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Coverage Pointers - Volume XXI, No. 12

Volume XXI, No. 12 (No. 551)
Friday, November 29, 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.

It was a fairly quiet week in the courts, but we bring you all that there is to report.  For newbies to our publication, what you are reading is what we affectionately call the “cover note”.  Coverage Pointers, itself, is attached in pdf format.

 

Coverage Pointers Thanks:

Happy Thanksgiving to all of you.  I am thankful for your loyalty and friendship.

A special thanks to our crack editorial staff, for always producing columns for your enjoyment and edification, with special thanks to my executive editors, Agnes Wilewicz and John Ewell for their overall editorial assistance.  Special thanks to my Legal Assistant, Donna Boice, for transcribing our 100 years ago stories and helping shape each issue.  For many years, my wife Chris has provided final proofreading of my cover note and that too is appreciated. This is a family affair, with lots of moving parts, and our Coverage Team never fails to produce

This newsletter is published on Thursday evenings, generally, so that you can read the issue with your morning coffee on Friday.  This being Thanksgiving, and our home being the gathering ground of a number of hungry travelers, we’ll probably post this a little earlier in the day.  We hope you are enjoying a wonderful Thanksgiving holiday with family, friends or strangers, and that the beginning of the holiday season shines a bright light on the month ahead.

We prepare two turkeys for the holiday, one in the over and one in the smoker.  No tofu turkeys here, but plenty of sides for those who prefer a meatless holiday (although we have only carnivores in attendance this year).

 

Child Victims Act Column Coming Next Issue:

We have a robust CVA practice, both in providing coverage counsel for some and defending individuals and institutions for others.  The office has established a Child Victims Act and Sexual Misconduct Coverage Team and a separate Defense Team.  Beginning next issue, in order to help our readership understand the developing case law in this area, and follow the kinds of lawsuits being filed, we will shuffle our editorial staff assignments to provide you with a Child Victims Act column.

 

The National Foundation for Judicial Excellence and Giving Tuesday:

Image

Tuesday is Giving Tuesday and there are many wonderful causes who can benefit from your generosity.  For those who believe in a balanced and educated judiciary, I would hope you would consider a donation to the NFJE, the National Foundation for Judicial Excellence.  It supports an educated judiciary and sponsors an annual judicial symposium where we host some 150 state appellate judges from throughout the country.  This year, some 39 states were represented with about 17 presiding judge or justices in attendance.  I’m honored to serve as NFJE President this year.

You can go right to the NFJE website by clicking here and donate there (and learn more about the NFJE) or go to my Facebook page where I’m running a fundraiser. 

 

DRI Insurance Coverage and Practice Symposium

I hope to see many of you at the DRI ICPS in New York City later on this week.  Delighted to buy you a drink at the open bar receptions, or elsewhere!

 

Exciting News a ‘Coming:

We continue to enhance our legal team with great and talented lawyers.  Watch this space ….

 

Newsletters:

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know.

  • Premises Pointers:  This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!).  Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.
     

  • Labor Law Pointers:  Hurwitz & Fine, P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected]  to subscribe.
     

  • Products Liability Pointers (coming soon): Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving.  Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up-to-date with the latest developments and trends, and providing useful practice tips and litigation strategies.  This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies.  Contact Brian F. Mark at [email protected] to subscribe.

     

    Missouri/Illinois Coverage Newsletter:

    I have been receiving, and recommend for your consideration, a fine newsletter on Missouri and Illinois coverage, edited by Michel L. Young, Esq., from the great Edwardsville law firm of HeplerBroom LLC.  If interested in subscribing, contact Michael at [email protected].



Jen’s Gems:

Greetings.

Hope everyone has a safe and enjoyable Thanksgiving.  I am glad we can provide you a new issue of Coverage Pointers to enjoy with your turkey.  This year we are having a scaled down Thanksgiving.  My husband recently had shoulder surgery to repair a torn rotator cuff, and since he traditionally takes the lead on Thanksgiving, instead of me taking it on, we have made the decision to go small and order much of the meal from Wegmans.  Probably a good decision since the idea of prepping a turkey is a bit intimidating to me. 

In terms of my column this week, I report on an unusual case from New York County Supreme Court.  Again, for those that only occasionally review my column, I report on trial court decisions in New York.  The one for review this week involved a question of whether the named insured was a resident of the premises.  But, that is not the really interesting part of this decision. What happened in the case is that the named insured’s prior insurance carrier decided not to renew.  And, instead of permitting the property to be uninsured, apparently, the mortgage company directed the insurance broker to obtain a new policy.

After a passerby fell in the driveway (allegedly due to a defective condition), the insured tendered the claim to her new carrier who denied coverage.  The insured claimed in the declaratory judgment action that the broker never asked her if she lived at the premises, and improperly obtained her a homeowners’ policy despite the premises being an investment property.  Ultimately, as you will read, the court let the insurer out and the mortgage company out (finding that its obligations were limited to the terms of the mortgage, which did not require the company to obtain the insurance), but kept the broker finding that its general affidavit was insufficient to establish its defense.  A good read.

Until next issue, and Happy Thanksgiving!

Jen

Jen
Jennifer A. Ehman
[email protected]

 

Smaller Jury Verdicts, Back in the Day:

The Semi-Weekly New Era
Lancaster, Pennsylvania

29 Nov 1919

Estate Recovers from Farm Tenant

Edward C. Waltman Found Indebted to Executor of Wilson W. Jackson In Sum of $233.27.

Other Cases Decided

          Before Judge Hassler on Tuesday afternoon the defense was opened in the case of the estate of Wilson W. Jackson against Edward C. Waltman.  It was denied that the defendant owed the estate anything.  It was claimed that counter claims, including attendance on Mr. Jackson and expenses incurred at his funeral, put the estate in debt to the defendant to the amount of $183.40.

