-read that part about the “continuous or repeated exposure to substantially the same general harmful conditions”. Yes, friend, that is language straight out of the definition of an “occurrence” in the standard CGL policy.  Kudos to you for recognizing such policy language!  Now keep that in mind, as you hurry over to read my write-up about the Supreme Court of Wisconsin’s holding issued this week in SECURA Insurance v. Lyme St. Croix Forest Company, LLC, et al.  The Supreme Court there found that a massive wildfire that swept through a portion of Wisconsin over three days in 2013 damaging numerous different properties over those three days constituted a single accidental occurrence.  The holding is based in part upon the CGL policy’s definition of “occurrence” as being “an accident, including continuous or repeated exposure to substantially the same general harmful conditions”.

Those of you who actually do go on and read my write-up of the case will learn whether Wisconsin is one of those majority states whose courts apply the “cause theory” in determining the number of occurrences under a CGL policy, or, whether Wisconsin instead applies the “effect theory”, the minority approach.    

Here’s hoping our little newsletters over the weeks and months to come; may in small measure help you cast aside the cause and effect of the lack of daylight time you’ll be dealing with for the foreseeable future.  Be well, friends, and see you again in two weeks. 



Eric T. Boron

[email protected]


Illegal Voting by Immigrants, Alleged – Then Too:


Buffalo Morning Express

November 2, 1918


Stop Illegal Voting

Buffalo Division of American Protective League to Watch at Polls


Albert B. Wright, chief of the Buffalo division of the American Protective League, an organization formed for the purpose of preventing illegal voting, announced yesterday that the league will make every effort to obtain the conviction in the courts of illegal voters. Mr. Wright declares that a number of foreign-born men and women who have not taken out their final citizenship papers will attempt to vote. The law provides that only citizens may vote.

The state superintendent of elections in the county elections commissioners have agreed to cooperate with the members of the league during the coming election. Inspectors of elections will be instructed to report to the authorities the names of all voters who are suspected of not being citizens. A general appeal through advertising will be made to all loyal citizens of the city and County to send the name and address of all persons who are believed to have voted illegally to the headquarters of the league.


Jerry’s No-Fault Navigation

Dear Subscribers,

Hello and welcome to Jerry’s No-Fault Navigation, your eyes and ears to the no-fault regulations.  As no-fault claims become more contested, the plaintiff’s urge to insert claims in tort has become a pattern.  The Appellate Division, Second Department, recently addressed an insurance carrier’s response to multiple tort claims when they filed a motion to dismiss the Complaint for failure to state a cause of action.  As the Court’s decision points out, sometimes more is less.  Read on for more (or less).



Jerry Marti

[email protected]


Trans-Atlantic Flight Considered.


Times Herald

Olean, New York

02 Nov 1918


Atlantic Flight Not New Idea


Transatlantic air flights are by no means new.  In 1860, Professor Lowe announced that he would make a trip across the Atlantic in a giant balloon, carrying a boat to be used in case of accident.  He advertised that he would take mail for all parts of Europe at a small rate of postage.  He planned to take with him two scientific assistants and a sea caption to navigate the boat, if this should prove necessary.  Flight date was set for late in the fall of the year, but the plan never materialized, although the machine was on exhibition in New York for weeks and was visited by thousands of persons who believed the feat practicable. 


Headlines from this week’s issue, attached:


Dan D. Kohane
[email protected]


  • In Pre-prejudice Late Notice Case, AI’s Delay of Nine Months in Giving Notice to Carrier was Unexcused and Coverage was Lost
  • Where Quebec Law Applied to Loss Allocation and all Parties were Citizens of Quebec, Forum Nonconveniens Motion Properly Granted in Dismissing New York Accident Lawsuit
  • If the Hit-and-Run Driver is Identified, Uninsured Motorists Protocols Inapplicable
  • Emergency Remediation Repairs were not Voluntary Payments
  • Primary Policy Responsible for Post-Judgment Interest on Entire Judgment.  Excess Carrier Cheers.
  • In Rare Decision, Court Looks to Extrinsic Evidence to Find Exclusion Applicable
  • Claims that Named Insured Caused Accident Triggered Additional Insured Obligations



Robert E.B. Hewitt III

[email protected]


  • No Serious Injury Where Plaintiff’s Medical Records Were Not Sworn or Certified and The Records Contained No Objective Evidence of Injury Such As an MRI
  • Plaintiff’s Subjective Assertions Not Enough in Absence of Objective Medical Evidence of Serious Injury
  • Defense Expert’s Testimony That Plaintiff’s Cyst and Tear Were There for Years Was Enough to Uphold Jury Verdict
  • Plaintiff’s Experts Failed to Address Defendant’s Expert’s Finding of Degeneration
  • Plaintiff’s Physician’s Affirmation Regarding Aggravation of Existing Condition Was Submitted too Late on Motion to Renew
  • Twenty Percent Range of Motion Limitation in Cervical Spine Was Enough to Find Issue of Fact Whether Plaintiff Suffered a Serious Injury 



Steven E. Peiper

[email protected]




  • Failure to Establish Loss Fell Within Specified Peril Results in Immediate Dismissal of Lawsuit




  • While Settlement of Indemnity Claim was Not a Mary Carter, Issues of Fact Existed as to Reasonableness of Such Settlement Necessitating a Jury Trial
  • Arbitration Panel Exceeded its Authority by Reconsidering Previous Award



Agnes A. Wilewicz

[email protected]


  • In Hurricane Sandy Case, the Second Circuit finds that a Policy’s Two Anti-Concurrent Clauses Create an Ambiguity Sufficient to Find Coverage, Despite Clear Flood Exclusion



Jennifer A. Ehman

[email protected]


  • Question of Fact as to Whether Damage Resulted from Theft or Vandalism; Similar Questions about Impact of Misrepresentations on Policy Application
  • Question of Fact as to Timeliness of Disclaimer



Jerry Marti

[email protected]


  • Court Grants Motion to Dismiss Majority of No-Fault Claims in Complaint



Brian D. Barnas

[email protected]


  • Issue of Fact on Bad Faith Failure to Settle Case where Each Insurer Claimed the Failure to Settle was the Other’s Fault
  • Florida Supreme Court Issues Far-Reaching Bad Faith Opinion


John R. Ewell

[email protected]


  • New Jersey Appellate Court Affirms No Coverage under GL Policy for Automobile-related Injury, Rejecting Argument that Truck with Lift Gate was a “Cherry Picker” or “Mobile Equipment”
  • New Jersey Appellate Division Bounces Negligent Misrepresentation Case against Insurance Producer


Brian F. Mark

[email protected]


  • Nothing on the mark this week.



Larry E. Waters
[email protected]


  • Defendant’s Proffer Denied as Defendant Failed to Establish Plaintiff’s Marine Surveyor’s Report was Admissible Pursuant to Federal Rules of Evidence of 803(6) and Federal Rules of Evidence  801(d)(2)(D)



Eric T. Boron

[email protected]


  • CGL Policy – Reversal of Court of Appeals’ Affirmance of Circuit Court’s Ruling That Fire Which Spread Over 7,442 Acres Over Three Days Constituted Multiple Occurrences Instead of Single Occurrence


Earl K. Cantwell
[email protected]


  • Insured’s Discovery Requests Rejected; but No “Claims File Privilege” Recognized as Such


That’s all for now.  Keep those cards and letters coming in.  We love hearing from you.



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

Dan D. Kohane
[email protected]



Agnes A. Wilewicz

[email protected]



Jennifer A. Ehman

[email protected]


Dan D. Kohane, Chair
[email protected]


Steven E. Peiper, Co-Chair

[email protected]

Michael F. Perley

Jennifer A. Ehman

Agnieszka A. Wilewicz

Edward B. Flink

Brian D. Barnas

Brian F. Mark

Eric T. Boron

John R. Ewell

Larry E. Waters

Diane F. Bosse

Joel R. Appelbaum


Steven E. Peiper, Team Leader
[email protected]


Michael F. Perley

Edward B. Flink

Eric T. Boron

Brian D. Barnas

James L. Maswick


Jennifer A. Ehman, Team Leader
[email protected]

Jerry Marti


Jody E. Briandi, Team Leader
[email protected]


Diane F. Bosse

Topical Index

Kohane’s Coverage Corner

Hewitt’s Highlights on Serious Injury

Peiper on Property and Potpourri

Wilewicz’s Wide World of Coverage

Jen’s Gems

Barnas on Bad Faith

Jerry’s No-Fault Navigation
John’s Jersey Journal

Off the Mark

Wandering Waters

Boron’s Benchmarks

Earl’s Pearls


Dan D. Kohane
[email protected]


11/01/18       LaFarge Building Materials, Inc. v. Harleysville Insurance Co. Appellate Division, Third Department

In Pre-prejudice Late Notice Case, AI’s Delay of Nine Months in Giving Notice to Carrier was Unexcused and Coverage was Lost

Harleysville issued a commercial general liability insurance policy to Adirondack Mechanical Services (“AMS”) effective from January 2005 to January 2006. On July 9, 2005, David O'Dell, a millwright employed by AMS, injured his back while working at the LaFarge cement plant.  AMS was performing services at the plant pursuant to a purchase order generated by LaFarge. AMS was required to procure general liability insurance naming plaintiff as an additional insured and to provide plaintiff with a certificate of insurance listing plaintiff as an additional insured.

