Coverage Pointers - Volume XX, No. 11

Volume XX, No. 11 (No. 521)

Friday, November 16, 2018

A Biweekly Electronic Newsletter

 

Hurwitz & Fine, P.C.

1300 Liberty Building

Buffalo, NY 14202

Phone: 716-849-8900

Fax: 716-855-0874

         

Long Island Office:

535 Broad Hollow

Melville, New York 11747

Phone: 631-465-0700

Fax: 631-465-0313

 

Lake Placid Office

2577 Main Street

Lake Placid, NY 12946

Phone: 518-523-2441

Fax: 518-523-2442

 

www.hurwitzfine.com

© Hurwitz & Fine, P. C. 2018
All rights reserved
 

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

 

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

 

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

 

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

 

 Dear Coverage Pointers Subscribers:

 

Do you have a situation?  We love situations.  We even have a gift for you.  Keep reading.

 

Happy Thanksgiving.  It’s my favorite holiday of the year.  We are having our first snow of the season.  It’s pretty out there but as I write this, it’s 7:00 p.m. and I can’t see it.  Snow is much prettier if one cannot see it.  Even prettier, if one doesn’t have to shovel it.

 

We also note, in this issue, the 100th anniversary of the end of World War I and salute those who have served and serve our nation now

 

Great stuff happening here with new counsel coming on board as the firm continues to expand, both with experienced personnel and geographically.  We’ll wait an issue to fill in the blanks.

 

I hope to see some of you down in New York for the DRI conference.  It’s a great program, probably the best in the nation, and we hope you can attend. 

 

Bonus Publication Attached – New York Coverage Protocols

 

For those who have recently joined us and those who were recently assigned New York State claims, and for those whose memory fades as quickly as mine, this one’s for you.

 

Every couple of years, when my feeble mind reminds me to do so, I provide you with a special treat – an updated version of my summary of New York coverage rules.  Today, as a special Thanksgiving treat, since I cannot upload my three-mushroom stuffing, I include as a special holiday bonus, the updated version of Kohane’s New York Coverage Protocols.  If you handle New York coverage work, we strongly suggest you review the attachment.  Download it, print it, tape it to your computer.  Share it with your friends and neighbors.  Do everything but ignore it.

 

If you are preparing to write, for example, a reservation of rights letter on a New York loss – STOP.  You may be shooting yourself in the foot, or heart or wallet.  Once you read the attached, you may decide that there is a safer way of responding to a coverage tender in the Empire State.

 

If there is a New York accident and an out-of-state policy and you’re feeling comfortable ignoring New York rules – STOP, read and appreciate what our great state may do to you if you fail to follow our rules.

 

You’re welcome.  Call any of us if you have a question.

 

Many interesting cases in this week’s issue of Coverage Pointers.  It’s attached and the headlines are listed at the bottom of this letter.

 

Sister Publications:

 

If you like Coverage Pointers, you’ll love Labor Law Pointers (contact Dave Adams, [email protected]) and Premises Pointers (reach out to Jody Briandi, [email protected]).  Those monthly publications can come to your mailbox at your simple request.  They are fabulously useful or usefully fabulous.

 

World War I ends – 11/11/18:

 

The Colfax Chronicle

Colfax, Louisiana

16 Nov 1918

 

Great World War at End

 

Fighting Ceased On All Fronts at 11 O’clock

On the Morning of Monday, November 11

 

Drastic Armistice Signed by Germans

           

Washington, Nov. 11.—Signing of the armistice with Germany was proclaimed today by President Wilson, who also announced its terms at a joint session of congress.

 

The terms herald the end of the war because they take from Germany the power to renew it.

 

Just before he went to the capital, the president, in a proclamation, addressed to his fellow-countryman, said:

 

"'The armistice was signed this morning. Everything for which America fought has been accomplished. It will now be our fortunate duty to assist, by example, by sober, friendly counsel and by material aid in the establishment of just democracy throughout the world."

 

Jen’s Gems:

 

Greetings!

 

I know it is hard to look past Thanksgiving next week, but, if you can (temporarily), there is still time to register for this year's annual Insurance Coverage and Practice Symposium taking place on November 29-30, 2018, in New York City.  ICP is the DRI Insurance Law Committee’s flagship program designed for insurance executives, claims professionals, and outside counsel who specialize in insurance coverage and casualty claims.  Something new this year is the Litigation Skills Workshop taking place on November 28, 2018, from 1-5 p.m., which will provide practical tools and teach techniques necessary to properly prepare and defend a Rule 30(b)(6) deposition.  Don't Miss Out – Register Now: http://bit.ly/2018ICP.  #DRIICP

 

Hope to see many of you there!  Happy Thanksgiving.

 

Jen

Jennifer A. Ehman

[email protected]

 

League of Nations under Consideration at that Time:

 

New York Herald

New York, New York

16 Nov 1918

 

SENATE AT ODDS ON

LEAGUE OF NATIONS

 

Penrose Suggests That Free

Trade Advocates May be

Backing Plan

 

WASHINGTON, Nov. 15.—The plan for a League of Nations to enforce peace, as proposed by president Wilson in his fourteen principles and indorsed by allied statesmen, was criticized and approved in debate to-day in the Senate.

 

Senators Walsh of Montana and Owen of Oklahoma, both Democrats, praised the plan and commended the indorsement of it by Premier Lloyd George and other British leaders in recent speeches, while Senator Poindexter, Republican, of Washington declared such a league would necessitate revision of the Federal Construction and virtually would bring about the abrogation of the Monroe Doctrine.

 

Senator Penrose of Pennsylvania characterized the plan as a “novel idea,” which would be carefully considered.  He also inquired as to whether the league was not being advocated for the purpose of furthering free trade.

 

During the debate Senior Owen declared that a league of nations was responsible for “bringing autocracy in Europe to its knees.”  He denied that the league as proposed would in any way interfere with this country’s tariff or internal affairs and declared this is the logical and opportune time for its establishment. 

 

John’s Jersey Journal:

 

Dear Subscribers:

 

Erin and I are looking forward to our first Thanksgiving in our new home. For those who celebrate it, I wish you a very Happy Thanksgiving. I wish you a wonderful time spent with family, friends, and great food. I hope that your family has been blessed with good cooks!

 

As many of you know, in my column, I report on recent insurance decisions from New Jersey state and federal courts. Meaning my beat covers the state’s appellate courts, the New Jersey Appellate Division and the New Jersey Supreme Court, and New Jersey’s federal courts—the District of New Jersey and the Third Circuit. I also keep you apprised of any key regulatory or legislative changes to New Jersey insurance law. This keeps us sharp (always a good thing) and keeps you informed of changes affecting the insurance industry in New Jersey.

 

The courts have been quiet. We have only one decision to report today. We see this come up quite often. The insured owns a motorcycle. For whatever reason, he or she does not buy UIM coverage for the motorcycle or does not buy enough UIM coverage, then tries to get the coverage under their auto policy covering their sedan, cross-over, or pick-up. Today’s case is a prime example.

 

The insured bought a motorcycle insurance policy providing liability insurance and $15,000 in UIM coverage for accidents involving his motorcycle. An accident occurred. The UIM coverage for the motorcycle was less than the tortfeasor’s liability insurance, meaning the tortfeasor was not underinsured compared to the coverage on the motorcycle. The insured then tried to find coverage under his auto policy covering his pick-up truck. However, as is normally the case, the auto policy excluded coverage for motorcycles. Even the Court noted “it should come as no surprise” that the insured could not recover UIM benefits under his truck policy for a motorcycle accident. Summary judgment was granted to the insurer covering the pick-up and affirmed on appeal.

 

Happy Thanksgiving!

 

John

John R. Ewell

[email protected]

 

One of the Largest Verdicts in Niagara County:

 

Buffalo Evening News

Buffalo, New York

16 Nov 1918

 

GETS $18,000 VERDICT

AGAINST INTERNATIONAL

 

Loretta Krauss Injured in a

Panic on Car, Caused by

Electric Flash, Claim

 

Special to the News.