         The jury found in favor of the plaintiff for $233.27.  Willis G. Kendig for plaintiff; H. Edgar Sherts for defendant.

 

Verdict In Auto Case.

          The jury in the case of Anna R. Fink against John H. Pfenninger, to recover for damages sustain when plaintiff’s care was struck by the defendant’s car, returned a verdict in favor of the plaintiff for $46.75.

          B. J. Myers for the plaintiff; Chas. W. Eaby for the defendant.


Peiper on Property and Potpourri:

We remain light on property issues again this week, but we do provide an interesting assortment of cases nevertheless.  In a rarity, we have two cases involving physicians suing insurance companies based upon actions undertaken by the insurers.  The first issue, addressed by the Court of Appeals, looks at whether a physician can sue a carrier for wrongfully reporting fraudulent activity to the Office of Professional Medical Misconduct.  The second issue is whether a physician can sue health insurers for removing it from approved provider status based upon a third party’s fraud.  A nice change up from our normal offer of fare.

We’ll leave the turkey references to others in this column, and simply close out our note by thanking all of you for reading and supporting this effort each and every year.  We appreciate your interest, feedback and well-wishes. If you keep reading, we’ll keep writing.

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

Steve
Steven E. Peiper

[email protected]
 

People Drive Cars All Year?  Who Would’ a Thunk?:

Star-Gazette
Elmira, New York

29 Nov 1919

          Agents writing automobile liability insurance are finding that the business is no longer a reasonable one.  In the past many car owners have laid up their machines for the winter and canceled their insurance.  Now most owners use their automobiles the year around.  Also machines are now purchased in all months.  Accordingly liability insurance has developed into a stable 12 months’ business.


Wilewicz’ Wide-World of Coverage:

Dear Readers,

Happy Turkey Day, everyone! Enjoy all the trimmings and the official start of the holiday season! In our house, Thanksgiving is very low-key. We never really celebrated it when I was a kid, since it’s not a holiday in Europe and so we never had any traditions or point of reference. During high school, I would spend Thanksgivings at my best friend’s house (who recently got married in Cancún) and his family, where I learned to make a mean pecan pie and a passable green bean casserole. But back at my house, the traditions we developed were to roast a duck or travel out of town. This year, my parents are spending the weekend in Florida, while at our house my daughter is starting to decorate for Christmas. We might have some turkey sandwiches and catch a football game. I told you, very low key. One tradition that we have maintained is to spend the day after Thanksgiving trekking down to a Christmas tree farm and cutting our own fresh tree. We plan do that again on Friday. Here’s hoping that we don’t return with a birds’ nest frozen solid to the truck, as happened last year.

Now, please let us know if we will have the opportunity to see you at next week’s DRI Insurance Coverage and Practice Symposium in New York. As usual, we have a contingent of coverage lawyers attending, and we’d love to meet or reconnect with you. I will certainly be at the annual Insurance Law Committee’s Women’s Dinner on Wednesday, December 4th. I hope to see many of you then and there!

Finally, in the Wide World of Coverage, the Second Circuit brings us a short, but important, one from Connecticut. In Parnoff v. Fireman’s Fund, the attorney for insureds, whose house burned down, sued the carrier who had disclaimed. The claims for violations of the Connecticut Unfair Trade Practices Act (“CUTPA”) and the Connecticut Unfair Insurance Practice Act (“CUIPA”) were dismissed after removal to federal court, but the attorney filed a second suit with nearly identical allegations. Seeing right through that, the court found those pleadings to have been frivolous. As such, when the carrier brought a Rule 11 sanctions motion, the court had to grant it, as there was no reasonable argument for having reasserted them again, anew. A brief case, but an informative one.

Until next time, Happy Thanksgiving!

Agnes
Agnes A. Wilewicz

[email protected]

 

A Penny for Your Thoughts About the Post Office:

Times Herald
Olean, New York

29 Nov 1919

 

ONE-CENT LETTERS

          Do Americans really want cheapness at the expense of efficiency? Experience has proved the contrary.  American willingness to scrap old machinery still in working order and replace it with new and expensive devices with a qualm, if the new devices will help better the product or increase the output, has become proverbial.

          At the present standard of mail delivery, even one cent may be too high a price to pay for a letter sent any distance.  One cent’s worth of efficiency has not been bought in the postal service for two cents, or three, for a long time.  From that point of view, the pending bill to reduce the local letter postage rate to one cent, approved by Postmaster General Burleson, is only fair.

          But that is not what Americans wants.  If by paying five cents for every letter that was mailed in this country the sender could be sure of prompt collection, prompt handling and prompt and safe delivery at the other end, in most cases he would gladly pay the five cents.

          Postmaster General Burleson says there is a profit in handling letters within the limits of one office.  He thinks, therefore, that the cost for this service should be reduced.  This sounds well, but—

          Profit to whom?  Certainly not to the sender nor the receiver of the epistle.  Improvements in the effectiveness of the service4 come before reductions.  When the mail service is as ne3ar perfect as human ingenuity, conscientiousness and fair wages can make it, the public will be glad to see postage rates reduced wherever possible. 

 

Barnas on Bad Faith:

Hello again:

Happy Thanksgiving.  This year may be the most excited I have ever been for Thanksgiving.  Thanksgiving is always great but when you add on a Bills game at Dallas to the expected staples of great food and family time, it’s really something to be thankful for.

I’m also excited for DRI’s Insurance Coverage and Practice Symposium next week at the Sheraton New York Times Square.  It’s always a great and well attended program.  If you’re there be sure to say hello!

That’s all for now.  Have a great weekend.