In March 2008, O'Dell sued LaFarge and others. Served on April 7, 2008, LaFarge retained counsel and filed an answer.  Nine months later, on January 5, 2009, LaFarge tendered to Harleysville seeking defense and indemnify under the policy. Defendant disclaimed coverage on the ground that plaintiff had failed to provide it notice of the lawsuit "as soon as practicable," as required by defendant's policy.

This was a policy issued prior to the “prejudice” statute going into effect.

The personal injury action ultimately settled, with plaintiff agreeing to pay O'Dell $1,425,000 and AMS agreeing to pay plaintiff $150,000 in settlement of a third-party action. LaFarge brought this action seeking defense costs incurred and reimbursement of the funds paid in settlement.

Here, Harleysville made a prima facie showing of its entitlement to judgment as a matter of law based upon plaintiff's nearly nine-month delay in notifying defendant of the underlying personal injury action.

LaFarge attributes the delay in notifying Harleysville to its purported lack of knowledge that it was covered under the applicable insurance policy and its claimed diligent efforts to ascertain coverage. It is undisputed, however, that, upon commencement of the underlying personal injury action, plaintiff possessed contemporaneous knowledge of the date and location of the incident, as well as the fact that it occurred in the course of O'Dell's employment with AMS, one of plaintiff's contractors. LaFarge’s own submissions further establish that, promptly after service of the complaint in the underlying action, it found in its records the April 26, 2005 certificate of liability insurance in AMS's name, which, notably, listed plaintiff as the holder and Harleysville as the insurance carrier for the project.

Thus, shortly after being served with the complaint in the underlying action, plaintiff (1) knew that an occurrence had taken place at its facility, (2) was aware that the incident involved an employee of one of its contractors, (3) had located the certificate of liability insurance listing it as the holder thereof and Harleysville defendant as the insurer for the project, and (4) knew that the language contained in its standard purchase orders required contractors, such as AMS, to name it as an additional insured on their policy of liability insurance.

In light of the information possessed by plaintiff promptly after service of the complaint in the underlying action, plaintiff "should have realized that there was a reasonable possibility of the subject policy's involvement" and the policy was breached.

Editor’s Note:  For policies issued on or after January 17, 2009, the insurer would have had to demonstrate material prejudice in its ability to investigate or defend the case, if coverage was being denied on late notice.


11/01/18       Claude v. Autobus Fleur De Lys

Appellate Division, Third Department

Where Quebec Law Applied to Loss Allocation and all Parties were Citizens of Quebec, Forum Nonconveniens Motion Properly Granted in Dismissing New York Accident Lawsuit

In July 2014, a motor coach bus carrying 56 individuals was traveling southbound on Interstate 87 in the Town of North Hudson, Essex County — heading from Quebec, Canada to New York City on a sightseeing expedition — when it struck a guardrail, careened down an embankment and rolled over, ultimately landing on its side. Numerous passengers were injured, and one teenager, Chelssy Mercier, died at the scene. In July 2016, Mercier's estate, as well as her family members, all of whom are Canadian residents, commenced this action against defendants, all Canadian residents or Canadian corporations, alleging negligence and negligent hiring and supervision.

It was claimed that the accident occurred because the bus driver, Perron, an employee of Autobus Fleur de Lys (“Autobus”) fell asleep. The bus was leased from defendant 9282-9621 Quebec, Inc. (“9282”). Morissette was the owner and president of Autobus Fleur and 9282. In December 2015, Autobus Fleur, 9282, Morissette and Perron (“defendants”) moved to dismiss the case based on the grounds of forum non conveniens (inconvenient forum). The lower court granted the motion.

A court may stay or dismiss an action where it finds, in the "interest of substantial justice," that the action "should be heard in another forum”. The application of this doctrine is discretionary and requires the balancing of several factors to ensure that a plaintiff's claims have "a substantial nexus with New York”.  The applicability of foreign law is an important consideration in determining a forum non conveniens motion.

In this regard, all of the parties are domiciles of Quebec and, under the first rule enunciated in Neumeier v. Kuehner (31 NY2d 121, 128 [1972]), although the accident occurred in New York, the law of Canada must be applied, in particular to loss allocation). Quebec’s loss allocation rules relating to automobile accidents as defined in the Quebec Automobile Insurance Act (hereinafter AIA) deeply conflict with New York law. In particular, AIA institutes a comprehensive no-fault compensation regime that provides compensation and expressly prohibits actions in a "court of justice". Compensation is determined and furnished through a nationalized governmental entity (see Automobile Insurance Act, RSQ, ch A-25, § 5 [1997] [Can]). Therefore, because Quebec law applies here, not only are plaintiffs prohibited from bringing an action for noneconomic loss, but Supreme Court would be required to interpret and apply the concepts that govern no-fault compensation under the AIA.  The lower court properly exercised its discretion in sending the case to Quebec.


11/01/18       Abdul S. v. Motor Vehicle Accident Indemnification Corporation

Appellate Division, First Department

If the Hit-and-Run Driver is Identified, Uninsured Motorists Protocols Inapplicable

In 2004, the infant petitioner, then five years old, was struck by a vehicle driven by nonparty Floyd. After obtaining a default judgment against Floyd, petitioners sought leave to pursue a claim against MVAIC under Insurance Law § 5218, which is entitled "Procedure for hit and run' cases," meaning cases in which "the identity of the motor vehicle and of the operator and owner cannot be ascertained." Here, the evidence submitted by petitioners in support of the application establishes that the accident was not a hit-and-run, and that the vehicle and its operator were identified. Accordingly, the particular procedure invoked is not available.


10/30/18       E.E. Cruz & Company, Inc. v. Axis Surplus Insurance Company

Appellate Division, First Department

Emergency Remediation Repairs were not Voluntary Payments

E.E. Cruz was the contractor on a deck replacement project on the Throngs Neck Bridge.  It seeks recover under various insurance policies for remediation costs it incurred and damages awarded against it in favor of the Triborough Bridge and Tunnel Authority (TBTA) as a result of a fire that broke out on the bridge during the performance of its work.

E.E. Cruz complied with the notice provision of the policy issued by National, which required it to "see to it that National was notified as soon as practicable of an occurrence' or an offense . . . which may result in a claim".

National contends that the costs of remediation undertaken by plaintiff were voluntary payments as a matter of law and not damages it was "legally obligated to pay." This contention fails to take into account the emergency nature of the remediation required; the bridge had been completely shut down as a result of the fire and was only partially opened as the damage was assessed and remediation work begun. Given that the costs incurred were covered under the policy, that time was of the essence in performing the remediation, and that plaintiff's damages would grow without remediation, the remediation costs were not voluntary payments.

The submission of a dispute notice to TBTA's Contractual Disputes Review Board merely preserved plaintiff's right to challenge TBTA's determination of damages in a mandatory arbitration. It is unclear which of the items in the list that precedes the phrase "entered into without our consent," i.e., settlements, judgments, arbitration, and other dispute methods, the phrase is intended to modify.

National argues that, because the policy provides additional insured coverage for property damages "caused, in whole or in part," by the named insured's acts or omissions, plaintiff is not entitled to additional insured coverage for the portion of fire damage attributed to it. However, the purpose of the quoted language is "to provide coverage for an additional insured's vicarious or contributory negligence"

National and Everest argue correctly that plaintiff's markups for its own overhead and profit on the remediation work are not covered under the policies, because these markups are not costs that it was "legally obligated to pay," within the meaning of the policies.

National is correct that its share of excess coverage is 1/11 of the total. While the National and Everest policies each provide excess coverage of $10 million, the National policy further provides that where additional insured coverage is required pursuant to contract, "the most we will pay on behalf of the additional insured is the amount of insurance required by the contract, less any amounts payable by [the underlying insurance]." National's named insured's subcontract required "not less than" $2 million in commercial general liability coverage naming plaintiff as an additional insured, and the underlying policy limit was $1 million. Thus, National's limit here is $1 million. Because insurers sharing the same risk are required to "contribute in the proportion their policies bear to the limit of coverage at that level".  National's share of the total excess coverage of $11 million is 1/11.


10/30/18       Chen v. Insurance Company of the State of Pennsylvania

Appellate Division, First Department

Primary Policy Responsible for Post-Judgment Interest on Entire Judgment.  Excess Carrier Cheers.

The specific interest-related questions at issue here did not become clear until after the May 2, 2016 order; only then did Supreme Court clarify that the Insurance Company of the State of Pennsylvania (“ICSOP”) the excess insurer was not liable to plaintiff for the first $1 million of the judgment. ICSOP's failure to articulate its position on interest issues earlier does not support a finding of waiver, which requires an indication of an intentional relinquishment of a known right that, except for the waiver, the waiving party would have enjoyed.

Plaintiff's interpretation of the "follow form" provision in the ICSOP policy is not persuasive. While a follow form policy is read in accord with the terms and conditions of the underlying policy that finding is not absolute.  The "terms and conditions" of the underlying Arch policy include, in its Supplementary Payments provision, Arch's agreement to cover prejudgment interest "on that part of the judgment we pay," i.e., the first $1 million, and "all" post-judgment interest on the "full amount of any judgment." The actual ICSOP "follow form" provision, moreover, states: "Except for the . . . conditions . . . of this policy, the coverage provided by this policy shall follow the terms, definitions, conditions and exclusions of the First Underlying Insurance Policy as shown in Item 4 of the Declarations."