 

LOCKPORT,  Nov. 16—One of the largest verdicts ever awarded in the local courts in a negligence action was reported yesterday afternoon by a supreme court in favor of Loretta Krauss of North Tonawanda and against the International Railway company, the verdict being $18,000.  The jury took the case at 12:45 P.M., deliberating only two hours to agree upon the amount.

 

Miss Krauss, a 17-year-old girl, suffered, it was claimed, a fractured arm and injury to her spine during a panic on an interurban International car operating through North Tonawanda, January 23 last.  The panic was caused, it was alleged, by a flash of electricity.  The plaintiff was a passenger and tried to escape fearing the car was on fire. 

 

Peiper on Property and Potpourri:

 

This week’s column comes with a word of caution.  Aside from chasing defense counsel for wayward reports, a claims professional also spends an inordinate amount of time negotiating with coinsurers over who will control the defense of a mutual insured and when such duty actually triggers.  These disputes often drag out for several weeks, if not months, as claim departments bob and weave seeking to negotiate the best possible resolution.  Out of this backdrop, it is easy to forget the insured actually needs someone, anyone, to enter an appearance.  Failure to do so, especially in the Second Department, may well result in a default.  On the bright side, I suppose the duty to defend is no longer in dispute.

 

In the case reviewed below, the insured’s carrier acknowledged receipt of the Summons and Complaint in July.  However, due to ongoing discussions with a co-defendants carrier, no appearance was ever lodged. The court was unpersuaded that inter-carrier arguments are a reasonable excuse for an insureds default.  Whoops. 

 

And who, then, is responsible for the default.  Although the recalcitrant carrier is often the cause of the delay (and then the default), the carrier who acknowledges an obligation to the insured (and lets the time to appear lapse) is generally left holding the bag.  The word of counsel is to assign a defense early.  If you ultimately convince a coinsurer to accept your tender, fees are recoverable, with interest, from the date of the tender.  Tender early, and defend early too. 

 

A final point on defaults.  Plaintiff in the most recent example served the defendant via the Secretary of State.  For a default to be ripe, however, secondary service through the US Postal Service or personally is also required.  One does not have to wait until the default occurs to make the secondary service.  However, failure to perfect secondary service is fatal to any default motion under CPLR 3215(g) when the Secretary of State is the initial recipient.  The lesson learned on this side of the ledger is also very clear.  Send the secondary service soon after initial service to avoid a procedural bugaboo down the road.

 

That’s all for this week.  See you in two more.

 

Steve

Steven E. Peiper

[email protected]

Editor’s note:  OK Steve, we both reviewed this one – I’ll delete my summary and leave it to you …

 

More Jury Give-Aways:

 

The Buffalo Times

Buffalo, New York

16 Nov. 1918

 

BIG VERDICT SUSTAINED

BY HIGH COURT

 

Miss Alice Crawford Recovers money

Damages for Severe Injuries.

 

PARTY HIT BY TROLLEY CAR

 

Three Other Actions Are Pending—Cases

May be Settled Out of Court

 

Special to The Buffalo TIMES

 

NORTH TONAWANDA, Nov. 16—A federal court in New York has rendered a decision, sustaining the verdict of $11,162 granted to Miss Alice Crawford of Martinsville, O., for injuries received in a collision between a Kenmore trolley car and an automobile, driven by Alderman Frank Schwinger of this city, on Delaware street a year ago last April.  The International Railway Company has settled the verdict.

 

A verdict for $7,500, rendered against the International and in favor of Harry Boddy of this city, as the result of the same accident, in which his wife, Mrs. Louisa Boddy, was killed, will come up for argument before the Court of Appeals at Rochester on Tuesday.  Mrs. Boddy was a sister of Alderman Schwinger. 

 

Hewitt’s Highlights: 

 

Dear Subscribers:

 

I write this edition of my serious injury column with snow falling. Not much for our colleagues in Buffalo but a bit early and messy for Long Island pre-Thanksgiving.

 

The Appellate Divisions take issue with several of the expert or physician reports this edition. Twice, the defendant’s own expert found significant range of motion limitations, thus defeating their motion for summary judgment, as they were not able to establish a prima facie case of entitlement. Another defendant expert report did not address all medical claims made in the bill of particulars.  A Plaintiff’s physician affirmation was rejected as it failed to specify the specific test used to measure range of motion.  Finally, plaintiff’s cessation of treatment was not explained by a claim that No-Fault Benefits ran out when plaintiff had other insurance that could have covered the treatment.

 

Hope you have a wonderful Thanksgiving. I will be spending this Saturday night with my sons sleeping on an army cot on the Intrepid ship with the Cub Scouts. See you next edition.

 

Until next time,

 

Rob
Robert Hewitt

[email protected]

 

Hello Operator – Free Coffee:

 

Democrat and Chronicle

Rochester, New York

16 Nov 1918

 

WANTED—Ladies over 16 years of age as telephone operators.  We will pay you $8 per week while receiving instructions and your salary will be increased to $9 or $11 per week after a three weeks’ course in our Operators’ Training School.  Regular stated advices thereafter up to $14 or $15 per week.  Double time for Sundays and legal holidays as well as anniversary payments of $25, $50 and $100, depending on the length of time in service.  Excellent mid-day meals at cost, including tea, coffee and sugar without charge. Apply from 9 A.M. to 5 P.M. Rochester Telephone Co., 59 Stone-gt.

 

Wilewicz’ Wide-World of Coverage:

 

Dear Readers,

 

Happy Thanksgiving to one and all! While we don’t really do Thanksgiving in my house (it’s not a Polish holiday, so growing up we didn’t have much of a point of reference), we have started some traditions of our own over the years. Typically, my parents like to get a duck rather than a turkey, and since it is prime movie season, we often will catch the latest flick on Thanksgiving night when theaters are quiet and one can get great seats. This year, my daughter and I plan to be volunteering at the City Mission during the day. In our house, Christmas is really more our “thing”, and so traditionally the day after Thanksgiving we drive out to the farm to cut our own tree, and have everything set up promptly that day. Hopefully the weather cooperates this time, and we don’t get snowed in or anything.

 

Now, the Second Circuit was quiet on the coverage front over the last few weeks. I even scoured the various other Circuit Courts of Appeal around the country, but came up empty as to cases of note or import. Perhaps they are all celebrating the holidays early. I’m hopeful that next time around we will be able to bring you a few fascinating coverage cases as we come to the end of the year.

 

Until then!

 

Agnes

Agnes A. Wilewicz

[email protected]

 

Minor Leagues in Trouble, 100 Years Ago:

 

New-York Tribune

New York, New York

16 Nov 1918

 

“Can’t Manage Own Affairs,”

Johnson Says of the Minors

 

CHICAGO, Nov. 15.—August Herrmann, chairman of the National Baseball Commission, and B. B. Johnson, president of the American League and also a member of the. National Commission held a conference here to-day to discuss matters relating to the future conduct of professional baseball.

 

No hint of the plan the National Commission members have in mind for the reorganization of the sport when it is permitted to be resumed was given before the conference, except in answer to the report from Peoria that the National Association of Professional Baseball Leagues, in annual session there, had appointed a committee to demand the abolition of the draft, with the alternative of a severance of diplomatic relations between the majors and the minors.

 

Referring to that demand, President Johnson said:

 

"The plans we have for restoring baseball after the war contemplates building from the ground up, and that means the abolition of the National Association of Professional Baseball Leagues, which for years has been incapable of managing its own affairs."

 

Barnas on Bad Faith:

 

Hello again:

 

This note comes to you from New York City for the first time in a long time.  It’s been almost a month since I have been down here, which feels like an eternity given my normal travel schedule.  Snow is falling here in New York City.  It’s easy to get tired of snow, especially living in Buffalo, but there is something magical about walking around Manhattan in November or December with snow flurries in the air.  It’s particularly more tolerable and enjoyable when you don’t have to drive through it and your flight doesn’t get delayed.

