Coverage Pointers - Volume XX, No. 20

Volume XX, No. 20 (No. 531)
Friday, March 22, 2019

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.

When you live in Buffalo, the most important day of the year is the first day of spring, the rebirth of greenery.  We are so happy to have made it through winter and look forward to glorious warm weather ahead.  This is a big thing here.  The groundhog, frankly, made material misrepresentation on Ground Hog’s Day and accordingly, we have one fewer friend in Pennsylvania.

We head to the FDCC Winter Meeting in Austin on Saturday as I attend my 59th consecutive membership meeting with that wonderful organization.  I have been fortunate to have established some of my dearest and most meaningful relationships through the Federation of Defense & Corporate Counsel, the ADTA, DRI and other national organizations to which I have had honor of association.

I will then be attending the PLRB Claims Conference in Indianapolis, spending time with great friends and associates there, teaching two classes on Risk Transfer (Contractual Indemnity and Additional Insured Coverage) and working with the Planning Committee to make sure the thousands of participants at that great conference find it worthwhile and enjoyable.  It will be both.  John Hanlon and I will be presenting on Monday at 10:30 - 12:00 and Tuesday at  1:30 - 3:00. See you there!  During the off time, I’ll be working one of the help kiosks so please stop by and say “hi”.

The Carlson decision from the Court of Appeals was the one where the high court expanded the applicability of Insurance Law §3420 to out of state policies if the insured had a substantial business presence (even if the policy was issued in another state).  We wrote about it extensively when the Court handed down its opinion in December 2017.  This issue provides one of the few post-Carlson decisions discussing what it means to have a substantial business presence and remanded the case back to a lower court to conduct an evidentiary hearing.  See the Vista Engineering decision in my column.

You will also find an interesting decision involving the determination of residency for SUM purposes.  There’s always great stuff in Coverage Pointers for the experienced and novice insurance aficionado.

We send a special thank you to a certain Westchester law firm for its basket of very tasty cheer.  We are delighted that we can provide this service for insurance professionals, lawyers and the judiciary alike, as well as those many-odd folks who just love the humor and history.  The humor is poor, the history may be interesting, but the heart is surely there.

And how about those sixth ranked Buffalo Bulls (on the men’s side) and tenth ranked Buffalo Bulls (on the women’s side)!


“I am woman, watch me swing (an axe)” -- 100 Years Ago:


Democrat and Chronicle

Rochester, New York

22 Mar 1919




Under Influence of Liquor, Swings

Ax on Fire Alarm Standard


Mrs. Nellie Smith, 42-years old of No. 128 Alexander Street, went on the warpath yesterday afternoon.  While under the influence of liquor she obtained an axe and is said to have chased several persons to Alexander Street and Broadway.  She attacked the fire alarm standard at the intersection of the two streets and demolished the red globe.

Many complaints were received at headquarters and the University Avenue station.  Patrolman William O’Brien went to the disturbed zone and managed to entice Mrs. Smith from the attic of her home, where she had hidden.  He placed her under arrest and sent her to headquarters. 


Jen’s Gems:

This week the trial courts were a little light on published decisions addressing coverage issues, but, perhaps, next week things will pick up.

Putting that aside, there are also some very exciting events coming up.  First, the University at Buffalo’s basketball team made the NCAA tournament this year as a No. 6 (this is the highest for a MAC program since the NCAA Tournament expanded to 64 teams in 1985).  As a town starved for athletic success, this is really exciting.     

Second, DRI’s Annual Insurance Coverage and Claims Institute will be held on April 3-5, 2019 at the Loews Chicago Hotel in Chicago!  This year I have the honor of serving as the program’s Vice-Chair.  This insurance coverage extravaganza is CLE/CE accredited and offers excellent networking opportunities.  Leading outside counsel and in-house representatives from across the industry will provide insight on timely topics, including The Evolution of D&O Coverage in a Time of Nontraditional Claims and the pros and cons of Automated Claims Handling.  It really is set to be a great conference with a number of dynamic speakers.  Please consider attending, and I hope to see you there.

Until next issue …



Jennifer A. Ehman

[email protected]


A Novel Idea – Revoke the License of Careless Drivers:


Buffalo Courier

Buffalo, New York

22 Mar 1919





New York, March 21.—“A proper solution to the motor vehicle traffic problem, in so far as it concerns the safety of the automobilist and pedestrian, cannot be reached until the efficiency of every operator and driver is determined by some process of examination,” said Secretary of State Francis M. Hugo, addressing members of the National Highway Traffic association at a meeting tonight at the Automobile Club of America.

“I am fully aware that there is no examination which can bring about a 100 per cent efficiency in driving,” he said.  “There will always be automobile accidents as long as the human equation exists.  But we can, by the process of suspension and revocation of licenses, accomplish a great deal in weeding out inefficient drivers.”


John’s Jersey Journal:

Dear Subscribers:

We love New Jersey situations. We are happy to help you navigate New Jersey coverage issues. Just drop us a note or give us a call.   The New Jersey state and federal courts issued a flurry of coverage decisions this week. We have three cases for you to mull over this week.

The first poses an interesting question of law. Should an unlicensed driver who borrows a car be able to collect PIP benefits?  The others have interesting facts.  A house on a private island in Barnegat Bay, along the coast of New Jersey, was damaged by Superstorm Sandy. Is it wind damage or flood damage?  A 65-foot yacht called Three Times A Lady partially sunk, but was it due to heavy rain or a hole in the boat?

Do any of these cases pique your interests? This week’s cover note is short so why not read the case summaries contained in the attached issue.

P.S. We have not forgotten about the New Jersey bad faith bill, the so-called “New Jersey Insurance Fair Conduct Act.” The bill is currently in the Assembly where it really hasn’t moved. Rest assured, we are still monitoring its progress for you and will report developments as they arise.



John R. Ewell

[email protected]


Auto Accident Leads to Murder Charge:



The Tampa Times

Tampa, Florida

22 Mar 1919





Information Is Filed Against

Nighswonger—His Auto

Killed Young Haddon.


Assistant County Solicitor Chris Chancey filed information charging second degree murder against L. Z. Nighswonger, whose automobile on the night of Jan. 19 struck Raymond Haddon, the boy’s death following the next day.  It had generally been understood that the accident was unavoidable hence the issuing of a capias for Mr. Nighswonger was somewhat surprising.

Editor’s Note:          A “capias” is a writ order the arrest of a named person.  I had to look it up.


But the Verdict was Manslaughter


The Tampa Tribune

Tampa, Florida

09 May 1919








Ran Over Youngster Last

January—Information Charged

2nd Degree Murder


L. G. Nighswonger, charged with second degree murder for the death of young Raymond Haddon, son of Mr. and Mrs. R. R. Haddon, and who died January 20, following his being struck by Nighswonger’s automobile at West Lafayette street and Hyde Park avenue, January 19, was found guilty of manslaughter in criminal court late last night, following an all-day trial.  Motion for a new trial will be made.  The jury brought in a verdict at 1 a.m.

A coincidence in the trial was that Alvin Roberts, Jr., son of Mr. and Mrs. Alvin Roberts, formerly of Tampa, but now of Orlando, and who was to have been a witness at the trial, was rundown and perhaps fatally injured by an automobile in Macon Wednesday.  Young Roberts was a playmate of the Haddon boy and witnessed the accident that cost little Raymond’s life.

County Solicitor R. E. L. Chancey, assisted by United States District Attorney Herbert S. Phillips, made every effort to show that accident which caused the death of the Haddon boy was due to the careless and reckless driving of Nighswonger, while the defense, represented by Attorney Don C. McMullen, fighting to the last ditch, claimed that the Haddon boy ran into the car while crossing the street.

Witnesses agreed that Nighswonger was not traveling very fast at the time of the accident, but testimony showed his automobile was on the wrong side of the street at the time the boy was struck.  Nighswonger was driving from town and turned into Hyde Park avenue, the automobile nearer the east than the west side of the street, while it was pointing south.

Immediately following the collision Nighswonger rushed the boy to the hospital, where the latter died the next day.

Editor’s note:  There is more to come on this story …. Below.


Peiper on Property and Potpourri:

In case you haven’t heard, its NCAA tournament time.  Whether you like basketball, hate basketball, or have no idea what basketball is, you simply cannot deny the impact of the famed bracket pools.  The first two days of the tournament have become a de facto national holiday, with long/late/long and late lunches the norm.  After a bit of quick research this afternoon, it is submitted that March 22nd should be National NCAA Tournament Day because there aren’t many other options.

Did you know that Bavarian Crepes have their own holiday.  Indeed, it is also March 22nd.  It joins National West Virginia Day and National Puppy Day on March 22nd for celebration.  I will confess to not realizing that crepes are, in fact, a Bavarian creation until this very day.  To those of you who are nodding like you were aware of this oddity, I have one thing to say to you.  I don’t believe you. I am also not ready to believe that crepes are solely a Bavarian creation.

March 22nd is also National Goof Off Day, so there’s that too. The Cambridge dictionary defines “goof off” as the avoidance of doing any work.  With this in mind, I’ll honor the day by ending my column.  See you in two weeks.



Steven E. Peiper

[email protected]


The Saga Continued:

The trial judge set aside the verdict based on new evidence and then the case was retried, not once, but twice:


The Tampa Tribune

Tampa, Florida

08 Oct 1919





Third Time Case Has Been

Fought Though the Criminal Court Here


After having been out two hours, a jury in criminal court at 12:30 o’clock this morning declared a mistrial in the case of L. Z. Nighswonger, charged with manslaughter in connection with the death January 19 this year, of Raymond Haddon, a young boy, in an automobile accident.

Yesterday was the third time that the case has been tried in criminal court.  The first trial resulted in a conviction, but Judge Graham ordered a new trial, new evidence having been discovered.  A mistrial resulted the second time, it being reported then that the jury stood four to two for acquittal.

Editor’s Note:  It appears the jury remained deadlocked and the case never went forward again.