Among the "conditions" of the ICSOP policy is the "Maintenance of Underlying Insurance" provision, pursuant to which, and regardless of whether the insured actually maintained such underlying insurance, ICSOP's excess coverage would be triggered only upon exhaustion of the "limits of insurance of the Underlying Insurance shown in Item 4 of the Declarations," which "limits," in turn, were not reduced by, and thus included, the interest payments set forth in the Supplementary Payments provision.


10/23/18       Zurich American Ins. Co. v. ACE American Ins. Co.

Appellate Division, First Department

In Rare Decision, Court Looks to Extrinsic Evidence to Find Exclusion Applicable

The duty to defend does not attach where, as a matter of law, there is no basis on which the insurer may be held liable for indemnification. The burden of establishing that a claim falls within a policy's exclusionary provisions rests with the insurer.  Here, the claimants' signed statements and the accident reports are properly considered to clarify ambiguous pleadings and meet ACE's burden that the underlying claims fell within the scope of its automobile exclusion.

The commercial general liability coverage provided by ACE included the following "Aircraft, Auto or Watercraft" exclusion, which excluded:

“Bodily injury' or property damage' arising out of the ownership, maintenance, use or entrustment to others of any aircraft, auto' or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and loading or unloading.'"

Here, the general nature of the operation of unloading the rebar cages, by the necessary step of untying the straps, led to the injuries sustained by the underlying claimants. Although the complaints alleged that the accident happened due to cages that were improperly constructed, improperly placed, improperly operated, improperly maintained, and not properly secured, the assertions nonetheless "arise out of" the loading and unloading of the truck and the ACE policy's auto exclusion is therefore applicable.

Editor’s Note:  This is the first case I can recall where the court looked outside the complaint, at notes and statements, to justify the applicability of an exclusion.  Extrinsic evidence is generally not allowed to limit coverage, only to expand it.


10/23/18       Indian Harbor Insurance Company v. Alma Tower, LLC

Appellate Division, First Department

Claims that Named Insured Caused Accident Triggered Additional Insured Obligations

Shortly after the underlying action was commenced, asserting claims of common-law negligence and Labor Law violations against Alma Tower and Vordonia in connection with injuries sustained by the injured party while he was working on the property for subcontractor S & S HVAC Corp., Alma Tower and Vordonia commenced third-party actions against S & S alleging negligence and seeking indemnification and contribution. Alma Tower and Vordonia also wrote to plaintiff seeking coverage pursuant to the insurer's duty to defend. Thus, plaintiff had actual knowledge that S & S may have proximately caused the underlying injury and that therefore Alma Tower and Vordonia may be vicariously liable to the injured party.

Burlington is inapplicable because of the allegations of causation.

As the underlying personal injury action was filed when the insurance policy was in effect, and plaintiff has a duty to defend, plaintiff is legally obligated at this time to pay Alma Tower and Vordonia's defense costs in the underlying action.  If there are additional grounds for policy rescission, those claims would be resolved in a separate rescission lawsuit.



Robert E.B. Hewitt III

[email protected]


10/30/18       Castro v. DADS National Enterprises Inc.

Appellate Division, First Department

No Serious Injury Where Plaintiff’s Medical Records Were Not Sworn or Certified and The Records Contained No Objective Evidence of Injury Such As an MRI

Defendants established entitlement to judgment as a matter of law by submitting evidence showing that plaintiff's claimed injuries were not serious within the meaning of Insurance Law § 5102(d). Defendants submitted the affirmed reports of their respective expert physicians, each of whom documented normal range of motion, diagnosed plaintiff with resolved strains/sprains of the spine, and opined that there was no objective evidence of serious injury.  In opposition, the Appellate Division held that plaintiff failed to raise a triable issue of fact as to whether she sustained a serious injury, rather than a minor injury. Plaintiff's chiropractic and physical therapy records were neither sworn nor certified, and the motion court properly declined to consider them.  In any event, the records contained no MRI or other objective evidence of injury and document only four months of therapy following the accident. Moreover, plaintiff resumed physical activities and participation in her gymnastics class.


10/25/18       Thomas v. McMaster

Appellate Division, Second Department

Plaintiff’s Subjective Assertions Not Enough in Absence of Objective Medical Evidence of Serious Injury

Plaintiff relied solely upon the 90/180-day category of serious physical injury, alleging that she suffered a pericardial effusion that "prevented [her] from performing substantially all of the material acts that constituted her usual and customary daily activities" during 90 of the first 180 days that followed the accident.   Defendant met his prima facie case that plaintiff did not suffer a serious injury by submitting plaintiff's medical records, which revealed that plaintiff was not medically restricted from her full-time employment or other activities after the accident.  In addition, plaintiff's deposition testimony established that she continued to perform her work after the accident with only occasional missed time for medical appointments, which she described as a few hours here and there, adding up to about two days. The burden thus shifted to plaintiff to submit objective medical evidence sufficient to create a question of fact regarding the existence of a serious injury caused by the accident. Plaintiff asserted that she missed work within the 180-day period after the accident because chest pain that she claimed was caused by a pleural effusion forced her to retire in August 2014, several months earlier than she had planned. She described various limitations on her activities, including the inability to perform certain household chores or carry groceries. Finally, she submitted records of four EKGs administered after the accident that she claimed reflected abnormalities that were not present in her previous EKGs. However, there was no medical evidence submitted to establish a causal relationship between these alleged abnormalities and her chest pain or limitations. On the contrary, the medical records included an assessment by plaintiff's treating cardiologist, stating that, although she had apparently experienced chest wall contusions, "it [was] unclear to [him] whether she actually had a cardiac contusion." He described a pericardial effusion seen in a previous examination as "minimal," stated that he was "not even sure of its significance," and concluded that he did not believe that the pain she was experiencing "was coronary in nature." In the absence of objective medical proof supporting her claim of serious injury, plaintiff's assertions were not sufficient to establish a triable question of fact.


10/25/18       Maksuta v. Heitzman

Appellate Division, Third Department

Defense Expert’s Testimony That Plaintiff’s Cyst and Tear Were There for Years Was Enough to Uphold Jury Verdict

Plaintiff moved to set aside a verdict finding no serious injury as being against the weight of the evidence.  The Appellate Division found that all of the testimony at trial revealed that the accident, which allegedly caused plaintiff's injury was relatively minor, a fact that was corroborated by photographs of the two cars involved. Medical doctors testified on behalf of both plaintiff and defendant. Richard Saunders, a medical doctor and orthopedic surgeon who testified on plaintiff's behalf, stated that an electromyogram and an MRI performed shortly after the incident, in September 2014, showed that plaintiff may have had a cyst as a result of a labral tear in his shoulder and a small ruptured disk in his neck. Saunders opined that plaintiff's injuries were a direct result of the accident. To the contrary, defendant's expert, Jessica Berkowitz, a diagnostic radiologist, testified that the cyst and labral tear shown in plaintiff's MRI were there for "many months to years." Berkowitz further testified that the injuries shown in plaintiff's neck were common in men his age. Accordingly, Berkowitz opined that plaintiff's injuries were not related to the accident. Similarly, Robert Hendler, a board-certified orthopedic surgeon, also provided expert testimony on behalf of defendant. Hendler opined that, given plaintiff's description of the accident, the only thing that happened to plaintiff's shoulder was that it struck the front of his seat, and that notations in plaintiff's medical records that he had full range of motion in his extremities after the accident were indicative of a minor injury. Hendler opined that plaintiff's injuries were not caused by the accident. Given the competing descriptions of what caused the injuries offered by the experts at trial, the jury was entitled to credit one decision over the other, and therefore, the Appellate Division found it proper not to set aside the verdict. 


10/24/18       Sylvain v. Maurer

Appellate Division, Second Department

Plaintiff’s Experts Failed to Address Defendant’s Expert’s Finding of Degeneration

The Appellate Court held plaintiffs failed to submit competent medical evidence showing that he sustained a serious injury to the cervical and lumbar regions of his spine under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d). The plaintiffs' experts failed to address the findings of the defendant's radiologist that the alleged injuries to the cervical and lumbar regions of the spine of both plaintiffs were degenerative in nature.


10/24/18       Moore v. Burns

Appellate Division, Second Department

Plaintiff’s Physician’s Affirmation Regarding Aggravation of Existing Condition Was Submitted too Late on Motion to Renew

The defendant moved for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. In support, the defendant submitted the affirmed report of an orthopedic surgeon who measured the range of motion of the cervical and lumbar regions of the plaintiff's spine on December 1, 2014, and found the results to be normal. In opposition, the plaintiff submitted her own affidavit in which she stated that she had undergone lower back surgery several months before the accident, and the accident aggravated her preexisting back injury. In support of her motion to renew, the plaintiff submitted the affirmation and operative report of her treating physician, who stated that he performed a second surgery on the plaintiff's lumbar spine on January 8, 2016. The Appellate Court held defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident as he 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). The Appellate Court held that plaintiff’s failure to submit the operative report and affirmation of her physician on the original motion was unexplained and the motion to renew properly denied.


