Coverage Pointers - Volume XX, No. 21

Volume XX, No. 21 (No. 532)
Friday, April 5, 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.

My long journey south and west has come to an end, after a week at the Federation of Defense & Corporate Counsel Winter Meeting held in Austin and then the PLRB Claims Conference in Indianapolis.  My office chair missed me but I am not sure as to others.

We welcome new subscribers from the PLRB and hope that you enjoyed the classes as much as we enjoyed presenting them.

For our new subscribers, a little bit about format.  What you are reading is the “cover letter”.  The actual issue of Coverage Pointers is attached as a pdf file.  Enjoy them both but understand that the attached issue has the substantive coverage discussion along with links to the cases discussed.  This cover letter provides an overview of what’s in the attached issue, along with commentary from our various column editors.  It also provides you with a snapshot of what was reported in the newspapers, 100 years ago. Why do we include the history?  It’s fun and generates lots of commentary from our many, many subscribers.

We have other publications that may be of interest to you.  Dave Adams ([email protected]) and his Labor Law team produces Labor Law Pointers, a monthly publication covering New York construction law litigation.  Jody Briandi ([email protected]) and her staff publish a monthly newsletter coverage all kind of premises liability decisions.  Contact them to subscribe.

Speaking of PLRB and training – understand that we do provide training on site.  Contact me to discuss.


Need an In-House Claims Conference Speaker of In-House Training?

We revise our topical list as requests come in.  Here is a sample of programs provided in the past but we can create one for you:

  • Life after Burlington – How Do We Resolve “Additional Insured“ Issues?
  • Tenders, Additional Insured Obligations, Indemnity Agreements and Priority of Coverage
  • Chaos Breeds Resolution: Mediation and the Role of Coverage Counsel in Resolving Chaos
  • Strategic Approaches to Resolving Insurance Coverage Disputes:  Do We Defend and Start a DJ? Do We Sit Back and Wait?
  • Good Faith, Consequential Damages and Extra-Contractual Liability - the New York Experience
  • NY Coverage Letters - Nuts & Bolts: How to Create and Write and Timely Send a Disclaimer Letter and NY’s Special Dangers with Reservation of Rights Letters
  • Uninsured and Underinsured Claims Handling
  • Preventing Bad Faith Claims - First Party Cases
  • Preventing Bad Faith Claims - Liability Cases
  • The Cooperation Clause - How to Handle
  • No-Fault Arbitrations and Appeals: Mock Arbitrations
  • The Serious Injury Threshold
  • No Fault Regs - Knowledge is Power
  • An Auto Liability Policy Primer
  • A CGL Policy Primer
  • A Homeowners Liability Policy Primer
  • EUO's Under First Party Policies
  • Insured-Selected Counsel: When is it Necessary and How to Avoid and Control?
  • ADR and How to Get to "Yes"
  • “Other Insurance”


Upcoming Presentations:

            Yours truly has the following presentations scheduled in the next few weeks:

  • Association of Defense Trial Attorneys

May 1, 2019 – Edinburgh, Scotland

Traps for the Unwary – Insurance Coverage and Related Issues
Bruce Barze, Barze Taylor Noles Lowther LLC, Birmingham, AL Don Myles, Jones, Skelton & Hochuli, P.L.C., Phoenix, AZ Dan Kohane, Hurwitz & Fine, P.C., Buffalo, NY Edward J. “Ned” Currie, Jr., Currie Johnson & Myers P.A., Jackson, MS

  • New York State Bar Association Insurance Coverage Update 2019

Friday, May 17, Albany, New York

Click here for more information and registration

  • Great Coverage Execution
  • Fundamentals of Preparing and Enforcing Coverage Denials:
  • Problems with Reservation of Rights and Effective Disclaimers
  • Common Law Waiver and Estoppel
  • Statutory Preclusion (Insurance Law Section 3420)
  • Use of Declaratory Judgment Actions and Direct Actions
  • New York Insurance Association Annual Meeting

May 29–May 31, 2019  - The Sagamore Resort Bolton Landing, NY

Click here for more information and registration

Flying with the Legal Eagles: Being Forewarned is Being Forearmed 

Moderator: Marc Craw, Senior Counsel, MLMIC Insurance Company

Panelists: Michael Brown, Partner, Nicoletti Gonson Spinner; Brian Heermance, Senior Partner & Co-Branch Leader, Morrison Mahoney LLP; Dan Kohane, Senior Member, Hurwitz & Fine, P.C.; and William Matlin, Partner, Hoffman Roth & Matlin, LLP

To be prepared for the unforeseen and unique challenges of the ever-changing legal landscape in New York takes a trained eagle eye. Our moderator and panel of legal aficionados have scoped the terrain and laid the groundwork needed to forearm your company against the unexpected. Gain insights from these birds of a feather as they come together to bring you foresight for the current state of affairs in New York’s litigation environment.

Kudos to:

  • Jen Ehman, who is serving as Program Vice-Chair (as we speak) in Chicago for the DRI Insurance Coverage and Claims Institute.
  • Jody Briandi, who attended her first meeting as a member of the Federation of Defense & Corporate Counsel.
  • Ryan Maxwell (3L at Buffalo Law School) who won second place honors in an American College of Coverage Counsel insurance writing competition.


Peiper on Property and Potpourri:

We start this Edition with another warning to anyone representing litigants in civil litigation.  You must, repeat MUST, look for additional coverage.  This includes placing carriers on notice of an incident, even when you’re representing the plaintiff.  Remember, the Insurance Law specifically grants any injured party or claimant the right to provide notice to an insurer.  Thus, regardless how disconnected the defendant/tortfeasor is, you can (and now must) undertake efforts to secure coverage for the loss.  Remember too that regardless of the insured’s failure to provide timely  notice, diligent investigation by the claimant/injured party can, and often will, ameliorate the lack of attentiveness by the named insured.   If you don’t, it looks increasingly likely that you might very well be sued for malpractice.

Again, this applies, to ALL counsel.  Whether you’re corporate counsel just put on notice of a loss, a co-defendant who may have an indemnity (common law or contractual) against another party, or simply representing an injured party.  Don’t forget the insurance question!

Also this week, we review an interesting first party decision addressing ensuing loss.  The case involves a fire which started due to defective electrical work. While policy surely excluded losses caused by defective work product, it also included an exception which granted back coverage for any resulting loss that arose out of a covered cause of loss.  Thus, when the defective work started a fire, the resulting fire damage was, in fact, within the scope of coverage.  This case serves a reminder to read the entire policy provision.  Those exceptions, usually tucked away at the end, can foil an otherwise solid coverage opinion in a heartbeat.

We also review the latest installment of the “landlords can be indemnified for their own negligence” line of cases.  Remember, where you have an insurance procurement clause, you very likely have a pass through regardless of negligence.  This, of course, supposes the indemnity provision, itself, isn’t limited to non-negligent acts.  If the contract doesn’t contemplate indemnity for the landlord’s own negligence, the protections of GOL 5-321 are of no consequence.

Today, by the way, is National Deep Dish Pizza Day.  So for those of you in Chicago for DRI’s annual coverage seminar, go crazy.

Speaking of training, tis’ the season.  Jen Ehman is heading up the dais in Chicago right now, our Editor just returned from conference, and yours truly will be chairing a panel of coverage lawyers for the New York State Bar Association’s annual coverage update in a few weeks.  That program, as always, goes off on the first two weeks of May depending on your location.  Panels will be sitting on Long Island and Manhattan, as well as Albany and Buffalo.  If you need CLE credits, the seminar boasts strong and varied list of topics this year.  Check it out or drop me a note with any questions.

That’s it for now.  See you in two weeks. 


Steven E. Peiper

[email protected]


100 Years Ago – It was Discovered that Woman Drink:


New-York Tribune

New York, New York

05 Apr 1919


W.C.T.U. Worker Finds

St. Louis Women Drink


“Beer in a Can or Champagne in

Silver Bucket: Alike Popular, She Says


ST. LOUIS, April 4.—Mrs. Minnie Sigler, of Parma, Mo., a state worker of the W.C.T.U., has found, after four weeks spent in a house to house canvass of St. Louis, that most of the women are frankly followers of Bacchus.

As a result of her experiences Mrs. Sigler says she is able to make the following statements:

“That the ministers of St. Louis would be greatly surprised if they knew how many women members of their congregations use liquor.”

“There is an unusually large proportion of women who refuse to sign temperance pledges in this city.”

“Women refuse to join the prohibition movement because they have been accustomed to drinking at social functions.”

“Women drink everything from beer in a can to champagne in a silver bucket, from gin to brandy and ale to porter.”

Mrs. Sigler says as many of the refusals to support prohibition come from the cultivated wealthy as from the uneducated poor.  She found the women were usually candid in admitting they do not wish to deny themselves alcoholic drinks.

“They say they drink temperately,” Mrs. Sigler said.  “They say that it is served wherever they go and that they themselves serve it when they entertain.”         


Editor’s Note:  Here is a picture of Minnie in her glory days. She lived to the age of 77 while her husband died at age 40.  Newspaper articles of the time indicated that she remained a lifetime member of the Women’s Christian Temperance Union.  Perhaps he drank more than she did.


Jen’s Gems:

Greetings from Chicago and the DRI Insurance Coverage and Claims Institute.


Jennifer A. Ehman

[email protected]


Too Many Montana Verdicts:


The Independent-Record

Helena, Montana

05 Apr 1919


Too Many Verdicts Says

Montana Supreme Court


After wiping out two verdicts by juries and ordering verdicts itself the district court of Fergus County is upheld in its last action by the Supreme Court in the case of Otis S. Lish against W. F. Martin and others.  Justice Holloway wrote the opinion.

The suit was to recover a balance of $384.50 on a promissory note.  The jury first returned a general verdict for the defendants for $294.  This the court ordered stricken from the files and instructed the jury to return a verdict for plaintiff.  They brought in another general verdict in favor of plaintiff for $179.85, and the court had this stricken also and the original verdict reinstated.

It is held that the court had no right to strike out the first verdict, but the only way it could have been remedied if it was informal or did not cover all the issues submitted, was to grant a new trial and that therefore everything after the erroneous striking out was void.

“The trial court extricated itself by granting a new trial, and it could not have done otherwise,” concludes the court. 


John’s Jersey Journal:

Dear Subscribers:

Welcome to our new subscribers! For those of you just joining us, I report on insurance law decisions and legislative changes in the Garden State. We keep you up-to-date on developments and changes to New Jersey insurance law. We handle New Jersey coverage matters too. So if you have situation in New Jersey or think New Jersey law might apply, give us a call or drop us a note, we would be happy to help.

The New Jersey Supreme Court, the state’s highest court, just handed down a decision addressing New Jersey’s no-fault system. Specifically, they addressed whether or not an injured motorist who elected to have a lower PIP limit can sue for their medical expenses that exceed their PIP limit.

The standard policy has $250,000 in PIP coverage by default (with the option to elect lower coverage). As you can imagine, such a high limit carries a higher premium. The New Jersey legislature amended the no-fault law to make insurance more affordable by allowing insureds to elect to lower PIP coverage in exchange for a lower premium.

Think about this:

The insured selects a lower PIP limit, is involved in an accident, exhausts their PIP, and has outstanding medical bills.

Can the insured sue the tortfeasor to recover the unpaid medical expenses?

Well, that’s what the Supreme Court has been thinking about. They answered the questions saying “no”. It is now law in New Jersey that injured motorists cannot sue for medical expenses that exceed their elected PIP limits.

The Court reasoned that the purpose of the Legislature’s amendment to the no-fault law have historically been cost containment measures. The Supreme Court felt it would be unfair for someone to choose a lower PIP option yet receive a higher overall reimbursement by suing the tortfeasor. The Court anticipated to rule otherwise would result in an explosion of litigation, “fostering cottage industries of expensive litigation”. The Court closed the opinion by telling the Legislature that if they disagree with the result, amend the law.

The decision is summarized for you in the PDF attachment to this email. If you would like to review the history of New Jersey’s no-fault law, there is a link to the opinion itself. The Court discusses the introduction of no-fault in 1972 and the various cost containment amendments enacted since (p. 18-29).

We also have a Hurricane Sandy case from the Appellate Division. A restaurant located in Liberty State Park (overlooks Ellis Island and the Statute of Liberty) sought coverage for lost business income. The Department of Environmental Protection shut down the park as Hurricane Sandy approached and police blocked access to the park. The roads then flooded. Due to the loss of business, the restaurant sought coverage under the Civil Authority provision in the Business Income for additional expenses it incurred.