 

Luckily, I’ll be right back here again in a couple weeks though for DRI’s Insurance Coverage and Practice Symposium at the Sheraton Times Square Hotel.  It’s a great program, and I’m certainly looking forward to seeing colleagues, clients, and, of course, readers of this publication.  If you see me there, please stop me and say hello. 

 

I don’t even really have any sports issues to complain about this week, which is quite novel for me.  UB and Syracuse basketball are both ranked in the top 25 (for the first time in program history for UB!), the Sabres are rolling in a way they haven’t in years, the Raptors are off to a great start, and UB football is well on its way to winning its division despite last night’s poor result.  I’m really hoping for a Cuse win over Notre Dame at Yankee Stadium this weekend to put the cherry on top of my recent sports good fortune.  I’m apparently tailgating with a bunch of Notre Dame fans.  Hopefully they go easy on me.

 

Have a nice weekend.

 

Signing off,

 

Brian

Brian D. Barnas

[email protected]

 

Jewish Homeland Sought – It Took Another 30 years to Secure:

 

The Buffalo Times

Buffalo, New York

16 Nov 1918

 

Zionist Drive
Opens Sunday

 

Five thousand Buffalo Zionists will be sought in a week’s campaign beginning with a mass meeting of Jews of the city at the auditorium of School No. 32, Cedar Street, near Clinton Street, Sunday night.  Originally, given a quota of 3,000 Zionist movement members, the Buffalo campaign committee has plans to enroll at least 5,000 Jews as supporters of this movement, which has as its object the establishment of a Jewish home and possibly a Jewish nation in Palestine.

 

Dr. Shmaria Levin, leader of the international Zionist movement, will address the Sunday evening mass meeting, speaking in Yiddish.  Leon H. Miller will preside at the meeting.  Addresses in English will be given by Rabbi Max Drob and Rabbi Nachman Ebin. 

 

Off the Mark:

 

Dear Readers,

 

This week the family and I are finally getting a vacation in.  With our last minute move at the end of the summer, we didn’t get the chance to get away.  We are spending our time off at Universal Studios in Florida and the kids are very excited to visit Harry Potter Land.  The wife and I are happy to take a break and spend some quality time with the kids. 

 

The construction defect front was quiet again with no relevant cases to discuss.  However, I did come across a number of cases recently commenced where the insurer has taken the position that it has no duty to defend or indemnify its insured in underlying construction defect actions.  I’m sure these cases, and hopefully more, will result in interesting decisions to report on.  As always, I’ll keep you informed.

 

Happy Thanksgiving to all!

 

Until next time …

 

Brian

Brian F. Mark
[email protected]

 

War is Over but War Insurance Important:

 

The New York Times

New York, New York

16 Nov 1918

 

Urges Soldiers to Keep Insurance

 

WASHINGTON, Nov. 15.—Soldiers and sailors holding Government insurance were urged by Secretary McAdoo today to keep up their policies after the war as a means of protecting their families , and to give them the right to convert it into other forms to be provided by the Government.  The insurance may be continued for five years or converted within that time.  If policies are allowed to lapse the right to take other forms of Government insurance never can be regained. 

 

Wandering Waters

 

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

 

What a week for the NBA.  The NBA experienced its first major trade of the 2018-2019 season.  After weeks of rumors and speculation, the Minnesota Timberwolves finally traded Jimmy Butler to the Philadelphia Sixers. Now, Jimmy Butler joins Ben Simmons and Joel Embiid to form a new “Big three”.

 

It is no secret that the Sixers have struggled in close games. Over the last few seasons, Jimmy Butler has been one of the clutch players in the NBA. With Butler, the Sixers now have a “go to guy” in the final two minutes of a close game.  In addition, Butler will bolster an already impressive Sixers’ defense.  During his rise to stardom, Jimmy Butler has been one of the best defensive players in the league.  While the Toronto Raptors  have the best record in the East, some would argue that the Sixers now have the better team.  

 

Despite the big trade, LeBron James once again made the headlines.  LeBron passed Wilt Chamberlin for fifth place on the NBA all-time scoring list.  As of now, LeBron is on pace to pass Kobe Bryant for third place on the NBA all-time scoring list by the end of the season.  Such a feat would only further cement his legacy.  

 

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

Larry E. Waters

[email protected]

 

Did they Need Campaign Finance Legislation 100 Years Ago?

 

Middletown Times-Press

Middletown, New York

16 Nov 1918

 

Candidates Spent Much Money

in the Effort to Be Elected

 

Goshen, Nov. 16—Judge Russell Wiggins, of Middletown, has filed a statement of expenses incurred in connection with his campaign for re-election, the total being $253.

 

District Attorney Henry Hirschoerg spent $917.

 

Ernest Hansen, of Newburgh, Socialist candidate for Member of Assembly in the first district, spent $33.

 

Miss Florence L. Ketchum, of War wick, Democratic and Prohibition candidate for County Clerk, spent $168.84.

 

Jonathan D. Wilson, Republican candidate for District Attorney spent $748.85.

 

William L. Leonard, Republican candidate for sheriff spent $1,250.

 

Lewis J. Stage. Democratic and Prohibition candidate for Member of Assembly in the Second District spent $187.05.

 

Boron’s Benchmarks:

 

On vacation.

 

Eric

Eric T. Boron

[email protected]

 

Editor’s Note:  Who authorized that?

 

With the End of the War, a Day of Thanksgiving:

 

The Topeka State Journal

Topeka, Kansas

16 Nov 1918

 

November 11 seems destined to become the Fourth of July of the civilized world.  Since Thanksgiving Day always comes in November, a combination of the two celebrations seems fitting for the future. 

 

Jerry’s No-Fault Navigation

 

Dear Subscribers,

 

The advancements in technology have created exciting times in the automotive industry.  Vehicles on the road today range from the driver performing all of the driving tasks to higher automation allowing vehicles to perform certain functions without any driver input.  According to the National Highway Traffic Safety Administration, fully automated cars essentially driving themselves will appear by 2025. 

 

While technology progresses, the laws of New York State must keep pace and replace outdated regulations.  One such example is the parking assist option. While this feature enables a vehicle to park itself without a hand on the steering wheel, the law does not allow a driver to do so.  Currently, Vehicle and Traffic Law Section 1226 states that no person shall operate a motor vehicle without having at least one hand or, in the case of a physically-handicapped person, at least one prosthetic device or aid on the steering mechanism at all times when the motor vehicle is in motion.  As a result, it places law enforcement and drivers with the parking assist option in an odd predicament.

 

In response, the New York State Senate introduced a bill that would not require drivers to maintain a hand on the wheel while driving automation is engaged.  The bill currently awaits the signing by Governor Cuomo, and is expected to re-align vehicle automation with the law.  Additionally, as time and technology march forward, it is anticipated that more interesting legal issues will appear ranging from coverage disputes to legal standard applied in cases involving fully automated vehicles.

                            

In recent no-fault news, the legal standard applied on the appellate review of no-fault arbitration decisions continues to be a high one.  In weighing the option of proceeding to a master arbitration or Article 75 proceeding to vacate an arbitration award, the decision boils down to one key consideration – if there is any viability to the award, the award will likely stand.  For details, please see below.

 

Jerry

Jerry Marti

[email protected]

 

A Fair Trade:

The Tampa Tribune

Tampa, Florida

16 Nov 1918

 

FOR EXCHANGE

 

FOR EXCHANGE—Orange grove for a modern car; Buick preferred.  For particulars, address Box 73, Dunedin, Fla.