Hewitt’s Highlights: 

Dear Subscribers:

Brian Mark and I had a great time presenting a CLE on Products Liability for DANY last week with a great panel. It was at a lovely location at Battery Park overlooking the Statute of Liberty. The second half is scheduled for some time around September, and I will try to give you readers notice of that one when we have a date set in case you are interested.                                                              

In this edition of my column, the courts address several serious injury aspects. One court held that Range of Motion Limitations of at most 10 percent were not enough to demonstrate serious injury. In another case, conflicting expert reports led to the denial of plaintiff’s motion as that issue is for a jury to decide.  In another case, plaintiff had a four year unexplained cessation of treatment, even though she had medical insurance and saw a primary care doctor throughout. The Court granted summary judgment in favor of the defendants.  Another court held that unaffirmed medical reports submitted by plaintiff were not admissible and that even in an affirmed report, an issue of fact would not be found if a doctor alleged range of motion limitations but did not set forth the objective tests performed or measurements taken.                                                          

Until next issue,


Robert E.B. Hewitt III

[email protected]


I am Willing to Spend Twenty Cents on This One”


The Tampa Times

March 22, 1919



PERSONAL – Magic Words! Sure method of obtaining anything you want.  Postpaid for a dime.  Lida Smedley, 140 Miller, Brooklyn, N.Y.


Wilewicz’ Wide-World of Coverage:

Dear Readers,

I celebrated my birthday the other day, and it was really lovely. Actually, I spent four days celebrating with friends and family, with multiple dinners and lunches, including one fabulous lunch my team put together for me (kudos to Eric Boron for coordinating!), and I’m a little partied out. Though, I have to admit, I really do love my birthday. I typically abhor being the center of attention (with a passion), but I feel like a little kid that one day a year, and it feels pretty nice. And getting older isn’t all that bad. Sure beats the alternative.

Now, this week in the Wide World of Coverage, the Second Circuit finally addressed a coverage case (birthday present for me?). In US Underwriters v. Orion Plumbing, the Court looked at whether a rescission action could be brought by a carrier even if an underlying action against an insured had already been resolved. That is, it was not until after a negligence action was brought, and dismissed, against US Underwriters’ insured that the carrier brought a DJ action as to coverage. While the lower court determined that this meant that the insurer’s action lacked subject matter jurisdiction, the Second Circuit disagreed. A rescission action presents a justiciable claim even absent a pending underlying claim. A carrier is entitled to its day in court, if nothing else because of the fact that the duty to defend issue remains outstanding, even if not currently pending. A pretty good, brief decision. Take a look at the summary attached here, with a link to the full decision therein.

Until next time!



Agnes A. Wilewicz

[email protected]


Let’s Take the Mystery Out of Insurance (and the Fun?):


The Topeka Daily Capital

Topeka, Kansas

22 Mar 1919




Nothing Under Cover in Insurance

Office, Travis Announces


“My purpose will be to take the mystery out of this office,” Frank L. Travis, Superintendent of Insurance for Kansas, announced yesterday.

“I am going to tell people about cases coming before this office.  There will be no secrecy.  Few people understand the insurance business.  I am going to try to let them know what we are doing.”

Mr. Travis proposes to give names of companies which engage in disputes with the State Department of Insurance.  He states that his office is to be operated in the interests of the policy holders primarily, with due respect being paid to rights of the companies.

At present the Insurance Department is gathering data regarding fire insurance in preparation for a new schedule of rates, which the fire insurance companies will submit.

The lopping off of the surcharge of 10 per cent on fire insurance rates, which was announced this week, Mr. Travis estimates, will save $450,000 annually to holders of policies.


Barnas on Bad Faith:

Hello again:

Happy March!  The MLB season is already underway with two games having been played in Japan.  March Madness is also underway as I write this note.  We’ve already had one crazy finish in the New Mexico State vs. Auburn game, but no big upsets to speak of yet.  I picked a plucky underdog from Durham, North Carolina, to win the tournament this year.  You may have heard of them; they’re called Duke.  Not very original, I know, but sometimes you have to go with what you think is right.

Both Syracuse and Buffalo have made it into the tournament, much to my delight.  Cuse has the last start time tonight in Salt Lake City against Baylor, and our starting point guard has been suspended indefinitely.  It might be a short stay in March for my Orange.  I’m thinking the Bulls have a better chance of making an extended run.  The West region really sets up for a mid-major to make a deep run in my opinion.  Hopefully it’s UB.  Have to get the first one to do that though, and they’ll face former coach [and Duke legend] Bobby Hurley’s Arizona State team tomorrow afternoon.  I’d like to offer my apologies in advance to my fellow Bulls fans for picking them to reach the Final Four in my bracket.  If they go down this weekend, I’ll accept the blame.

I have a federal court case from right here in the Western District of New York in my column this week.  It’s a bit of a long one, but the court concluded that the insured adequately pled a claim for breach of the implied covenant of good faith and fair dealing by pleading factual allegations that differed from the breach of contract claim.  However, the claims for bad faith denial of insurance coverage, violation of General Business Law § 349, and punitive damages were dismissed.  Give it a look if you are so inclined.

Signing off,



Brian D. Barnas

[email protected]


Before the Curse ….:


Buffalo Morning Express and

Illustrated Buffalo Express

Buffalo, New York

22 Mar 1919


Babe Ruth has come to

terms with the Red Sox


New York, March 21 (A.P.).—Babe Ruth, pitcher and hard hitting outfielder of the Boston Americans, today came to terms here with Harry Frazee, president of the Boston club, and signed a contract for three years.  The amount of his salary was not mentioned, but Mr. Frazee announced that both he and Ruth were entirely satisfied.


Off the Mark:

Dear Readers,

Last week’s CLE presentation on product liability litigation went well.  The exciting conclusion will be held sometime in the fall.  I will certainly provide an update once same has been scheduled for anyone interested.

Due to ongoing computer issues, I am forced to sit this edition out.  I’m sure I’ll be good to go by the next edition with interesting construction defect cases to report on.  Until then …



Brian F. Mark
[email protected]


The League of Nations:


Poughkeepsie Eagle-News

Poughkeepsie, New York

22 Mar 1919




Conference in Paris Over

League of Nations

Covenant Is Concluded.




Paris, March 21. (By The Associated Press)—The council of the powers today considered the question of sending three Polish divisions now in France to Poland by way of Danzig, but decision on the question was deferred until tomorrow.  The delegates of neutral stations on the question of the League of Nations concluded their presentation of views to the League of Nations committee today.  About thirty-five amendments to the league covenants were proposed, mainly textual and formal.  All these amendments will be considered at the league commission meeting tomorrow, which will sit under the presidency of President Wilson.


The Japanese delegates informed the league commission that their amendment on racial equality would be renewed in modified form.  This will omit reference to “facial discrimination” and provide for “equal and just treatment.”  This, it is said, may further be changed to “just treatment,” but the Australians are declared still to object to this modified form.


Wandering Waters:

I hope all of you had a wonderful week and welcome to another edition of Wandering Waters.  

Spring is official here. With a sizzling 47 degrees, Buffalo is experiencing its first heat wave of the year.  I can honestly say, my short time in Buffalo has made me appreciate sub 50-degree days.

As the temperature heats up, the Laker’s season is officially on ice.  While the Laker’s are mathematically still in the playoffs, they have a slight to zero chance of actually accomplishing this feat.  As such, LeBron’s first season in LA will go down as a large disappointment.  Not only would the Lakers fail to make the playoffs, but the team has endured a lot of drama this season.  From the front office, to the coaching staff and the players, it appears every aspect of the organization is in some sort of disagreement. In addition, LeBron had one of the worst injury seasons of his career.  LeBron has always been the NBA’s ironman.  LeBron has been one of the more consistent players in NBA finals.  LeBron has been to the playoffs every year since his rookie season, he’s been to the finals for eight straight years, and he has not had a season derailed by injury.  Now heading into the 2020-2021 season, LeBron has to prove, once again, that he is the NBA’s ironman. I believe the Lakers and LeBron will be just fine next year as LeBron is still the king of the NBA.

With that said, we have one case from the Eastern District of New York. Until next time …



Larry E. Waters

[email protected]


Health Insurance?


Poughkeepsie Eagle-News

Poughkeepsie, New York

22 Mar 1919


Heard on the Trolley


What’s this health insurance they’re talking about?

Oh, I don’t know, some kind of a thing that insures you when you’re ill.

Then why don’t they call it sick insurance?

Why Mary, you have the funniest ideas.  Tee-hee.


Boron’s Benchmarks:

Dear Subscribers:

Every U.S. state has at least one vowel letter in its name.  Seven U.S. states have four different vowel letters in their names.  There are six U.S. state names that contain only one vowel letter which is used more than once in their names.  For only one of those six states, it is the letter “i” (used four times).  Name that state.

Yes, friends, it’s the great state of Mississippi.  And, come to think of it, Boron’s Benchmarks happens to be bringing you a coverage opinion from the Supreme Court of Mississippi in this edition of my bi-weekly Coverage Pointers column.  Incredible coincidence?  You decide.

Now, friends, don’t beat yourself up if you had to look up the answer to my little quiz, or phone a friend for help.  After all, you haven’t had your third cup of coffee yet today.  Believe me, I know not everyone has a Dan-Kohane-like-immediate-recall-memory for things like fun facts, case names, statute citations, or ISO-form numbers.   

The Supreme Court of Mississippi decision I’ve selected for your consideration deals with applicability of an earth movement exclusion in an insured’s homeowner’s insurance policy, and a claim arising from foundation damage to a home.  After carefully considering the pertinent language of the policy’s earth movement exclusion (always a fine idea), the Court interpreted the exclusion – broadly, some may say – in holding that the exclusion as worded applies to any earth movement, not just to earth movement caused by “natural forces”.  This holding won’t necessarily apply to all foundation damage claims where the policy at issue has an earth movement exclusion, because not all earth movement exclusions are identically worded.

So, do you have a coverage question about the application of the earth movement exclusion from YOUR policy to the claim you’re handling?  Call us.  We’ll be happy to analyze and advise.  We’ll dot every “i” - up to a maximum limit of 4 - and cross every “t” in providing you with the coverage evaluation you need.

In the meantime, here’s hoping you have a great next couple of weeks.



Eric T. Boron

[email protected]


There’s No Such Thing as a Free Lunch:

New-York Tribune

New York, New York

22 Mar 1919


Girl Wife Tells Story

Of Old Man’s Wooing


Mrs. Katie Wolf Hart, Aged 18,

Witness Against Her Husband, Aged 87


Mrs. Katie Wolf Hart, eighteen years old, whose eighty-seven-year-old husband, James Harvey Hart, is seeking an annulment of their marriage, was a witness on her own behalf before Justice Benedict in the Supreme Court, Brooklyn, yesterday.