The problem for the restaurant though was that the Civil Authority provision only applied where there is a Covered Cause of Loss. Covered Cause of Loss was expressly defined to exclude flood waters. More importantly, the policy had an anti-concurrent causation clause. That clause barred coverage when two identifiable causes – one covered and one not covered – contributes to a single loss. Since the restaurant’s shut down was, at least, partially caused by flooding, the Appellate Division ruled there was no coverage.

Note: In case you were wondering the restaurant has 4.4 stars on Google.

As for me, I am ready for warmer weather. I bought a new propane grill which took 3 hours to assemble. It took a little bit longer than it should have because Donald, my dog, kept stealing my screwdriver and some of the pieces, with which he would run around the yard. Chase ensued.



John R. Ewell

[email protected]


Wife AWOL, a Century Ago: 


The Buffalo Commercial

Buffalo, New York

05 Apr 1919





Special to The Buffalo Commercial:

OLEAN, April 5.—“When I woke up in the morning she was gone,” Angelo Ruby, who has a grocery at Elm and Spruce streets, told police in informing them of the strange disappearance of his wife, Mary.

One thousand dollars, the family fortune, was also gone, said Ruby.  The grocer said that last he saw his wife was in their home at No. 1119 Spruce Street Thursday night.

Mr. Ruby told police that he knew of no reason why his wife should leave him.  They had been living happily, he said, and there had been no quarrel.

She is 41 years old.  She usually wore a black velvet coat and black hat, said Ruby.

Police are searching.


Editor’s Note:  Apparently Mary was located.  Angelo died in 1941 and Mary, in 1975.  They are buried together in St. Bonaventure Cemetery in Cattaraugus County, New York.  The two of them ran a grocery store for a time.  Where she went in 1919, remains a mystery.  Here’s the proof:


Times Herald

Olean, New York

23 Aug 1941


Death Claims

Angelo Ruby


Angelo Ruby of 1119 Spruce Street, died Friday evening (August 22, 1941) after a short illness.

He was a member of St. John’s Church; Mr. Ruby is survived by his widow, Mrs. Mary Ruby; one son, Louis, Olean, and one granddaughter.

The funeral will be held Monday morning at the late home at eight-fifteen o’clock and at St. John’s church at nine o’clock.  Burial will be in St. Bonaventure Cemetery. 


Hewitt’s Highlights: 

Dear Subscribers:

Well it is spring! The sun is shining, the birds are singing, and my boys are back playing Little League baseball. Granted, practice went to 7:45 the other day and it was about 38 degrees, but they are playing, while my wife and I freeze. In the professional front, the Yankees are not doing so well, but the Mets had their home opener today and are doing better than the Yankees.                                                              

The serious injury cases this time focus on a few areas. In one case, plaintiff’s failed because their doctor did not address the effect of a subsequent accident and whether it caused the injuries at issue. Thus, the conclusion regarding causation was deemed speculative.  In another, the plaintiff’s doctor failed to address defendant’s experts finding that the injuries were degenerative in nature.  Both cases show that courts will look for the reports or affidavits of experts/doctors to address all issues, particularly issues related to degeneration and causation.

Hope the weather is warming up where you are.                                                             

Until next issue,


Robert E.B. Hewitt III

[email protected]


Watching the Docket – a Century Ago:


The Buffalo Times

Buffalo, New York 

5 Apr 1919


Three Important

Cases to Come Up


Special to The Buffalo TIMES


BATAVIA, April 5.—At the April term of Supreme Court, which will convene in Batavia on Monday, District Attorney Kelly will present evidence in the case of the burning of the house of Charles Fannaro at Central and Pringle avenues on February 2nd, to the grand jury.  Other cases are those of Norman Bernard of Pavilion, charged with forgery in the second degree, and that of Mrs. Bertha Hale and Mrs. Margaret Curtiss of Batavia, charged with concealing the birth of a child.  There is also another John Doe inquiry to be had. 


Wilewicz’ Wide-World of Coverage:

Dear Readers,

The ABA TIPS Section Conference is less than a month away! Held at the Westin in Times Square in NYC this year from May 1st through the 4th, it features over 25 hours of CLE credit, including ethics and CE credit opportunities. The Insurance Coverage Litigation Committee will be having its committee dinner on Wednesday, May 1st, and I’m proud to note that I will be coordinating that evening. Mark your calendars! The dining location is being finalized right now, but it should be a fantastic event to kick off the conference. Drop me a line if you will be in town, and meet us for dinner!

Now, this week in the Wide World of Coverage, the Second Circuit issued a brief opinion on an employee injury case dealing with an injury that resulted from the use of a hand truck. Interestingly, the court found that Montana law applied (quite removed from the territorial jurisdiction of the Second Circuit typically), and discussed the policy’s employee exclusion and notice provisions. The takeaway – as is the lesson of all of coverage litigation – words matter. If your policy provides an obligation for the Named Insured, it does not apply to any insured necessarily. If your policy provision requires any insured to do something, this includes the Named Insured, along with all other insureds.

Until next time, spring is almost here. Thankfully.



Agnes A. Wilewicz

[email protected]


Court Allows Discovery of Insurance Policies:


The Cincinnati Enquirer

Cincinnati, Ohio

04 Apr 1919




Of Indemnity Policies


Is Ordered by Judge in Auto

Accident Damage Suit


Court Holds Plaintiff Who Wins

Judgment Has Right to Learn

Extent of Insurance Protection


Liability and indemnity companies are interested in a decision handed down yesterday by Common Pleas Judge E. T. Dixon, in which the Court holds that a person who is execution proof and against whom a judgment has been rendered for damages because of a fault of the defendant, can be forced to disclose to the plaintiff whether or not he held liability or indemnity insurance, and to disclose the policy to the plaintiff.

This is a question which long has been agitating the courts, and decisions of Courts of other states had to be examined as the Ohio supreme court never has determined the question.


Barnas on Bad Faith:

Hello again:

I bring you a brief cover note this week from DRI’s Insurance Coverage and Claims Institute Seminar from Chicago.  Our own Jen Ehman is Program Vice Chair, and the program she has helped put together has been excellent so far.  We had a particularly interesting session this morning on strategies for mediating coverage cases that provided a number of useful tips and strategies.  I’m looking forward to the afternoon and day two.

I have two cases in my column this week, one of which is a bit different from our normal content.  In the Kamins case the Second Department concluded that New York’s mental health parity law, also known as Timothy’s Law (Insurance Law §§ 3221[l][5]; 4303[g], [h]) does not provide a private cause of action to challenge the denial of mental health benefits.  The Petrarca case applies Rhode Island law to conclude that the insured stated a claim for bad faith but could not state a claim under Rhode Island’s Deceptive Trade Practices Act.

Signing off,



Brian D. Barnas

[email protected]


Who Would Believe it?


Buffalo Courier

Buffalo, New York

04 Apr 1919


A Delaware court has caused a lot of trouble among the tightwads by deciding that a person may have liquor in his possession and give it away if he wishes. 


Off the Mark:

Dear Readers,

Slowly but surely, the warmer weather seems to be arriving.  I’m already looking forward to taking the kids hiking and camping.  Hopefully, this will be the year I finally get my VW Westfalia (“Westy”) back from the shop.  It’s been a long time since we were able to enjoy it.  I made the mistake by telling the mechanic to take his time.  At the time, I figured he had almost a year to get it ready for the next planned trip.  It’s been three years.  Live and learn.  Speaking of the kids, we have been left to our own devices this week as the wife is out of town on business.  The house has become like a bachelor pad where cleaning up seems to be optional.  Oh well, as long as the homework gets done, I should be okay with the wife.

This edition of “Off the Mark” discusses a recent construction defect case from the US Court of Appeals for the Second Circuit.  In Valls v. Allstate Ins. Co., the Court of Appeals examined the “collapse” provision of a homeowner’s policy.  The Court held that because the cracked and deteriorating walls at issue were still standing and had not collapsed suddenly, accidently, and entirely as required under the policy, the homeowner’s carrier had no coverage obligation to its insureds.  It should be noted, that once a collapse occurs, coverage may be triggered.



Brian F. Mark
[email protected]


Selling Insurance?  Women Need Not Apply:


Buffalo Evening News

Buffalo, New York

04 Apr 1919


WANTED—Men to write sick and accident insurance; you can give part or all your time to it.  Apply 310 Mutual Life Bldg.


Wandering Waters:

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

I want to welcome all of the new subscribers to Coverage Pointers.  In the Wandering Waters column, I discuss recent and interesting (at least in my view) coverage cases from New York District Courts. In addition, I discuss recent NBA news, as I am an avid basketball fan.

As some of you may know from my previous editions, D-Wade of the Miami Heat is not only retiring at the end of this season, but he is my favorite player of all time.  As such, I made it a goal to watch him play in person one last time before this NBA season ends.  I am proud to have accomplished my goal, as I traveled to Miami last week to watch a Miami Heat home game against the Dallas Mavericks. The game was phenomenal.  Although D-Wade is not the player he used to be in his prime, he still has plenty of game left. Not only did he play a well-rounded game, he led the Heat to victory with two critical plays in the last minute of the game.  It was a great moment to see one of the all-time great NBA players one last time in person.

With that said, we have two cases from the Southern District of New York. Until next time …



Larry E. Waters

[email protected]


Sunday Baseball a Reality?


Buffalo Evening News

Buffalo, New York

04 Apr 1919


THINGS look pretty good now for the Sunday baseball bill which yesterday passed the senate. The Republicans made the passage possible as seven of them voted with the Democrats, making the vote 28 to 21. It is not likely that the assembly, to which the bill now goes, will treat it as a strictly party measure any more than the senate did. It is known that Governor Smith favors the bill and that he will sign it if it gets by the assembly. The bill makes Sunday baseball a matter of local option. I don't know whether the local legislations are by ordinance or whether it takes a special election.


Boron’s Benchmarks:

Dear Subscribers:

Today, April 4, is the 16th day (already) of (our late-arriving) spring.  Seems spring has taken a detour in getting to these parts along the banks of Lake Erie.  We’re holding out hope here that last week’s snowfalls, on two different “spring” days, were the last snowfalls we’ll see … until next October.

The Internet is telling me that today, April 4, is “National Hug a Newsperson Day”.  Gotta admit, I’ve never heard of that one.  With all these crazy, new, made-up, supposed holidays, I prefer to play it safe, and stick to the traditional ones.  The ones everybody celebrates.  That’s why I go by what my personalized Hurwitz & Fine desk calendar, autographed by the one-and-only Mr. Dan Kohane, says today is celebrated as throughout the world.

My desk calendar says its Coverage Pointers Day today, so, let’s go with that, shall we?

For readers new to Coverage Pointers, my “beat” is covering decisions of the high courts of the 49 states not named New York.  If I haven’t covered a decision from your home state’s high court in recent issues, please don’t take it personally.  If that is too much to ask from you, then perhaps you may consider writing to your state’s highest court demanding more rulings, pronto, on insurance coverage topics.

Now, will all those readers out there who deal with aircraft liability insurance claims on a regular basis please raise their hands?  Hmm.  Not that many hands up.  Yet, anyone who handles liability insurance claims in general will benefit from reviewing the Supreme Court of Montana’s decision issued March 26, 2019, dealing with the issue of whether or not a third-party claimant is entitled to stacked liability limits in an aircraft insurance policy that covered multiple aircraft, after one of those covered aircrafts crashed, unfortunately killing its pilot as well as the third-party claimant.

You’ll have to pop over to my case write-up for the background facts.  And, notice dear readers, how I’m leaving you in suspense as to how the Montana Supreme Court ruled!  So, hurry up and go, read, learn, and then, of course, feel free to contact me or any of our other coverage attorneys with your questions, comments, and feedback. 

I hope you have a wonderful next two weeks.  And get outside now that “spring” is here. 



Eric T. Boron

[email protected]


Health Insurance an Issue a Century Ago – Some Things Never Change:


New-York Tribune

New York, New York

04 Apr 1919


Health Insurance in the Open


The attempt at Albany to send social measures affecting women over a parliamentary Bridge of Sighs to an unknown death has failed.  The bills may be killed, but the public will know they are dead and who killed them.  Mrs. Norman de R. Whitehouse and her co-workers seem entitled to congratulation on their quick breach of an embargo.

Perhaps, as Senator Thompson says, the Senate without stimulus would have done that which has been done.  However this may be, it will probably be conceded that Mrs. Whitehouse’s visit to the Capitol did no harm.

The health insurance bill is at last out in the open—has broken through screens erected to conceal its existence.  It will not again be successfully immured.  This session of the Legislature may not see its enactment; seldom do bills like it win at the first trial.

A class interest has been appealed to against the bill, and legislators who would like to support  it, but naturally do not want to affront influential constituents, hang back until there is evidence of general popular support.  This evidence should be furnished.  It exists.