 

 

This Week’s Headlines:

 

Dan D. Kohane
[email protected]

 

  • Injuries that Occurred from Spray-On Asbestos Fireproofing during World Trade Center Construction Do Not Arise Out of a Single Occurrence.  Policy Covers Injuries that Result from Operations that Occurred During Policy Period, not Injuries that Occurred During Policy Period

  • Claim Seeking to “Pierce the Corporate Veil” to Reach the Insured’s President for Additional Premium Survives Motion to Dismiss

 

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

Robert E.B. Hewitt III

[email protected]

 

  • Defendant’s Own Expert Report Found Significant Range of Motion Limitations

  • Defendant’s Expert Found Significant Range of Motion Limitations in Plaintiff’s Knee

  • Plaintiff’s Cessation of Treatment for Lumbar Spine Was Not Properly Explained By Claiming No-Fault Benefits Ran Out as Plaintiff Had Other Insurance

  • Plaintiff Could Not Raise Issue of Fact Where Her Physician’s Affirmation Failed to Specify the Objective Test Used to Measure Range of Motion

  • Defendant’s Expert Report Failed to Address Plaintiff’s Ankle Claims in the Bill of Particulars

  • Electronic Signature of Plaintiff Physician’s Report Admissible

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

Property

 

  • Failure to Confirm “Total Insurable Value” is Not a Condition Precedent to Coverage

 

Potpourri

 

  • Negotiation with Co-Insurer over Defense Obligations is Not a Reasonable Excuse for Insured’s Default

  • Question of Fact over Independent Contractor Status Precludes Summary Judgment

 

WILEWICZ’S WIDE WORLD OF COVERAGE

Agnes A. Wilewicz

[email protected]

 

  • All’s quiet on the Circuit Court front.

 

JEN’S GEMS

Jennifer A. Ehman

[email protected]

 

  • Premises Was Not the Named Insured’s Residence Where She Used it Only in the Summer and Stayed there One Week a Year

 

JERRY’S NO-FAULT NAVIGATION

Jerry Marti

[email protected]

 

  • Court Denies Petition to Vacate Arbitration Award

 

BARNAS ON BAD FAITH

Brian D. Barnas

[email protected]

 

  • Evidence Supported a Finding of Bad Faith by the Insurer

  • Insured was not Entitled to Summary Judgment on Bad Faith Claim

 

JOHN’S JERSEY JOURNAL
John R. Ewell

[email protected]

 

  • Unsurprisingly, No UIM Coverage under Pick-up Truck’s Policy for Motorcycle Accident

 

OFF THE MARK
Brian F. Mark

[email protected]

 

  • No cases on which to report this week.

 

WANDERING WATERS

Larry E. Waters
[email protected]

 

  • Defendant’s Motion for Summary Judgment Denied Because the Insurer Had a Continued Duty to Defend in the Underlying Action

 

BORON’S BENCHMARKS

Eric T. Boron

[email protected]

 

  • On much needed and overdue vacation.

 

EARL’S PEARLS

Earl K. Cantwell
[email protected]

 

  • Insurance Policy Interpretation: When is a Tow a Tow?

 

 

All the best.  Write often.

 

 

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


NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

 

ASSOCIATE EDITOR

Agnes A. Wilewicz

[email protected]

 

ASSISTANT EDITOR

Jennifer A. Ehman

[email protected]

 

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
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

 

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

 

Michael F. Perley

Edward B. Flink

Eric T. Boron

Brian D. Barnas

James L. Maswick

 

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

Jerry Marti

 

APPELLATE TEAM
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

 

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

 

11/15/18       American Home Assur. Co. v. The Port Authority of NY and NJ
Appellate Division, First Department

Injuries that Occurred from Spray-On Asbestos Fireproofing during World Trade Center Construction Do Not Arise Out of a Single Occurrence.  Policy Covers Injuries that Result from Operations that Occurred During Policy Period, not Injuries that Occurred During Policy Period

American Home sought a declaration that that certain personal injuries allegedly arising from exposure to asbestos at the World Trade Center site during original construction of the site (WTC asbestos claims) are not covered under the subject insurance policy because defendants cannot prove that those injuries occurred during the policy periods.  It also sought a declaration that the claims arising from the spray-on asbestos-containing fireproofing on the Twin Towers arose from a single occurrence that exhausted the policy limits.

 

The plain language of the subject insurance policy providing for coverage for injuries arising out of the "Premises - Operations Hazard" means that the policy covers injuries that result from operations that occurred during the policy period. Plaintiff's interpretation, which would limit coverage to injuries themselves occuring during the policy period, is not supported by that language and also is inconsistent with the broad "Insuring Agreement[]" that requires plaintiff to pay "all sums" that the insured becomes legally obligated to pay as damages for personal injuries in connection with the construction of [the WTC project]."

 

The Supreme Court correctly concluded that, in the absence of a single event or accident, all claims alleging exposure to asbestos from spray-on fireproofing at the site over a three-year period did not arise from a single occurrence under the policy.

 

As American Home reserved its right to recoup expenses it incurred that are not covered by the policies, the recoupment claims remain in play.

 

The duty to defend does not survive exhaustion of the policy's liability limit because the policy says so.

 

11/07/18       Minico Insurance Agency, LLC v. AJP Contracting Corp.
Appellate Division, Second Department

Claim Seeking to “Pierce the Corporate Veil” to Reach the Insured’s President for Additional Premium Survives Motion to Dismiss

AJP Contracting Corp. (“AJP”), through an agent, submitted an application to the Minico to obtain commercial general liability insurance, and was issued a policy. Minico claimed that the premium charged and collected for the policy was based upon an estimate, provided by AJP's president, Pappas, of AJP's anticipated gross sales for the policy period.

 

After the expiration of that period, the Minico conducted a premium audit and allegedly determined that AJP's actual gross sales for the policy period had been substantially underestimated. Based upon the audit and the policy, the plaintiff demanded an additional premium, which was never paid.

 

Minico sued claiming breach of contract, account stated, and fraud.  In the action, it tried to “pierce the corporate veil” and recover directly against Pappas for the premiums. Pappas sought to dismiss the lawsuit.

 

On a motion to dismiss a pleading, that pleading must be afforded a liberal construction, the facts alleged are presumed to be true, the plaintiff is afforded the benefit of every favorable inference, and the court is to determine only whether the facts as alleged fit within any cognizable legal theory, without regard to whether the allegations ultimately can be established.

 

"A party seeking to pierce the corporate veil must establish that (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in the plaintiff's injury'".  The party seeking to pierce the corporate veil must further establish that the controlling corporation abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against that party such that a court in equity will intervene.

 

Here, affording the complaint a liberal construction, accepting as true all facts alleged therein, and according the plaintiff the benefit of every favorable inference the agency sufficiently pleaded a cause of action to recover against Pappas for the alleged wrongs committed by AJP based on a theory of piercing the corporate veil.

 

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

Robert E.B. Hewitt III

[email protected]

 

11/14/18       Alexander v. Annarumma

Appellate Division, Second Department

Defendant’s Own Expert Report Found Significant Range of Motion Limitations

The plaintiff and the defendant were involved in a motor vehicle collision in Queens. In support of the motion for summary judgment, the defendant submitted the affirmed report of an orthopedic surgeon who measured the range of motion of the cervical region of the plaintiff's spine using a goniometer, compared those results with what would be considered normal range of motion, and found the results to be normal. The defendant further submitted the affirmed report of a neurologist who measured the range of motion of the cervical region of the plaintiff's spine using a goniometer, and compared those results with what would be considered normal range of motion. He noted deficits of up to 50%. This caused the court to find on appeal that the defendant failed to make out a prima facie case of a lack of serious injury.

 

11/14/18       Singleton v. F & R Royal, Inc.

Appellate Division, Second Department

Defendant’s Expert Found Significant Range of Motion Limitations in Plaintiff’s Knee

The defendants failed to meet their burden of demonstrating that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The defendants failed to submit competent medical evidence establishing, prima facie, that Darlene Singleton did not sustain a serious injury to her left knee under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d), as their expert found significant limitations in the range of motion of that knee. In addition, the papers submitted by the defendants failed to eliminate issues of fact.