Brian
Brian D. Barnas

[email protected]

 

Hartford Protests “Birth of a Nation”:

Hartford Courant
Hartford, Connecticut

29 Nov 1919

“BIRTH OF A NATION” NOT TO BE SHOWN HERE NEXT WEEK

Mayor, Acting Upon Request Of Americanization Committee, Issues Order.

          “The Birth of a Nation,” the moving picture made from Tomas Dixon’s story of Southern life after the Civil War, which was announced to be shown at the Empire Theater next week, will not be seen at the Asylum street theater, Mayor Richard J. Kinsella having acted in accordance with the request of the Americanization committee for its suppression, on the ground that, at this time, it would be unwise to show a picture which, in the past has aroused some race feeling, owing to the story it tells of the white and black in the Ku Klux Klan days of half a century ago.

          “The Birth of a Nation” has had two runs in Hartford.  The first time it came to this city there was special police censorship which deleted several scenes but, on its second visits, it was shown in its entirety.

          Edward J. McMahon, manager of the Empire Theater, said last night that he had been ordered by the major not to show the picture.  “The film exchange has agreed to cancel the contract for the picture, under the circumstances,” he said.

          When asked last night why he had ordered the picture stopped.  Mayor Kinsella said, “I was requested by the Americanization committee to suppress it.  This is a very inopportune time for showing such a picture.  I do not think such a subject should be given publicity at this time.”

 

Off the Mark:

Dear Readers,

I hope everyone has a relaxing and enjoyable Thanksgiving.  We are headed to my aunt and uncle’s house in New Jersey as we do every year.  As is tradition, we will listen to Alice’s Restaurant as we sit in traffic.  The kids and wife actually seem to be looking forward to it this year.  Maybe they don’t remember how long it is (18 minutes, 34 seconds for anyone wondering) or maybe they are just looking forward to the food.

Despite my time away from Coverage Pointers last edition due to a trial, there were no noteworthy decisions waiting for me upon my return.  As always, I will continue to be on the lookout for interesting decisions.   

Until next time …

Brian
Brian F. Mark
[email protected]

 

Kissing Controversy, Part I:

Daily News
New York, New York

25 Nov 1919

SAVING KISSES FOR RIGHT MAN

          Editor of THE NEWS:

          I am nineteen and am lonesome.  I have lost a young man’s friendship for the simple reason I refused to kiss him.  He also said that he thought I was very slow; perhaps because I do not allow any of that mushy stuff and do not believe in giving my kisses away to any Tom, Dick or Harry.  I am saving mine for the right man.

          The question is now, will he ever come?  Do all respectable girls who go out accommodate the young men with kisses?  Is there no other way of making friendships?

          I am a bookkeeper and not bad looking.

                                                                                            ADA C.

Editor’s Note – Ada C. Stirred up a Hornet’s Nest.  See Article Below:

 

Boron’s Benchmarks:

Dear Subscribers:

Greetings from Boron’s Benchmarks, your source for coverage of the latest rulings of the high courts of the 49 states not named New York.  I write this note to you on Thanksgiving Eve 2019.  So, first and foremost, best wishes to each of you for a wonderful Thanksgiving!

Perhaps like me, you and yours not only have Thanksgiving Day traditions, but also, Thanksgiving Eve traditions.  My Thanksgiving Eves for the past 40 years have involved meeting up with friends and family in the early evening to partake in our traditional stuffing of our faces with a to-die-for Buffalo culinary delicacy, Duff’s chicken wings.  Many laughs are shared as we indulge together, catch up on current events, and reminisce about the past.  It’s tradition that my brother-in-law Paul will instantly break into a full-body-hot-sauce sweat upon his first sniff of a Duff’s wing.  We also then bowl together after our wing fest.  It’s nice to fall asleep smiling on Thanksgiving Eve, and then wake up smiling some more the next morning, knowing it is now Thanksgiving Day. I sure have a ton to be thankful for, especially my having such a wonderful family and set of friends, and I imagine it is the same for each of you.

I trust many of you will enjoy reading the insurance coverage case I have selected for your consideration in this edition of Boron’s Benchmarks.  Its background facts seem to have been hot-sauce-dipped – including, “doctored evidence” manipulated by City of Chicago Heights police officers, a wrongful felony conviction and twenty-year imprisonment of a man named Rodell Sanders, an ultimate exoneration of Mr. Sanders, a subsequent federal civil rights action of Mr. Sanders against the City of Chicago Heights for malicious prosecution, a denial by Illinois Union Insurance Company of the City’s liability insurance claim for coverage as to Mr. Sanders’ malicious prosecution action, and a declaratory judgment action which, over the course of three-and-a-half years, finally made its way up to the Illinois Supreme Court.  This is a decision you will not only want to read, but I suspect will enjoy reading.  Spoiler alert - the Illinois Supreme Court ruled on November 21, 2019, as have most jurisdictions in the U.S. under similar circumstances, that malicious prosecution claims only trigger coverage under liability insurance policies that are in effect at the time the malicious prosecution began. 

Enjoy your Thanksgiving holiday traditions, and see you in two weeks, folks!

Eric T. Boron
[email protected]

 

Ada’s Popularity Increased:

Daily News
New York, New York

29 Nov 1919

ADA, JUST READ WHAT MERE

MEN SAY ABOUT YOU

Your Anti-Kissing Stand Wins Approval; But These Boys Are Ambitious

Have all men been inoculated with the virus of the “kissing bug?”

“Ada C.” thinks so.

But several dozen young men who read Ada’s letter, in which she told of losing the friendship of a man because she refused to kiss him, disproved her theory.

They want to meet Ada, and while they don’t say so outright all have the same object—matrimony.

* * *

Robert E. “admires her good taste and feels she merits the approval of everybody who likes the things worthwhile in life.” He hopes to be able to meet her.