Wearing a handsome suit and cloak which her husband had given her, the bride of ten months said that she had been forced to help support her mother and four other children ever since her father died three years ago.

For a time she worked in a factory for $6 a week, and then became a manicurist in a barbershop in the building in which Hart had his office.  She related at great length her wooing by the aged man, and said he proposed to her a week after they first met.

When this occurred, she testified, she told him he would have to see her mother.  She also said that Hart promised to give her $50,000 on their wedding day.

Under cross-examination, Mrs. Hart said her husband left their home as a result of a quarrel.  Dirty dishes, she related, had been left on the mantel, and when Hart ordered her brother to remove them and he refused, her husband left her saying:

“I’m through with you.”

“I was so surprised that I was speechless,” the witness said.

Physicians testified yesterday that except for a slight heart murmur Hart was in surprisingly good health. 


Marti's Legislative and Regulatory Markers:

Dear Subscribers,

In continuation of our multi-part series on the Child Victims Act (the CVA), we look this week to a case that elaborates upon the Court’s analysis of constitutional issues affecting revival statutes, particularly the Due Process clause under the New York State Constitution.  While the case deals with an environmental contamination claim, it sets forth certain factors in consideration of due process issues.  Of note, the Courts have universally cited to one such factor, concerning the latent effect of injuries resulting from environmental contamination.  In other words, the Courts have generally found that revival statutes reasonably provided an avenue to remedy an injustice where plaintiffs discovered the extent of their injuries, or the source of their injuries, over the passage of time.

Whether the CVA satisfies the due process requirements under the state constitution remains to be seen.  While the legislature sought to right a wrong for abuse victims under the CVA, there remains the factor regarding the latent effect of their injuries.  Since most abuse victims would know of the perpetrator immediately and some of their injuries would arguably be immediate (as well as develop over time), the same latent effect would not be found in order to justify the revival provisions of the CVA.  Does this mean that the CVA violates due process rights? For more details on the case law, please read on.



Jerry Marti

[email protected]


What’s in a Name?



New-York Tribune

New York, New York

22 Mar 1919


‘Tammany Times’ Will

Change Name April 15


District Attorney’s Office Suggests

Action to Carb Work of Grafting Agents


The name of “The Tammany Times” will be changed after the appearance of the anniversary number of that publication on April 15.

This decision was reached the publisher of the paper after a conference with Assistant District Attorney Edwin P. Kilroe, who stated last night that for the past year many complaints have been received at his office against solicitors of the paper.  Some of these solicitors, he said, had represented that the paper was the official organ of Tammany Hall and that it would be to the best interests of those approached to patronize it. 


Barci’s Basics (On No Fault):

Hello Subscribers!

March Madness is upon us, and I have filled out my first official bracket ever for the tournament. Now, I am not trying to step on Brian’s or Larry’s toes as I am sure they are giving you significantly more detail about the teams and players and odds, but I’m feeling good about my final picks. Last year for our office bracket a dog won (shout out to Earl’s dog), so maybe beginner’s luck will be enough to edge him out this year. As the saying goes, may the odds be ever in your favor!

On the no-fault front I have two cases for you this week. In Fu-Qi, a notice of trial and certificate of readiness was vacated after they were served only a month after the carrier filed its answer. Then in Global Liberty/Medco, the provider goes through almost the entire appellate process from arbitration up to the First Department before it gets the arbiter’s award vacated and remanded for a de novo hearing.

That’s all folks,



Marina A. Barci

[email protected]


Since I’m on My Way to Austin:



Austin American Statesman

March 22, 1919

Famous Midgets to Visit Austin


The famous Filipino Midgets, without a doubt the two smallest adults alive in the world today, are to be exhibited at 701 Congress Avenue, all the week of March 25.

Editor’s note:  We  learned that Martina De La Cruze was only 21 inches high and her brother, Juan, was 24 inches tall.  They also had another sister, Myrtle, who towered over them at 36 inches,  They had been received in the White House by President Taft.  Juan died in 1954 at the age of 75.  The sisters died in 1948 and 1949.  701 Congress is the current site of the Intercontinental Hotel in Austin.  I shall tip my hat to the De Law Cruze’s when I pass it by. 


Lee’s Connecticut Chronicles:

The snow and ice are thawing here in the Nutmeg State – we’ve even seen the mercury top 60 once or twice. Perhaps the warming was the result of the Connecticut Supreme Court issuing one of the hottest decisions to come out of Hartford in decades. In Soto v. Bushmaster Firearms, the Court captured national headlines by reviving the Sandy Hook plaintiffs’ law suit against the maker of the AR-15 used to massacre 26 children and educators. The Court may have given future plaintiffs a roadmap to overcome a federal preemption for gun violence liability, and in the process made significant rulings impacting the Connecticut Unfair Trade Practices Act.

Our complete analysis can be found here:

In a 4-3 ruling, the Connecticut Supreme Court carved a narrow exception to a federal law that protects the gun industry from legal liability for gun violence. But, perhaps more significantly for the readers of Coverage Pointers, the Court may have significantly broadened potential liability under the Connecticut Unfair Trade Practices Act (CUTPA). The plaintiffs argued that the defendant’s violent, militaristic marketing of the AR-15 violated CUTPA and that CUTPA qualifies as a predicate exception to federal preemption. The Connecticut Supreme Court agreed. The defendants are sure to seek review by the United States Supreme Court; however, regardless of that outcome, the Connecticut Court’s CUTPA pronouncements will stand.



Lee S. Siegel

[email protected]


Headlines from this week’s issue:


Dan D. Kohane

[email protected]


  • Dual Residence for SUM Policy
  • Sufficient Notice Given to Progressive of Intention to Settle Underinsurance Claim under Condition 10
  • Does Carlson Apply to a NJ Corp?  Only if it has a Substantial Business Presence (and Discovery is Needed to Determine that Question)



Robert E.B. Hewitt III

[email protected]


  • Plaintiff Raised Issue of Fact through Submission of Expert Affidavit
  • Plaintiff Cannot Raise an Issue of Fact Submitting Unaffirmed Reports of His Medical Doctors or Reports Which Do Not Set Forth Objective Range of Motion Tests
  • Defendants Demonstrated Plaintiff Had Prior Fusion Surgery and Significant Degenerative Injuries through Deposition Testimony and Radiologist’s Scans
  • Plaintiff’s Own Medical Reports Submitted in Support of Their Motion Demonstrated Conflicting Accounts as to whether the Injuries Were Degenerative
  • Defendant Succeeded On Demonstrating No Serious Injury as a Matter of Law as Range of Motion Restrictions Were No More than 10 Percent
  • Unexplained Cessation of Treatment for Four Years Rendered the Opinion of Her Doctor Who Examined Her One Time Four Years after the Accident Speculative



Steven E. Peiper

[email protected]


  • Lawsuit for Legal Malpractice Hangs on a Question of Fact Regarding Carrier’s Denial
  • Vexatious Discovery Demands for Multiple Policies and Underwriting Files Denied
  • Plaintiff’s Claims Against Bus Line and Bus Owner are Dismissed on Section 11 and Graves Amendment Grounds, Respectively



Agnes A. Wilewicz

[email protected]


  • Second Circuit Remands Carrier’s Rescission Action, Finding an Actual Controversy Exists, Even in Cases without Pending Claims



Jennifer A. Ehman

[email protected]


  • Nothing this week.



Brian D. Barnas

[email protected]


  • Implied Covenant of Good Faith and Fair Dealing Claim Survived Motion Practice but Plaintiff’s Claims for First Party Denial of Insurance Benefits, Violation of General Business Law 349, and Punitive Damages did not


John R. Ewell

[email protected]


  • New Jersey Appellate Division Rules Vehicle Owner Cannot Grant Permissive Use to Unlicensed Driver, Affirms PIP Denial to Unlicensed Driver
  • In Hurricane Sandy Case, New Jersey Federal Court Bounces Bad Faith, Breach of Good Faith and Fair Dealing, and CFA Claims
  • New Jersey Federal Court, Applying Federal Admiralty Law, Rules No Coverage for Sinking Yacht 



Lee S. Siegel

[email protected]


  • Please see my cover note.


Marti's Legislative and Regulatory Markers

Jerry Marti

[email protected]


  • Environmental Contamination Revival Statute Did Not Violate Due Process Rights under New York State Constitution


Brian F. Mark

[email protected]


  • No cases this week.



Larry E. Waters
[email protected]


  • Defendants’ Motion to Dismiss Granted because Plaintiff Violated the Notice Provision Under the Policy



Eric T. Boron

[email protected]


  • Homeowner’s Insurance – Earth Movement Exclusion – Lower Court Erred in Denying Insurer’s Motion for Summary Judgment; Earth Movement Exclusion was Unambiguous and Excluded Coverage for the Property Damage Suffered



Marina A. Barci

[email protected]


  • Plaintiff’s Notice of Trial and Certificate of Readiness Vacated Because Discovery Was Not Complete
  • Arbitration Award to Carrier Overturned and Remanded for De Novo Hearing



Earl K. Cantwell
[email protected]


  • A Forest Fire Constituted One Single Occurrence



That’s all there is and there isn’t any more.  Hope to see old friends and new in the next couple of week.  We’re always available.  Contact information is below and feel free to reach out to anyone in our offices if we can be of assistance.



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

Lee S. Siegel

Brian D. Barnas

Brian F. Mark

John R. Ewell

Larry E. Waters

Jerry Marti

Eric T. Boron

Marina A. Barci

Diane F. Bosse

Joel R. Appelbaum


Steven E. Peiper, Team Leader
[email protected]


Michael F. Perley

Eric T. Boron

Brian D. Barnas

Larry E. Waters


Jennifer A. Ehman, Team Leader
[email protected]

Jerry Marti

Marina A. Barci


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

John’s Jersey Journal

Lee’s Connecticut Chronicles

Marti's Legislative and Regulatory Markers

Off the Mark

Wandering Waters

Boron’s Benchmarks

Barci’s Basics (on No Fault)

Earl’s Pearls


Dan D. Kohane
[email protected]


03/20/19       Allstate Insurance Company v. Campanella

Appellate Division, Second Department

Dual Residence for SUM Policy

In 2013, the appellant was injured when, as a pedestrian, she was struck by an automobile. After arbitrating her claim against the tortfeasor, she served the petitioner, Allstate with a demand to arbitrate a claim for underinsured motorist benefits pursuant to the supplemental uninsured/underinsured motorist insurance endorsement (hereinafter the SUM endorsement) of her father's automobile insurance policy with Allstate. Allstate commenced this proceeding for a permanent stay of arbitration, contending that the appellant did not qualify as an insured person under that policy because she was not a resident relative of her father's household at the time of the accident. After a hearing, the Supreme Court granted the petition and permanently stayed the arbitration. This appeal followed.