 

11/13/18       Tejada v. LTG Hunts Point Parks

Appellate Division, First Department

Plaintiff’s Cessation of Treatment for Lumbar Spine Was Not Properly Explained By Claiming No-Fault Benefits Ran Out as Plaintiff Had Other Insurance

Defendants met their prima facie burden of demonstrating lack of serious injury to plaintiff's lumbar spine by submitting the expert reports of a neurologist and orthopedist who found near normal range of motion and opined that plaintiff's subjective complaints were not substantiated by clinical objective findings. Defendants further showed that plaintiff's lumbar spine condition was not causally related to the March 2013 motor vehicle accident through the report of their radiologist, who opined that plaintiff's MRI showed multilevel degenerative disc disease.

 

However, in opposition, plaintiff raised a triable issue of fact as to the existence of an injury involving a "significant" limitation of use of his lumbar spine, but not as to a "permanent consequential" limitation of use injury.  Plaintiff's orthopedic surgeon, who performed a discectomy procedure in May 2014, sufficiently addressed the findings of degeneration by opining that the MRI films did not show degeneration and that plaintiff's acute onset lumbar condition was causally related to the accident. Plaintiff also demonstrated the existence of significant limitations in his lumbar spine range of motion, both shortly after the accident and nine months later, through the reports of his orthopedic surgeon and his post-accident treatment records. Since the medical records were submitted by defendants and were properly before the court, plaintiff was entitled to rely on them.

 

However, plaintiff failed to provide a reasonable explanation for his complete cessation of treatment for his lumbar spine conditions after the May 2014 procedure. Plaintiff's claim that he ceased treatment because of an inability to pay due to a lack of no-fault insurance is unpersuasive in light of his testimony that he had other insurance. The cessation of treatment renders the opinion of a nontreating physician, based on an examination of plaintiff in December 2016, speculative concerning the permanence and causation of plaintiff's condition at that time. Plaintiff’s allegation in his bill of particulars that he was confined to home and bed for just eight weeks after the accident defeated his 90/180-day claim.

 

11/07/18       Firoucci-Melosevich v. Harris

Appellate Division, Second Department

Plaintiff Could Not Raise Issue of Fact Where Her Physician’s Affirmation Failed to Specify the Objective Test Used to Measure Range of Motion

The plaintiff commenced this action to recover damages for her injuries allegedly suffered in a motor vehicle accident, alleging in the bill of particulars that she had sustained injuries to the cervical, thoracic, and lumbar regions of her spine. She also alleged that she sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d).

 

In support of defendants’ motion for summary judgment, the defendants submitted, inter alia, the plaintiff's deposition testimony, as well as the affirmation of an orthopedic surgeon who stated that on June 10, 2016, he measured the range of motion of the cervical, thoracic, and lumbar regions of the plaintiff's spine using a goniometer, and that he found the results to be normal. In opposition, the plaintiff submitted, inter alia, the affirmation of a physician who stated that he measured the range of motion of the cervical and lumbar regions of the plaintiff's spine at a recent examination and found significant restrictions. The plaintiff's physician did not specify the objective test he used to measure the plaintiff's range of motion. Plaintiff was found to have failed to raise an issue of fact due to this deficit in its physician’s affirmation.

 

11/07/18       Epstein v. Kachar

Appellate Division, Second Department

Defendant’s Expert Report Failed to Address Plaintiff’s Ankle Claims in the Bill of Particulars

The defendants moved for summary judgment dismissing the complaint on the grounds that the plaintiff did not sustain a serious injury. In support, they submitted the affirmed report of an orthopedic surgeon, who measured the plaintiff's range of motion, using a goniometer and an inclinometer, and compared the results to what would be considered normal range of motion. He found normal range of motion in the cervical region of the plaintiff's spine, in both of the plaintiff's shoulders, and in both of the plaintiff's knees. He also found a 50% restriction in the flexion of the plaintiff's lumbar spine, and a 75% restriction in the dorsiflexion of her right ankle. The appellate division found the papers submitted by the defendants failed to adequately address the plaintiff's claims, set forth in the bills of particulars, that she sustained serious injuries to the lumbar region of her spine and to her right ankle under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102 as the right ankle was unaddressed in the expert report. Why an issue of fact is raised as to the lumbar spine is not specified.

 

11/07/18       Ramirez v. Miah

Appellate Division, Second Department

Electronic Signature of Plaintiff Physician’s Report Admissible

The Appellate Court found plaintiff’s physician report was enough to create an issue of fact. The main issue on the appeal was whether the electronic signature rendered it inadmissible. The Appellate Court held that under the State Technology Law, the electronic signature was valid and the document admissible evidence.

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

Property

 

11/13/18       Great American Ins. Co. of NY v. L. Knife & Son, Inc.       

Appellate Division, First Department

Failure to Confirm “Total Insurable Value” is Not a Condition Precedent to Coverage

Great American denied defendant’s claims for first party coverage on the basis of a material misrepresentation.  Despite two trips to the Appellate Division, and a full discovery process, a question of fact persisted as to whether defendant or its broker presented any misrepresentations about the total insurable value of the property and contents therein.  In addition, Great American failed to establish that any misrepresentations made were material, and impacted the premium charged.  Finally, a question of fact existed as to whether the wholesale broker was working on behalf of carrier or policyholder.

 

Nevertheless, the Court affirmed the trial court’s decision dismissing Great American’s denial on the basis that defendant’s failed to confirm the “total insurable value.”  Apparently, the duty to confirm the “total insurable value” was a condition precedent to coverage.  No such condition is found in the policy, and the Court noted that if Great American had intended to create such an obligation, it needed to expressly identify the same in policy.

 

Potpourri

 

11/14/18       Lee v. 354 Management, Inc.

Appellate Division, Second Department

Negotiation with Co-Insurer over Defense Obligations is Not a Reasonable Excuse for Insured’s Default

The lawsuit was served on 354 Management on May 23, 2014.  As required by CPLR 3215, the lawsuit was later sent via regular mail on June 8, 2014.  When no appearance was lodged, plaintiff moved for a default judgment the following November. 

 

In opposition, the insurer for 354 Management introduced an affidavit arguing that the defendant was entitled to a defense and indemnity with co-defendant.  During the default, the insurer’s claims professional was negotiating with co-defendant’s insurer to ensure 354 Management’s representation was assumed per the contract. 

 

In affirming the trial court’s decision to uphold the default, the Appellate Division noted that 354 Management’s insurer was aware of the Summons and Complaint in July of 2014.  As such, they had ample time to appear.  The decision to continue negotiations with another insurer was not a reasonable excuse for their failure to appear in the action.

 

11/13/18       Edwards v. Rosario

Appellate Division, First Department

Question of Fact over Independent Contractor Status Precludes Summary Judgment

Earlybird moved for summary judgment on the basis that co-defendant Almonte was not employed by Earlybird at the time of the incident.  In support of its motion, Earlybird proffered evidence that Mr. Almonte was paid on a per delivery basis, received an IRS 1099 tax form at the end of each year, and that he was required to furnish and maintain his own vehicle. In addition, Mr. Almonte had the ability to hire assistants at his discretion, and was free to engage other delivery services for work. Almonte operated under an “Independent Contractor Agreement” at the time of the incident.  Finally, Almonte was not covered under the company’s workers’ compensation policy, nor did he have any deductions in his pay for employee benefits.

 

Plaintiff, however, successfully created an issue of fact by establishing that over the course of the past decade Mr. Almonte had worked five days a week for Earlybird, received performance bonuses from Earlybird, and was required to “check in” with Earlybird dispatchers at the completion of each assignment.  In addition, Mr. Almonte was required to wear a company uniform while performing deliveries for Earlybird.

 

Earlybird also moved for summary judgment on the basis that even if Mr. Almonte was their “employee” he was not in the course of his employment at the time of the incident.   Specifically, Earlybird noted that according to Mr. Almonte’s testimony, when the accident occurred he had completed deliveries for the day and was waiting for co-defendant Rosario to run a personal errand.