Marti's Legislative and Regulatory Markers:

Dear Subscribers,

From yesterday’s headlines in the Buffalo News, it has been estimated that tens of thousands of lawsuits will be filed across the state under the one-year window suspending the statute of limitations in sex abuse lawsuits.  This flood of cases is set to begin the week of August 14, 2019, with potential defendants ranging from the Catholic Church to schools and others.

Given the passage of time, the late notice of an incident, offense, occurrence, or wrongful act by the insured to the insurance carrier could serve as a basis for disclaimer of coverage.  How the courts treat such a coverage determination will depend on the excuse provided by the insured.  We look this week to a federal court case from 1996 that dealt with the late notice issue in the context of allegations of sexual abuse in a foster home.  In that case, the Court looked to the reasonable belief of the insured as to non-liability to conclude that the insured’s delay in providing notice to the insurer was excusable.

Ultimately, the determination for coverage on late notice will be made on a case-by-case basis for claims made under the Child Victims Act.  For further details, please read on . . .



Jerry Marti

[email protected]


State (of Minnesota) to Stay Out of Insurance Biz:


Star Tribune

Minneapolis, Minnesota

04 Apr 1919


The State Escapes Two Evils


The effort to put the state into the insurance business failed.  The bill having been amended to permit employers to insure in private companies as well as through the state, the friends of the state insurance scheme abandoned their effort and asked to have the bill defeated and this was done.  Evidently the advocates of state insurance were unwilling to have that system tested in competition with insurance by private companies.  In some cases, at least, where both forms of compensation and insurance are provided, the state does a very small percentage of that business and it may have been feared that that would be the result here.  While the state insurance plan had the nominal support of labor organizations, we doubt very much whether the rank and file of labor was greatly interested in the proposed change or expected any better results if it had been made. 


Barci’s Basics (On No Fault):

Hello Subscribers!

Sadly, I am not doing so well in March Madness. I only have one team left in the tournament, which I guess is better than most due to the upsets.

In other news, the high school mock trial team I coach had its end-of-the-year party this past weekend. What was supposed to be a fun-filled Saturday afternoon of laser tag turned into a wait-filled Saturday afternoon when technology failed. The place we were at to play laser tag had a system malfunction, so we ended up getting a refund and they gave us some free arcade games to play. Luckily, my team has pretty good sports and won some prizes in the arcade.  We then went to have a hibachi lunch and ice cream afterward. Unluckily for the 7 birthday parties who were also planning on playing laser tag, we watched the parents try to wrangle what felt like hundreds of children under 12 after being let loose in the arcade to tell them their birthday party fun was over. It was a sight to see.

On the no-fault front, my column is a bit longer this week as there were several no-fault cases that primarily had procedural issues. A civil procedure refresher is always helpful, right? First in the Progressive case, we get a refresher on how to vacate a default judgment. Then in Global Liberty, we get a reminder about how to obtain a default judgment in the first place. In the Nationwide case, we are reminded that an assignment of benefits trumps an injured party’s claims, and then for good measure I also threw in a note that EUO notices need not be followed up by an explanation, even if one is requested by the insured.

That’s all folks,



Marina A. Barci

[email protected]


Insurance Lobby Annoys Insurance Commissioner:


The San Francisco Examiner

San Francisco, California

04 Apr 1919





Commissioner Declares High

Priced Aides Boast Ability to

Break Up Strong State System


Asserts Publicly Operated

Compensation Plan Is California’s

Most Efficient Department




SACRAMENTO, April 3.—Meyer Lissner of the Industrial Accident Commission is after the insurance lobby with a sharp stick.  He says it is the most pernicious influence around the session, thought State Mineralogist Fletcher Hamilton seems to believe the oil lobby is even more pernicious as it has put the crusher on his bill to give him proper control of the flooding water of oil fields.

However, here is the attack of Lissner on the insurance lobbyists as he prepared it for “The Examiner”:

The most efficient thing about the present Legislature, but by no means the most economical, is the insurance lobby.

It consists of a small standing army of paid legislative agents and attorneys, directed by a general staff composed of the suavest, most plausible, highest salaried insurance men in the State, good fellows all, good livers, good dressers, good spenders, good servants of big insurance interests. 


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

You’ve scrolled down the page and made it all the way to Lee’s Connecticut Chronicles. This is your one stop shopping for all things Connecticut insurance law. This edition comes to you from the friendly confines of our Long Island office, where I’ve been spending the week visiting some of my favorite court houses (although I do have a sweet spot for the Ninth Circuit’s Pasadena, California, location). Turning back to Connecticut, while we don’t have anything as exciting as last edition’s analysis of the Supreme Court’s Sandy Hook ruling,, we do have the Connecticut Supreme Court tackling another question of first impression. Today we’re going to continue looking at Connecticut bad faith law and we’ll even answer a question for all you underserved Workers’ Compensation folks out there.



Lee S. Siegel

[email protected]


Headlines from Today’s Issue (attached):

Dan D. Kohane

[email protected]


  • Uninsured Motorist Insurer Provided Enough Information to the Court to Justify a Hearing on the Question of a Staged Accident
  • Where Plaintiff Sends Notice of the Commencement of his Action against the Plaintiff to an Address not Connected to the Insurer, and a Default Judgment was Entered against the Insured, Late Notice/Prejudice Established
  • Existence of Insurance Policies Reflects Intention to Indemnify under Trade Contract
  • To Cut off Obligations to Pay Interest after Judgment against Insured, Insurer Must do More than Offer Policy Limits but Must Pay or Tender or Deposit into Court the Part of the Judgment that Does Not Exceed Limits
  • Extrinsic Evidence Leads to Obligations to Defend AI, but Not Necessarily Indemnify
  • Commencement of Coverage Litigation Constitutes Repudiation of Policy.  No Non-Cumulation Clause so Pro Rata Allocation



Robert E.B. Hewitt III

[email protected]


  • Plaintiff’s Neurologist’s Opinion that the Injury was caused by the Accident Deemed Speculative Where He Did Not Address Subsequent Accident
  • Plaintiff’s Doctor Failed to Address Degenerative Nature of Injuries Found by Defendant’s Expert
  • Plaintiff Did Not Have to Explain Any Gap in Treatment as Defendant Failed to Make Out a Prima Facie Case as to Causation



Steven E. Peiper

[email protected]




  • Ensuing Loss Exception Extends Coverage for Fire Damage Arising from Defective Work Product



  • Plaintiff’s Counsel’s Failure to Investigate Coverage Leads to Malpractice Claim
  • Speculation over Cause of Injury Results in Dismissal of Claim; GOL 321 Does Not Prohibit a Landlord from being Indemnified for Its Own Negligence



Agnes A. Wilewicz

[email protected]


  • Second Circuit Finds for Carrier in Employee Accident Case, Citing Employee Exclusion and Notice Provisions of Policy (Montana Law)



Jennifer A. Ehman

[email protected]


  • In Chicago for the DRI Insurance program.



Brian D. Barnas

[email protected]


  • Timothy’s Law does not provide a Private Cause of Action to Challenge Denial of Mental Health Benefits
  • Plaintiff Plead a Viable Independent Tort Cause of Action for Bad Faith Refusal to Pay the Insurance Claim


John R. Ewell

[email protected]


  • New Jersey Supreme Court Rules that Injured Motorists Cannot Sue for Medical Expenses That Exceed their Elected PIP Limits
  • Anti-Concurrent Causation Clause Bars Restaurant’s Claim for Hurricane Sandy Loss



Lee S. Siegel

[email protected]


  • Sole Member of an LLC is an Employee for Workers’ Compensation Insurance
  • Adding Person as Additional Insured is Not Bad Faith


Marti's Legislative and Regulatory Markers

Jerry Marti

[email protected]


  • Insured’s Delay in Providing Notice Could Be Excused


Brian F. Mark

[email protected]


  • US Court of Appeals Finds No Coverage Obligation Under “Collapse” Provision of Homeowners Policy for Damages Related to Cracking of Basement Walls Where Walls Were Still Standing and Had Not Collapsed Suddenly, Accidentally, and Entirely as Required Under the Policy



Larry E. Waters
[email protected]


  • Plaintiff’s Motion for Default Judgment Granted in Full as Plaintiff sufficiently pled the Existence of a Contract Between itself and the Defendant; Performance of the Plaintiff’s Obligations under the Contract; Breach of the Contract by that Defendant; and Damages to the Plaintiff by the Defendant’s Breach
  • Defendant’s Motion to Stay Granted in Part as to Plaintiff’s Duty to indemnify and Denied in Part as to Plaintiff’s Duty to Defend



Eric T. Boron

[email protected]


  • Aircraft Insurance Policy – Montana Supreme Court Rejects Stacking of Liability Coverages



Marina A. Barci

[email protected]


  • Vacatur of a Default Judgment Requires More Than an Affidavit as Proof
  • Assignment of Benefits Precludes Injured Party From Collecting No-Fault Benefits
  • Carrier Prevails on Procedure to Get Default Judgment Over Provider



Earl K. Cantwell
[email protected]


  • Insurance Company Wins Challenge to Insured’s Expert



See you in a couple of weeks!  Reach out if you have a situation.



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]


04/03/19       Global Liberty Ins. Co. of New York v. Eveillard

Appellate Division, Second Department

Uninsured Motorist Insurer Provided Enough Information to the Court to Justify a Hearing on the Question of a Staged Accident

This was a proceeding to permanently stay an uninsured motorist arbitration.  That application must be brought by an insurer within 20 days of receipt of a demand for arbitration if the insurer believes that there is a legal reason not to proceed with arbitration.

On May 9, 2015, Eveillard was involved in a two-car motor vehicle collision while he was a passenger in a livery vehicle hired through a smartphone "e-hail" application. On the date of the collision, the livery vehicle in which Eveillard was riding was insured by the petitioner, Global Liberty. The other vehicle was uninsured.

On or about March 2, 2017, Eveillard served upon Global a demand for uninsured motorist arbitration. In October 2017, Global commenced this proceeding, seeking to permanently stay arbitration, or, in the alternative, to temporarily stay arbitration pending a framed-issue hearing on the issue of coverage. The issue regarding coverage was whether the collision giving rise to the claim was an accident, or an intentional act orchestrated, in part, by Eveillard, thereby precluding uninsured motorist coverage under Global's policy.

In support of its petition, Global submitted its investigative report of the loss, in which Global identified "numerous fraud red flags"; an affidavit from its manager of the Special Investigation Unit; a letter from Liberty Mutual Insurance Company confirming that the insurance policy on the other vehicle was cancelled prior to the date of the loss; and a sworn statement from the driver of the insured livery vehicle detailing the events leading up to, during, and after the collision, including his observation that the passengers in his vehicle did not appear to be injured.

In opposition, Eveillard submitted an affidavit in which he averred that he sustained legitimate injuries in the collision, that he did not know the driver, owner, or any of the occupants of the other vehicle involved in the collision, and that he had no reason to believe that the collision was intentional. He also submitted a copy of his medical records relating to treatment for the alleged injuries.

The lower court – without a hearing – found that Global had not "set forth a basis for its claim that the accident giving rise to the claim was staged."

An intentional and staged collision caused in the furtherance of an insurance fraud scheme is not a covered accident under a policy of insurance. As the party seeking a stay of arbitration based upon a lack of coverage, Global bore the initial burden of showing the existence of sufficient evidentiary facts to establish a preliminary issue which would justify the stay.

Here, Global set forth evidentiary facts and submitted documentary evidence sufficient to establish a preliminary issue as to whether the collision giving rise to the claim for uninsured motorist benefits was an accident or an intentional act orchestrated, in part, by Eveillard.  Global was entitled to a hearing on the subject.


04/03/19       Lipnitsky v. American Transit Insurance Company

Appellate Division, Second Department

Where Plaintiff Sends Notice of the Commencement of his Action against the Plaintiff to an Address not Connected to the Insurer, and a Default Judgment was Entered against the Insured, Late Notice/Prejudice Established

This was a direct action against an insurer, brought pursuant to Insurance Law § 3420(a)(2) to recover the amount of an unsatisfied judgment against American Transit’s (“American”) insured.

On May 4, 2011, a vehicle operated by the Lipnitsky was involved in an accident with a vehicle owned by the American’s insureds. In July 2011, Lipnitsky commenced an action against the American’s insureds to recover damages for personal injuries. There was a default judgment entered and after an inquest, the judgment was assessed at $101,455.

The plaintiff's attorney enclosed a copy of the judgment in a letter sent to American dated February 6, 2015. In letters dated February 26, 2015, American notified its insureds and the plaintiff that the letter dated February 6, 2015, was the first notice it had received that an action had been commenced against its insureds, and that it was disclaiming coverage based upon the insureds' and the plaintiff's failure to provide timely notice of the commencement of the action, as required by the subject insurance policy.