At the hearing, Allstate presented evidence that the appellant was not a resident relative of her father's household at the time of the accident, and thus was not an eligible insured under the policy, by tendering a police accident report for the incident and certain other records. Those documents listed an address for the appellant on Amsterdam Avenue, Staten Island, which is different than the address for her father, on Lamont Avenue in Staten Island, which was listed on the policy.

Nonetheless, the Supreme Court's determination to stay arbitration, upon its finding that the appellant's connection to her father's home on Lamont Avenue was "ephemeral at best," is contrary to the weight of the evidence. At the hearing, the appellant submitted evidence which showed that she had more than one residence for the purposes of automobile insurance coverage. She testified that her father's home was her primary residence, but that she also resided at the Amsterdam Avenue address that was listed on the evidence provided by Allstate, typically on nights she worked as a bartender at a bar near that location that she had keys to her father's home on Lamont Avenue, as well as a garage door opener, and that her dog was there as well as her personal belongings.

The appellant's father also testified that his home was the appellant's primary residence, that she stayed there at least four nights per week, and that she stayed at the other address when she worked late. In addition to her own testimony and the testimony of her father, the appellant proffered the testimony of a neighbor who resides near her father's home on Lamont Avenue. The neighbor testified that she had lived near the father's home for 41 years, had observed the appellant residing there, and had frequently seen the appellant's vehicle parked there. The appellant also submitted copies of personal checks, her driver license, and correspondence to her from Allstate and the tortfeasor's insurer regarding the accident as documentary proof that she resided at her father's home on Lamont Avenue at the time of the accident.

Allstate proffered no evidence to show that the appellant's connection to her father's home was temporary or ephemeral, and did not argue that the SUM endorsement of her father's policy precluded an insured from having more than one residence.


03/20/19       Progressive Northwestern Insurance Co. v. Valenti

Appellate Division, Second Department

Sufficient Notice Given to Progressive of Intention to Settle Underinsurance Claim under Condition 10

This was an application to stay an underinsured motorists arbitration.

Valenti, insured by Progressive, was involved in a car accident in 2005 and sued a tortfeasor.  On January 29, 2014, Valenti’s lawyer advised Progressive that he was negotiating a settlement with the tortfeasor’s carrier, that the tortfeasor had $50,000 in auto liability coverage and no excess or umbrella coverage and that unless Progressive objected he would issue a release and file a UIM claim.

When the insured received no response to that letter, she proceeded with the settlement on April 29, 2014, for $50,000, and forwarded the relevant documents to Progressive. By letter dated October 16, 2014, Progressive notified the insured that its file on the matter was closed. The settlement funds were released on November 1, 2014.

By letter dated December 10, 2014, the insured's counsel informed Progressive of the insured's intention to pursue her claim for supplementary underinsured motorist (hereinafter SUM) benefits under her policy. Progressive disclaimed coverage by letter dated January 19, 2015, on the ground that the release was signed without Progressive's permission or written consent.

The insured demanded arbitration of her claim for SUM benefits and, in response, Progressive commenced this proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration, based upon its contention that the insured had improperly settled her action against the tortfeasors without Progressive's consent.

"As a general rule, an insured who settles with a tortfeasor in violation of a policy condition requiring his or her insurer's consent to settle, thereby prejudicing the insurer's subrogation rights, is precluded from asserting a claim for SUM benefits under the policy.” However, the language set forth in 11 NYCRR 60-2.3(f), which must be included in all motor vehicle liability insurance policies in which SUM coverage has been purchased, creates an exception to this rule in situations where the insured advises the insurer of an offer to settle for the full amount of the tortfeasor's policy, which obligates the insurer [to either] consent to the settlement or to advance the settlement amount to the insured and assume the prosecution of the tort action within 30 days.  In the event the insurer does not timely respond in accordance with this condition, the insured may settle with the tortfeasor without the insurer's consent and without forfeiting his or her rights to SUM benefits.  That is Condition 10 of the SUM endorsement.

Progressive contended that the absence of a claim number in the letter or the fact that the insured's counsel mailed it to Progressive's headquarters deprived Progressive of actual notice. Among other things, the insured's policy contains no specific instruction that the insured provide a claim number and requires only that written notice be provided "to us" in the event of a settlement.


03/13/19       Vista Engineering Corporation v. Everest Indemnity Ins. Co.
Appellate Division, Second Department

Does Carlson Apply to a NJ Corp?  Only if it has a Substantial Business Presence (and Discovery is Needed to Determine that Question)

Vista Engineering Corporation (“Vista”) was hired as a general contractor for a project at an elevated structure known as the Queensboro Plaza Station. Vista then subcontracted work to the defendant East Coast Painting & Maintenance (“East Coast”). The subcontract identified the project owner as the plaintiff Metropolitan Transportation Authority (“MTA”) and the "Architect/Engineer" as the plaintiff New York City Transit Authority (“NYCTA”). The subcontract contained an indemnity/hold harmless clause and required East Coast to procure an insurance policy that named Vista and MTA as additional insureds.

Everest, a New Jersey insurance company, issued a commercial general liability policy to East Coast, a New Jersey limited liability company, covering the period of July 6, 2010, to July 6, 2011. Thereafter, an additional insured endorsement was issued naming NYCTA and MTA as additional insureds.

On April 19, 2011, East Coast employee Fernandes was injured at the job. In March 2012, Fernandes commenced the underlying personal injury action against Vista, NYCTA, and MTA. On September 28, 2011, Vista's insurer, Argonaut tendered the underlying action to Everest, seeking for Vista a defense and indemnification for the action commenced by Fernandes. By letter dated December 5, 2011, FARA Insurance Services, a third-party claims administrator for Everest, disclaimed defense and indemnity to Vista, based upon a "Third Party Action Over Exclusion Endorsement" in the policy, which excluded coverage for bodily injury to employees of East Coast.

Vista, MTA, and NYCTA (the “plaintiffs”) then commenced this action for declaratory relief. The plaintiffs moved for summary judgment declaring that Everest did not issue a timely disclaimer of coverage in connection with the underlying action as required by Insurance Law § 3420(d)(2) and is obligated to defend and indemnify the plaintiffs in the underlying action. Everest cross-moved for summary judgment declaring that it is not obligated to defend or indemnify the plaintiffs in the underlying action.

Subsequent to the Supreme Court issuing the order appealed from, the Court of Appeals, on November 20, 2017, issued its decision in Carlson v American Intl. Group, Inc. (30 NY3d 288, 306). In relevant part, the Court of Appeals held that "section 3420 applies to policies that cover insureds and risks located in the state" of New York, and further determined that a company was "located in" New York if it had a "substantial business presence" there (id. at 305, 306).

Upon the record before us, we cannot determine whether East Coast had a substantial business presence in New York. Since the record is insufficiently developed concerning East Coast's business presence in New York, the matter is remitted to the Supreme Court, Queens County, to allow the parties to conduct further discovery, develop the record, and give the Supreme Court an opportunity to meaningfully review the case.



Robert E.B. Hewitt III

[email protected]


03/20/19       Park v. Orvieto

Appellate Division, Second Department

Plaintiff Raised Issue of Fact through Submission of Expert Affidavit

The Appellate Court held defendant established, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. Plaintiff, however, raised an issue of fact through submission of an expert affidavit as to the permanent consequential limitation of use and significant limitation of use categories.


03/20/19       Radoncic v. Faulk

Appellate Division, Second Department

Plaintiff Cannot Raise an Issue of Fact Submitting Unaffirmed Reports of His Medical Doctors or Reports Which Do Not Set Forth Objective Range of Motion Tests

Plaintiff was allegedly injured when the vehicle in which he was a back-seat passenger was struck in the rear by a vehicle operated by the defendant. The Appellate Division held defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. They submitted competent medical evidence establishing, prima facie, that the alleged injuries to the plaintiff's left shoulder and the cervical and lumbar regions of his spine did not constitute serious injuries under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d).  In opposition, the plaintiff failed to raise a triable issue of fact. The unaffirmed reports of the plaintiff's treating physician, which were not submitted in admissible form, were insufficient to raise a triable issue of fact with respect to the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d).  Furthermore, the report of the plaintiff's treating orthopedist, although affirmed, failed to raise a triable issue of fact, as it did not identify the objective tests utilized by the orthopedist to measure the plaintiff's range of motion. As for the 90/180-day category of Insurance Law § 5102(d), the plaintiff failed to submit any evidence in opposition to the defendants' prima facie showing that he had missed, at most, one month of work during the 180-day period following the accident.


03/19/19       Dixon v. Kone

Appellate Division, First Department

Defendants Demonstrated Plaintiff Had Prior Fusion Surgery and Significant Degenerative Injuries through Deposition Testimony and Radiologist’s Scans

The Appellate Division held that defendants established their entitlement to judgment as a matter of law in this action where plaintiff alleges that he suffered an aggravation of preexisting conditions in his cervical and lumbar spine as the result of an accident that occurred while he was a passenger in defendants' taxi. Defendants submitted, among other things, plaintiff's deposition testimony, acknowledging that he previously had fusion surgery in his cervical spine, and reports of their radiologist who, consistent with plaintiff's own radiologists, found that MRIs and CT scans performed approximately seven years before the accident showed significant degenerative disc disease in his cervical and lumbar spine. Defendants' orthopedist and neurologist found no current symptoms related to the accident, but only symptoms related to the preexisting conditions, and their emergency medicine expert found no indication of traumatic injury in plaintiff's hospital records from the day of the accident. In opposition, plaintiff failed to raise a triable issue of fact. He submitted medical records, which also confirmed his preexisting conditions, and the report of a physician who examined him two years after the accident. Although the physician acknowledged plaintiff's prior surgery, preexisting degenerative conditions, and continuing pre-accident treatment, he failed to explain why plaintiff's alleged injuries were not caused by the preexisting conditions, or to provide any basis for finding an aggravation of those injuries


03/15/19       Kesick v. Burns-Allen

Appellate Division, Fourth Department

Plaintiff’s Own Medical Reports Submitted in Support of Their Motion Demonstrated Conflicting Accounts as to whether the Injuries Were Degenerative

The Appellate Division concluded that plaintiff failed to meet his initial burden of establishing that he sustained a serious injury under the permanent consequential limitation of use and significant limitation of use categories that was causally related to the accident inasmuch as plaintiff's own submissions raise triable issues of fact. In the case at bar, although plaintiff submitted the affidavit of his chiropractor, who opined that plaintiff had sustained a serious injury of a permanent nature that was caused by the accident, i.e., herniated discs, plaintiff also submitted the report of defendant's medical expert, an orthopedic surgeon, who opined that plaintiff merely sustained spinal sprains and strains that had resolved and that plaintiff did not sustain a serious injury as the result of the accident.