* * *

George writes:

“Please let me know how I can write to Miss Ada or meet her.  I think she is a fine, sensible girl.”

* * *

“Brother Happy feels that Ada is the one girl to go through life with him.  He says:

“I agree with her stand against promiscuous kissing.  The Broadway ‘chickens’ think I am kind slow.  I have never made a hit with him, and don’t intend to.  I prefer the home-loving, unpainted girl.  A little powder may not hurt, but I shout ‘Kamerad!’ when it comes to three thick coats of rouge.”

* * *

From Charles comes this appeal:

“Ada’s letter has made me think deeply.  I am sure she is the girl for me.  Can I meet her through THE NEWS?”

* * *

A veteran of the war, 20 years old, would also like to meet Ada.  He penned thusly:

“I feel; just as Ada does about ‘the right one.”  I am not considered impossible and supposedly on the road to success.  I earn $3,000 a year now and have good prospect.  If it is possible, I would like to meet Ada.”

* * *

The only wish Harry has is:  “To meet a sweet girl like Ada.”  He writes:

“Your stand on kissing every Tom, Dick and Harry meets with my approval.  You are sure to meet the right man.”

 

Barci’s Basics (On No Fault):

Hello Subscribers!

I have escaped the winter weather to celebrate Thanksgiving in North Carolina. As I write to you, I am overlooking the ocean from the porch of a little coffee shop in the seaside town of Swansboro, NC. I would ask for suggestions of fun things to do in this area if we have any subscribers down here, but I think by the time you read this I’ll already be back in Buffalo. So with that, I hope you all had/have a wonderful Thanksgiving holiday with good food, good company, and good traditions. I know I am ready for some pumpkin pie!

On the no-fault front, I have three cases for you out of the Second Department’s Appellate Term. The first, a very short reminder about denials based on EUO scheduling; the second, a more procedural case about obtaining benefits; and the third, a reminder about denials vs. fee schedule defenses and the application of the New Jersey fee schedule.

That’s all folks,

Marina
Marina A. Barci

[email protected]

 

Where is TAE When You Need Him?:

Press and Sun-Bulletin

Binghamton, New York

29 Nov 1919

 

THOMAS EDISON

          Thomas Alva Edison, creator of the phonograph,  the telephone transmitter, the incandescent light and many other conveniences of civilization, is still new at the old stand over in Orange, J. J.  He is seventy-two years young, and on February 11 next he will be seventy-three.

          He is not as youthful as he was when he came into this world in 1847 out at Milan, Ohio, but he is as full of untiring energy as he always was.

          The public last heard of him in connection with his work on concrete houses, or rather the pouring of them, as the calls it.

          He is now laboring about seventeen hours each day in his several laboratories at west Orange, physically, chemically and electrically.

          Sometimes he does to bed early, say 5 o’clock in the morning, but as he advances in years he needs a little more sleep, and does not take to his couch at as early an hour in the morning as he did.  Mrs. Edison takes some exercise, principally in walking about the plant, an feels that it does not hurt him any.  He easts lightly, as he thinks a man of mature age should bolt his deals deftly and not waste any time which might be given to work.

          Thomas a. Edison, beyond the appointed span of life, and at a time when it is said that the days of man are full of trouble and the grinders cease because they are few, is eagerly at his self-appointed tasks.  In vain could the world say to such a center of force as this that his day is done and that it’s time for him to retire in favor of more youthful inventors.  Young experts around those Orange laboratories have to be very careful about getting plenty of rest and having their vacations regularly so that they can keep up with the processes of this perennial intellect. 


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

Happy Thanksgiving, Friendsgiving, and Football! Hopefully your plans included family, friends, and food. The Maxwell clan served up brunch at home, loaded up the kids and travelled south (ten minutes or so) to my wife’s family festivities. Thanksgiving remains one of my favorites and I hope that my children feel the same way in a few years.

As I write this on Wednesday morning, I have no doubt that the Buffalo Bills will be 9-3 after a win in Jerry’s World on the road. But like all Bills fans (especially this guy), I’ve been wrong before. The Bills defense is legitimate and appeared to have shored up a middle that was less than stellar against the run through several games this season. Secondary continues to shine like a new penny. Offensively, although many are not sold on Josh Allen, he appears to command respect among opposing players, coaches, and teammates. There was a noticeably different tone regarding Allen in Denver’s post-game locker room player interviews than I can remember for any QB the Bills have had since Kelly. He has missed the deep ball this season and made mistakes that should not be made but has excelled in intermediate routes and found Beasley and Brown routinely with space. I believe he has turned some heads and improved his play game-over-game from the beginning—and that’s all you can ask for. And Devin Singletary has looked impressive in the run game, avoiding big hits and juking defenders with the best of them. Finally, let’s hear it for Brian Daboll in the coach’s box and respectfully ask that he stays there. Bills 27, Dallas 17.

In this issue’s Legislative List, I outline a new law curtailing “storm chaser” con-artists from performing oft unnecessary and shoddy roof-repairs following catastrophic storms, as well as a couple vetoes out of the Governor’s office involving a bill that sought to allow CE credits for joining insurance associations and a bill that, in part, offered premium reductions for installation of smoke alarms in row house cock lofts. The Regulatory Wrap-Up includes modifications to the existing bail bond business with an eye towards consumer protection. Finally, From the Filings Cabinet outlines the problem with offering “defense expenses” exception language without a license to issue line 29 legal services insurance.

Go Bills! (Hopefully you didn’t let me down)

Ryan
Ryan P. Maxwell

[email protected]

 

Hope His Wife Didn’t Mind:

The Brooklyn Daily Eagle
Brooklyn, New York

29 Nov 1919

MARRIES HIS MOTHER-IN-LAW

          John B. Broer, a carpet cleaner, of 416 76th St., and Mrs. Kate Koester Schoerling, his mother-in-law, were married by the Rev. Orpaz M. West, in the Hedding M. E. Church, Jersey City, on Nov. 22.