Lipnitsky then commenced this direct action pursuant to Insurance Law § 3420(a)(2) against the defendant to recover the amount of the unsatisfied judgment against American’s insureds. American moved for summary judgment dismissing the complaint, arguing that it properly and timely disclaimed coverage on the ground that it was not provided timely notice of the commencement of litigation against the insureds. Lipnitsky cross-moved for summary judgment on the complaint, contending that his counsel had sent notice of the accident on June 6, 2011, and notice of the commencement of the litigation on November 30, 2011.

The lower court found that the notice of the commencement of the litigation sent by the plaintiff's attorney was not sent to an address connected to the defendant.

"Distinct from notice of an accident, an insurer may . . . demand that it receive timely notice of a claimant's commencement of litigation.  American established its prima facie entitlement to judgment as a matter of law by demonstrating that it had no notice of the commencement of the plaintiff's action against the defendant's insureds until it received the letter dated February 6, 2015, from the plaintiff's counsel. The prior notices allegedly sent by the plaintiff's counsel were sent to a post office box address that was not a valid address for the defendant. In opposition, the plaintiff failed to raise a triable issue of fact.”

Editor’s Note: The New York Insurance Law statute mentioned in the decision provides a plaintiff who has taken judgment against an insured (and thereby becomes a judgment creditor), to sue the carrier directly to recover any amount covered by the policy.  The carrier can – and did in this case – raise coverage defenses in response to that action.  That’s called a “Direct Action” and differs from a Declaratory Judgment Action.


04/02/19       Ajche v. Park Avenue Plaza Owner, LLC

Appellate Division, First Department

Existence of Insurance Policies Reflects Intention to Indemnify under Trade Contract

Ajche brings a claim involving an unwitnessed accident and he had no recollection of the fall. He claims he fell because the A-frame ladder on which he was working "moved," based on what his foreman had allegedly told his wife. Plaintiff's foreman, however, testified that plaintiff fell from a scaffold, as he saw plaintiff on the scaffold when he went to get coffee, and found him lying on the floor near the scaffold when he returned. CPM's superintendent testified that he heard a noise and an impact, and found plaintiff on the floor a few feet away from a scaffold.

Plaintiff has demonstrated entitlement to partial summary judgment on the issue of liability on his Labor Law § 240(1) claim.

CPM can be held liable as a general contractor. Although CPM did not retain plaintiff's employer, Cobra, for the HVAC work, CPM oversaw the entire construction project, and coordinated Cobra's work with the other trades.

53rd Street is entitled to contractual indemnification from CPM. The contract between the two requires CPM to indemnify 53rd Street from any "claim arising out of, in connection with, or as a consequence of the performance or nonperformance of [CPM's] or any Subcontractor's Work."

Park is also entitled to contractual indemnification from CPM, as the contract between 53rd and CPM required CPM to indemnify Park. Contrary to CPM's contention, the record establishes CPM's intent to be bound. CPM signed the contract with 53rd Street, which physically incorporated the indemnification agreement. Although the signature line in the indemnification agreement is blank, "an unsigned contract may be enforceable, provided there is objective evidence establishing that the parties intended to be bound".  Here, the fact that CPM had purchased insurance policies naming Park as an additional insured demonstrates its intent to indemnify Park.


03/28/19       Gyabaah v. Rivlab Transportation Corp.

Appellate Division, First Department

To Cut off Obligations to Pay Interest after Judgment against Insured, Insurer Must do More than Offer Policy Limits but Must Pay or Tender or Deposit into Court the Part of the Judgment that Does Not Exceed Limits

Rivlab Transportation Corp.'s insurer's bare offer to pay the policy limit was not a "tender" of the policy for the purposes of stopping the accrual of prejudgment interest under 11 NYCRR 60-1.1(b). While the policy provides that the insurer will pay interest on a judgment until "we have paid, offered to pay or deposited in court the part of the judgment that is within our Limit of Insurance," 11 NYCRR 60-1.1(b) requires the insurer to pay post-judgment interest until it has "paid or tendered or deposited in court" the part of the judgment that does not exceed the policy limit.

As the policy language is less generous to the insured than the regulation, it is deemed superseded by the regulation. Within that framework, a bare offer to pay does not constitute a tender. Thus, interest must be calculated from the date of entry of the order that granted summary judgment to plaintiff until the date of payment.


03/26/19       Breeze National, Inc. v. Century Insurance Company

Appellate Division, First Department

Extrinsic Evidence Leads to Obligations to Defend AI, but Not Necessarily Indemnify

In Century's additional insured endorsement, Century agreed to afford plaintiff Breeze National, Inc. (Breeze) coverage as an additional insured only with respect to liability "caused, in whole or in part, by" its named insured ACT Abatement Corporation's (ACT) acts or omissions.  Here, there was sufficient proof in the record that Century’s named insured MAY have proximately caused the accident.

Accordingly, Century had an obligation to defend.

However, since it may be that the additional insured was solely responsible for the accident, the court did not rule on the obligation to indemnify.

Editors’ Note:  The Court was right to distinguish between the duty to defend and indemnify.


03/28/19          Century Indem. Co. v. Brooklyn Union Gas Co.

Appellate Division, First Department

Commencement of Coverage Litigation Constitutes Repudiation of Policy.  No Non-Cumulation Clause so Pro Rata Allocation

The insured defendant entered into a settlement to pay for remediation of a former manufactured gas plant.  The issue in this decision is the insurer Century’s motion for summary judgment as to whether it was obligated to reimburse the insured for amounts it agreed in a settlement to pay for remediation of the manufactured gas plant, whether certain insurance policies issued by Century and its predecessors require a pro rata allocation of losses, and whether the per-occurrence limits in certain of the policies are limits for the respective policies' entire terms, rather than annual per-occurrence limits.

In modifying the trial court, the Appellate Division held that Century’s commencement of this litigation constituted a repudiation of liability under the policies for the remediation claims against the insured, relieving the insured of its obligation under the policies to obtain Century's consent before agreeing to pay for remediation costs for the manufactured gas plant.

The appellate court also held that the trial court correctly determined that the "other insurance" clauses in four of the policies do not contain "non-cumulation" or "anti-stacking" clauses and therefore occurrences or losses spanning successive policies must be allocated pro rata across the successive policies.  However, the policies that had multi-year terms or contained a multi-year renewal were determined to be ambiguous as to whether the per-occurrence limits were limits for the respective policies' entire terms or were annual per-occurrence limits.

The appellate court lastly affirmed that trial court’s finding that the insured was not on notice at the time the minutes of executive conference meetings in 1951-1952 and 1988-1989 were lost or destroyed and that the minutes may have been needed for future litigation.  Thus, the trial court properly concluded that sanctions were not necessary as a matter of elementary fairness.



Robert E.B. Hewitt III

[email protected]


04/04/19       Mendoza v. L. Two Go, Inc.

Appellate Division, First Department

Plaintiff’s Neurologist’s Opinion that the Injury was caused by the Accident Deemed Speculative Where He Did Not Address Subsequent Accident

The Appellate Division held that defendants established prima facie that plaintiff did not suffer a serious injury to his cervical or lumbar spine through the affirmed reports of their radiologist and neurologist, who found that plaintiff's CT scans were normal, plaintiff had full range of motion, and there was no evidence of traumatic injury. Defendants also relied on plaintiff's deposition testimony that he reinjured the same body parts in an accident one year later.

In opposition, plaintiff submitted radiologist's reports finding that plaintiff had bulging and herniated discs in his spine after the subject accident, but did not provide competent medical evidence of the extent and duration of the disc injury sufficient to raise an issue of fact as to whether those conditions constituted a "serious injury.” Plaintiff's neurologist found only a minor limitation in one plane of lumbar spine range of motion and no limitations in cervical range, which was insufficient to demonstrate a serious injury involving significant or permanent limitations in use. Further, the neurologist's opinion that plaintiff's current limitation was caused by the subject accident was speculative, as he failed to address the impact of plaintiff's subsequent accident.


As for plaintiff's 90/180 day claim, defendants, relying on plaintiff’s admissions in his deposition, were held to have met their initial burden, and plaintiff offered no competent medical evidence in support of the claim.


04/03/19       Campanile v. Miller

Appellate Division, Second Department

Plaintiff’s Doctor Failed to Address Degenerative Nature of Injuries Found by Defendant’s Expert

The defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. The defendant submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine were not caused by the accident. In opposition, the plaintiff failed to raise a triable issue of fact, as her experts failed to address the findings of the defendant's radiologist that the magnetic resonance imaging of the cervical and lumbar regions of the plaintiff's spine, taken approximately one month after the accident, revealed that the alleged injuries were degenerative in nature.


04/03/19       Torres v. Rettaliata

Appellate Division, Second Department

Plaintiff Did Not Have to Explain Any Gap in Treatment as Defendant Failed to Make Out a Prima Facie Case as to Causation

The defendant submitted competent medical evidence establishing, prima facie, that the alleged injuries to the plaintiff's right shoulder and the cervical and lumbar regions of the plaintiff's 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, however, the plaintiff raised a triable issue of fact as to whether she sustained a serious injury to her right shoulder and the cervical and lumbar regions of her spine under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d).  As the defendants failed to establish, prima facie, a lack of causation, the burden did not shift to the plaintiff to raise a triable issue of fact regarding causation or to explain any gap in treatment.



Steven E. Peiper

[email protected]




04/03/19       Fruchthandler v. Tri-State Consumer Ins. Co.

Appellate Division, Second Department

Ensuing Loss Exception Extends Coverage for Fire Damage Arising from Defective Work Product

Plaintiff’s home was damaged by fire in May of 2014.  After an inspection of the loss, Tri-State determined that the origin and cause of the fire was a faulty junction box found within the premises.  As such, Tri-State denied coverage on the basis of the faulty workmanship exclusion found within the terms of the policy.

Plaintiff commenced the instant action arguing that while the workmanship exclusion might have been applicable, the provision also contained an exception for ensuing losses which arose from a covered cause of action.  The insured/plaintiff reasoned then that the junction box would be excluded by the faulty workmanship, however, the resulting fire damage which arose from a covered cause of loss (i.e., fire) should have been covered.

In reversing the trial court, the Appellate Division noted that the insured bears the burden of establishing the applicability of an exception to an exclusion.  The Court noted that “an ensuing loss provision provides coverage when, as a result of an excluded peril, a covered peril arises and caused damage.”  Accordingly, where the fire occurred two years after the allegedly defective work, it followed that the exception applied and the fire damage covered.



03/27/19       McGlynn v. Burns & Harris, etc.

Appellate Division, Second Department

Plaintiff’s Counsel’s Failure to Investigate Coverage Leads to Malpractice Claim

Plaintiff commenced this action against his former attorneys seeking recovery due to their supposed legal malpractice.  Apparently, Mr. McGlynn lost coverage which may have been applicable to a defendant in an underlying claim due to his failure to provide timely notice.  Injured parties, as you know, have an independent right, per the Insurance Law, to provide notice of an occurrence/claim.

Defendant B&H moved to dismiss the lawsuit on the basis that plaintiff failed to establish proximate cause.  In other words, B&H argued that by the time they had an opportunity to place the carriers on notice Mr. McGlynn was ready impermissibly late.  Here, the Court determined that a triable issue of fact remained over whether, at the time of counsel’s retention, notice could have been timely provided.  As such, B&H’s motion for summary judgment was denied.


04/03/19       Bilska v. Truszkowski

Appellate Division, Second Department

Speculation over Cause of Injury Results in Dismissal of Claim; GOL 321 Does Not Prohibit a Landlord from being Indemnified for Its Own Negligence

Plaintiff sustained injury when she fell on a wet floor at a building owned by Truszkowski.  At the time of the incident, plaintiff was in the course of her employment with Bowian.  Plaintiff eventually commenced an action against Truszkowski, as landlord, seeking recovery for injuries she allegedly sustained in the fall.  Truskzkowski, in turn, commenced a third-party action against Bowian.

In the resulting summary judgment motions, plaintiff argued that water was dripping from the ceiling and that “must have been” what caused the slippery condition.  She was unable, however, to establish where the water was dripping, and how it contributed to the incident giving rise to her injuries.  Bowian, however, opposed plaintiff’s position by noting that there was no dripping of the ceiling where plaintiff fell, and the dripping referenced was in an entirely different part of the premises and thus unrelated to the incident.  The Court then noted that a defendant can meet its burden by establishing that the plaintiff cannot identify the cause of his or her fall.  Where, as here, plaintiff can only speculate as to the cause, it follows her claim must be dismissed.

With regard to Truszkowski’s claims against the Bowian, the Court noted that the landlord established the existence of a valid lease which contained both a contractual indemnity provision as well as an insurance procurement component.  As such, GOL 321 does not act to prohibit a landlord from being indemnified for its own negligence.  That provision is inapplicable where, as here, there is a commercial lease negotiated at arms-length and which includes a viable insurance procurement requirement.