Additionally, plaintiff submitted the report of the radiologist who interpreted plaintiff's MRI, wherein the radiologist opined that plaintiff had disc herniations associated with "mild facet joint hypertrophy," a degenerative disc condition.  Conflicting expert opinions may not be resolved on a motion for summary judgment.  Further, a plaintiff may not recover under the permanent consequential limitation of use and significant limitation of use categories where there is persuasive evidence that plaintiff's alleged pain and injuries were related to a preexisting condition. Although plaintiff submitted a decision of the Social Security Administration in which an administrative law judge (ALJ) concluded that, since the date of the accident, plaintiff has a disability within the meaning of the Social Security Act, that conclusion was based on the ALJ's finding that plaintiff has a degenerative disc disease. The Appellate Division therefore concluded that plaintiff was not entitled to judgment as a matter of law with respect to the permanent consequential limitation of use and significant limitation of use categories.

Plaintiff also failed to meet his initial burden with respect to the 90/180-day category of serious injury. Although plaintiff's chiropractor opined that plaintiff was disabled from working for more than 90 of the first 180 days following the accident, plaintiff also submitted the chiropractor's treatment notes from the relevant time period, which indicate that plaintiff reported that he "does not have difficulty taking care of [him]self." Plaintiff also submitted notes prepared by the physical therapists with whom he worked during the relevant time, which indicate that plaintiff was able to perform numerous exercises and walk on a treadmill. Consequently, the evidence submitted by plaintiff failed to eliminate all issues of fact with respect to the 90/180-day category.


03/13/19       Broadwood v. Bedoya

Appellate Division, Second Department

Defendant Succeeded On Demonstrating No Serious Injury as a Matter of Law as Range of Motion Restrictions Were No More than 10 Percent

In the bill of particulars, plaintiff alleged injuries to the cervical and thoracic regions of his spine. He also alleged that he sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d). The defendants moved for summary judgment dismissing the complaint on the ground that Broadwood did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. In support, the defendants submitted the affirmed report of an orthopedic surgeon who examined plaintiff on October 17, 2016. The surgeon measured the range of motion of the cervical and thoracic regions of plaintiff’s spine and compared the results to what would be considered normal range of motion. She found restrictions of no more than 10 percent. The defendants also submitted a transcript of plaintiff's deposition testimony in support of the motion. Plaintiff testified that he missed only one week of work following the accident.

In opposition to the defendants' motion, the plaintiffs submitted the affidavit of plaintiff's chiropractor, who stated that plaintiff “did have significantly limited range of motion in his cervical spine as compared to normal, as well as his thoracic spine." The chiropractor did not report any of his range-of-motion measurements and did not state what would be considered normal range of motion. The Appellate Division found this failed to raise an issue of fact.


03/07/19       Bogle v. Paredes

Appellate Division, Second Department

Unexplained Cessation of Treatment for Four Years Rendered the Opinion of Her Doctor Who Examined Her One Time Four Years after the Accident Speculative

Plaintiff alleged that, as a result of an accident involving defendant's car, she suffered serious injuries to her cervical spine, lumbar spine, wrists and right knee for which she underwent three to six months of treatment. The Appellate Division held defendant satisfied his prima facie burden as to all the claimed injuries by submitting the reports of an orthopedist, a radiologist and a neurologist, who found, inter alia, that plaintiff had full range of motion and negative test results in her cervical and lumbar spine, that sprains and/or contusions to her spinal column, chest, wrists and knee were resolved, and no evidence of acute causally related injury. In opposition, plaintiff failed to raise an issue of fact. Plaintiff submitted an affirmed report of a doctor who examined her one time, over four years after the accident, but did not address her prior accident or provide admissible objective evidence. Moreover, plaintiff failed to explain her complete cessation of treatment three to six months after the accident even though she had health insurance and saw a regular primary care doctor. The unexplained four-year period of time in which plaintiff failed to seek treatment for any accident-related injuries renders the opinion of her medical expert speculative as to the permanency, significance, and causation of the claimed injuries.



Steven E. Peiper

[email protected]


03/15/19       Pugliese v. Martin Law Group, P.C.

Appellate Division, Second Department

Lawsuit for Legal Malpractice Hangs on a Question of Fact Regarding Carrier’s Denial

Plaintiff, a client of defendant, commenced this action for legal malpractice after defendant failed to perfect and prosecute an appeal.  The appeal was from an underlying trial court decision which granted Allstate’s motion for summary judgment resulting from a fire loss.

As an initial matter, the Court repeated the understood standard that a claimant in a malpractice action must not only establish a breach of the lawyer’s obligations, but also that success was lost only as a result of the attorneys’ negligence.  In reversing the trial court, the Appellate Division noted that defendant failed to establish that plaintiff’s case, and therefore the lost appeal, was without merit.  Where, as here, the movant failed to meet its prima facie burden, the sufficiency of plaintiff’s opposition was moot.


03/14/19       Am. Stevedoring, Inc. v. Red Hook Container Terminal, LLC

Appellate Division, First Department

Vexatious Discovery Demands for Multiple Policies and Underwriting Files Denied

The instant appeal grew out of the third-party defendant, JBL’s, request for expansive discovery.  In addition to policies issued by Seneca which responded to this loss, JBL also sought production of other policies issued to other insureds which provided coverage for commercial property and inland marine coverage.  In addition, JBL also sought the underwriting files for all of the policies Seneca voluntarily produced.  Finally, JBL sought documents “related to the flood endorsement that were provided to state insurance departments for approval to use the form.”

In a brief decision, the Appellate Division affirmed the trial court’s decision denying JBL’s application.  Where, as here, the moving party cannot establish the necessity of the information sought, it follows that its application to compel must be denied.  Specifically, in this case, the Court ruled that JBL “failed to demonstrate that the information produced thus for was insufficient to prepare its defense.”

03/13/19       Zielinski v. NJ Transit Corp.

Appellate Division, Second Department

Plaintiff’s Claims Against Bus Line and Bus Owner are Dismissed on Section 11 and Graves Amendment Grounds, Respectively

Plaintiff, an employee of Hudson Transit Lines (“HTL”), was injured when he was struck by a bus driven by his co-employee.  As a result, plaintiff was paid workers’ compensation benefits by HTL.  Plaintiff also commenced a lawsuit against Diaz (the driver of the bus), HTL, and NJT.  We are advised that HTL leased the bus at issue from NJT.

Diaz and HTL moved for summary judgment on the basis that Section 11 of the Workers’ Compensation Law precluded plaintiff’s claims.  In support, the defendants proffered evidence that both Diaz and plaintiff were in the course of their employment at the time of his injury and that plaintiff had received workers’ compensation benefits from HTL’s carrier.  Accordingly, the Complaint, insofar as it was directed against Diaz and HTL, was dismissed.

NJT also moved for summary judgment on the basis of the Graves Amendment.  In support of its application, NJT established that it was not negligent in the operation of the bus. It also established that it was in the business of renting and/or leasing vehicles, and that the bus at issue was leased to HTL pursuant to a written agreement with NJT.  On that basis, the Grave’s Amendment applied to bar plaintiff’s claims.   



Agnes A. Wilewicz

[email protected]


03/18/19       U.S. Underwriters Ins. Co. v. Orion Plumbing & Heating Corp.

United States Court of Appeals, Second Circuit

Second Circuit Remands Carrier’s Rescission Action, Finding an Actual Controversy Exists, Even in Cases without Pending Claims

In May 2012, US Underwriters issued a policy to Orion Plumbing, providing them with liability coverage for the following year. In September 2012, the policy was cancelled for non-payment of premiums. In June 2012, however, prior to the cancellation, a NYC Firefighter was injured at a home that was being renovated by a number of contractors, including Orion. When the case went into suit in February 2015, Orion was eventually brought into the action. Orion was subsequently dismissed from that suit but had presumably incurred defense costs.

In August 2016, US Underwriters sued Orion for a declaration of no coverage under the policy they had issued, as well as a declaration of rescission based upon Orion’s alleged misrepresentations on their insurance policy application. Orion defaulted in the DJ action. However, the magistrate hearing the case recommended that the coverage case be dismissed for lack of subject matter jurisdiction. The judge concluded that the carrier’s claims failed to present a case or controversy and that “an attenuated chain of contingencies” would have to occur before Orion could claim entitlement to coverage. US Underwriters did not contest the dismissal relative to the declaration of no coverage, but appealed the ruling as to its rescission of the policy.

On appeal, the Second Circuit held that the insurer did indeed have a justiciable claim. Citing prior precedent, they noted that rescission claims may be justiciable even absent a pending claim. US Underwriters had pled the underlying facts, and the key for rescission – the fact that they would never had issued the policy had they known that Orion performed the work that they did. Namely, they would not have issued the policy they did had Orion informed them that they worked on residential buildings/structures. US Underwriters alleged a reasonable likelihood that they could face liability to Orion based, at a minimum, on its duty to defend under the policy. Since the misrepresentations had essentially induced the carrier to issue a policy it would not otherwise have issued, they had pled facts sufficient to raise to an actual controversy. As such, the matter was remanded back down to the lower court to address the merits of US Underwriters’ arguments.



Jennifer A. Ehman

[email protected]


Nothing this week.



Brian D. Barnas

[email protected]


03/12/19       H&H Environmental Systems, Inc. v. Evanston Ins. Co.