10/24/18       Kholdarov  v. Hyman

Appellate Division, Second Department

Twenty Percent Range of Motion Limitation in Cervical Spine Was Enough to Find Issue of Fact Whether Plaintiff Suffered a Serious Injury 

The defendant moved for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. In support, he submitted the affirmed report of an orthopedic surgeon who examined the plaintiff on June 1, 2015. The defendant's orthopedic surgeon measured the range of motion of the cervical region of the plaintiff's spine and compared those results to what would be considered normal range of motion. He found the results to be normal. In opposition, the plaintiff submitted the affirmed report of a neurologist who examined the plaintiff on March 16, 2016. The neurologist measured the range of motion of the cervical region of the plaintiff's spine and compared his results to what would be considered normal range of motion. The neurologist found a 20 percent deficit in the flexion of the plaintiff's cervical spine, but otherwise found the results to be normal. While the Appellate Division held the defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law §5102(d) as a result of the subject accident, it found the plaintiff raised an issue of fact by the submission of the report finding the 20 percent range of motion deficit. 



Steven E. Peiper

[email protected]



10/18/18       Calhoun v. Midrox Ins. Co.

Appellate Division, Third Department

Failure to Establish Loss Fell Within Specified Peril Results in Immediate Dismissal of Lawsuit

Plaintiffs presented a claim for structural damage sustained to their barn when a tractor and bailer “broke through the floor.”  Upon receipt of the suit papers, defendant Midrox immediately moved to dismiss under CPLR 3211(a)(1) which provides authority for a motion based upon documentary evidence.  Midrox offered the policy into evidence which included only 11 specified perils.  Not one of the perils, however, reasonably encompassed a tractor “breaking through a barn floor.”  As such, the Court reasoned that upon review of the policy, dismissal of the plaintiffs’ claims was appropriate.

In addition to arguing that the policy applied, plaintiffs also opposed Midrox’s application on the basis that they did not proffer a properly authenticated document.  Midrox adduced proof by way of an affidavit from the President of the insurance company which swore to the completeness and accuracy of the policy in question.  Further, the plaintiff’s submission which consisted of the Declarations Page and only some endorsements did not include the entirety of the policy.  Nevertheless, when the Declarations Page provided by plaintiffs was compared with the policy proffered by Midrox, it was further confirmed that the document submitted in supported Midrox’s motion was full and complete. 




11/01/18       Reutzel v. Hunter Yes, Inc.

Appellate Division, Third Department

While Settlement of Indemnity Claim was Not a Mary Carter, Issues of Fact Existed as to Reasonableness of Such Settlement Necessitating a Jury Trial


Plaintiff was employed by third-party defendant Paraco when he slipped and fell while descending a staircase at the place of his employment.  Paraco leased the entire first floor of the premises, as well as a portion of the basement from Hunter Yes.  Hunter Yes, naturally, owned the entirety of the building --- including the staircase where plaintiff fell.

Plaintiff settled his personal injury lawsuit against Hunter Yes.  At that time, however, plaintiff acknowledged in the settlement agreement that he bore some “culpable conduct with respect to the subject fall.”  Paraco first opposed the settlement on the basis that the settlement was an impermissible Mary Carter agreement, and on the basis that the indemnity clause at issue violated GOL 5-321.  Paraco lost these arguments at the trial court, and again on appeal.  While Paraco lost its legal arguments, the Third Department also noted that an issue of fact persisted as the remainder of the indemnity claim.

Just prior to trial of the indemnity claim, Hunter Yes moved, in limine, to limit the issues before the Court.  Specifically, Hunter Yes argued that the reasonableness of the settlement had been confirmed by the previous appeal.  The Appellate Division noted, in response to this claim, that generally an indemnitor will be bound by a reasonable, good faith settlement where it was on notice of the indemnitee’s resolution.  Although the Court upheld the settlement (with regard to the Mary Carter challenge), it did not opine as the reasonableness of the settlement.  It is this issue, in fact, which forms part of the basis necessitating trial between Hunter Yes and Paraco.

Hunter Yes also argued that the matter should have been converted to a bench trial because it was only a money judgment which was being sought.  This, too, was rejected because, again, the issues surrounding the reasonableness of the original settlement required a factual determination that fell to the jury’s province. 


10/25/18       Am. Inter. Specialty Lines Ins. Co. v. Allied Capital Co.

Appellate Division, First Department

Arbitration Panel Exceeded its Authority by Reconsidering Previous Award

This case has its origins in an arbitration which was intended to establish whether American International, as plaintiff, had an obligation to defend, and indemnify, Allied Capital with respect to a claim which resulted in Allied paying $10.1 million to the government.  Allied argued that the payment constituted a “loss” under the policy, and therefore it was entitled to reimbursement for the payment, along with over $1 million dollars in legal fees.

Per the terms of the American International policy, the matter was subject to compulsory arbitration.  The two litigants agreed to select JAMS to facilitate a three panel arbitration.  However, the parties agreed that the JAMS Comprehensive Rules did not govern the arbitration.  During the course of briefing the arguments, the parties acknowledged that, as a threshold matter, the panel would decide whether American International had an obligation to defend, or indemnify, Allied.  If such a determination was reached, the parties would then commence a second phase to the arbitration wherein Allied would be required to establish its damages with respect to attorneys’ fees.

At the conclusion of proof, the panel reached a “partial final award” wherein it was determined that American International did not have an obligation to pay damages; to wit, the payment by Allied did not constitute a “loss” under the American International policy.  Nevertheless, the panel held that a duty to defend had been triggered.  As such, the panel invited the parties to submit additional briefing and evidence on the appropriate measure of legal fees.

Allied moved for reconsideration of the panel’s decision, and American International opposed on the basis that the JAMS Rules prohibited review of the decision. Further, American International submitted that the common law doctrine of functus officio also prohibited reconsideration.  After a hearing, the panel concluded that it was not bound by the JAMS Rules and that its previous “partial final” decision was not a final decision.  As such, it was free to reconsider its previous findings.  After exercising its authority to do so, the panel issued a “corrected” partial final award wherein they reversed the prior to determination.  The new, partial, final award provided the Allied payment was a “loss” under the terms of the relevant policy.

While American International’s appeal of the “corrected” decision was pending, the panel also presided over a hearing relative to defense costs and issued a subsequent final arbitration award.

American International sought to vacate the arbitration award pursuant to Article 75 of the CPLR.  Its efforts at the trial court level failed where the Justice presiding noted that the panel was not bound by the JAMS Rules and that the court would defer to the panel on the issue of whether its first opinion was final within the contexts of the arbitration.

On appeal, the First Department reversed.  The Court initially noted that vacatur is generally limited to issues of fraud, corruption or bias.   However, where the arbitrators have exceeded their powers, a court is also authorized to vacate the award.  Here, the arbitrators’ decision to revisit a previous determination was in excess of their power.  Under the doctrine of functus officio, an arbitration agreement cannot be changed “except…to correct a deficiency of form or a miscalculation of figures or to eliminate matter not submitted.”

Here, both parties agreed that the arbitration panel would render a partial final ruling as to the scope of coverage.  If coverage was confirmed, a second phase would be conducted to determine the scope of defense costs. The second phase entirely independent of the first, and would involve an entirely separate evidentiary hearing and briefing process.  Moreover, the panel recognized the “finality” of the first award when they characterized themselves as the “partial final award.” 

In so holding, the Appellate Division gave no merit to the arbitrators own argument that the matter was “bifurcated, and thus no decision with regard to coverage was final.

In dissent, Justice Gische first noted that the JAMS Rules prohibiting reconsideration where not applicable in this case (a position also adopted by the majority).  However, the dissent reasoned that an arbitration decision is not “final” until ALL of the issues before the panel are decided.  Where, as here, the issue of defense costs remained open, it followed that the previous decisions where not subject to the rules of finality which prohibit reconsideration. 



Agnes A. Wilewicz

[email protected]


10/23/18       Madelaine Chocolate Novelties v. Great Northern Insurance Co.

United States Court of Appeals, Second Circuit

In Hurricane Sandy Case, the Second Circuit finds that a Policy’s Two Anti-Concurrent Clauses Create an Ambiguity Sufficient to Find Coverage, Despite Clear Flood Exclusion

Madelaine Chocolates was insured under an all-risk policy by Great Northern when, in 2012, it suffered considerable business damage as a result of storm surges caused by Hurricane Sandy. Notably, a storm surge is a phenomenon “produced by water being pushed toward the shore by the force of the winds”. The total damage was claimed in excess of $40 million in property damage, and lost business income and operational expenses of $13.5 million. Great Northern disclaimed coverage relative to most of the damage, citing that storm surge was excluded under the policy.

The policy in question stated that Great Northern would pay for damage or direct physical loss to a “building; or personal property, caused by or resulting from a peril not otherwise excluded.” The policy also state that they would pay “for the actual: business income loss ... and extra operational expenses ... caused by or resulting from direct physical loss or damage by a covered peril to property, unless otherwise stated”. It was undisputed that “windstorm” was a covered peril, however it is not expressly defined in the policy. Instead, it contained an endorsement, The Windstorm Endorsement:

“Under Definitions, the following is added: Windstorm means: • wind; • wind-driven rain; • erosion of soil or other land caused by or resulting from wind or wind driven rain; • hail; or • collapse of a building or other structure caused by or resulting from wind, regardless of any other cause or event that directly or indirectly: • contributes concurrently to; or contributed in any sequence to, the loss or damage, even if such other cause or event would otherwise be covered. Windstorm does not mean: • frost; cold weather; • snow; or • sleet or ice (other than hail), whether driven by wind or not.”