 

In opposition, plaintiff submitted a handwritten statement from Mr. Almonte which proffered that he was in the process of a delivery at the time of the accident.  The Court noted that the statement was hearsay, but was admissible for purposes of opposing Earlybird’s summary judgment motion.   On that basis, a question of fact was found.

 

WILEWICZ’S WIDE WORLD OF COVERAGE

Agnes A. Wilewicz

[email protected]

 

All’s quiet on the Circuit Court front.

 

JEN’S GEMS

Jennifer A. Ehman

[email protected]

 

10/30/18       Tower Ins. Co. of N.Y. v. Kreft

Supreme Court, New York County

Premises Was Not the Named Insured’s Residence Where She Used it Only in the Summer and Stayed there One Week a Year

This declaratory judgment action arises out of a drowning in a swimming pool at a premises owned by the defendant, Laura Kreft, in Hampton Bays, New York.  The woman who drowned was a guest of her son, Paul Kreft.

 

A lawsuit was eventually brought by the woman’s estate against Ms. Kreft and her son alleging that they were negligent in, among other things, permitting or causing the woman to consume liquor resulting in her intoxication and, in her intoxicated state, permitting her to use the swimming pool located on the premises.  At the time of the incident, Ms. Kreft had a homeowners’ policy issued by Tower in connection with the premises.

 

Ms. Kreft and her son tendered their defense and indemnification in the lawsuit to Tower.  In response, Tower disclaimed coverage on the basis that Ms. Kreft did not reside at the premises on the date of the loss; thus, it did not qualify as an “insured location.”  The letter further advised that the Krefts’ breached the policy condition requiring notice of an occurrence as soon as reasonably possible.  Tower eventually brought this action to confirm its coverage position.

 

Ms. Kreft’s excess carrier, Allstate, moved to intervene seeking a declaration that Tower was obligated to defend and indemnify the Krefts, and a declaration that the Allstate policy did not trigger until the Tower policy was exhausted.

 

Tower moved for summary judgment, and Allstate cross-moved.   In support of its cross-motion Allstate contended that Laura Kreft was using the property as a residence at the time of the incident.  She resided in both her home in Queens and the Hampton Bays property.  Allstate also argued that Paul Kreft maintained the premises and visited on four occasions during the two months prior to the incident.  It lastly claimed that the lawsuit was about the Krefts’ conducts and not the result of any dangerous condition on the property; thus, it should be covered.

 

In considering the competing arguments, the court held that Tower met its prima facie burden of showing entitlement to summary judgment based upon evidence that the Tower policy unambiguously required that Ms. Kreft reside at the premises in order to receive coverage, and that she did not so reside.  The court first noted that the language of the policy focused on Ms. Kreft’s residence; thus, her son’s residency was irrelevant.  Citing Tower’s investigation, the court noted that Ms. Kreft did not live at the premises and used it as a temporary home for summer vacations.  Typically, she would stay at the property during the summer months, but stopped in 2012 when her husband died (two years before the incident).  Between that time and the incident, she had spent no more than one week per year at the premises.  The court also noted that at the time Ms. Kreft was deposed in this action, she hadn’t been to the property for years.

 

Next, considering the opposition, the court held that they failed to raise a trial issue of fact.  Simply because Ms. Kreft owned the property and paid the utilities was insufficient to establish residency.  Likewise, the court found that the fact the premises contained her personal items including mementos and clothing did not demonstrate some degree of permanence and intention to remain at the premises.  A statement by Ms. Kreft that she hopes to spend more time at the premises this summer should her health permit, without more, was also insufficient to raise a question of fact. 

 

Lastly, the court rejected Allstate’s argument that the loss did not arise out of the premises noting that the complaint referenced the swimming pool.  Accordingly, since the woman’s death resulted from drowning in the swimming pool at the premise, there was some causal relationship between the injury and the risk for which coverage was provided.  And, any argument about timeliness of notice was rendered moot.

 

JERRY’S NO-FAULT NAVIGATION

Jerry Marti

[email protected]

 

11/07/18       Progressive Advanced Ins. Co. v. New York City Tr. Auth.           

Appellate Division, Second Department   

Court Denies Petition to Vacate Arbitration Award

New York City Transit Authority (“NYCTA”) had sought reimbursement from Progressive Advanced Insurance Company (“Progressive”) for workers’ compensation benefits that NYCTA had paid to an employee who was involved in a collision with a vehicle operated by Progressive’s insured.  As Progressive admitted that its insured was completely at fault for the accident, the central issue at arbitration was the amount of damages NYCTA was entitled to recover.  The arbitrator decided that the 20% offset under Insurance Law § 5102(b) did not apply to the workers’ compensation wages portion of the benefits paid by NYCTA because a one-third offset had already been applied to the wages pursuant to the Workers’ Compensation Law.

 

After the Supreme Court denied Progressive’s article 75 petition to vacate the arbitration award, the appeal ensued.  In affirming the lower court’s decision, the Appellate Division, Second Department highlighted the standard of review for an award made in a compulsory arbitration proceeding.  Specifically, the award must have evidentiary support and cannot be arbitrary and capricious.  For no-fault arbitrations, the Court further pointed out that any reasonable hypothesis can be found to support the questioned interpretation.  So long as the arbitrator’s determination was supported by a reasonable hypothesis and was not arbitrary or capricious, the award was allowed to stand.

 

BARNAS ON BAD FAITH

Brian D. Barnas

[email protected]

 

11/09/18       Hayes v. Metropolitan Property and Casualty Ins. Co.

United States Court of Appeals, Eighth Circuit

Evidence Supported a Finding of Bad Faith by the Insurer

Hayes was insured by Met under a homeowner’s policy.  Hayes used the detached garage of the residence as part of a home base for his plumbing business, and in addition to living there himself with his children, he also rented out the second and third levels of the residence to a tenant and her two children.  When Hayes insured the residence in 2007, Met argues that he indicated on his application that the premises were not used to conduct business, and were not used as rental property.  However, the application was not filled out personally by Hayes, was done through a broker, and contained his signature stamp and not his actual signature.

 

On January 24, 2013, the home was destroyed by a fire.  Hayes was in Haiti on a mission trip when the fire occurred.  Hayes filed a claim with Met. Met made a notation as of January 28, 2013, that it believed the fire was intentionally set.  By January 29, 2013, Met knew that Hayes was operating part of his business at the detached garage near the premises, and that he leased the upper portion of the premises to tenants.  Accordingly, in February 2013, Met sent Hayes a reservation of rights letter, informing him that it was investigating the circumstances surrounding the fire, and whether there had been a change in occupancy due to the business and tenants.

 

Hayes submitted multiple sworn proofs of loss, all of which were rejected by Met for deficiency in form and documentation.  On September 18, 2013, the state fire marshal informed Met that there was insufficient evidence to charge anyone with arson.  In October 2013, while the investigation was ongoing, Met sent Hayes a policy renewal for the premises for the effective dates of November 2013 through November 2014.  In this renewal form, there was a provision for “optional coverage” for Hayes's plumbing business venture.  In January 2014, Met concluded that Hayes had made material misrepresentations on his 2007 insurance application.  Met informed Hayes of this conclusion in April 2014, and email communications between the parties' lawyers ensued.  Part of the discussion in that correspondence included whether, in return for agreeing not to sue Met, Hayes would accept a check to cover the balance of what was owed on Hayes's mortgage.  Those talks never came to satisfactory fruition, and Hayes ultimately sent a demand letter in the amount of $669,000 on July 30, 2014.

 

On August 5, 2014, Met officially informed Hayes that it was denying the claim, cancelling the policy ab initio based upon material misrepresentations, and enclosed a check for all premiums Hayes had paid, with interest.  Met also sent a check to Springfield State Bank for $127,342.97 to satisfy the balance due on Hayes's mortgage. Hayes returned the premium check and asked the bank to refuse to cash the mortgage payment.  The bank nonetheless accepted the check to satisfy the mortgage payment.