United States District Court, Western District of New York

Implied Covenant of Good Faith and Fair Dealing Claim Survived Motion Practice but Plaintiff’s Claims for First Party Denial of Insurance Benefits, Violation of General Business Law 349, and Punitive Damages did not

Plaintiff is a corporation that provides precision repair, maintenance, and calibration of environmental chambers, as well as rental sales and service.  To provide these services, Plaintiff owns and operates equipment at 385 Adirondack Street in Rochester, New York 14606 (the “Premises”).

Evanston insured Plaintiff from June 1, 2016, through June 1, 2017 pursuant to a Commercial Property Coverage Policy (“Evanston Policy”).  Additionally, Travelers insured Plaintiff during the same time period pursuant to a Commercial Inland Marine Insurance Policy.

During the coverage period a number of Plaintiff’s precision equipment items were damaged.  Plaintiff promptly notified Defendants of the losses it sustained, submitting a claim to Evanston in the amount of $648,432.82, and a claim to Travelers in the amount of $947,420.01.

At Evanston’s request, Plaintiff provided Evanston documents and agreed to submit to an Examination Under Oath (“EUO”).  To date, Evanston has not conducted an EUO, provided a coverage determination, or rendered a decision about Plaintiff’s claim under the Evanston Policy.

Plaintiff has also cooperated with Travelers' investigation of the Travelers Claim, allowing two inspections of the damaged equipment, one by a Travelers representative and one by a third-party hired by Travelers.  According to the Complaint, Travelers has not yet provided a coverage determination or made a decision about Plaintiff’s claim under the Travelers Policy.

Defendants moved to dismiss Plaintiff’s claim for breach of the covenant of good faith and fair dealing.  The court concluded Plaintiff sufficiently alleged a breach of the implied covenant of good faith and fair dealing claim that was separate from the breach of contract.  Plaintiff alleged that the defendants delayed payments, failed to complete a proper investigation, and left it without sufficient resources to maintain its business.  Plaintiff also alleged consequential damages of lost business income, extra expenses, debt, and attorneys’ fees.  In contrast, the breach of contract claim alleged that the defendants failed to pay the amount of the claim submitted by Plaintiff.  Thus, the court found that there were sufficient distinct allegations contained in the breach of covenant of good faith and fair dealing cause of action to allow it to proceed as a separate claim.

Defendants also argued that New York law does not recognize an independent tort for bad faith denial of a first party insurance claim.  The court agreed and dismissed Plaintiff’s attempt to allege an independent tort claim for bad faith.

In addition, the court dismissed Plaintiff’s General Business Law § 349 claim.  Even construing the Complaint liberally, Plaintiff failed to allege that Defendants' conduct was consumer-oriented because Plaintiff did not allege facts that demonstrate Defendants' conduct affects other consumers.  Simple conclusory statements were insufficient to meet the pleading requirements of federal court.  Likewise Plaintiff’s fraud claim was dismissed based upon Plaintiff’s failure to specifically plead any fraudulent statements.

Plaintiff’s claim for punitive damages was also dismissed based upon Plaintiff’s failure to plead an independent tort, egregious in nature, and directed at the public generally.

Finally, the court allowed Plaintiff’s demand for attorneys’ fees to survive the motion.  The court stated that New York courts are split as to whether a plaintiff can seek attorneys’ fees as part of a consequential damages claim.  Thus, the court allowed the attorneys’ fees demand to stand given “the uncertainty of the legal landscape surrounding whether attorneys' fees can constitute consequential damages, and given Plaintiff’s allegations that Defendants breached the covenant of good faith and fair dealing.


John R. Ewell

[email protected]


03/20/19       Ortiz v. Personal Service Ins. Co.

New Jersey Superior Court, Appellate Division

New Jersey Appellate Division Rules Vehicle Owner Cannot Grant Permissive Use to Unlicensed Driver, Affirms PIP Denial to Unlicensed Driver

On May 2, 2017, Plaintiff Alicia Ortiz was in an auto accident while operating a vehicle borrowed from her boyfriend’s brother. Defendant Personal Service Insurance Company issued an auto insurance policy to Lourdes Naba, plaintiff’s daughter. Asserting she was a resident of Lourdes's home, plaintiff claimed she was entitled to personal injury protection (PIP) benefits under Lourdes's policy with defendant. Plaintiff submitted a PIP application to defendant. Defendant took a recorded statement from plaintiff about the accident. During the course of that statement, plaintiff acknowledged she did not have a valid driver's license at the time of the accident. Defendant declined the request for PIP benefits, advising plaintiff it was “not possible” for her to obtain permission to operate the vehicle because she was “not legally eligible to drive” in this State.

Plaintiff sued Personal Service Insurance seeking a declaration that she was eligible for PIP benefits under Lourdes's policy with defendant. There was no dispute that plaintiff was not a licensed driver. The motion judge granted summary judgment, ruling plaintiff she was excluded from receiving PIP benefits under the policy because she was an unlicensed driver at the time of the accident.

N.J.S.A. 39:6A-7(b) permits an insurer to exclude PIP coverage to “any person having incurred injuries . . ., who, at the time of the accident . . . (2) was occupying or operating an automobile without the permission of the owner or other named insured.”

The Appellate Division ruled that a vehicle owner cannot grant permissive user status to an unlicensed driver, and therefore, an unlicensed driver is not entitled to PIP benefits when operating a vehicle without permission. The Appellate Division further found that plaintiff – knowing she was unlicensed – must also be assumed to know she was not entitled to drive the vehicle and that a vehicle owner could not permit her to drive the vehicle within the meaning of N.J.S.A. 39:6A-7(b).

The Appellate Division affirmed the grant of summary judgment to the carrier.

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


03/18/19       Zero Barnegat Bay v. Lexington Ins. Co.

United States District Court, District of New Jersey

In Hurricane Sandy Case, New Jersey Federal Court Bounces Bad Faith, Breach of Good Faith and Fair Dealing, and CFA Claims

During the time of Superstorm Sandy Plaintiff Zero Bamegat Bay, LLC (“Plaintiff”) maintained a homeowner’s insurance policy for property located at Middle Sedge Island, in Normandy Beach, New Jersey. The policy was underwritten by

Defendant Lexington Insurance Company (“Lexington”). Plaintiff’s deductible for claims arising out of wind and hail damage was $21,860.00, or 2% of the total coverage dwellings.

After Plaintiffs property sustained damage from Superstorm Sandy, Plaintiff submitted a claim to Lexington. Lexington had the property inspected and concluded that high winds caused and contributed to:

-    The damage to the roof shingles along the leave edge on the north-facing side of the uppermost roof of the main house;

-    The broken window on the north-facing side of the guesthouse;

-    The water intrusion at the south-facing bank of windows in the living room on the first level of the main house, however most of the observed damage to the windows existed prior to Hurricane Sandy; and

-    The cracks in the gypsum ceiling and walls of the main house, however most of the observed damage to the ceiling and walls existed prior to Hurricane Sandy.

Lexington determined the wind damage amounted to $17,344.79. Lexington denied Plaintiffs claim because Plaintiffs the damage cost ($17,344.79) was less than the deductible ($21,860.00).

Plaintiff then hired its own inspector, Shannon Cook, to assess the damages and prepare an estimate of the cost of repairs. Plaintiff’s inspector estimated that the total for the wind damage was $466,550.47.

Plaintiff sued Lexington asserting (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) bad faith; and (4) a violation of the New Jersey Consumer Fraud Act.


Breach of Contract

The court reviewed Lexington’s estimate and Cook’s estimate. Both illustrate the repairs needed to the property for the wind damage caused by Superstorm Sandy. In fact, the damage estimate prepared by Cook suggest repairs to exactly the same damage that Lexington’s damage report noted as being caused by wind: the roof a broken window, the water intrusion at the south-facing bank of windows in the living room, and the cracks in the gypsum ceiling and walls of the main house.

The only difference between both estimates is that Cook provides detailed repairs and includes additional repairs to the flooring, while Lexington’s estimate describes only general repairs, at much lower costs.

Here, the Cook estimate highlights the same damage that the Lexington estimate and damage report noted as being caused by wind, but instead suggests more extensive and costly repairs. Accordingly, because both estimates deal with primarily the same damage that Lexington has previously determined to have been caused by wind, and there exists a genuine issue of material fact as to the amount and scope of the wind damage, and the cost of repairs.

Since the Court found a genuine issue of a material fact regarding the extent and scope of wind damage, Defendant’s motion for summary judgment was denied in part with respect to Plaintiffs breach of contract claims.

Plaintiff further claimed that wind caused damage to the property’s boardwalk, pool, and electrical transformer, citing a report by their causation expert, Todd Heacock. In response, Defendant argued that the anti-concurrent/anti-sequential causation clause in the insurance policy barred any recovery for Plaintiffs damages arising from both wind and flood. Defendant asserted that because Heacock identified that first wind, then rain caused damage to the property’s boardwalk, pool, and electrical transformer, Plaintiff is barred from recovery for any damages identified in that report under the anti-concurrent causation clause.

Anti-concurrent provisions are enforceable in New Jersey, and have been enforced to exclude all coverage for a loss occasioned by a flood, even when a flood acts concurrently or sequentially with a covered peril. In his report, Heacock found “[t]he effects of wind and rising water caused significant disturbance at the residential property on Middle Sledge Island... [i]t is evident from our analysis that wind likely caused significant damage to [the pool, boardwalk and transformer]. Additional damage may have occurred due to flood after the severe wind event.”

Accordingly, based on Plaintiffs own expert, those damages were caused first by wind, and then by flooding, the damage to the boardwalk and the pool, and the policy does not cover the damage to those items. The Court found that the policy’s anti-concurrent clause bars recovery for these damages because the anti-concurrent clause bars recovery for damage to the pool, boardwalk and transformer. Thus, Defendant’s motion for summary judgment was granted with respect to those claims.


Breach of Implied Covenant of Good Faith and Fair Dealing / Bad Faith

Under New Jersey law, claims for bad faith and claims for breach of implied covenant of good faith and fair dealing are considered as one claim. A plaintiff that has not shown it is entitled to summary judgment on a breach of contract claim has no claim for bad faith. Since summary judgment on the breach of contract claim was denied, the Court dismissed the claims alleging breach of the implied covenant of good faith and fair dealing and bad faith.


New Jersey Consumer Fraud Act

New Jersey courts have consistently held that the payment of insurance benefits is not subject to the Consumer Fraud Act (“CFA”). Since the CFA does not provide a remedy for failure to pay insurance benefits, the Court granted summary judgment dismissal of the CFA claim.