That endorsement also included an anti-concurrent clause (namely, “Windstorm means: wind ... regardless of any other cause or event that directly or indirectly: contributes concurrently to; or contributed in any sequence to, the loss or damage...”). While the insured interpreted this endorsement to encompass losses caused by storm surge (a wind-driven peril), Great Northern denied coverage on the basis of its flood exclusion provision, which stated:

“This insurance does not apply to loss or damage caused by or resulting from: • waves, tidal water or tidal waves; or • rising, overflowing or breaking of any boundary, of any natural or man-made lakes, reservoirs, ponds, brooks, rivers, streams, harbors, oceans or any other body of water or watercourse, whether driven by wind or not, regardless of any other cause or event that directly or indirectly: • contributes concurrently to; or • contributes in any sequence to, the loss or damage, even if such other cause or event would otherwise be covered. This Flood exclusion does not apply to ensuing loss or damage caused by or resulting from a specified peril.”

The court, in reviewing these policy provisions, noted that all exclusions in an insurance policy must be written in clear and unmistakable language. They are accorded strict and narrow construction, and any ambiguities in the drafting will be read against a drafter. While the lower court had held that the policy unambiguously excluded coverage for damage caused by storm surges. However, the Second Circuit was not so sure. They noted that the lower court did not cite any cases directly on point here and the lower court erred in trying to analogize this case with other hurricane endorsements that did not contain the type of anti-concurrent language found here. Indeed, the court found here that the anti-concurrent clause in the Windstorm Endorsement conflicted with the anti-concurrent clause in the Flood Exclusion. Since the policy must be read all together, these inconsistent provisions created an ambiguity. Since this was not an example of “clear and unmistakable language”, as required by precedent, they found that there was coverage for the claims here.



Jennifer A. Ehman

[email protected]


10/24/18       2015 Freeman LLC v. Seneca Specialty Ins. Co.

Supreme Court, New York County

Hon.  Andrew Borrok

Question of Fact as to Whether Damage Resulted from Theft or Vandalism; Similar Questions about Impact of Misrepresentations on Policy Application

Plaintiffs purchased commercial insurance from defendants.  In February, 2013, they suffered a loss which they alleged stemmed from vandalism.  When the claim was submitted to defendant, the company denied on the basis that the loss was actually theft which was excluded from its policy.  It also submitted that plaintiffs made certain misrepresentations in their applications which affected the underwriting risk.

Plaintiffs then brought this action, and defendant moved for summary judgment.  Plaintiffs opposed the motion arguing that the forcible removal of property that is affixed to real property is vandalism, which would be covered under the policy.  They also argued that defendants failed to prove that the company relied upon the alleged misrepresentations concerning the presence of a central alarm and weekly inspections when it issued the policy.

In considering these arguments, the court found a question of fact as to whether the property was vandalized, and whether defendant relied on the statements set forth in the application.


10/15/18       Colony Ins. Co. v. MYM Construction, Inc. v. Tutor Ins. Co.

Supreme Court, New York County

Hon. Gerald Lebovits

Question of Fact as to Timeliness of Disclaimer

This decision arises out of an underlying New York labor law case.  An employee of Greenside fell from a scaffold while working on a construction site.  As in all of these cases, the employee sued the owner and general contractor.

Upon receipt, the insurer for the general contractor, Colony Insurance, tendered the defense of the owner and its named insured to the employer and its carrier, Tutor Insurance.  The facts of this particular case indicate that there was a dispute surrounding the mailing of a November 5, 2014 letter allegedly sent by Colony to Tutor notifying them of the action and tendering its insureds’ defense.  This letter allegedly included a sentence stating that “Colony has been advised that Greenside Corp. is the employer of [the injured plaintiff.”

Another letter was then sent on November 20, 2014, and allegedly received by Tutor on November 24, 2014.

Tutor denied receiving the first letter, but acknowledged the second.  At that point, Tutor retained a company to investigate the claim and reached out to its insured.  Tutor submits that on December 10, 2014, the company finally spoke with its insured who confirmed that the injured party was its employee, and then received an investigation report on November 15, 2014 confirming same.  Formal denial letters were then issued on December 30, 2014 citing an employee exclusion in the policy which applied to “‘bodily injury’ to: (1) any contractor or subcontractor hired or retained by or for any insured; or (2) [a]n ‘employee’. . . of any contractor or subcontractor who was hired or retained by or for any insured.”  And, another provision which removed the insured contract exception to definition of “insured contract.”

Ultimately, Colony challenged the disclaimer and this action resulted.  Colony’s central challenge was that the denial was untimely pursuant to New York Insurance Law § 3420(d).  The Court considered this argument.  Initially, the court agreed with Tutor that the company did not have sufficient information upon receipt of the November 20, 2014 letter to issue a disclaimer as the comment by Colony concerning employment was far from unequivocal.  In turn, it agreed that an investigation was needed.  It then looked to whether Tutor diligently investigated the claim.  The court found that an investigation was then conducted diligently.  However, the court questioned the reasonableness of the delay between the time Tutor received confirmation of employment and issuing the December 30th disclaimer.  Of concern, the court declined to adopt the argument of Tutor that its denial was issued within 30 days of its receipt of confirmation of employment.  The court noted there is no “bright-line rule that any delay of 30 days or less in issuing a disclaimer is reasonable as a matter of law.”  Instead, the court submitted that a determination about whether a disclaimer is timely is “a fact-sensitive inquiry that is based upon all the surrounding circumstances…”  Ultimately, it concluded that question of fact existed about whether Tudor's disclaimer was timely.

The court also denied a separate request by Tutor, pursuant to CPLR 3126, for an order precluding plaintiffs from offering any evidence that Colony mailed the November 5 letter.  The court concluded that Tutor had not established that wiping its former employee’s computer was grossly negligent or done as a willful attempt to avoid discovery, or in bad faith. There was also an insufficient showing that Tutor could not defend against the claim as a result.  In turn, the sanction for spoliation of evidence was inappropriate.



Jerry Marti

[email protected]


10/31/18       Giovanni Abruscato v. Allstate           

Appellate Division, Second Department   

Court Grants Motion to Dismiss Majority of No-Fault Claims in Complaint

Plaintiff alleged injuries as a result of a motor vehicle accident with a deer, and commenced an action to recover no-fault benefits. In turn, the defendant insurance company filed a motion to dismiss the complaint for failure to state a cause of action pursuant to CPLR 3211(a)(7). In considering the motion, the Appellate Division noted that the court must afford a liberal construction, take the allegations of the complaint as true, and provide the plaintiff the benefit of every possible favorable inference.

In particular, the Court affirmed the dismissal of the claim for lost wages since the plaintiff had not submitted a claim for reimbursement for lost wages. The Court further affirmed the dismissal of claims for intentional and negligent infliction of emotional distress. The Court noted that the relationship between the plaintiff as the eligible injured party and the defendant insurance company did not give rise to a duty which could become a basis for tort liability in negligence. The Court also affirmed the dismissal of the claim for declaratory relief since the plaintiff had an adequate alternative remedy based on the cause of action to recover no-fault insurance benefits.  Moreover, the Court affirmed the denial of plaintiff’s cross-motion for leave to amend the complaint because the proposed amendments were palpably insufficient and patently devoid of merit.

But, the Court reversed and reinstated the cause of action to recover no-fault insurance benefits for medical expenses. The Court reasoned that since there was a failure of insurance coverage rendering the plaintiff personally responsible for the medical bills, the plaintiff had a claim for medical expenses notwithstanding the assignment of benefits to certain medical providers. 



Brian D. Barnas

[email protected]


10/25/18       Healthcare Professionals Insurance Company v. Parentis

Appellate Division Third Department

Issue of Fact on Bad Faith Failure to Settle Case where Each Insurer Claimed the Failure to Settle was the Other’s Fault

Don Schultz fractured his ankle at work and treated with Dr. Stoeckl initially.  Eventually he treated for it with Parentis.  After numerous surgeries, he underwent an above-the-knee leg amputation.  In February 2014, a jury awarded Schultz and his wife a verdict in a medical malpractice action against Parentis totaling $8.6 million, which was upheld on appeal.

At the time of the verdict, Parentis had a liability insurance policy with MLMIC with $1.3 million in coverage and an excess policy with Healthcare Professionals Insurance Company (“Plaintiff”) with $1 million in coverage.

Plaintiff commenced a declaratory judgment action seeking a determination that it acted in good faith during the settlement negotiations with Schultz and that it was only required to indemnify up to the limits of its policy.  Parentis filed a counterclaim against Plaintiff and cross-claimed against MLMIC alleging that both carriers acted in bad faith.  The carrier defendants moved for summary judgment dismissing the bad faith claims against them.

In reviewing circumstances of the underlying action as part of its bad faith analysis, the Court noted that the underlying action was a “prototypical battle of the experts.”  However, the according to the Court, the record demonstrated that MLMIC was aware of the gravity of the injury and that there was a potential for an unfavorable verdict.  MLMIC’s in-house orthopedic expert expressed concern that the case would be settled “because of the inability to find a point of defense.”  However, the orthopedic specialist MLMIC retained opined that the case was defensible, and assigned defense counsel assessed the chances of successfully defending the case to be better than fifty-fifty.

In addition to liability, MLMIC was aware that the claimed damages greatly exceeded the available coverage.  Schultz was only 36 at the time of the fractured ankle, and had claims for pain and suffering, loss of consortium, and economic losses.

As for settlement demands, Schultz’s counsel made a demand at both pretrial conferences to settle the case against both doctors for the policy limits.  In June 2012, it was specified that the demand against Parentis was $2.3 million.  This was repeated at several other pretrial conferences.  The insurers contended that only a combined demand of $3.6 million was made to settle the claims against both doctors.  While it was disputed whether the demands were made separately, it was undisputed that no counter offer was ever made.