Agnes A. Wilewicz

[email protected]


03/25/19       American Trucking and Transport v. Liberty Mutual, et al.

United States Court of Appeals, Second Circuit

Second Circuit Finds for Carrier in Employee Accident Case, Citing Employee Exclusion and Notice Provisions of Policy (Montana Law)

In an opinion scant with facts, the Second Circuit addressed a couple of issues relative to a policy issued by carrier American Trucking and Transportation Insurance Company, RRG (ATTIC). First, with regard to the policy’s employee exclusion, that provision read that in the “trucking liability insurance provided by ATTIC, to the Named Insured(s) does not apply to ... any bodily injury to any employee of an insured arising out of and in the course of the employee’s employment by an insured or while performing any duties in furtherance of the business of an insured.” The Court determined that this unambiguously meant what it said and was triggered by injuries to employee of any insured.

Second, the insurer had claimed that its coverage was excess. However, the ATTIC policy stated that “if cargo moving equipment used by an insured during the loading or unloading process is not ... under the control of the Named Insured(s) this coverage will apply only in excess of any other available coverage”. This provision too was determined to unambiguously mean that since the claimant had “controlled” the hand truck that hurt him because he was “restraining or directing influence” over it, the coverage for it was not excess.

Third, ATTIC’s policy’s notice requirement stated that “in the event of an accident, claim, suit, or loss, the Named Insured(s) must give ATTIC prompt notice”. It also stated that “in the event of a claim or suit being made or served on any insured, the Named Insured(s) must ... immediately deliver to ATTIC a copy of such claim or suit including any demand, request, notice, order, summons or legal paper received by any insured” (emphasis added by court). This, the court found, was unambiguous in its requirement on the Named Insured to provide notice, not other insureds.

Finally, since Montana law was found to apply to this case, New York’s prejudgment interest rule was found to have been inapplicable.



Jennifer A. Ehman

[email protected]


In Chicago for the DRI Insurance program.



Brian D. Barnas

[email protected]


04/03/19       Kamins v. United Healthcare Ins. Co. of N.Y., Inc.

Appellate Division, Second Department

Timothy’s Law does not provide a Private Cause of Action to Challenge Denial of Mental Health Benefits

The plaintiff is an employee of the State of New York.  During the time period relevant to this action, the plaintiff received health insurance benefits for himself and his family members through a health insurance plan that was insured and administered by the defendants.  The plaintiff commenced this putative class action challenging the defendants' denial of mental health benefits allegedly owed to his adult son and similarly situated subscribers of the plaintiff's health insurance plan.  Plaintiff alleged violations of New York's mental health parity law, also known as Timothy's Law (Insurance Law §§ 3221[l][5]; 4303[g], [h]). Specifically, the plaintiff alleged that the defendants applied a definition of medical necessity and utilization review requirements to coverage of mental health care claims that were far more restrictive than those imposed on general medical claims.

The defendants moved to dismiss.  The statute that the plaintiff sought relief under did not expressly provide for a private right of action.  Thus, the court had to consider whether one could be implied.  This required consideration of three factors: (1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme.

The court held that Timothy’s Law did not provide a private cause of action.  In its reasoning, the court relied upon an amicus brief filed by the New York State Department of Financial Services in a federal case.  In that brief, the DFS took the position that the statute did not create a private right of action and that a private right of action would upend the legislative enforcement scheme.  Determinations of whether the law has been violated require complex, fact-based determinations about medical necessity, and DFS had implemented a comprehensive system to evaluate appeals following denials of coverage.


04/02/19       Petrarca v. Garrison Property and Casualty Insurance Company

United States District Court, District of Rhode Island

Plaintiff Plead a Viable Independent Tort Cause of Action for Bad Faith Refusal to Pay the Insurance Claim

Plaintiff was involved in a motor vehicle accident that occurred on April 28, 2016.  Plaintiff claimed that he obtained a policy from Defendant that included uninsured and underinsured motorist coverage and that Defendant refused to pay Plaintiff the fair value of his claim under that policy.  Plaintiff filed a lawsuit asserting multiple causes of action, including breach of contract, breach of the covenant of good faith and fair dealing, tortious reach of the implied covenant of good faith and fair dealing, common law bad faith, bad faith - R.I. Gen. Laws § 9-1-33 , and unfair trade practices - R.I. Gen. Laws § 6-13.1-5.2.

The court declined to dismiss the bad faith claims based upon Defendant’s argument that the claims were duplicative.  Further, the court noted that Rhode Island specifically recognizes an independent tort cause of action for bad faith refusal to pay an insurance claim.  To state a claim for bad faith, the plaintiff must show an absence of a reasonable basis for denying benefits of the policy and the defendant’s knowledge or reckless disregard of the lack of a reasonable basis for denying the claim.  Here, Plaintiff’s boilerplate allegations that Defendant refused to pay benefits without a reasonable basis in fact or law and that Plaintiff sustained damages in excess of the policy limits as a result was sufficient to state a claim.

However, Plaintiff’s unfair trade practices claim was dismissed.  Rhode Island’s Deceptive Trade Practices Act declares unlawful unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.

However, the statutory cause of action does not exist when Defendant’s challenged actions are subject to federal or state regulation.  The motor vehicle policy at issue was regulated by Rhode Island’s Department of Business Regulation.  Accordingly, the unfair trade practices claim failed as a matter of law.


John R. Ewell

[email protected]


03/26/19       Haines v. Taft

New Jersey Supreme Court

New Jersey Supreme Court Rules that Injured Motorists Cannot Sue for Medical Expenses That Exceed their Elected PIP Limits

Each plaintiff was injured in a car accident. Each was insured under a standard policy with insurance that provided for $15,000 in PIP coverage instead of the default amount of $250,000. Neither plaintiff was able to sustain a claim noneconomic loss) pain and suffering) due to each policy’s limitation-on-lawsuit option. Each plaintiff filed a personal injury claim suing the other driver for medical expenses in excess of their elected PIP coverage ($28,000 and $10,000, respectively).

Each defendant made pre-trial motions to preclude plaintiff from presenting evidence of medical expenses that exceeded their $15,000 PIP limits. Defendants relied on N.J.S.A. 39:6A-12 (“Section 12”), which addresses the inadmissibility of evidence of losses collectible under personal injury protection, and Roig v. Kelsey, 135 N.J. 500 (1994). In Roig, the New Jersey Supreme Court held that the public policies underlying the no-fault system required that Section 12 be construed to prohibit injured parties from recovering medical deductibles and copayments from a tortfeasor.

In opposition to the motion, plaintiff Joshua Haines maintained that medical bills exceeding PIP coverage constitute “economic loss” as that term presently is defined in N.J.S.A. 39:6A-2(k) and that evidence of such medical bills should thus be admissible. Similarly, plaintiff Tuwona Little distinguished the present case from Roig, stating that, in amending the definition of economic loss to include “medical expenses” after Roig, the Legislature “clearly evinced its intention to allow recovery [in tort] for medical expenses.”

The trial courts ruled against plaintiffs in each matter and prohibited plaintiffs from admitting evidence of their medical expenses that exceeded their $15,000 PIP limits. The Appellate Division consolidated the cases on appeal, and, in a published opinion, reversed both trial court orders. The Supreme Court granted certification.

The Court began its analysis by reviewing Section 12. Section 12 addresses evidence that is admissible or not in a claim for bodily injury. Despite the provision’s narrow focus on evidentiary matters in trials for noneconomic losses, plaintiffs construed the third paragraph’s language – “Nothing in this section shall be construed to limit the right of recovery, against the tortfeasor, of uncompensated economic loss sustained by the injured party” – in concert with the present definition of “economic loss” in N.J.S.A. 39:6A-2(k), to give rise to a stand-alone right to pursue a third-party liability claim against a tortfeasor exclusively for uncompensated economic loss of medical benefits not covered due to having a lesser amount of PIP coverage.

After reviewing the pertinent statutory provisions, the Court stated:

Section 12 does not unmistakably compel plaintiffs’ interpretation. Indeed, one can envision an equally plausible construction that such uncompensated economic losses may be recovered from the tortfeasor within the context of a viable suit for bodily injury.

Given the difference in interpretations between Plaintiffs and Defendants, the Court reviewed the historical development of New Jersey’s No-Fault law looking for legislative intent.

The Court discussed at length the history of no-fault insurance, and emphasized that the New Jersey no-fault system is one of changing priorities, shifting from full coverage to cost containment.

In 1998, the Legislative enacted Automobile Insurance Cost Reduction Act (“AICRA”). AICRA is the most significant and most recent amendment to the no-fault law.

In AICRA’s opening section, the Legislature declared that its goals were “to preserve the no-fault system, while at the same time reducing unnecessary costs which drive premiums higher.” AICRA changed the arbitration process used for benefit disputes, established bases for determining whether treatments and diagnostic tests are medically necessary, revised the threshold for suits for noneconomic loss, and created insurance options with decreased coverage in exchange for lower premiums. AICRA’s regulatory scheme ensured that benefits were paid according to their medical necessity, keeping premiums at a manageable level, while preventing such claims from inundating the court system.

The Court found that some provisions of AICRA indicate that the Legislature was concerned that people might be subject to the lower PIP coverage limits without making the conscious decision to do so. The Court found that this concern would seem “overblown” “if a private cause of action remained to recover any medical costs above the selected PIP ceiling.”

The Court determined that AICRA’s legislative history demonstrates that there was a legislative awareness of the possibility of creating a gap in medical coverage should PIP coverage be lowered, which presumes the absence of other forms of reimbursement, such as suits in tort, to fill that gap.

Based upon the legislative intent in enacting AICRA and numerous other cost containment amendments to New Jersey’s no-fault law, the Supreme Court held that:

… [I]nterpreting Section 12 to allow the admission of evidence of medical expenses falling between the insured’s PIP policy limit and the [presumptive PIP amount of $250,000] … transgresses the overall legislative design of the No-Fault Law to “reduce court congestion, . . . lower the cost of automobile insurance,” and most importantly, avoid fault-based suits in a no-fault system.

Based on the strong evidence of a legislative effort to avoid fault-based suits in the realm of medical expenses in the No-Fault Law, we cannot conclude that the Legislature clearly intended Section 12 to allow fault-based suits consisting solely of economic damages claims for medical expenses in excess of an elected lesser amount of available PIP coverage. …

[T]o do so would be to “lose sight of the overwhelming goals of reducing court congestion and lowering the cost of automobile insurance.”

The Court further found that efforts to subject medical costs to careful review and control through AICRA’s extensive regulatory programs would be undercut by the ability of a third party to sue for medical expenses above their PIP policy coverage limit but below the presumptive amount of $250,000. The Court reasoned that such suits would commandeer the judicial resources that the arbitration system was enacted to preserve.

The Court rejected Plaintiffs’ argument entirely:

The result of plaintiffs’ reading of AICRA could allow the unintended – and, one could assert, absurd – consequence whereby someone who chooses a lower PIP coverage option could receive a higher overall reimbursement. …We cannot envision that the Legislature countenanced such results. …

Under the No-Fault Law, the ability to sue is the exception, not the rule. The Legislature has determined that the benefits of creating limited but automatic medical reimbursement for injured motor-vehicle-accident victims outweigh the ability of a minority of injured parties to recover larger amounts in tort.

Accordingly, the Court concluded that the Appellate Division judgment must be reversed, and ordered that the cases be remanded to the trial order for entry of dismissal.

The Supreme Court closed its decision by stating that if the Legislature disagrees with the Court’s analysis and ruling, it is free to amend the law.


03/29/19       Maritime Park, LLC v. Nova Cas. Co.

New Jersey Superior Court, Appellate Division

Anti-Concurrent Causation Clause Bars Restaurant’s Claim for Hurricane Sandy Loss

Maritime Parc (“Maritime”) is a self -described “high-end” restaurant on Audrey Zapp Drive within Liberty State Park in New Jersey. The restaurant is located on the Hudson River waterfront. On October 28, 2012, the Commissioner of the New Jersey Department of Environmental Protection (“DEP”) issued an order closing the Park in anticipation of Superstorm Sandy. Superstorm Sandy made landfall in New Jersey the following day. A park ranger testified that all buildings within the Park were closed pursuant to the DEP’s order and police blocked access to the Park. The Park remained closed to the public until November 16, 2012.

According to the park ranger, the Park’s roads were closed due to flooding and debris. Floodwaters and force winds carried and deposited debris all over the Park but especially on the roads of the Park. Debris included boats and yachts, trees, garbage, and building materials. The park ranger specifically recalled seeing “boats across the street from the Marina, on Audrey Zapp Drive” and “a really large piece of a barge”. He recalled Audrey Zapp Drive “being under water for days, maybe even a week or two.