CJ at the Threshold:

Happy Thanksgiving!

2019 has been a year full of things to be thankful for, among those things are all of you. Without your situations I wouldn’t have the opportunity to wake up every day and work on exceedingly interesting legal issues with the smartest people in our field.

A short work week makes for short opinions. This issue I bring you two “serious injury” cases. The first reminds us that without a valid reason for ceasing treatment, a plaintiff’s claim of “serious injury” will likely cease to exist. The second case shows the importance of complete replies. In that case, had the defendant replied to every argument made by plaintiff, the outcome very well could have been different.

Have a safe and happy Thanksgiving,

CJ
Charles J. Englert, III

[email protected]

 

Six Months for Kleptomaniac?:

Buffalo Morning Express and Illustrated Buffalo Express
Buffalo, New York
29 Nov 1919

 

WOMAN TO WORKHOUSE

Accused of stealing money

Former convictions

          Judge William P. Brennan yesterday sent to the penitentiary for six months Mrs. Mary Kotecka, 38 years old, of No. 171 Ashley street, who pleaded guilty to sneaking $10 from the handbag of Mrs. F. E. Seybold of Albion, Mich., in a Main street store on Monday.  The woman is said to have served 30 days during the summer for a similar offense and in Dunkirk a few months ago was fined $50 on a like charge, it is alleged.  Leo F. Donnelly, counsel for Mrs. Kotecka, was inclined to question the sanity of his client.  He told the court that the woman received $40 each week from her husband $20 from a daughter and had no reason to commit the thefts.  It seems to be a mania with her, he believed.  Attorney Ralph Taylor, representing the department store, asked that the woman be given a severe sentence.  Mrs. Kotecka was caught in the act by Mrs. Anna H. Flanigen, a store detective.

 

John’s Jersey Journal:

Happy Turkey Day!

I will be celebrating Thanksgiving twice. Celebrating with Erin’s family on Thursday and then my family on Friday. While Erin’s family will have over thirty folks for Thanksgiving dinner, my family’s gathering is quite a bit smaller with only four of us. No matter how large or small your gathering is, I wish you all a Happy Thanksgiving! For those who will be on the road, safe travels.

It is not often that we have a PIP coverage case from the Garden State. Today we do and this one is, well, unique. An injured driver tried to recover PIP from the other driver’s mother and sister.

Nesby was rear-ended by a vehicle operated by Fleurmond who did not carry automobile liability insurance. Nesby received $15,000 in PIP benefits from his automobile insurer. Nesby made a claim against the owner of the vehicle and recovered the vehicle owner’s full $25,000 policy. Nesby investigated whether Fleurmond had insurance and discovered that she lived with her mother and sister. Nesby placed those carriers on notice of his intent to make a PIP claim against their policies. Not a liability claim. A PIP claim. More specifically, a PIP claim under an insurance policy issued to the tortfeasor’s relatives.

That’s unique because to qualify for PIP, a person must generally be (1) a named insured; (2) a resident relative of a named insured; or (3) occupying or using a vehicle insured under the policy.

The Appellate Division saw this case as an easy one and ruled that the injured driver was not entitled to PIP. Nesby was not a named insured on the policies issued to the tortfeasor’s mother and sister. Nesby did not reside with the tortfeasor’s mother and sister, and was not driving or occupying a vehicle listed on the relatives’ policies. Further, New Jersey law does not allow stacking of PIP coverage, so it should have been reasonably clear from the beginning that Nesby never had a claim. It is curious that this case ever reached the Appellate Division.

If we can assist you with a New Jersey situation, question, or problem, let us know. We would love to work through the questions with you. Have a great Thanksgiving!

John
John R. Ewell

[email protected]

 

Liberation:

Star-Gazettle
Elmira, New York

29 Nov 1919

 

Arrested For Vagrancy Two Men Are Liberated

          Floyd Simpson and Henry Cronright of Flint, Mich., arrested here Monday charged with vagrancy, were released yesterday in police court on suspended sentence.  They promised to get out of town.

 

Lee’s Connecticut Chronicles:

cid:image006.jpg@01D5A5E7.4BD77EE0

Hi Nutmeg Newsies:

The picture above is most certainly not found in the Constitution State. This is the historic Ponce de Leon Hotel (now the flagship building on the campus of Flagler College) in St. Augustine, Florida. A welcome Thanksgiving Week respite with family and the beach. Here at the Connecticut Chronicles, we wish all of our readers a happy Thanksgiving and a great start to the Holiday Season. Oh, by the way, there was an important decision this week from Connecticut holding the UM/UIM exclusions barring coverage for rental vehicles are void in Connecticut.

Lee
Lee S. Siegel

[email protected]

 

Headlines from this week’s issue, attached:

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

  • In a Motion to Dismiss Pleadings, Seeking a Ruling that an Employee Exclusion Applied, Affidavit about Employment Could Not be Considered

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • No Private Cause of Action Arising out of Misconduct Reports to the Office of Professional Medical Conduct

  • Physician’s Claims for Wrongful Dismissal from Approved Provider List did not State a Cause of Action

  • Failure to Disclose Prior Medical Condition Results in Rescission of Policy

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz

[email protected]

  • Second Circuit finds that Second Suit against Carrier, Reasserting Nearly Identical Previously-Dismissed CUTPA/CUIPA Claims Warranted Rule 11 Sanctions (CT Law)

 

JEN’S GEMS
Jennifer A. Ehman

[email protected]

  • Court Grants Carrier Summary Judgment on Residency Questions; Grants Mortgageholder’s Motion to Dismiss but Finds Question of Fact as to Broker’s Negligence

 

BARNAS ON BAD FAITH
Brian D. Barnas

[email protected]

  • Excess Insurer Sufficiently Stated Claims for Statutory Bad Faith and Bad Faith by Equitable Subrogation but not Common Law Bad Faith by Assignment

 

JOHN’S JERSEY JOURNAL
John R. Ewell

[email protected]

  • Injured Driver Not Entitled to PIP under Policies Issued to Tortfeasor’s Relatives

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • UM/UIM Exclusion for Rental Vehicles Void and Unenforceable

 

OFF THE MARK
Brian F. Mark
[email protected]

  • No noteworthy decisions to report on this edition.