The court also focused on a key moment during trial in discussing settlement negotiations.  After a little more than an hour, the jury sent out a note at 2:24 p.m. requesting a breakdown of the life care plan expenses for Schultz's future care, which totaled about $1.1 million.  Following a read back of the relevant testimony, the jury resumed deliberations at 2:56 p.m. Shortly thereafter, Weidner advised Parentis for the first time to pursue settlement and obtained Parentis' immediate consent, as well as confirmation from Black that the Schultzes would settle for the coverage of $2.3 million against Parentis, subject to consent from the workers compensation carrier.  It is disputed what happened after this.  Plaintiff claimed that MLMIC never offered its policy to settle and that it did not learn Parentis consented to settle until after the verdict.  MLMIC claimed that it offered the policy to settle but that Plaintiff decided to wait for further jury deliberations.  At 3:42 p.m. the jury returned and the verdict was rendered.

The Court concluded there was an issue of fact as to whether Plaintiff and MLMIC acted in bad faith.  Each insurer pointed the finger at the other for failing to accomplish the settlement, and who was responsible for not settling the case was an issue for a jury to determine.  The Court stated that it was clear from the outset of the case that if Parentis was liable the damages would exceed the coverage.  As such, it was incumbent on both carriers to be fully engaged and attentive to the case, especially after the jury asked for clarification about Schultz’s future care. If MLMIC did offer the policy limits and Plaintiff failed to respond to the settlement offer, then Plaintiff could be found to be in bad faith.  However, if MLMIC never offered the policy, then Plaintiff had no obligation to offer its policy.

Judge McCarthy offered a concurring opinion, stating that he believed the triable question of fact was narrower.  He noted that MLMIC’s summary judgment motion only argued causation.  McCarthy stated that, in his opinion, all serious doubts about Parentis’ liability were not removed until the time of the jury note.  Up until that point, Parentis, his trial counsel, and MLMIC’s representatives all thought the case was defensible.  The relevant lost opportunity to settle was on February 4, 2014 between 2:24 p.m. and 3:44 p.m.  Thus, he would narrow the scope of the bad faith analysis to only that time period.


Guest column courtesy of our friend Kevin J. Willging, Executive Counsel for Travelers, reprinted with permission and thanks.

For more information about the vase below, contact Kevin at [email protected].


9/20/18         Harvey v. GEICO General Insurance Company

Supreme Court of Florida

Florida Supreme Court Issues Far-Reaching Bad Faith Opinion

Last month, the Florida Supreme Court handed down an unfortunate decision that has the potential to expand bad faith claims in that state and make summary judgment for insurers far less likely.

In Harvey v. GEICO, a deeply divided Supreme Court reinstated a $9.2M bad faith jury verdict. Following that verdict, the 4th District Court of Appeals granted judgment in GEICO's favor, based on the Supreme Court's well-established criteria as delineated in Boston Old Colony Ins. Co. v. Guterriez, 386 So.2d 783 (1980). The effects of the Court's ruling, reversing the 4th DCA, will be far-reaching.

The facts of the case are as follows: James Harvey (GEICO's insured) was in an auto accident, which resulted in the death of John Potts. Potts (51) left behind a wife and three children. Harvey's policy had a liability limit of $100,000. Just two days after the accident, GEICO determined that Harvey was at fault for the accident. Potts' estate retained counsel and a paralegal from that office contacted GEICO's claim handler to request a statement from Harvey regarding Harvey's assets, additional policies of insurance and course/scope information. The majority concluded that GEICO did not convey that request to Harvey, but the dissent points out within one hour of that call, the adjuster called Harvey to "update [him] on the status of the claim." To the "best of his recollection," Harvey does not recall the adjuster advising him about the paralegal's request. The paralegal testified that the adjuster rejected the request. Within 3 days of that conversation (9 days post-accident), GEICO tendered a $100,000 check to counsel for Potts' estate and included an affidavit of available insurance. Counsel for the estate wrote to GEICO's adjuster explaining the reasons for the requested statement. GEICO's adjuster did not respond to that letter but did forward it along to Harvey. Harvey reached out to the adjuster to advise that he scheduled a meeting with his personal counsel to review the financial documents and provide the information requested. That meeting was not scheduled for another 4 days, so Harvey asked the GEICO adjuster to let claimant's counsel know that the request is being worked on. The adjuster did not communicate that message to claimant's counsel. Two weeks later, claimant's counsel returned GEICO's check and filed suit. The court did not address whether any additional settlement discussions took place. But knowing the tactics of the FL plaintiff's bar, it is unlikely that the Estate expressed a willingness to settle for the policy limit at any point after suit was filed. We do know that Harvey never provided the financial statements requested by counsel either before or after suit was filed. The dissent points out that Harvey had over $900,000 in liquid assets, plus four cars and two houses. The estate's attorney nevertheless contended that there was only $85,000 in collectible assets, and if he was told that pre-suit, he would have recommended settling for the policy limit. Without a settlement, the case went to trial and resulted in a verdict in the amount of $8.47M. The bad faith suit on Harvey's behalf followed, and resulted in a verdict against GEICO in the amount of $9.2M.

In reversing and granting judgment in GEICO's favor, the intermediate appellate court relied almost exclusively on several factors established by the FL Supreme Court in the Boston Old Colony decision. The 4th DCA further relied on additional Supreme Court precedent in concluding that "when an insured's own actions or inactions at least in part" cause the excess judgment, the insurer cannot be liable in bad faith for having caused the excess judgment. Perera v. USF&G, 35 So.3d 893 (2010). In its decision, the Supreme Court in Harvey narrowed the reach of those decisions, making it even more difficult for a carrier defend itself in bad faith litigation in Florida.

The Supreme Court reiterated that, at least in the third party claim context, the insurer owes its insured a fiduciary duty. Then, the Court went on boldly state that the duties laid out in Boston Old Colony do not constitute a checklist, and even if a carrier meets all of those delineated obligations, it could still, "under the totality of circumstances," be deemed to have failed to meet its obligation to act in good faith with due regard for the interests of the insured. Furthermore, the Court went on the state, it is for the jury to decide whether the insurer met that standard. It is worth noting that in Boston Old Colony, the Supreme Court upheld the grant of a directed verdict in favor of the insured – without letting the jury decide that issue. The Court also went out of its way to criticize federal courts' handling of bad faith litigation in Florida, holding that "[f]ederal case law interpreting our precedent does not always hit the mark," even though those federal cases often cite Florida Supreme Court precedent. While negligence is not the standard for proving bad faith, a carrier's negligence is relevant to the analysis, according to the majority's holding. The Court cited to a number of facts that it believed constituted competent evidence for the jury's conclusion, perhaps the most critical of which was that GEICO tendered its limits when it knew that claimant's counsel demanded a financial/insurance statement from the insured. Therefore, the tendering of the full policy limit was not enough to save GEICO in this case. According to the majority, the insurer's duty to act in good faith continues through the entire claims process.

The fact that the insured knew of the request for financial/insurance information and yet never once provided it, could not save GEICO either. The majority emphasized that it is the insurer's actions which are the focus of a bad faith claim, and not those of the claimant or insured. Therefore, the Court concluded, an insurer's actions/inactions do not let the carrier off the hook when the evidence establishes that the carrier itself acted in bad faith. The Court was loathe to create the equivalent of a contributory negligence defense for carriers.

Justice Canady, in his dissent, was (rightfully) concerned about how the majority "muddie[d] the waters between negligence and bad faith claims" and may be "bolster[ing] 'contrived bad faith claims.'" There is little doubt that claimant's counsel was relieved that they weren't provided the statement requested because it gave them the pre-text for rejecting GEICO's tender and refusing to settle at any later opportunity. Justice Canady also pointed out the irony of the majority's position that it is only the carrier's action which is the focus of a bad faith claim.

This Court's ruling in Boston Old Colony expressly vindicated the carrier because the failure to settle was "at the explicit request of the insured" and the claimant "refused to settle when the insurer subsequently offered to settle prior to trial." Justice Canady was deeply troubled by the majority's insistence on focusing "solely" on the carrier conduct, when, in this case, the insured caused catastrophic damages, had assets that were 9 times the policy limit and never provided the financial information requested by the claimant. The result, Justice Canady noted, is that other insurance customers may end up footing the bill.

In the end, there are some lessons (practical and legal) to be taken from this case:

  • Communication is Key. Carriers must keep their insureds constantly informed on developments in a claim, particularly those impacting settlement. Here, the GEICO adjuster apparently failed to tell the insured, initially, about the request for a statement. And that adjuster failed to convey the insured's message to the claimant's counsel that the request was being worked on.
  • Pay attention to Claimant's Conditions for settlement. Although not expressly couched as a condition for settlement, it was apparent that the claimant needed financial and insurance information before discussing settlement. Aware of that fact, GEICO's attempt to tender without the requested statement was almost certainly doomed from the start. If claimants made a request in connection with settlement talks and that request is reasonable, like the one here, don't ignore it. Attempt, as best as possible, to comply or at least explain to the insured what is being requested and why it is important.
  • Are Summary Judgment grants in Florida going to be completely extinct? Quite possibly. The majority seemed intent on emphasizing that bad faith is a primarily a fact question and that the actions of the insured and claimant are nearly irrelevant.
  • How will the federal courts react? Several favorable federal court decisions came under attack by the majority. It remains to be seen how federal trial court judges will respond to motions for summary judgment following the Harvey decision. Will there be begrudging compliance with the majority's caution against deciding these issues as a matter of law, or will there be quiet defiance?
  • Watch the Governor's race. The new Florida governor will be in a position to appoint several new Supreme Court justices after he takes office. Therefore, the outcome of that election could well dictate whether the thin Harvey majority stays in place.