On November 19, 2012, power was restored to Maritime. After the Park reopenedit was only open until “dusk.” Maritime maintained that “having to close its property at dusk … [,] approximately 5:00 p.m. – 6:00 p.m., does not make for a profitable dinnertime at a restaurant on the Hudson River.”

Maritime was insured by defendant Nova Casualty Company (“Nova”). The Nova policy included, among other things, business income coverage where the loss is caused by a civil authority that prohibits access to the premises (“Civil Authority provision”).

Under the Civil Authority provision, the prohibition on access to the property experienced by the insured must be the result of damage caused by a “covered cause of loss." The introductory words of the provision notably state, “When a covered cause of loss causes damage . . . .”

The policy defines a Covered Cause of Loss as “risks of direct physical loss unless the loss is excluded in Section B., Exclusions; or 2. Limited in Section C., Limitations.”

Section B of the Policy delineates the types of claims that are excluded from the Policy:

B. Exclusions.

1. We will not pay for loss of damage caused directly or indirectly of the following. Such loss or damage is excluded regardless of any other cause of event that contributes concurrently or in any sequence to the loss.

One of the exclusion is for “Water”, which provides in pertinent part:

B. Water

(1) Flood, surface water, waves (including tidal wave and tsunami), tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind (including storm surge);

(3) Water that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment;


(5) Waterborne material carried or otherwise moved by any of the water referred to in Paragraph 1., 3. or 4. …




After the storm, Maritime filed a property insurance claim with Nova. The claim was categorized under the policy category of “wind and hail” and was described as “Hurricane Sandy – Wind/water damage”. Nova paid Maritime’s claim for food spoilage, damage to the property, and lost business income and extra expense under the “utility services” portion of the policy. Nova denied coverage under the Civil Authority provision, finding it inapplicable.

Following a dispute over the amount of damages and scope of coverage, Maritime requested an appraisal of its business income claim. The parties disagreed over the appropriate scope of an appraisal. Maritime then sued Nova seeking declaratory judgment that Nova was required to proceed to an appraisal on Maritime’s claim for Civil Authority coverage.

Nova and Maritime each moved for summary judgment. The trial court denied Maritime’s motion and granted Nova’ motion, ruling that Maritime was not entitled to coverage under the Civil Authority provision.

On appeal, Maritime argues the trial court erred in rejecting its claim for coverage under the policy’s Civil Authority provision.

The Appellate Division reviewed the Civil Authority Provision. The Policy provides Civil Authority coverage when: (1) a “covered cause of loss” causes damage; (2) the damage is to property at a location other than the insured location, but located within a mile of it; and (3) the action of a civil authority prohibits access to the described premises. Maritime argued that the act of “civil authority” was the DEP’s order closing the Park.

The Court expressly noted that Maritime cannot be paid under the Civil Authority provision unless the circumstances involve a “covered claim of loss.”

The Policy's definition of “covered claim of loss” contains various exclusions in Section B that operate to nullify coverage. In particular, the Policy makes clear that Nova “will not pay for loss or damage caused directly or indirectly” by any of Section B’s listed exclusions, including water infiltration, sewage back-up or overflow and waterborne material that has been carried or moved.

Importantly, the Policy states “[s]uch loss or damage is excluded regardless of any causes or events that constitutes concurrently or in any sequence to the loss.” This language is commonly known as an “anti –concurrent causation clause.” The clause bars coverage when two identifiable causes – one covered and one not covered – contributes to a single loss.

The record clearly showed that one of the reasons the Park was kept closed for several weeks – if not the sole reason – was the flood waters that overflowed portions of the Park. This was confirmed by the park ranger.

The Court held that the policy was clear and unambiguous, and that due to the anti-concurrent cause provision, there was no coverage under the Civil Authority provision because the restrictions on Park access were produced, at least in part, by flooding. The Appellate Division, therefore, affirmed the grant of summary judgment to the insurer.

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



Lee S. Siegel

[email protected]


04/02/19       Gould v. City of Stamford

Connecticut Supreme Court
Sole Member of an LLC is an Employee for Workers’ Compensation Insurance
Mr. Gould was injured while working as a part-time employee for the City of Stamford. Concurrently, he was the sole member of a single-member limited liability company. Under Connecticut law, if an injured employee works multiple jobs but the average weekly wage received from the employer where the injury occurred is insufficient to obtain the maximum weekly compensation rate, the employee can aggregate wages and make a claim against the state’s Second Injury Fund. Mr. Gould worked part time for the City as a park police officer, but also ran his own video production business, grossing almost $100,000 in the year before he was injured. In this context, the Court needed to determine if Mr. Gould qualified as an employee of his LLC, for workers’ compensation insurance.

The Court analyzed whether the sole member of an LLC who controls the company and also performs services for the company can be the company's employee. If the right to control test applied in this situation, the Court reasoned, then the member of a single-member LLC could never be the company's employee. Rejecting the control test, the Court adopted the reasoning from a 1973 Missouri Court of Appeals decision, Lynn v. Lloyd A. Lynn, Inc., 493 S.W.2d 363 (Mo. App. 1973). Instead the Court posed the test as whether the individual “was subject to the hazards of the company's business.” Because there was no dispute that Mr. Gould was subject to the hazards of the LLC, the Court found that, as a matter of law, he was an employee of the LLC for Workers’ Compensation purposes.


01/28/19       Jay v. New London County Mut. Ins. Co.

Superior Court, Hartford
Adding Person as Additional Insured is Not Bad Faith

The trial court granted the insurer’s motion to strike the plaintiff’s bad faith cause of action. Here, Mr. Jay was a property owner covered as an additional insured under a policy of insurance procured by Heritage Kitchen and Bath Center, Inc. Although the opinion does not explain how, presumably, Mr. Jay as the owner rented the building to Heritage and, as is typically required by such leases, was an additional insured by contract to Heritage’s commercial liability policy. Again, the court leaves out some necessary detail, but it appears that the building sustained loss not covered by the owner’s policy for which Mr. Jay was trying to hold Heritage responsible. In this suit, Mr. Jay alleged that the insurer made a “secret decision” to add him to Heritage’s policy in order to deny coverage. The insurer relied on a provision that excluded coverage for loss occurring on property owned by an insured.

The court, construing the allegations in favor of the plaintiff, still found the bad faith count failed to state a cause of action. “Adding an additional insured to a policy only increases the responsibility of an insurance company and makes it more likely that a claim will have to be paid…” The court, therefore, refused to infer that an act which is generally favorable to an insured was actually intended to harm the insured.

Editor’s Note: Presumably, Mr. Jay will amend his complaint and a new round of bad faith motion practice will ensue. We will closely monitor the docket and bring you any developments.


Marti's Legislative and Regulatory Markers

Jerry Marti

[email protected]


10/28/96       Safeguard Ins. Co. v. Angel Guardian Home

United States District Court, Eastern District of New York         

Insured’s Delay in Providing Notice Could Be Excused

Plaintiffs Safeguard Insurance Company, American and Foreign Insurance Company, and Royal Insurance Company (“Royal”) commenced this action to disclaim coverage of their insured, the Angel Guardian Home (“AGH”).  The parties cross-moved for summary judgment.  Among other things, Royal argued that the defendant was not entitled to coverage because of its failure to provide timely notice of the claim.  After the parties agreed to submit the case to the Court for a bench trial based upon a stipulated evidentiary record and the briefs submitted in support of the cross-motions for summary judgment, the Court decided that Royal was obligated to defend and indemnify AGH for the claimed losses in the underlying Thomas action.

In particular, the Thomas action involved Yvonne Thomas’s children who had been abused under the care of their foster parent, Carole Webb. AGH had placed the children with Ms. Webb.  Thereafter, the Thomas complaint alleged that AGH had improperly investigated the Webb home, acting with deliberate indifference to the safety of the children, failing to supervise the children in the home, failing to train its employees properly, acquiescing in the use of force against the children, breaching its contract with the City as a foster home provider, and failing to release the children from foster care when appropriate.

The Court noted that the test for determining whether the notice provision has been triggered is whether the circumstances known to the insured at that time would have suggested to a reasonable person the possibility of a claim. The insured may proffer a reasonable excuse or explanation for a delay in notification, such as lack of knowledge or a good faith belief that a claim is not likely. In such a case, the reasonableness of any delay and the sufficiency of the excuse offered is a matter for trial.

Even so, an insured asserting this defense has a duty to make some inquiry when circumstances raise the possibility of liability. When the inquiry leads to a reasonable conclusion that no liability will result or that no claim would be made, the insured may be excused from giving notice.

Here, Ellen Shep, a supervisor at AGH received a telephone call from Ms. Thomas regarding allegations of sexual abuse on October 10, 1990.  After AGH received the Thomas complaint in April, 1992, AGH promptly forwarded the complaint to Royal.

In looking at the evidence, the Court considered the log notes of the insured, which did not indicate that a lawsuit or any theories of liability would be alleged against the insured.  Specifically, the log notes recounting Thomas’s anger over the adoption were focused on the adoption itself and removing Thomas’s parental rights.  The Court found that AGH’s reasonable belief of non-liability was further supported by their immediate steps to remedy the situation.

In addition, the Court rejected Royal’s argument that the allegations of abuse were serious enough to be considered a critical incident requiring notice under the AGH policy. Likewise, the Court found it unpersuasive that AGH’s attorney had advised contacting its insurance carrier. This fact was also not persuasive since it did not address AGH’s reasonable belief that the adoption would constitute the core of any potential liability.  Only after the lawsuit was filed against AGH did AGH know that a claim would in fact be made against it.                                                

Accordingly, the Court held that the insured had a reasonable belief that it would not be sued or held liable for events relating to the abuse of children placed in a foster home by the insured, and thus, insured’s delay in providing notice to insurer could be excused.

Editor’s Note:  While this is a 1996 case, we are taking a close notice on late notice issues in sexual abuse claims.


Brian F. Mark

[email protected]


04/02/19       Valls. v. Allstate Ins. Co.

United States Court of Appeals, Second Circuit
US Court of Appeals Finds No Coverage Obligation Under “Collapse” Provision of Homeowners Policy for Damages Related to Cracking of Basement Walls Where Walls Were Still Standing and Had Not Collapsed Suddenly, Accidentally, and Entirely as Required Under the Policy

This case involved an appeal that arose from a multitude of lawsuits filed by Connecticut homeowners whose basement walls were likely constructed with defective concrete manufactured by the now‐defunct J.J. Mottes Company.  These cases have been collectively referred to as the “crumbling concrete cases.”  The Plaintiffs‐Appellants, William A. Valls and Christine C. Valls (the “Vallses”), filed an appeal from a September 28, 2017 judgment of the United States District Court for the District of Connecticut granting the motion of Defendant‐Appellee, Allstate Insurance Company (“Allstate”), which sought to dismiss the Vallses’ amended complaint.  This case concerned a single question: Whether the “collapse” provision in the subject Allstate homeowner’s insurance policy afforded coverage for basement walls that exhibited significant cracking but remained standing.

The Vallses owned a home in Connecticut that was insured by Allstate.  In October 2015, the Vallses noticed several horizontal and vertical cracks in their basement walls.  It is undisputed that that the basement walls remained standing.  At issue was whether the homeowners insurance policy issued by Allstate (the “Policy”) covered the damage the Vallses alleged.

The amended complaint asserted three causes of action against Allstate: (1) breach of contract based on Allstate’s denial of coverage under the Policy; (2) breach of the implied covenant of good faith and fair dealing; and (3) unfair and deceptive practices in violation of the Connecticut Unfair Insurance Practices Act (“CUIPA”), as enforced through the Connecticut Unfair Trade Practices Act (“CUTPA”).

The Policy is an “all‐risk” policy that covers “sudden and accidental direct physical loss to property . . . except as limited or excluded in this policy.”  The Policy generally excludes “[c]ollapse” from its all‐risk coverage.  In a section entitled “Additional Protection,” however, the Policy reinstates coverage for a limited class of collapses:

We will cover:

a) the entire collapse of a covered building


b) the entire collapse of part of a covered

building structure; and

c) direct physical loss to covered property

caused by (a) or (b) above.

For coverage to apply, the collapse of a building

structure specified in (a) or (b) above must be a

sudden and accidental direct physical loss

caused by one or more of the following: . . .

b) hidden decay of the building structure; . . .

f) defective methods or materials used in

construction, repair, remodeling or renovation.

Collapse does not include settling, cracking,

shrinking, bulging or expansion.

The sole issue on appeal was whether the gradual deterioration of the Vallses’ still‐standing basement walls constituted a covered “collapse” under this provision of the Policy.