 

BORON’S BENCHMARKS
Eric T. Boron

[email protected]

  • Trigger for Coverage of Malicious Prosecution is the Date the Malicious Prosecution was Instituted; Dismissal of Insured’s DJ Action Unanimously Affirmed

 

BARCI’S BASICS (ON NO FAULT)
Marina A. Barci

[email protected]

  • No-Fault Insurer Secures Case Dismissal where Assignor Failed to Appear for EUO

  • Stay Halting Prosecution of Actions Does Not Prevent Recovery of No-Fault Benefits where Judgment Already had been Entered

  • Summary Judgment Granted to Insurer where New Jersey Treatments were Paid under New Jersey Fee Schedule; Provider’s Timeliness Argument Rejected

 

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell

[email protected]

Legislative List

  • Law Intends to Curtail Unscrupulous Roofing Contractors from Fleecing Those with Property Damage Following Catastrophic Storms

  • Governor Cuomo Vetoes Bill Offering Tax and Insurance Premium Incentives for Increased Fire Safety Measures

  • Governor Cuomo Vetoes Bill That Would Have Allowed Continuing Education Credit for Merely Being a Member of a Professional Association
     

Regulatory Wrap-Up

  • DFS Amends Insurance Regulations to Provide Greater Protections for Consumers and Raise the Standards of Integrity in the Bail Business
     

From the Filings Cabinet

  • DFS Advises Insurers Must be Licensed to Issue Legal Services where Policy contains “Defense Expenses” Exception to Exclusion

 

CJ AT THE THRESHOLD
Charles J. Englert III

[email protected]

  • Cessation of Treatment Must Be Explained to Survive Summary Judgment

  • Contemporaneous and Current Objective Findings of Injury Raise a Triable Issue of Fact 

 

EARL’S PEARLS
Earl K. Cantwell

[email protected]

  • Misrepresentations on Proof of Loss Void Claim 

 

Keep those kind notes coming in – we do love to hear from you, including learning about your situations.
 

Hurwitz & Fine, P.C. is a full-service law firm providing legal services throughout the State of New York and provide insurance coverage advice and counsel in New Jersey and Connecticut.

 

In addition, Dan D. Kohane is a Foreign Legal Consultant, permit no. 000241, issued by the Law Society of Upper Canada, and authorized to provide legal advice in the Province of Ontario on matters of New York State and federal law.


NEWSLETTER EDITOR
Dan D. Kohane

[email protected]

ASSOCIATE EDITOR
Agnes A. Wilewicz
[email protected]

ASSISTANT EDITOR
John R. Ewell

[email protected]

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
[email protected]

Steven E. Peiper, Co-Chair
[email protected]
 

Michael F. Perley

Jennifer A. Ehman

Agnieszka A. Wilewicz

Lee S. Siegel

Brian D. Barnas

Brian F. Mark

John R. Ewell

Eric T. Boron

Marina A. Barci

Diane F. Bosse

Joel R. Appelbaum

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

Michael F. Perley

Eric T. Boron

Brian D. Barnas

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

Marina A. Barci

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]

Diane F. Bosse

Topical Index

Kohane’s Coverage Corner

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

Off the Mark

Boron’s Benchmarks

Barci’s Basics (on No Fault)

Ryan’s Capital Roundup

CJ At the Threshold

Earl’s Pearls

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

11/20/19       Minchala v. 829 Jefferson, LLC
Appellate Division, Second Department
In a Motion to Dismiss Pleadings, Seeking a Ruling that an Employee Exclusion Applied, Affidavit about Employment Could Not be Considered

Where an insurer wishes to exclude certain coverage from its policy obligations, it must do so in clear and unmistakable language.  Ambiguities in the terms of an insurance policy must be construed in favor of the insured, and against the insurer, but the plain meaning of a policy's language may not be disregarded to find an ambiguity where none exists.

A party may move for judgment dismissing one or more causes of action asserted against it on the ground that a defense is founded upon documentary evidence.  To be considered documentary, evidence must be unambiguous and of undisputed authenticity.  However, affidavits, deposition testimony, and letters are not considered documentary evidence within CPLR 3211(a)(1).  This is a discussion of applications seeking to dismiss complaints, NOT a discussion of motions for summary judgment.

Insurer sought to dismiss the third-party complaint asserted against it and, in effect, for a judgment declaring that it was not obligated to defend and indemnify 829 Jefferson in the main action. Western Heritage submitted a certified copy of the relevant insurance policy, a tender letter from 829 Jefferson's counsel, Western Heritage's disclaimer letter, and an affidavit from an employee of Western Heritage.

The relevant insurance policy, which qualifies as documentary evidence, includes an endorsement entitled "Exclusion-Injury to Contractors" which unequivocally establishes that the policy does not require Western Heritage to defend, indemnify, or contribute with another because of bodily injury to any employee of any insured or contractor.  However, the insurance policy does not establish that the plaintiff was an employee of any insured or contractor, and the other evidence submitted by Western Heritage does not qualify as documentary evidence.