03/20/19       Chartis Property Cas. Co. v. Inganamort

United States District Court, District of New Jersey

New Jersey Federal Court, Applying Federal Admiralty Law, Rules No Coverage for Sinking Yacht 

Plaintiff Chartis Property Casualty Company (“Chartis”) issued a Yacht policy to John and Joan Inganamort (the “Defendants”). The policy insured Defendants’ 65-foot, 1996 Sportfish vessel, Three Times A Lady, which was berthed in Boca Raton, Florida. On September 5 or 6, 2011, the Inganamorts’ yacht suffered a partial sinking while docked in Florida. Chartis claimed the boat partially sank due to a hole in Defendants’ boat brought about by years of lack of upkeep. Defendants claimed “heavy rainstorms” overwhelmed the vessel, causing it to sink. Chartis commenced a declaratory judgment action against Defendants in the District of New Jersey, seeking a declaration there was no coverage for the yacht as there was no fortuitous loss.

The Court determined that federal maritime law applied. The fortuity rule states that “all-risk policies in marine insurance contracts only cover losses caused by fortuitous events.” Under the rule, “[a] loss is not fortuitous if it results from an inherent defect, ordinary wear and tear, or the insured's intentional misconduct.  On the other hand, losses that arise from acts of nature or the insured's negligence are covered.” In admiralty law, “[t]he burden of proof generally is on the insured to show that a loss arose from a covered peril.”

Chartis argued that the policy at hand did not cover the damage sustained by Defendants’ boat because it is an “all-risk” policy that only covers losses that the policyholders can prove were “fortuitous.”

Defendants contend that the partial sinking of their boat stemmed from heavy rainfall, and cite two reports written by their expert, Charles Stevens, a Marine Surveyor and Licensed Insurance Adjustor.  Mr. Stephens stated that there were "5 to 15 inches of rain" in South Florida in September of 2011 based on “talking to other people,” including “people at the marina” and “the captain.” The only other evidence that the Inganamorts submitted was the testimony of a security guard employed by the Inganamorts' homeowners' association who said there was “heavy rain”.

Chartis argued that heavy rain could not have been the proximate cause of the yacht's partial sinking. Chartis submitted a historical weather chart that showed there was only 3 inches that week.  Likewise, no other boats in the marina where the vessel was docked were found to have been damaged by any heavy rainfalls during the same time period.

The Court found that there was not enough evidence for a rational juror to find that the amount of rainfall was sufficiently fortuitous to have caused the partial sinking of the boat. Defendants did not submit sufficient evidence, such as meteorological data or publicly available reports, as to the rain's severity. (read: security guard not qualified to render meteorology reports). The Court ruled that Defendants had no evidence to demonstrate a fortuitous loss, and the insurer was entitled to a declaration that there was no coverage for the yacht.

Disclaimer: This decision is not for publication.



Lee S. Siegel

[email protected]


Please see my cover note.


Marti's Legislative and Regulatory Markers

Jerry Marti

[email protected]


05/16/18       Sweener v. Saint-Gobain Performance Plastics Corporation

United States District Court, Northern District of New York       

Environmental Contamination Revival Statute Did Not Violate Due Process Rights under New York State Constitution

In this action, Plaintiff Ann Sweener alleged that defendants had contaminated the Village’s groundwater by discharging perfluorooctanoic acid (“PFOA”) from the manufacturing facilities operated within the Village. As a result of the contamination, Plaintiff alleged that she sustained personal injuries, including uterine cancer.  Defendants moved to dismiss the Amended Complaint based in part on the grounds that CPLR § 214-f, which allowed for the revival of such time-barred claims, violated the Due Process Clause of the New York State Constitution.

The Court held that § 214-f satisfied the due process requirements since it was enacted as a reasonable response in order to remedy an injustice.  In particular, the Court cited to the New York Appeals decision in In re World Trade Center, which had noted the salient facts from recent Court of Appeals decisions regarding the due process requirements for revival statutes.  First, there existed an identifiable injustice that moved the legislature to act. Second, the legislature’s revival of the plaintiff’s claim was reasonable in light of that injustice.  See In re World Trade Ctr. Lower Manhattan Disaster Site Litig., 89 N.E.3d 1227 (N.Y. 2017).  Of note, the Court in In re World Trade Center found that § 214-f was a reasonable response to an injustice because it allowed plaintiffs “who suffer latent injuries stemming from environmental contamination to pursue claims that would otherwise be time-barred simply because a defendant’s tortious conduct was unknown.”

Accordingly, the Court denied the Defendants’ Motion.


Brian F. Mark

[email protected]


No cases this week.



Larry E. Waters
[email protected]


03/14/19       K.B.K. Huntington Corp. v. Hanover Ins. Co.

United States District Court, Eastern District of New York

Defendants’ Motion to Dismiss Granted because Plaintiff Violated the Notice Provision Under the Policy
Plaintiff brought the current action against defendant Hanover Insurance Company (“Hanover”) for alleged breaches of Hanover’s obligations to defend and indemnify the Plaintiff under an insurance contract for a property damage claim at the Insured Location.

On May 10, 1979, Hanover issued a general liability insurance policy to Plaintiff covering damage or accident arising out of the ownership, operation and maintenance of the Insured Location between May 10, 1979 and May 10, 1982 (the “Hanover Policy”).  The Hanover Policy contained a notice requirement, which required the insured to provide written notice if a claim is made or suit is brought against the insured.

On October 6, 2003, the DEC issued a notice of claim (the “Notice of Claim”) to the Plaintiff. The Notice of Claim provided that the DEC had “included the [Insured Location] in the Registry of Inactive Hazardous Waste Disposal Sites in New York State.”  Following the Notice of Claim, the DEC sent Plaintiff its Record of Decision in March 2012. The Record of Decision identified Plaintiff as one of the Potentially Responsible Parties and who may be legally liable for the contamination at the site. The Record of Decision also stated Plaintiff declined to implement a remedial program when requested by the DEC.

On May 4, 2016, Plaintiff served a notice of claim under the Hanover Policy. Plaintiff contended that it failed to submit a claim before because it had not been aware of the Hanover Policy until early 2016 due to the deteriorating health of its President.   In response to the notice of claim, Hanover denied Plaintiff’s claim under the Hanover Policy citing Plaintiff’s late notice.

Thereafter, Plaintiff commenced this action.  Now Hanover has moved to dismiss pursuant to 12(b)(6).

The Court considered whether the Plaintiff stated a viable claim under the Policy. First, the Court noted that “[u]nder New York law compliance with the notice provisions of an insurance contract is a condition precedent to an insurer’s liability under policies with effective dates prior to January 17, 2009.” Further, the Court noted that no-prejudice rule governs such policies and therefore if an insured fails to provide timely notice as required by the particular policy, then, absent a valid reason for the delay, the insurer is under no obligation to defend or indemnify the insured.

Applying this rule of law as the Hanover policy was issued well before January 17, 2009, the Court turned to when Plaintiff’s obligation to provide notice arose.  Plaintiff conceded that it had to provide notice pursuant to the “occurrence” provision under the Hanover Policy. However, Plaintiff argued that a “claim” occurred by the time the Plaintiff submitted its demand letter in 2016 because no suit or other litigation against the Plaintiff had yet commenced.  Nevertheless, the Court rejected Plaintiff’s argument. In its reasoning, the Court noted that  while the Second Circuit has not explicitly held that a receipt of a Potentially Responsible Party (“PRP”) designation constitutes a “claim” under notice-of-claim provisions, the Second Circuit has recognized that a powerful argument can. . . be made to that effect, because an insurance company would want the opportunity to play a role in whatever proceedings might follow.  As such, the Court held that Plaintiff’s obligation to provide notice to Hanover was triggered when the DEC’s Record of Decision designated Plaintiff as a PRP.

Next, the Court considered the timeliness of Plaintiff’s notice.  The Court began its discussion by acknowledging that “where a policy has an immediate notice of suit requirement, even a relatively short delay in providing notice violates that requirement. The Court also acknowledged that it will forgive the absence of “immediate” action by the claimant, so long as the claimant carries the burden of offering a reasonable excuse for the delay.

Here, the Court held Plaintiff’s delay of four years since it first received the DEC’s Record of Decision and thirteen years in the case of the Notice of Claim was inordinately long.  In addition, the Court found that there was no reasonable excuse for the delay.  While the Court noted that it had great sympathy for Plaintiff’s president hardship, Plaintiff could not justifiably blame a delay of such great length entirely on his illness.  The Court also noted that a medical aliment might justify a minor delay, in order for an emergency but not a delay of four years.  Further, the Court noted that accepting the factual allegations in the Complaint as true, the President’s family of Plaintiff had assumed control and apparently failed to even look for an insurance policy for over a decade. Moreover, the Court reasoned “it would be profoundly unfair to permit the Plaintiff to avoid one of the most basic obligations of its agreement with [Hanover] simply because the Plaintiff failed to exercise the minimal diligence necessary to discover the [Hanover Policy].

In sum, the Court granted Hanover’s motion to dismiss the Complaint in its in entirety because Plaintiff breached the Hanover Policy’s notice provision. 



Eric T. Boron

[email protected]


03/07/19       Mississippi Farm Bureau Cas. Ins. Co. v. Dorothy Smith  

Supreme Court of Mississippi

Homeowner’s Insurance – Earth Movement Exclusion – Lower Court Erred in Denying Insurer’s Motion for Summary Judgment; Earth Movement Exclusion was Unambiguous and Excluded Coverage for the Property Damage Suffered

The background facts can be summarized as follows.  After learning her home's foundation was defective, Ms. Smith filed a claim under her homeowner’s insurance policy for the repair of the foundation, but her insurer Mississippi Farm Bureau Casualty Insurance Company (“Farm Bureau”) denied the claim.  Ms. Smith alleged that Farm Bureau's refusal to pay for her foundation repairs not only breached the insurance contract, but constituted bad faith and a tortious breach of contract.

Ms. Smith filed suit against both her home builder, and, as pertinent here, Farm Bureau, demanding an award of damages to repair the foundation, and further, an award of damages for inconvenience, anxiety, emotional distress, plus, extra contractual damages, punitive damages, and attorneys' fees.  Whew.