The Court applied Connecticut law pertaining to contract interpretation and reiterated that Connecticut courts interpret an insurance policy “by the same general rules that govern the construction of any written contract”—that is, by “look[ing] at the contract as a whole, consider[ing] all relevant portions together and, if possible, giv[ing] operative effect to every provision in order to reach a reasonable overall result.”  If the policy’s terms are “clear and unambiguous,” then that language “must be accorded its natural and ordinary meaning.”  Any ambiguities in the policy are “construed in favor of the insured because the insurance company drafted the policy.”

In support of their claim for coverage, the Vallses relied on a Connecticut case that had held that the term “collapse,” left undefined, encompasses “substantial impairment of the structural integrity of a building.”  The Court found the case law relied on to be easily distinguishable and noted that unlike the Allstate Policy, the policy in the case relied on did not define or otherwise qualify the term “collapse.”  The Court pointed out that it was the absence of such clarifying language that rendered the term “collapse” ambiguous in the policy at issue in the relied on case.  In this case, by contrast, Allstate has expressly circumscribed the definition of “collapse” in its Policy with several qualifying terms, i.e., Allstate’s Policy requires that such collapses be “entire,” “sudden,” and “accidental.

The Court next turned to the limiting effect of the terms “sudden and accidental” and “entire collapse” within the Policy.  The phrase “sudden and accidental” in the Policy requires that the collapse in question occur both abruptly and unexpectedly.  The Court cited case law from the Connecticut Supreme Court that held:

Reading “sudden” in its context, i.e. joined

by the word “and” to the word “accident,”

the inescapable conclusion is that “sudden,”

even if including the concept of

unexpectedness, also adds an additional

element because unexpectedness is already

expressed by “accidental.” This additional

element is the temporal meaning of

“sudden,” i.e. abruptness or brevity.

The Court determined that the gradual erosion and cracking of the basement walls was not sudden.  Thus, the inclusion of the words “sudden and accidental” in the collapse provision was sufficient to bar coverage under the Policy for the damage sustained to the Vallses’ basement walls.

Because any alleged collapse at issue in this case was not “sudden,” it follows that the damage to the Vallses’ walls was not covered by the Policy.  But even if such cracking could be said to have occurred suddenly or accidentally, the Vallses’ claim is still barred because the damage sustained to their basement walls cannot be deemed an “entire collapse.”  The Court held that whatever the term “entire collapse” encompasses, it must entail more than mere “cracking,” since cracking is expressly excluded under the Policy’s provision that “[c]ollapse does not include settling, cracking, shrinking, bulging or expansion.”

In support of their argument, the Vallses claimed that it was inconsistent to interpret the term “sudden” as imposing an abruptness requirement when several of the Policy’s enumerated causes of collapse—including “hidden decay”— occur gradually.  The Court found this argument to be unavailing, since physical collapse can occur abruptly even if the underlying cause proceeds slowly.

While the concrete in the Vallses’ basement walls may be gradually deteriorating, there has been no sudden entire collapse, and there is no coverage for gradual decay unless it has caused such a collapse.  Accordingly, the Court held that the Vallses’ claim was properly excluded under the Policy.  The Court concluded that the horizontal and vertical cracking in the Vallses’ basement walls did not constitute a covered “collapse” under the Policy.  Therefore, Allstate did not breach its contract by denying coverage for the Vallses’ claim.  Furthermore, because Allstate did not breach its contract, the Vallses’ bad faith and CUTPA/CUIPA claims necessarily fail.



Larry E. Waters
[email protected]


03/26/19       Liberty Mutual Insurance Company v. Project Tri-Force, LLC

United States District Court, Southern District of New York

Plaintiff’s Motion for Default Judgment Granted in Full as Plaintiff sufficiently pled the Existence of a Contract Between itself and the Defendant; Performance of the Plaintiff’s Obligations under the Contract; Breach of the Contract by that Defendant; and Damages to the Plaintiff by the Defendant’s Breach
The current decision arises out on insurance contract between Plaintiff Liberty Mutual Insurance (“Plaintiff”) and Defendant Project Tri-Force (“Defendant”). Plaintiff issued a marine insurance policy (the “Policy”) which provided in part that Plaintiff would be subrogated to the rights of Defendant in the event of a payment for any loss, damage, or expenses. The Policy also included an Impairment of Recovery provision, which provided Defendant “[s]hall not waive, transfer, or take any action tending to defeat or decrease any claim against the carrier or other person or persons, whether before or after the insurance is effected under this policy.”

After the Policy was issued, Defendant submitted claims under the Policy for damages to a shipment from China, which had been delivered on or around January 23, 2017. During its investigation, Plaintiff determined that the damage was caused by wet and/or improper packaging by the entity who had packaged the shipment. Thereafter, Plaintiff paid Defendant for its claim arising from the damage and Defendant signed subrogation receipts that assigned and transferred all claims airing from the shipments, and warranted that no settlement regarding the claims had been made and no release had been given.

However, when Plaintiff sought to pursue its subrogation against the entity who had packaged the shipment, Plaintiff was informed that Defendant had entered into a settlement agreement on April 14, 2017. Defendant’s CFO signed the settlement agreement/release dated April 14, 2017.

On January 17, 2018, Plaintiff commenced this action seeking damages for breach of the Policy and the subrogation receipts. Plaintiff filed Proof of Service by a Special Process Server on March 27, 2018.  The filed Proof of Service reflected that Defendant was personally served on March 9, 2018.

After failing to interpose an Answer by March 30, 2018, Plaintiff counsel emailed a copy of the Summons and Complaint to the principal of Defendant on May 10, 2018. Thereafter, the Clerk entered a certificate of Default on August 1, 2018 at Plaintiff’s request. Plaintiff moved for default judgment on August 31, 2018.

The Court began its analysis discussing the jurisdiction and choice law.  The Court noted that “whether a contract gives rise to admiralty jurisdiction “depends upon . . . the nature and character of the contract” and whether it has reference to maritime service or maritime transactions.” Further, the Court acknowledged that it has admiralty jurisdiction over cases involving marine insurance contract.  As such, the Court concluded substantive federal law applied, since there was nothing inherently local about the insurance contract in this matter, “which may well have been made anywhere in the world.”

Applying Federal substantive law, the Court acknowledged in order to prevail on its breach of contract claim on default judgment, Plaintiff had to sufficiently allege: (1) the existence of a contract between itself and that defendant; (2) performance of the plaintiff’s obligations under the contract; (3) breach of the contract by that defendant; and (4) damages to the Plaintiff by the defendant’s breach.

Here, the Court found Plaintiff sufficiently alleged all four factors.  Specifically, the Court found Plaintiff’s allegations clearly established that Plaintiff was harmed by defendant’s breaches as “Plaintiff paid out the claim for the damaged shipment on the understanding that it could then pursue its subrogation rights against the entity who packaged the shipment” and Defendant’s action rendered Plaintiff unable to pursue said rights. Further, the Court found Plaintiff established damages caused by Defendant’s breach as the Policy provided that Plaintiff was entitled to deduct from its payment to Defendant “a sum equal to the estimated recovery lost by reason of [Defendant’s] action or inaction.”

In sum, the Court granted Plaintiff’s default judgment in full.

Please let me know if you would like a copy of this case.         


03/26/19       Federal Insurance Company et al. v. Weinstein, 

United States District Court, Southern District of New York

Defendant’s Motion to Stay Granted in Part as to Plaintiff’s Duty to indemnify and Denied in Part as to Plaintiff’s Duty to Defend

Plaintiffs Federal Insurance Company (“Federal”), Chubb Indemnity Insurance Company (“Chubb”), Pacific Indemnity Company (“Pacific”) and Great Northern Insurance (“Northern”) (collectively “Chubb”) issued a number of insurance policies to Defendant Harvey Weinstein, his company The Weinstein Company (“TWC”), and/or members of his family providing multiple coverages including homeowner’s property, fine arts, auto and personal liability with varying limits and terms.  The policies included both primary and excess level policies for annual policy periods from 1994 to 2018.

The current action stems from Chubb seeking a court order declaring that it has no obligation under any of the policies to defend or indemnify Weinstein in any of the Underlying Actions. Weinstein counterclaimed alleging breach of contract and breach of the covenant of good faith and fair dealing based upon Chubb’s refusal to insure his defense in the Underlying Actions.

The Court granted Chubb’s leave to make its motion for partial summary judgment without discovery; but advised Weinstein to place his objection in his opposition to Chubb’s motion and the Court would consider it at that time.  Thereafter, Weinstein moved to stay Chubb’s action pending the resolution of the Underlying Actions and Chubb moves for partial summary judgment declaring that Chubb has no contractual duty under any of the Chubb Policies to defend Weinstein in the Underlying Actions.

In its analysis, the Court noted that “the power to stay proceeding is discretionary one, incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel and for litigations.” The Court noted also, the “party seeking the stay bears the burden of proving its need, and absent a showing of undue prejudice upon defendant or interference with his constitutional rights, there is no reason why plaintiff should be delayed in its efforts to diligently proceed to sustain its claim.”  Further, the Court acknowledged that where the parallel proceeding is a criminal one, concerns about potential prejudice and a defendant’s Fifth Amendment protection against self-incrimination warrant additional considerations.  Nevertheless, the additional considerations do not automatically stay civil proceedings simply because a defendant has been charged criminally.

Applying the relevant rule of law, the Court concluded that a stay was not warranted as to Chubb’s duty to defend claims.  The Court rejected Weinstein’s argument that the insurance coverage issues “overlap and are derivative of underlying liability issues.”  In support, the Court noted that under both New York and Connecticut law, an insurance provider’s duty to defend is determined solely by comparing the allegations on the face of the underlying complaint(s) to the terms of the policy. Further, the Court highlighted that any testimony of Weinstein about his guilt, innocence, or potential liability in the Underlying Lawsuits is immaterial to the Court’s assessment of whether the Chubb Policies contemplate coverage for the Underlying Actions. The Court reasoned any such determination will be assessed on the face of their pleadings.

Moreover, the Court noted that Weinstein would not be prejudiced by a ruling on Chubb’s duty to defend because Chubb has already refused to defend him in any of the Underlying Actions. Therefore, the Court reasoned a ruling “can only lead to preservation of the status quo or a favorable ruling for Weinstein. As such, the Court ruled that a stay was not warranted as to Chubb’s duty to defend.

Next, the Court considered whether a stay is warranted as to Chubb’s duty to indemnify.  The Court noted that under both New York and Connecticut law, “the duty to indemnify cannot be triggered by the mere possibility of coverage; rather, it is triggered by an independent factual finding that the insured’s liability is within the coverage provided by the policy.”   The Court noted when considering actions for declaratory judgment courts have generally declined to rule on the issue of indemnity until resolution of the underlying claim.  As such, the Court decided to exercise its discretion and ordered Chubb’s duty to indemnify claims stayed until the resolution of the Underlying Actions.

Thereafter, the Court considered Chubb’s motion for partial summary judgment seeking a declaration that Chubb has no duty to defend Weinstein for any of the Underlying Actions. The Court began its analysis by determining which state law governed. Chubb argued New York law should apply to all Chubb Policies. In contrast,  Weinstein argued that Connecticut law should apply.

In its analysis, the Court found applying choice of law rules to the Chubb Policies were further complicated by the dispute over where Weinstein was domiciled at the time the Chubb Policies were issued.  Weinstein argued that his domicile was determined to be Connecticut for purposes of diversity jurisdiction. Chubb did not dispute Weinstein currently resides in Connecticut. Rather, Chubb argued that Weinstein’s domicile for purposes of diversity jurisdiction was irrelevant because domicile for an insurance contract is determined at the time the policy was issued.  Chubb argued further that Weinstein has represented in his last five court cases (dating back to 2006) he has resided in New York. 

In light of the arguments presented and the evidence available, the Court determined that Weinstein’s domicile was likely to control choice of law for at least some of the Chubb Policies.  However, based upon the record available, the Court could not conclude Weinstein’s domicile at the time the Chubb Policies were issued. As such, the Court concluded that discovery was required to determine the limited choice-of-law question this case presented.

In sum, the Court denied Weinstein’s motion to stay in part as to Chubb’s duty to defend the claims and granted in part as to Chubb’s duty to indemnify claims. In addition, the Court ordered the parties to confer and agree upon a schedule for a brief period of discovery and supplemental briefing limited to the question of choice of law for teach of the Chubb Policies. 