Editor’s Note:  At some point, a summary judgment motion may resolve this issue, but not on a motion to dismiss the pleadings.

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

11/21/19       Haar v. Nationwide Mut. Fire Ins. Co.
New York State Court of Appeals
No Private Cause of Action Arising out of Misconduct Reports to the Office of Professional Medical Conduct

Plaintiff commenced this proceeding seeking civil damages under New York Public Health Law § 230 and defamation.  In short, plaintiff is an orthopedic surgeon who treated at least four individuals who were injured in automobile accidents.  Plaintiff’s claims for payment related to his services were rejected by defendant Nationwide.  Suspecting fraud, Nationwide also further reported plaintiff to the Office of Professional Medical Conduct.   Plaintiff was apparently cleared of misconduct, and resultantly commenced the instant lawsuit.

Nationwide appeared in the action, and immediately removed it to federal court.  Nationwide thereafter moved to dismiss the action on the basis that a private cause of action does not exist under Section 230, and the defamation cause of action was time-barred by application of New York law.  The District Court agreed, but on appeal the Second Circuit noted case law from the Appellate Division of New York which appeared to support a conclusion that a private cause of action did, in fact, exist.  As such, the Court submitted a certified question to the Court of Appeals on the applicability of Section 230 in this case.

The Court of Appeals directed answered the question posed by the Second Circuit; therein holding that the Legislature did not create a private cause of action and thus effectively dismissed plaintiff’s lawsuit.  In reaching its decision, the Court noted that the test for a private cause of action is threefold.  The first issue to be addressed is whether the claimed right “is one of the class for whose particular benefit the statute was enacted.”  If so, the plaintiff must also establish that the “recognition of a private right of action would promote the legislative purpose” and, also that the “creation of such a right would be consistent with the legislative scheme.”

In addressing the first question, the Court reviewed the legislative history along with the actual text of the statute.  The statute in question specifically establishes the procedure for medical misconduct proceedings.  As part of the statutory scheme, subsection 11 of Section 230 exempts reporting parties from civil liability where a complaint was made in good faith.  The Court also noted the memoranda prepared by the law’s sponsor explicitly explained that subsection 11 was meant to “alleviate concerns” of reporters about potential civil liability.

The court also rejected the argument that because the statute exempted only “good faith” reports, it implicitly meant that “bad faith” reports were subject to a private cause of action.  In addressing this issue, the Court argued that such a position would not advance the overall legislative purpose of the law.  While the law was meant to discourage, on some level, bad faith reporting, the overarching goal of the statutory scheme established by Section 230 was to encourage reporting of potential misconduct.  The Court also noted that if the Legislature meant to create a penalty for bad faith reports it would have explicitly said so within the text of the statute. 

Lastly, plaintiff’s claims also failed under the third factor “whether creation of such a right would be consistent with the legislative scheme."   Because recognizing a private cause of action could have a chilling effect on future reports, the Court noted that it could not be consistent with the legislative purpose. 

 

11/19/19       Abdul Q. Malik, M.D. v. Ultraline Med. Testing, P.C.
Appellate Division, First Department
Physician’s Claims for Wrongful Dismissal from Approved Provider List did not State a Cause of Action

In this interesting case, the plaintiff and a number of defendants were victim of fraudulent claims perpetrated by a third-party.  However, when the scheme was first discovered, plaintiff was charged and prosecuted as part of the action.  Upon being charged, defendants terminated plaintiff from their panels of approved physicians.

Plaintiff, after being cleared of any fraudulent activity, presented the instant action alleging that defendants had a duty to protect him from third-party fraud.  That claim was rejected where, as here, the defendants were also victims of the same fraud.  As such, any claim of aiding and abetting the wrongful activity could not be substantiated.  The fact that defendants processed the fraudulent claims, without knowledge of nefarious activity, is also insufficient to create a legal duty.

In addition, plaintiff’s claims for breach of contract/wrongful termination of provider status were also dismissed.  In so holding, the Appellate Division ruled that the defendant carriers did not violate notice provisions in the provider agreements because they relied upon a grand jury indictment in terminating their relationship with plaintiff.  The court also dismissed plaintiff’s claims that defendants failed to provide notice and a hearing per the terms of the contract. 

 

11/13/19       Neiditch v. William Penn Life Ins. Co. of NY
Appellate Division, Second Department
Failure to Disclose Prior Medical Condition Results in Rescission of Policy

This action arises out of defendant’s denial and rescission of a life insurance policy based upon a material misrepresentation.  Plaintiff’s decedent died as a result of an anaphylactic reaction to a food allergy. The carrier established that the decedent failed to provide notice of previous hospitalizations due to anaphylactic events despite the request for this information during the application process.

Where, as here, the carrier also established that it would not have issued the policy had the insured’s reported medical history been accurate, it established its burden on summary judgment.  In support of its application, the insurer submitted its proof via affidavits of a senior underwriter, its medical director, and documentary evidence as found in the underwriting file. 

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz

[email protected]

11/25/19       Laurence Parnoff v. Fireman’s Fund Ins. Co.
United States Court of Appeals, Second Circuit
Second Circuit finds that Second Suit against Carrier, Reasserting Nearly Identical Previously-Dismissed CUTPA/CUIPA Claims Warranted Rule 11 Sanctions (CT Law)

Donato Telesco (“Telesco”) and Anita Pettengill (“Pettengill”) owned a home in Connecticut that was destroyed by fire in 2011. Their insurance company, Fireman’s Fund disclaimed coverage and did not pay for the damages claimed. In 2013, their attorney Laurence Parnoff (“Parnoff”) sued Fireman’s for breach of contract and violations of the Connecticut Unfair Trade Practices Act (“CUTPA”) and the Connecticut Unfair Insurance Practice Act (“CUIPA”) in Connecticut state court. The matter was removed to federal court and the CUTPA/CUIPA claims were dismissed. A jury ultimately found in favor of Fireman’s on the Pettengill’s breach of contract and counterclaims, but found in favor of Telesco on Fireman’s counterclaims against him.