 

Hayes’ breach of contract claim was dismissed as time-barred.  However, Hayes succeeded on his bad faith claim in district court.  As relevant, the court found that the insurance form was filled out by the independent insurance agent and signature stamped by Hayes's sister.  Further, the court found that the form contained ambiguous questions.  Accordingly, the court held there was a lack of evidence that Hayes knowingly provided false answers on the insurance application with the intent to deceive.  The court additionally held that Met did not suffer a detriment due to any possible deception, and thus had no basis for rescission. The district court found that even if Met had proved deception and detriment, it should be estopped from rescinding the contract because of the eighteen-month delay between the time Met found out Hayes had a tenant and a plumbing business (in January 2013), and the time it rescinded (August 2014).

 

On appeal, Met argued that the court had no jurisdiction over the bad faith claim because the contract of insurance had been rescinded and the insured had not succeeded on his breach of contract claim.  While the court agreed with Met that there must have been a valid contract for a bad faith claim, it stated that Met could not insulate itself from a bad faith claim by creating the fiction that a contract never existed by voiding or rescinding it ab initio.  It noted that asserting that Hayes was never a policyholder because the contract was rescinded 18 months after the fire was “a bit of a stretch.”

 

The appellate court also concluded that Hayes had met his burden of proving the elements of bad faith – that Met had no reasonable basis for denying the claim and did so with knowledge or reckless disregard of that fact.  This knowledge was based upon the eighteen-month time frame between when Met first knew of a possible problem and when it rescinded the policy on that very basis.  Further evidence of its knowledge or reckless disregard for improperly denying the claim, according to the court was found in the emails exchanged wherein Met tried to secure a release from a bad faith suit in exchange for paying off Hayes's mortgage.

 

10/31/18       Three Blind Mice, LLC v. Colony Insurance Company

Court of Appeals of South Carolina

Insured was not Entitled to Summary Judgment on Bad Faith Claim

The insured owned and operated the Blind Horse Saloon.  It was insured by Colony.  In 2011 a patron filed suit against the bar claiming that an unknown person playing a boxing arcade game at the bar inadvertently struck her and knocked her unconscious.  Colony denied based upon an assault and battery exclusion and an exclusion for athletic or sport participants.  Blond Horse retained counsel to defend and settle the tort claim.  It then commenced an action against Colony seeking damages for breach of contract and bad faith.

 

The court first affirmed the lower court’s decision to grant the insured’s summary judgment motion holding that the assault and battery exclusion did not apply to bar coverage.  The court likewise held that thee athletic or sport participants exclusion was not applicable.

 

However, the insured was not entitled to summary judgment on its bad faith cause of action.  The elements of a bad faith cause of action in South Carolina are: (1) the existence of a mutually binding contract of insurance between the plaintiff and the defendant; (2) refusal by the insurer to pay benefits due under the contract; (3) resulting from the insurer's bad faith or unreasonable action in breach of an implied covenant of good faith and fair dealing arising on the contract; and (4) causing damage to the insured.

 

There was not sufficient evidence to conclude that Colony unreasonably denied coverage as a matter of law.  The court determined that the question of Colony’s bad faith should be submitted to a trier of fact.

 

JOHN’S JERSEY JOURNAL
John R. Ewell

[email protected]

 

11/01/18       Cox v. Tomasso and New Jersey Manufacturers Ins. Co.

New Jersey Superior Court, Appellate Division

Unsurprisingly, No UIM Coverage under Pick-up Truck’s Policy for Motorcycle Accident

Plaintiff was injured when a car driven by Krystal Tomasso struck the motorcycle he was riding. Plaintiff had insured his motorcycle through Rider Insurance Company (Rider) under a policy with a $15,000 liability limit, which was $10,000 less than the $25,000 limit Tomasso had on her car. Thus, Tomasso's vehicle was not underinsured compared to the coverage on plaintiff's motorcycle.

 

However, plaintiff sought underinsured motorist (UIM) benefits under a $500,000-limit policy he had obtained from New Jersey Manufacturers Insurance Company (NJM) to cover his pick-up truck. The liability section of the NJM policy specifically stated that NJM did not provide liability coverage for "the ownership, maintenance or use" of any vehicle with fewer than four wheels. In other words, NJM did not provide liability coverage for plaintiff's motorcycle or for plaintiff while he was riding a motorcycle. As such, plaintiff obtained a separate policy from Rider to cover his motorcycle.

 

The UIM section of the NJM policy explicitly excluded coverage for plaintiff "[w]hile occupying any vehicle insured by another motor vehicle policy in which you or a family member are a named insured." That provision further stated: "However, this exclusion . . . does not affect UM/UIM coverage for minimum limits required by New Jersey law for liability coverage as set forth in N.J.S.A. 39:6A-3." NJM denied plaintiff's UIM claim on the basis of this exclusion, because he was the named insured on the Rider motorcycle policy, and Tomasso's vehicle had limits higher than the $15,000 minimum required by law.

 

The trial judge granted NJM summary judgment, reasoning that the policy exclusion was unambiguous and was clearly applicable to plaintiff's situation. He also concluded that the exception for the minimum required limits for liability coverage did not render the exclusion ambiguous. The Appellate Division agreed with the trial judge that the NJM policy is not genuinely ambiguous, and the trial judge's interpretation of the policy is consistent with the insured's reasonable expectations.

 

The Appellate Division found that:

 

A reasonable reader would understand the exclusion as meaning that if … he had insured a vehicle with another insurance company and was a named insured on that policy, NJM would not provide UIM coverage for the use of that vehicle. In that context, the second sentence, stating an exception to the exclusion, for "minimum" limits required by law, would not lead a reasonable reader to believe that NJM would provide $500,000 in UIM coverage for the use of such a vehicle.

 

Therefore, the Court stated “it should have come as no surprise to plaintiff that NJM would not provide UIM coverage when [Cox] was riding a motorcycle for which he had purchased separate coverage from another insurer, particularly when the NJM policy explicitly stated that it did not cover vehicles with fewer than four wheels”. Therefore, the Appellate Division affirmed the grant of summary judgment to the insurer.

 

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

 

OFF THE MARK
Brian F. Mark

[email protected]

 

No cases on which to report this week.

 

WANDERING WATERS

Larry E. Waters
[email protected]

 

11/07/18       Gissim, Inc. v. Scottsdale Insurance Company

United States District Court, Eastern District of New York

Defendant’s Motion for Summary Judgment Denied Because the Insurer Had a Continued Duty to Defend in the Underlying Action

Plaintiff, Gissim, Inc. d/b/a Surf Manor Home for Adults (“Surf Manor”) is an adult care facility, which provides long-term residential care, room, board, housekeeping, and supervisions to its residents.  Previously, defendant, Scottsdale Insurance Company (“Scottsdale”), issued a general and professional liability policy to Surf Manor (the “Policy”). The Policy defined Damages as “monetary judgment, award or settlement . . . .”  In addition, the Policy defined that Wrongful Act” as “any act, error or omission in the furnishing of professional healthcare services. It includes furnishing of food, beverages, medications or appliances in connection with those services.”

 

In addition, the general liability section of the Policy provided that Scottsdale has the duty to defend any lawsuits and indemnify any sums that Surf Manor becomes legally obligated to pay as damages because of “bodily injury,” “property damage,” or “personal and advertising injury,” which are defined in the Policy. Further, the Policy’s professional liability section of the Policy provided that “[w]e will pay those sums that the insured becomes legally obligated to pay as Damages because of injury as a result of Wrongful Act. . . . .”

 

Following the issuance of the Policy, Surf Manor residents filed a class action suit alleging breach of contract, social services, human rights, and implied warranty of habitability claims (the “Underlying Action”).  Specifically, the Underlying Action alleged that Surf Manor subjected the residents to “dangerous and uninhabitable living conditions resulting in pervasive bed bug and scabies infestations, filth and neglect, and a constellation of repeated and ongoing health and building code violations.”  After receiving notice of the Underlying Action, Scottsdale agreed to defend and indemnify Surf Manor subject to a reservation of rights. 