Kevin Willging
Executive Counsel
Hunt Valley MD
(443) 353-1919


John R. Ewell

[email protected]


10/30/18       Ruffa v. Farmers Ins. Co. of Flemington

New Jersey Superior Court, Appellate Division

New Jersey Appellate Court Affirms No Coverage under GL Policy for Automobile-related Injury, Rejecting Argument that Truck with Lift Gate was a “Cherry Picker” or “Mobile Equipment”

Antonio Ruffa (Ruffa), G.R.’s father, purchased a Chevy box truck for his catering

Business called Sapore. Ruffa bought the box truck to deliver food and transport employees to catering events. A hydraulic lift gate, called a “Tommy Gate”, was permanently attached to the vehicle. The Tommy Gate contained warnings that explicitly proscribed riding on its platform. Additionally, the owner’s manual directed against using the Tommy Gate as a wheelchair or personnel lift. Ruffa was inside the cargo area of the truck installing shelving when G.R. accidentally operated the Tommy Gate and sustained injury.

There was no auto insurance on the vehicle at the time of loss. Farmers, however, issued a Businessowners Policy (Farmers policy) to Sapore. The Farmers policy excluded coverage for bodily injury claims arising out of the operation of an automobile. Automobile was defined as “any land motor vehicle . . . designed for travel on public roads, including any equipment or machinery attached to such vehicle . . . [and not including] vehicles covered . . . as mobile equipment.”

Two provisions of the Farmers policy provide limited coverage for losses involving an automobile. First, under the incidental automobile coverage provision, coverage is extended for bodily injury claims arising out of the operation of “[c]herry picker and similar devices used to raise/lower workers” if those devices are “permanently attached to an automobile.” Second, pursuant to the incidental mobile equipment coverage section, coverage is provided for bodily injury claims “arising out of . . . [the] use of mobile equipment.” Mobile equipment is in turn defined as “solely land vehicles (including any equipment or machinery permanently attached to, or forming an integral part of, the vehicle) . . . used solely at your premises."”

Farmers moved for summary judgment that the claim was excluded from coverage by the automobile exclusion, which was granted.

On appeal, Plaintiffs raised three arguments. First, plaintiffs maintained, as they did in the trial court, that because the Tommy Gate was permanently attached to the box truck and is a “similar device” to a cherry picker, the judge should have found coverage under the incidental automobile coverage provision. Second, they argued, for the first time on appeal, that at the time of G.R.'s accident, the box truck was “solely a land vehicle” being used at catering business’ premises, and thus G.R.’s injuries were covered under the incidental mobile equipment coverage provision.

The Court first determined what the term “cherry picker” means, and concluded that a “cherry picker” a “maneuverable vertical boom with an open bucket or cage at the end from which a worker can perform work high off the ground." The Appellate Division was not persuaded by plaintiffs’ argument that the Tommy Gate is a “similar device” to a “cherry picker” because it is not used to “raise/lower workers.” In fact, the warnings affixed to the Tommy Gate and the instructions in its owner’s manual specifically directed against such use.

Plaintiffs’ argument that G.R.'s claim is covered under the incidental mobile equipment coverage provision was both procedurally and substantively deficient. Procedurally, defendant did not raise that argument at the trial court, and therefore, the Court was not required to consider it.

In any event, the Appellative Division also ruled that the argument was substantively without merit. The injuries did not arise out of the use of “mobile equipment” because the box truck was not “solely [a] land vehicles” used exclusively” at the premises.” It was undisputed that Ruffa purchased the truck to deliver food and personnel for Sapore's catering jobs, bought automobile insurance for the vehicle the following day, and consistently used the truck for deliveries after the accident. Rather than “mobile equipment,” the Court found that the box truck fell squarely within the definition of an “automobile” as it was designed for travel on public roads. The Appellate Division affirmed the grant of summary judgment to Farmers.

Disclaimer: This is an unpublished decision which has precedential value in only limited circumstances. 


10/22/18       City of Patterson School District v. American Alt. Ins. Corp. et al.

New Jersey Superior Court, Appellate Division

New Jersey Appellate Division Bounces Negligent Misrepresentation Case against Insurance Producer

The City of Paterson School District (the School) conducted a bidding process for the transportation contract for its students. The specifications for the contract required that the contractor maintain, among other things, automobile liability insurance and comprehensive commercial general liability (CGL) coverage in specified amounts. In addition, the successful bidder was required to provide a “certificate of insurance for the duration of the contract.” The bid specifications further stated: “The certificate of insurance shall name the Paterson Public School District as ‘an additional insured’ party of the policy.”

K&M Transportation (K&M) was awarded the contract. The contract required K&M to obtain automobile liability insurance in a specified amount. Although the contract obligated the automobile insurer to name plaintiff as an “additional insured,” it was silent as to whether the coverage afforded to plaintiff was to be primary or excess.

K&M procured a Certificate of Insurance from Clay Thomas & Associates a licensed insurance producer” (the Producer). The Certificate listed a CGL policy issued by Essex Insurance Company, an automobile liability policy issued by American Alternative Insurance Company (AAIC). The Certificate stated: “Paterson Public School District is an additional insured party to the policy.”

Following an accident in which a student suffered injuries while being transported by K&M, plaintiff sought coverage under the policy issued by AAIC. The AAIC policy stated that it was excess over other insurance unless the contract required insurance on a primary basis. AAIC sent a coverage letter informing the School that its coverage was excess to any other insurance coverage maintained by the School.

The School sued the Producer alleging misrepresentation of the “level” of insurance coverage afforded under the AAIC policy. The School argued that the Producer failed to inform plaintiff that the coverage provided by AAIC was excess to any other coverage plaintiff might have, despite its additional insured status on the AAIC policy.

Under New Jersey law, a claim of negligent misrepresentation requires plaintiff to show a reliance on the incorrect statement caused it to sustain damages. During discovery, the school employees uniformly testified that they never even reviewed the certificate of insurance before the loss. Since none of the School’s employees ever read the certificate of insurance, and therefore, could not have relied upon it, the Appellate Division affirmed summary judgment to the Producer.

Disclaimer: This is an unpublished decision which has precedential value in only limited circumstances. 


Brian F. Mark

[email protected]


Nothing on the mark this week.



Larry E. Waters
[email protected]


10/19/18       National Liability & Fire Ins. Co. v. Rick’s Marine Corp.

United States District Court, Eastern District of New York

Defendant’s Proffer Denied as Defendant Failed to Establish Plaintiff’s Marine Surveyor’s Report was Admissible Pursuant to Federal Rules of Evidence of 803(6) and Federal Rules of Evidence  801(d)(2)(D)

Plaintiff National Liability & Fire Insurance Company (“National) insured Defendant Adam Weinstein (“Weinstein)’s vessel, which sank in early May 2014.  The vessel sank shortly after being launched by Rick Dillworth, the owner of defendant Rick’s Marine Corp. (“RMC”).  As part of its investigation into the sinking of Weinstein’s vessel, National hired an Accredited Marine Surveyor Anthony L. Fazio (“Fazio”) to determine the cause of the sinking and the resulting damage.  After his investigation, Fazio opined that a defect in the salt water wash down system aboard Weinstein’s vessel caused the loss.  Fazio opined also that the damage was the same as the face amount of the insurance policy.  Based upon its investigation, National paid Weinstein pursuant to the terms of the insurance policy.

The current decision stems from National’s objection to RMC’s attempt to introduce Fazio’s report into evidence.  RMC argued that Fazio’s report was admissible pursuant to Federal Rules of Evidence 803(6) and 801(d)(2)(D).

The Court began its analysis with a review of Federal Rules of Evidence 803(6).  The court noted that 803(6) requires the necessary foundation for its introduction including testimony by the custodian or other qualified witness that the report was kept in the course of a regularly conducted activity of business, and that making the report was a regular practice of that activity. In support of its argument that Fazio’s report should be admitted pursuant to Rule 803(6), RMC relied on the testimony of National’s witness a Senior Claims Handler.  Although National’s Senior Claims Handler testified that it is customary when investigating marine insurance claims to use a marine surveyor like Fazio, the Court determined that RMS failed to lay the proper foundation to support its proffer.  The Court reasoned that absent from the National’s Senior Claims handler testimony was any indication that post-accident survey reports like Fazio’s were kept in the course of a regularly conducted activity of National and that the making of the record was a regular practice of that activity.  As such, the Court concluded that the gap in the proof was fatal to RMC’s proffer.

Next, the Court considered RMC’s contention that Fazio’s report should be admitted pursuant to Rule 801(d)(2)(D).  RMC argued that Fazio’s report was an admissible as an admission by an agent of National.  The Court rejected this argument.  The Court reasoned that Fazio was an independent contractor hired to perform a specific task, which was performed by Fazio absent any control, supervision, or other meaningful involvement being furnished by National.  In further support, the Court highlighted that National’s Senior Claims Handler never saw the vessel which Fazio’s report was based upon.  As such, the Court concluded that Fazio’s report was not admissible pursuant to Rule 801(d)(2)(D).