Farm Bureau’s motion for summary judgment, arguing Ms. Smith's claim was properly denied because her home’s foundation defects were not covered because of the policy's earth movement exclusion, was denied by the Circuit Court.  Farm Bureau’s petition for interlocutory appeal was granted by the Supreme Court of Mississippi.

Per Supreme Court’s opinion, the earth movement exclusion from Ms. Smith’s homeowner’s insurance policy states:

A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.


2. Earth Movement Earth Movement means:

a. Earthquake, including land shock waves or tremors before, during or after a volcanic eruption;

b. Landslide, mudslide or mudflow;

c. Subsidence or sinkhole; or

d. Any other earth movement including earth sinking, rising or shifting; caused by or resulting from human or animal forces or any act of nature unless direct loss by fire or explosion ensues and then we will pay only for the ensuing loss.


The Mississippi Supreme Court’s opinion recited its analysis and consideration of four cases decided in various Mississippi courts between 1977 and 2018 which had wrestled with the applicability of various earth movement exclusions to various property damage claims.  None of those four cases had the same exclusionary language as the Farm Bureau case, however.

It was noted by the Mississippi Supreme Court that the earth movement exclusion contained in the Farm Bureau policy at issue did not limit application of the exclusion to only those losses or damage caused by “natural” forces.  Because the Farm Bureau policy also excluded coverage for loss or damage arising from earth movement caused by non-natural/external forces (i.e., “human” forces), the Farm Bureau exclusion was read broadly to exclude coverage for Ms. Smith’s loss or damage, which Ms. Smith asserted in her papers was or could have been caused by at least three different events:  faulty design of her builder for the foundation of her house; poor compaction on the fill dirt by her builder when her house was first built; or, a busted water line that could have leaked water under the house to the extent that voids developed beneath the foundation of the house.  Ms. Smith also argued the policy nonetheless expressly covered “water damage”, and leaked water was or could have been the cause of her foundation problems, and as such, the earth movement exclusion could not be applied, due to asserted ambiguity in the policy.

The Mississippi Supreme Court rejected Ms. Smith’s arguments.  The Court noted the Farm Bureau policy stated the earth movement exclusion applied “regardless of any other cause or event contributing concurrently or in any sequence to the loss”.  Ms. Smith’s policy was found to contain an unambiguous earth movement exclusion providing that loss or damage caused by earth movement is excluded from coverage, whether the earth movement was caused by natural forces or external forces.  The Court held that even under Ms. Smith’s variously asserted sets of facts/hypothetical causes, the earth movement exclusion would apply, because even Ms. Smith’s expert had opined that whether one of Ms. Smith’s hypothetical causes of the foundation damage or another was a cause, a contributing factor in any event to the loss was in fact earth movement. 

Friends, this case reminds us that, regardless of case law which may be cited in support of applicability or inapplicability of any exclusion, a court will in any event look to the actual wording of the particular exclusion at issue.  If the wording of such exclusion is clear and unambiguous, the court will apply it.   Here, regardless of other court decisions interpreting similar, but different earth movement exclusions, the Supreme Court of Mississippi ultimately looked to the specific exclusionary language at issue and applied it, in order to provide, in my humble opinion, the true meaning and intent of its terms, as this Court correctly decided this case.



Marina A. Barci

[email protected]


03/08/19       Fu-Qi Acupuncture, P.C. v. Travelers Ins. Co.

Supreme Court, Appellate Term, Second Department

Plaintiff’s Notice of Trial and Certificate of Readiness Vacated Because Discovery Was Not Complete

A notice of trial and certificate of readiness was submitted to the court by the plaintiff provider in February 2015. The defendant carrier made a timely motion to vacate the notice of trial because the certificate of readiness contained an erroneous statement that, contrary to plaintiff’s representation, discovery was complete or had been waived. When the defendant had served its answer in January 2015, the answer was accompanied by a notice to take deposition upon oral examination. It was undisputed that the plaintiff never appeared for a deposition, despite being served with a notice for one. The court agreed with the defendant and vacated the notice of trial and certificate of readiness, as discovery was not complete.

I, personally, find it telling that the notice of trial and certificate of readiness were filed only a month after the defendant served its answer and discovery demands. A similar situation to this recently happened in one of my no-fault matters. The plaintiff filed a certificate of readiness almost immediately after we filed our answer and demands, without responding to any of our discovery requests. We in turn made a motion to vacate, but did end up withdrawing it once we received the documents we requested. We also didn’t need to conduct depositions in that particular case. I find it interesting that plaintiffs are making these motions for trial readiness before discovery has even really been opened.


03/21/19       Matter of Global Liberty Ins. Co. v. Medco Tech, Ins.

Supreme Court, Appellate Division, First Department

Arbitration Award to Carrier Overturned and Remanded for De Novo Hearing

Medco Tech sought from Global Liberty payment from no-fault insurance benefits for medical equipment provided to its assignor as a result of a motor vehicle accident. The carrier denied claim from Medco based on a peer review report that concluded, based on a review of the medical records that the assignor’s condition was degenerative in nature and not post-traumatic and therefore the surgery undergone by the assignor was not medically necessary in relation to the accident.

Medco then brought an arbitration to recover the cost of the medical equipment it provided to the assignor, plus other fees. It appears that the arbitrator denied Medco’s claim entirely and found for the carrier, so Medco made a motion to vacate the arbitral award and remand for a de novo hearing and the carrier made a motion to confirm the award. The award was confirmed by the Bronx County Supreme Court and Medco’s motion to vacate and remand for hearing was denied.

Medco then appealed to the First Department. The First Department found that the arbitral award must be vacated and a de novo hearing held because, on the record before them as argued, they found it was “irrational to conclude that the need for the subject medical equipment was causally related to the accident.”



Earl K. Cantwell
[email protected]


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

Supreme Court of Wisconsin

A Forest Fire Constituted One Single Occurrence

A logging company’s CGL carrier brought an action for declaratory judgment with respect to its liability for a fire which purportedly started in logging equipment and burned several thousand acres of land. On a motion for summary judgment, the Trial Court held that the fire constituted more than a single occurrence and that an umbrella policy provided no coverage. A first Appellate Court agreed that there were multiple occurrences, but reversed the determination that the umbrella policy provided no coverage. The case then went to the Wisconsin Supreme Court.

In May 2013, a fire broke out on forest land owned by Lyme St. Croix. It burned approximately 7,500 acres over the course of three days. The fire allegedly began in logging equipment operated by Ray Duerr Logging. Flames allegedly spread to dry grass to pine and into the surrounding forest. Secura insured Duerr under the CGL policy and an umbrella policy. The CGL policy contained $2,000,000 general aggregate policy limit, and a $1 million dollar per occurrence limit. However the CGL policy also had a logging operations endorsement which reduced the per-occurrence policy limit to $500,000 for property damage due to fire arising from logging operations. Secura brought the declaratory judgment action to determine its coverage obligations.

Secura argued that the fire was one occurrence and therefore the $500,000 policy limit applied. Secura also contended that the umbrella policy afforded no coverage for damage from the fire. The Trial Court rejected Secura’s argument concerning the applicable policy limit. It concluded that there were multiple occurrences because each transgression of fire onto another property constituted a separate occurrence for purposes of that property and the policy. However, the Court agreed with Secura that the umbrella policy provided no coverage for any damages. The Appellate Court agreed that there were multiple occurrences and therefore the $2,000,000    aggregate policy limit applied, but reversed the determination that the umbrella policy provided no coverage. The case then proceeded to the Wisconsin Supreme Court.

The Supreme Court began with essential insurance coverage analysis that interpretation of an insurance contract often presents as a question of law. Summary judgment is therefore appropriate when there is no genuine issue as to any material fact and the Court can construe a policy and its obligations as a matter of law. The language of the policy here was fairly typical defining an occurrence as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” If this fire was a single occurrence, the $500,000 policy limit applied. If there was a new occurrence each time the fire crossed a separate property line, then the $2,000,000 policy limit would apply.

The Court focused on Wisconsin cases that emphasized the “cause theory” in defining an occurrence. Under the “cause theory” where a single, uninterrupted cause results in all of the injuries and damages, there is but one accident or occurrence. Wisconsin courts apparently do not favor the opposing “effect theory” which suggests that each accident must be construed and considered from the point of view of the person whose property was damaged. Under the “effect theory”, there is an “occurrence” when separate property of each claimant is damaged.

The Supreme Court in this case adhered to the cause theory. 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, there is only one occurrence. As long as the damage stems from one proximate cause, there is but one single occurrence. 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 were crossed with the damages closely following the cause in both time and space.

The Supreme Court noted that applying the “effect theory” could have confusing and anomalous results. For example, under the “effect theory” two identical fires could burn exactly the same amount of land over exactly the same amount of time but if all the land were owned by one person that would be one occurrence but if the land was owned by several people that would be multiple occurrences. This would in effect compel the policy to pay more simply because of a fortuity of whose land was being damaged. The Court also cited decisions by other states determining that a fire damaging a property of multiple claimants would be considered a single occurrence.

Therefore, the decision of the Appellate Court was reversed, there was held to be only one single occurrence and the $500,000 policy limit provided in the endorsement would apply.

This case is a good example of extensive litigation over basic policy terms, such as what is an occurrence, and what constitutes one as opposed to several occurrences. These questions obviously have ramifications with respect to policy limits, umbrella coverage, exhaustion and stacking of coverage issues, and the like.

The case also presents an interesting point in that the cause theory focuses on the initial precipitating cause, and if there is only one, then there is one occurrence even if there may be multiple damage sites or events. The “effect theory” looks at the fire from the standpoint of individual property owners and would argue that as to them there is a new, separate occurrence each time each person’s property is damaged. This issue was of some interest within the insurance industry since at least one amicus brief was filed on this case by the Wisconsin Insurance Alliance.

Although this case was decided essentially on summary judgment, the language used by the Court to define the “cause theory” still may leave some room for interpretation. If the test is whether the cause and result are so simultaneous or closely linked as to be considered “by the average person as one event”, there may in fact be different positions and interpretations with respect to that analysis. What if, for example, there had been two or more fires that had somehow burned or come together in juxtaposition and resulted in additional fire damage?  What if there had been a fire that had been substantially subdued but sometime later erupted from embers resulting in a new fire event? What if the fire had been contained for some period of time but then due to the wind or other factor(s) changed course or erupted in a new and different direction? Asking whether an “average person” would regard the event as essentially one fire is not necessarily the most exact test to apply.           


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