Eric T. Boron

[email protected]


03/26/19       U.S. Specialty Insurance Company v. Estate of Ward

Supreme Court of Montana

Aircraft Insurance Policy – Montana Supreme Court Rejects Stacking of Liability Coverages

This matter reached the Supreme Court of Montana as a result of the United States District Court for the District of Montana certifying a question asking the Montana Supreme Court to address the Estate of Darrell L. Ward’s third-party claim to stacked liability limits in an aircraft insurance policy that covered multiple aircraft.   The Supreme Court of Montana accepted the certified question, reformulating it pursuant to Montana statutory law as follows:

Is the Estate of Darrell L. Ward entitled to stack the limits of liability coverage for three separate aircraft under the terms of an insurance policy issued to the pilot of an aircraft in which Ward was a passenger at the time it crashed?

The Supreme Court of Montana concluded that the answer to the reformulated question is no.

The background facts are as follows.  Mark Melotz was piloting his aircraft, FAA Number N9936T, with Darrell Ward as a passenger. The plane crashed.  Both Melotz and Ward were killed.  Melotz had insured N9936T and two other aircraft under one insurance policy issued by U.S. Specialty Insurance Company (“USSIC”). Melotz paid a separate premium for each aircraft.

The aircraft insurance policy’s applicable coverage provision provides as follows:

1. What We Cover


We will pay damages you, and anyone we protect, are legally required to pay for bodily injury or property damage caused by an occurrence during the policy period.


e. Coverage DL covers bodily injury to passengers and others and property damage in a combined limit of liability for each occurrence which includes a lower limit for each passenger.

The most we will pay for bodily injury to each passenger is shown in item 6DL opposite “each person”. The most we will pay for all bodily injury and property damage is shown in item 6DL opposite “each occurrence”.


The policy describes each aircraft, with a stated $100,000 limit for “each person,” and a stated $1,000,000 limit for “each occurrence”.  The policy defines an “occurrence” as “a sudden event ... involving the aircraft during the policy period, neither expected nor intended by you, that causes bodily injury.”

Following Ward’s death, USSIC paid Ward’s Estate $100,000—the per-passenger limit for bodily injury claims involving N9936T. Ward’s Estate argued that it was entitled to stack the coverage of each aircraft’s per-passenger limit, for a total of $300,000.

The Montana Supreme Court found no ambiguity in the pertinent policy provisions. The Court recognized an “occurrence” in the context of this policy is a “sudden event ... involving the aircraft ... that causes bodily injury.” While the policy did not define the word “involving,” the Court determined that a common-sense reading of that term made plain that it refers to the aircraft that is a part of the sudden event that caused bodily injury.

The Estate’s argument that public policy requires the stacking of the liability coverages applicable to each plane was rejected by the Court, which noted that Montana does not statutorily regulate aviation insurance in any manner. Montana statutory law regulating motor vehicle liability insurance was not applicable to this aircraft liability insurance coverage issue, in the Court’s view.

The Court then analyzed the “reasonable expectations doctrine”.  The Court noted that doctrine’s requirement that the Court apply a liberal construction of the insurance contract in favor of coverage when the policy language is such that an ordinary, objectively reasonable person would fail to understand that the policy technically does not provide the coverage at issue or where circumstances attributable to the insurer would cause an ordinary, objectively reasonable person to believe that the coverage exists.  The Court also noted that in applying the doctrine the terms of the insurance policy must be construed in their plain, ordinary, and popular sense.  Here, the Court found:

The plain language of the USSIC policy and the Estate’s status do not entitle it to a reasonable expectation of stacked liability coverage. The policy defines passenger as “any person who is in the aircraft or getting in or out of it.” Coverage is limited to the aircraft involved in the crash. As a passenger in N9936T, Ward was an insured under that policy only. Ward did not have a connection to the other two aircraft because he was not a passenger in either of those aircraft and he was not an insured. The policy states that “the most” USSIC will pay per passenger is $100,000 for each occurrence.

Citing prior decisions of Montana courts, the Court continued:

[t]he plain language of the policy makes clear that the aircraft not involved in an accident are not part of the occurrence and coverage for those aircraft is not available for that accident. Ward was not an insured and did not have a reasonable expectation of benefits for additional aircraft owned by Melotz that were not “involved” in the crash.

Finally, the Estate of Melotz does not have a reasonable expectation under the plain language of the policy that Ward is entitled to stack the coverages…although Melotz paid premiums for three separate polices, Ward was not an “insured” under Melotz’s policies for the uninvolved aircraft. And Melotz did not seek benefits under the policy’s “liability to others” coverage. Melotz did not have a reasonable expectation that a third party would be entitled to stack coverages for which that party was not an insured. Melotz paid for coverage that would pay liability damages for bodily injury caused by an occurrence with a separate coverage limit for each aircraft. Any expectation that a passenger would recover more than the $100,000 limit for the aircraft involved in a crash is not objectively reasonable under a common-sense reading of the policy.

The takeaway a folk is that although aircraft liability insurance may be something most of us rarely if ever deal with in our day-to-day work, the analysis of the Court here mirrors how courts most often consider and determine more regularly encountered liability insurance coverage issues.  What does the policy at issue say is always the starting point for such analysis.

So, please feel free to call us with your coverage questions.  We’re here to help you consider, understand and interpret the relevant policy language at issue in the claims you are handing.  Until then, be well, and think spring! 



Marina A. Barci

[email protected]


First, I just want to highlight several cases in the last two weeks have come out discussing EUOs and reiterating that as long as an EUO notice is served properly, it is not the insurance carrier’s responsibility to establish why they are requesting an EUO, as it is a right provided to them under the policy. An insured objecting to the EUO and requesting the justifications behind them does not give them a pass for failure to show up for the EUO. Insured’s have been using those excuses consistently to try and show that denials of claims for failure to appear for the EUO’s are not proper, and the courts are holding steadfast that the carrier’s persistence with the EUO through objection is proper. See Bronx Chiropractic Care, P.C. v. State Farm Ins., Hertz Vehicles, LLC v. Alluri, Actual Chiropractic, P.C. v. State Farm Ins..


04/03/19       Progressive Cas. Ins. Co. v. Excel Prods., Inc.

Appellate Division, Second Department

Vacatur of a Default Judgment Requires More Than an Affidavit as Proof

This is more of a procedural case under the banner of no fault, but a good refresher for everyone on default judgment rules. Here, Progressive brought this action for judgment declaring that they were not obligated to pay certain no-fault claims submitted by Excel on the grounds that Excel failed to comply with conditions precedent to coverage or verify its claims.

Progressive served Excel with the summons and complaint via the Secretary of State, which is proper under the Business Corporation Law § 306, and Excel failed to answer or appear. Progressive then moved for a default judgment, which was unopposed and granted on September 3, 2015. A week later on September 7, Progressive served Excel with a copy of the judgment and notice of entry.

In January 2017, Excel moved to vacate the default judgment under CPLR § 317 and § 5015(a)(1). CPLR § 317 allows a defaulting defendant who was not served personally to vacate the default by showing that they were served by means other than personal service and that they have a potentially meritorious defense. CPLR § 5015(a)(1) allows for vacatur when a defaulting defendant can demonstrate a reasonable excuse for the default and a potentially meritorious defense.

Here, Excel submitted an affidavit that denied receipt of the summons and complaint and stated that they had no notice of the action until January 2017. In response, Progressive submitted valid affidavits of service for the notice of entry and other documents that listed the same address Excel’s affidavit gave for the company, which was also the address listed with the Secretary of State. Note that service upon a corporation through the Secretary of State is not considered personal service.

The Court found that Excel’s affidavit under the circumstances had only a conclusory and unsubstantiated denial of receipt of the summons and complaint, which is insufficient to establish that Excel did not have actual notice of the action, and that the affidavit failed to raise a reasonable excuse for the default. Therefore, the Court did not even need to determine whether Excel demonstrated the existence of a potentially meritorious defense and vacatur of the default judgment was denied. Takeaway: be diligent with your mailing records.


03/27/19       Noel v. Nationwide Ins. Co. of Am.

Appellate Division, Second Department

Assignment of Benefits Precludes Injured Party From Collecting No-Fault Benefits

Noel was injured in 2014 when he was allegedly struck by a motor vehicle owned by Nellen. Nationwide was Nellen’s car insurance carrier at the time of the accident. Noel submitted an application for no-fault benefits for medical expenses to Nationwide and Nationwide denied the application for benefits on the ground that Noel’s injuries were not causally related to the alleged accident.

Thereafter, Noel commenced this action and Nationwide moved to dismiss the complaint on the grounds that Noel had assigned his eligibility to receive no-fault benefits to various medical providers, and thus had no standing to maintain the action. Nationwide submitted proof that Noel had assigned his right to benefits to 10 different medical providers. The lower court denied Nationwide’s motion on the grounds that it was premature due to outstanding discovery.

Nationwide appealed and this Court found that Nationwide had demonstrated their prima facie entitlement to judgment as a matter of law and that Noel failed raise a triable issue of fact, to establish that discovery might lead to relevant evidence, or that the facts essential to oppose the motion were within the exclusive knowledge and control of the carrier. Therefore, Nationwide should have been granted summary judgment dismissing the complaint. Takeaway: pay attention to those assignment of benefits forms.


03/27/19       Global Liberty Ins. Co. v. Haar Orthopaedics & Sports Med., P.C.

Appellate Division, Second Department

Carrier Prevails on Procedure to Get Default Judgment Over Provider

Global Liberty brought this action seeking a de novo adjudication that the denial of payment for a no-fault claim on the grounds that the services were not medically necessary, were not related to the subject motor vehicle accident, and/or were billed in excess of the fee schedule was proper and overturning the master arbitrators award of more than $5,000 to Haar Orthopaedics.

Haar Orthopaedics failed to appear, answer, or oppose the motion, so Global Liberty moved for leave to enter a default judgment under CPLR § 3215. The lower court denied Global Liberty’s motion on the basis that the master arbitration award confirming the original arbitration award was support by evidence in the record was rationally based, and was not arbitrary or capricious.

A motion for leave to enter a default judgment under CPLR § 3215 requires that the movant file proof of (1) service of the summons and complaint, (2) the facts of the claims consisting of sufficient evidence to enable the court to determine if the claim is viable, and (3) the other party’s default.

Here, Global Liberty submitted all the proof required under CPLR § 3215 and Haar Orthopaedics failed to oppose the motion. Therefore, the Second Department held that Global Liberty’s motion for default judgment should have been granted and an order must be entered declaring that they are not obligated to pay the claim for no-fault benefits. Takeaway: even if you have won every appeal before, you must diligently continue to show up because procedure can give your opponent the win over the merits.



Earl K. Cantwell
[email protected]


11/21/18       Citizens Property Insurance Corporation v. Vazquez

Florida District Court of Appeal

Insurance Company Wins Challenge to Insured’s Expert

The insured submitted a property damage claim as a result of an explosion inside a marijuana growing house located across the street which occurred on September 22, 2012. The insurance company’s experts certified that the explosion did not cause the damage and attributed it to depreciation. During litigation, the insured produced an expert (Dr. Konya) for deposition on the last business day before trial. His testimony indicated that the explosion “could have” caused the damage to the insured’s home, but he was unable to provide an opinion as to specific damage because he had not visited the home.

When trial began on August 17, 2015, Dr. Konya arrived in Florida and inspected the house that night. The insured never disclosed that Dr. Konya was inspecting the property, and it was revealed for the first time when he took the stand that he had inspected the property during the trial. Citizens moved to suppress Dr. Koya’s testimony but that motion was denied. At trial, Dr. Konya was (suddenly) able to testify with certainty that the explosion caused specific damages (now) based on his inspection of the home during the trial. Subsequently, the jury found in favor of the insured in the amount of $100,000, and Citizen appealed based upon Dr. Konya’s testimony. This appeal was granted, and the jury verdict was reversed and remanded for a new trial.

The trial court abused its discretion in admitting Dr. Konya’s trial testimony. Trial counsel had a reasonable expectation that discovery had ceased once trial began, and that experts will not change their opinions after discovery deadlines. The mid-trial inspection of the home violated the discovery orders of the trial court, and it is clear that this assessment changed the expert’s opinion from the explosion “could have caused” the damage to an opinion of certainty that the explosion “did cause” specific damage.

In insurance litigation, expert disclosures are often important on both sides. Significant care should be taken to drafting them completely, correctly, and in a timely fashion consistent with local practice rules and court case management orders. Furthermore, a change in an expert’s report or opinion the eve of trial, such as occurred in this case, is almost inherently viewed as prejudicial and grounds for a mistrial, striking the expert’s testimony, or other legal remedy. Not only did the expert change his opinion as more favorable for the insured, he did so on the basis of a home inspection well after the discovery schedule and indeed in the middle of trial.

Of course, if the insured’s expert only could testify that the explosion across the street “could have caused” the property damage, that opinion may not have even allowed the insured to present a prima facie claim, since that is not to a reasonable degree of expert certainty.


Hurwitz & Fine, P.C.

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