Nevertheless, the Court denied RMC’s Rule 803(6) proffer without prejudice.  The court reasoned that in fairness RMC should be afforded the opportunity in the ongoing non-jury trial to cure the present deficiency in proof by re-calling National’s Senior Claims Handler or by calling another qualified witness when the trial resumes.

In sum, the Court denied RMC’s Rule 801(d)(2)(D) proffer but denied RMC’s Rule 803(6) proffer without prejudice to counsel to permit RMC’s continuing effort to lay a foundation subject to the conditions and concerns set forth above.   



Eric T. Boron

[email protected]


10/30/18       SECURA Insurance v. Lyme St. Croix Forest Company, LLC

Supreme Court of Wisconsin

CGL Policy – Reversal of Court of Appeals’ Affirmance of Circuit Court’s Ruling That Fire Which Spread Over 7,442 Acres Over Three Days Constituted Multiple Occurrences Instead of Single Occurrence

The Supreme Court of Wisconsin held this week that a massive wildfire which swept through a portion of Wisconsin over three days in 2013, damaging many different properties, constituted a single accidental occurrence under Lyme St. Croix Forest Company, LLC’s CGL policy.

SECURA was Lyme St. Croix’s insurer. SECURA’s appeal to the Supreme Court of Wisconsin sought review of the unpublished, per curiam decision of the court of appeals affirming the circuit court's interlocutory order which determined the fire at issue constituted multiple occurrences instead of a single occurrence. The court of appeals had reasoned in this declaratory judgment action that under SECURA's commercial general liability (CGL) policy there was an occurrence each time the fire spread to a new piece of real property and caused damage. As such, the court of appeals had concluded that the $2 million aggregate limit on the SECURA CGL policy at issue applied, rather than the $500,000 per-occurrence limit for property damage due to fire arising from logging and lumbering operations.

SECURA argued to the Supreme Court that pursuant to the “cause theory,” the fire constitutes a single occurrence. Notwithstanding the fact that the fire crossed several property lines, SECURA contended it was a single, uninterrupted cause of the alleged damages.  Spoiler alert:  the Supreme Court of Wisconsin agreed, ruling the wildfire constituted a single occurrence pursuant to the CGL policy, and further finding the $500,000 per-occurrence limit for property damage was to apply, thereby reversing the court of appeals.  Here’s why.

The Supreme Court of Wisconsin looked to the so-called “cause theory” to determine whether the wildfire constituted a single occurrence or multiple occurrences, citing prior Wisconsin cases.   The Supreme Court stated that pursuant to the cause theory, “where a single, uninterrupted cause results in all of the injuries and damage, there is but one ‘accident’ or ‘occurrence.’ The Supreme Court said if “cause and result are ‘so simultaneous or so closely linked in time and space as to be considered by the average person as one event,’ ” then only a single occurrence has taken place. “If, however, that cause is interrupted or replaced by another cause the chain of causation is broken and more than one accident or occurrence has taken place.” (Numerous Wisconsin case law citations are omitted here and throughout the rest of this write-up; see the actual decision if you need to view the citations.)

The Supreme Court of Wisconsin noted that by following the cause theory, Wisconsin courts disavow the opposing “effect theory.” The effect theory suggests that “each accident” “must be construed from the point of view of the person whose property was injured.” It was noted that “[a] small number of jurisdictions subscribe to the ‘effect theory’ of liability”, and that pursuant to the effect theory, there is an occurrence when the separate property of each claimant is damaged. Under this theory, “[i]f one cause operates upon several at one time, it cannot be regarded as a single incident, but the injury to each individual is a separate accident.” The Supreme Court of Wisconsin’s analysis applied the cause theory rather than the effect theory.

Supreme Court’s analysis here was also grounded in the premise that courts should interpret a policy's terms as they would be understood from the perspective of a reasonable person in the position of the insured. After discussing prior Wisconsin cases applying the cause theory, the Supreme Court of Wisconsin opined that a three-day fire in a discrete area caused by a single precipitating event would reasonably be considered by the average person to be one event.   Regardless of how many property lines the fire crossed, the damage closely follows the cause in both time and space, said the court, and an average person would view the cause and result as a single event.

Supreme Court’s also found that the court of appeals' holding that the damages caused at the various properties by the wildfire constituted multiple occurrences appeared to occasion arbitrary and unreasonable consequences, saying it is arbitrary to determine the number of occurrences solely from the number of owners whose property is damaged. Under the court of appeals' analysis, the fire could have burned exactly the same amount of land over exactly the same amount of time, but if all the land were owned by one person instead of several, the fire would constitute but one occurrence. Such a result would force the insurer to pay more in the event that the same amount of land burned is split among several owners, an arbitrary and unreasonable result in Supreme Court’s eyes.  Supreme Court noted that the court of appeals had determined that “there was an ‘occurrence’ each time the fire—fueled and expanded by the consumption of new materials—spread to a new piece of real property and caused damage.” This premise also appeared to Supreme Court to lead to unreasonable results. It is the nature of a fire to “fuel and expand by the consumption of new materials”, noted Supreme Court.  If it is an occurrence each time a fire refuels and expands, then a fire, which is constantly refueling and expanding, will necessarily result in an unfathomably large number of occurrences regardless of how many property lines it crosses, if the court of appeals analysis were to be applied.  Supreme Court said that a court's interpretation of an insurance policy should avoid unreasonable results.

Finally, Supreme Court’s ruling that the damage caused by wildfire here constitutes a single occurrence is buttressed by decisions from other jurisdictions likewise determining a fire destroying the property of multiple claimants to be a single occurrence:  see Denham v. La Salle-Madison Hotel Co., 168 F.2d 576, 583 (7th Cir. 1948) (explaining that a fire that damaged property in numerous hotel rooms was a single occurrence);  Barrett v. Iowa Nat'l Mut. Ins. Co., 264 F.2d 224, 226 (9th Cir. 1959) (concluding that there is “no merit” to the contention that a single fire that damaged property owned by seven different tenants in a building was seven accidents within the meaning of the policy);  Tri-State Roofing Co. v. New Amsterdam Cas. Co., 139 F.Supp. 193, 198 (W.D. Pa. 1955) (determining, on rehearing, that a fire damaging eleven properties that began with an overturned pot of tar was a single occurrence);  and, Travelers Indem. Co. v. New England Box Co., 102 N.H. 380, 157 A.2d 765, 769 (1960) (concluding that a fire spreading to several properties is a single occurrence because “reasonable persons would regard [it] as one accident, no matter how many persons should become involved”).


Earl K. Cantwell
[email protected]


04/25/18       Homeowners Choice Property and Cas. Ins. v. Raul Avila

Court of Appeals, Third District Florida

Insured’s Discovery Requests Rejected; but No “Claims File Privilege” Recognized as Such

This dispute arises out of the insured’s claim for damage caused to their property. The insured thereafter sued for breach of contract, in addition to alleged statutory violations. The insured served a request for production on Homeowners Choice which was very broad, seeking all statements obtained by the company, its attorneys, or investigators, any documents relating to evaluations of the loss, any documents relating to issues of insurance coverage, etc. Homeowners Choice objected to a number of the requests for production as being protected by a work product privilege and / or “claims file privilege”. The insurance company filed a privilege log and the Trial Court conducted an in-camera review of the disputed items. The Trial Court ordered some of the documents be produced finding they were not protected by either the work product privilege or a “claims file privilege”, and this appeal petition followed. Generally, it appears that the additional items ordered to be produced were generated or created prior to the date when the insured’s public adjustor sent a letter to the insurance company contesting the amount paid on the claim. Therefore, implicitly, the Trial Court must have believed that litigation or a contested coverage dispute did not exist before that date, which undoubtedly led to its denial of work product privilege as to those items.

The Court first reviewed a number of Florida appellate cases dealing with the same or similar issues. The cases seem to draw a distinction to where there is no bad faith claim being pursued, but the relief is solely a question of coverage and breach of contract. The precedents held that the discovery of insurer claim file materials is discouraged when the issue of coverage is the dispute and has not been resolved. Generally, the cases hold that the claim file documents are protected from disclosure in a breach of contract action where there is no bad faith claim and the issue of coverage is yet to be resolved. Neither the insured nor an injured third-party is entitled to discovery of the claims file in a declaratory judgment action to determine coverage, because the claims file is the insurance company’s “work product”. In short, the determinative issue is what type of action is under review. Where there is no bad faith claim but rather a straightforward breach of contract / coverage dispute, the contents of the insurance company’s claim file are not to be produced. Therefore, the Appellate Court granted the petition and overturned the Trial Court order.

The Court noted that counsel for the parties had referred to a “claims file privilege” during the motion and on appeal. The Appellate Court distinctly held that there is no such privilege labeled as such in the cited cases or state rules of procedure or evidence code. The decision in this case was not based on any such “privilege”, but largely on prior precedent that, absent a bad faith claim, the content of the insurance company’s claim file is non-discoverable as confidential or at least work product documentation.

A separate concurring opinion by one of the judges again stressed the distinction between a case where a bad faith claim exists and a breach of contract / coverage dispute. This judge essentially argued that where there is no bad faith claim and there is a strict coverage dispute, claims file handling materials are simply not relevant to the coverage determination, and also because they are confidential and proprietary. The concurring judge made the argument to a greater extent that in a coverage dispute in the typical case, claim file handling documents are simply not relevant to resolution and argument of a coverage dispute.


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