 

On February 10, 2015, Norman Bloomfield, the only remaining Plaintiff was deposed.  At his deposition, Mr. Bloomfield testified that “I don’t think there’s any request for financial damages or residents as a whole.”  Six months after Mr. Bloomfield’s deposition, Scottsdale informed Surf Manor that it would no longer defend the Underlying Action.   Scottsdale reasoned that the deposition of Mr. Bloomfield established that the matter did not involve any loss that could subject the Insured to pay Damages as the term is defined by the Policy.  As such, Scottsdale determined that it did not have any obligation to defend or indemnify the Insured defendants in the Underlying Action.

 

On June 26, 2016, Surf Manor commenced this current declaratory Judgment action against Scottsdale.  On July 1, 2016,  Plaintiff in the Underlying Action submitted an affidavit setting forth new allegations including lack of heat in his room, failure to take preventive action resulting in a fractured rib, noxious odors on the premises, broken showers and toilets, the presence of mice, trespass by Surf Manor employees and doors without locks resulting in theft.  On May 1, 2017, Scottsdale moved for summary judgment.  On June 20, 2017, Surf Manor cross-moved for summary judgment,

 

The Court began its analysis determining whether Scottsdale disclaimer was untimely under New York law. Surf Manor argued that Scottsdale disclaimer was untimely under New York Insurance Law § 3420(d)(2) because Scottsdale waited to deny coverage six months after Mr. Bloomfield’s deposition testimony.  The Court rejected Surf Manor’s argument.  In its analysis the Court noted that the “New York Court of Appeals construed the language denial of coverage in section 3420 to apply only to  instances in which insurance covering the event could be said to exist but for some nonpayment of premiums, cancellation, or other exclusion that would arguably defeat such coverage. The Court found no such circumstances were present in this matter.  Rather, the Court concluded that Scottsdale denied coverage because it claims the type of damages sought in the Underlying Action is not covered by the Policy in the first place.  Therefore, Scottsdale denial was timely as New York Insurance Law § 3420(d)(2) was not applicable.

 

Next the Court considered Scottsdale duty to defend the Underlying Action.  In its analysis, the Court noted that “[i]n determining whether an insurer has a duty to defend, the Court must compare the allegations in the complaint to the provisions of the insurance contract and then the question becomes whether the allegations are covered by one of the exclusionary provisions of the contract, thus relieving [an insurer] of its duty to defend. The Court concluded that Scottsdale has a duty to continue to defend the Underlying Action.  While Mr. Bloomfield alleged a breach of contract claim in the Underlying Action, the Court found that the original complaint made numerous allegations of “bodily injury,” “property damage,” and “personal and advertising injury”, which the Policy provides coverage for.  Further, the Court reasoned that Scottsdale had a continued duty to defend because Mr. Bloomfield’s additional allegations on July 1, 2016 constitute bodily injury,” “property damage,” and “personal and advertising injury” as defined under the Policy. 

 

Lastly, the Court considered Scottsdale’s duty to indemnify the Underlying Action.  The Court began its analysis by noting that “[t]he narrower duty to indemnify arises only if the claim for which the insured has been judged liable lies within the policy’s coverage.”  In this matter the Court concluded that Scottsdale may have a duty to indemnify the Underlying Action.  The Court reasoned that if Surf Manor is found liable for Mr. Bloomfield’s human rights, social services and implied warranty of habitability claimed based on his bodily injury,” “property damage,” and “personal and advertising injury” allegations, Scottsdale would have a duty to indemnify.  Similarly,  the Court reasoned that if Surf Manor is found liable for “any act, error or omission in the furnishing of professional healthcare services, Scottsdale is liable to pay monetary damages awarded for each Wrongful Act as defined within the Policy.

 

In conclusion, the Court denied Scottsdale’s motion for summary judgment and granted Surf Manor’s cross motion. 

 

BORON’S BENCHMARKS

Eric T. Boron

[email protected]

 

On much needed and overdue vacation.

 

EARL’S PEARLS

Earl K. Cantwell
[email protected]

 

02/14/18       Continental Insurance Co. v L&L Marine Transportation, Inc.

Court of Appeals, Fifth Circuit

Insurance Policy Interpretation: When is a Tow a Tow?

Coverage Pointers here delves into the arcane world of maritime law and insurance to review and discuss basic points of insurance policy interpretation.

 

Three tugs were towing a barge on the Mississippi River when one of them, the Miss Dorothy, allided (that is the maritime term) with a portion of a bridge fender system and sank, resulting in a total loss. In the resulting insurance litigation, the argument was that another tug, the Angela Rae, was the lead tug and was therefore responsible for coordination of the tow. On cross-motions for summary judgment, the Trial Court found that the insurance policy covering the lead tug was liable for the loss. This was despite the fact that the lead tug never collided with anything, nor was its tow stranded, subject to collision, or damaged in any way. The argument was that the lead tug caused its “tow” to come into collision with the bridge. This decision was reviewed by the Fifth Circuit on both arcane maritime law issues, but also on standard contract interpretation analysis, and reversed.

 

The Court started from the proposition that it determines coverage largely by looking to the allegations in the underlying suit complaint. The central issue, therefore, was whether the Miss Dorothy was in the “tow” of the Angela Rae? With respect to the meaning of the word “tow”, the words of a contract must be given their generally prevailing meaning or their technical meaning when the contract involves a technical matter. If the words of the contract are unambiguous and the intent is clear, the insurance contract can be enforced as written. The Court basically accepted the definition of a “tow” as “a vessel that is being provided extra motive power by another vessel by being pushed or pulled”. A “tow” may have its own power, but a “towed” vessel receives at least auxiliary motive power from the tug or towing vessel.

 

Using this “plain meaning approach”, the Court held that the Miss Dorothy was not the tow of the lead tug, the Angela Rae. Nowhere in the facts of the case or the complaint was there an indication that the lead tug was actually providing the Miss Dorothy with any motive power, or was pushing or pulling it in any way. Accordingly, there was no reason to characterize the Miss Dorothy as the “tow” of the Angela Rae.

 

To counter this argument, the argument was made that a maritime tort law concept of the “dominant mind” should be applied to define “tow” in the context of an insurance policy. The Court declined and rejected this argument. This dominant mind doctrine usually applies where there are several vessels that cause damage to some third party, and courts may hold the lead tug liable if it is in control of the entire operation as the “dominant mind”. The Court found various faults with this theory, including the fact that event that doctrine does not impute to the lead tug sole responsibility for safe navigation of the flotilla.

 

As a result, “tow” meant “a vessel that is being provided auxiliary motive power by being pushed or pulled”. A tug remains a tug when it is tugging, and it is a tow only when it is being towed, i.e. being pushed or pulled. Because the Miss Dorothy was not being provided with any extra motive power, it was not a tow, and the one insurance policy did not apply. Therefore, the Trial Court’s grant of summary judgment was reversed, and judgment was entered in favor of the other insurance company.

 

This case represents a good explanation, even under Louisiana Law, of how courts approach insurance policy interpretation. For example, the Court declined to insert the maritime law concept of the “dominant mind” as somehow defining or controlling the meaning of the insurance policy language.

 

This case also represents an example of where coverage disputes can often be resolved on motions for summary judgment applied to undisputed facts of the case, or at least to known controlling facts of the case insofar as insurance coverage is concerned. In this case, there was no indication that the following tug boat was being provided any pushing or pulling assistance by the lead tug, and therefore under the Court’s analysis, it could not be a “tow”, and therefore the one insurance policy did not apply.

 

This case is also a good example of where the Court will literally resort to dictionary definitions of words and phrases in an effort to arrive at common or at least understandable definitions, in this case of the word “tow”. The case and definition did not turn on technical insurance policy language, or equally specialized maritime law terms.

 

This case also stands for the proposition that usually nothing very good happens when a tugboat pushing a barge along the Mississippi River not only slams a bridge abutment but then completely sinks to the bottom. SOS.

 

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