Nevertheless, in 2017, Parnoff again represented Telesco in another suit against Fireman’s for similar claims. The matter was again removed to federal court, and ultimately dismissed entirely. Fireman’s then moved for sanctions, asserting that the second case was nearly identical to the first and thus frivolously brought. That sanctions motion was granted and went up on appeal.

A Federal Rule of Civil Procedure 11 Motion (“Rule 11”) can be brought when any pleading, motion, or other paper filed with the court is made for “any improper purpose, or where, after reasonable inquiry, a competent attorney could not form a reasonable belief that the pleading is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law.” Namely, when a complaint or motion is made frivolously, sanctions may be warranted. Here, the court found that no reasonable attorney could have believed that the second Telesco breach of contract claim was warranted under existing law. Any counterclaims that could have been brought in the first case (i.e. compulsory counterclaims) should have been brought at that time. Moreover, Telesco’s nearly identical pleadings and allegations as to the CUPTA/CUIPA claims were just that, identical. There was no reasonable argument for reasserting them again.

 

JEN’S GEMS
Jennifer A. Ehman
[email protected]

 

11/04/19       Tower Ins. Co. of N.Y. v. Johnson
Supreme Court, New York County
Hon. Robert R. Reed
Court Grants Carrier Summary Judgment on Residency Questions; Grants Mortgageholder’s Motion to Dismiss but Finds Question of Fact as to Broker’s Negligence

This decision arises out of a slip and fall accident on an allegedly defective driveway.  The underlying plaintiff commenced suit against the property owner, Typhyne Johnson, who then tendered the claim to her homeowners’ insurer, Tower.  As part of the investigation, Ms. Johnson told the claims manager at Tower that she didn’t live at the location and hadn’t for 17 years as it was an investment property.

Based upon this admission, Tower denied coverage since the property was not a “residence premises,” and therefore, not an insured location.  The policy excluded “bodily injury” arising out of a premises, owned by the insured, which is not an insured location.  Tower ultimately agreed to provide a defense, and then commenced this declaratory judgment action.

Interestingly, upon being served, Ms. Johnson commenced a third-party action against HSBC (the mortgage holder) and the broker that procured the policy.  A slew of motions then followed.  The court began by discussing HSBC’s motion to dismiss.  Ms. Johnson’s claim was essentially that HSBC failed to render full performance under the mortgages by failing to properly procure insurance coverage for her reflecting the true status of the premises in Tower’s policy. HSBC argued in its motion that it had no duty to procure insurance for her and directed the court to that portion of the mortgages which stated that Ms. Johnson was solely responsible for procuring insurance.  In this case there appears to be some dispute as to who procured the insurance.  Apparently, the premises was insured with another company, Allstate, for several years before they elected not to renew.  The record contains differing accounts as to whether HSBC requested the broker to obtain new insurance or Ms. Johnson made the request.  Nonetheless, the court found that even if HSBC obtained the insurance policy, as alleged by Ms. Johnson, it was under no contractual obligation to procure any particular type of insurance coverage.  The court also rejected the argument that further discovery was needed since the case law established that HSBC had no legal obligation independent of the mortgages.  The court, however, declined to award HSBC costs and fees on the grounds that the third-party action was not completely without merit in law.

Next, the court turned to Tower’s motion for summary judgment.  In support of its position, Tower submitted an affidavit of its liability claims manager attesting to her conversation with Ms. Johnson wherein she was told that Ms. Johnson did not reside at the premises, and Ms. Johnson’s answer wherein she admitted that she did not reside at the premises.  The court granted Tower’s motion.  While Ms. Johnson asserted that Tower had waived its right to disclaim coverage because it knew she didn’t reside at the premises and nonetheless accepted premiums on the policy.  The court was not persuaded by this argument noting that waiver was simply inapplicable wherein the issue is the existence or nonexistence of coverage (e.g., the insuring clause and exclusions).  The court also rejected any argument based on estoppel or unclean hands noting that the defense had been provided to Ms. Johnson under a reservation of rights which purpose is to prevent detrimental reliance on the defense provided by the insurer.  And, Ms. Johnson had also failed to demonstrate that Tower was guilty of immoral or unconscionable conduct, or that she was injured by such conduct.  On the same line, the court dismissed Ms. Johnson’s cross-claim alleging breach of the covenant of good faith and fair dealing.

Lastly, the court addressed the motion for summary judgment filed by the broker.  The broker submitted that Ms. Johnson received the Tower policy and is presumed to know its contents.  The broker also maintained that he had no special relationship as they had a typical customer-broker relationship with no direct contact from December 2006 through the date of the accident.  The court nonetheless denied the motion for summary judgment on the basis that the broker’s affidavit submitted in support did not recite any materials fact of which he had personal knowledge.  The affidavit submitted that one of his employees would have contacted Ms. Johnson to advise that the Allstate policy was not being renewed, and that if requested, his firm could obtain a replacement policy.  He then stated that, as required by Ms. Johnson, the broker obtained the Tower policy.  In rejecting the affidavit, the court also noted that the broker failed to identify what documents he was relying upon for this information and failed to produce a copy of the application.

The court also considered Ms. Johnson’s affidavit wherein she submitted that HSBC acquired the policy on her behalf, and that HSBC never provided information about the ownership or occupancy of the premises.  She also never provided information about the ownership or occupancy of the premises, and never directed the broker to obtain a three-family owner-occupied insurance policy.  Since the broker failed to establish its prima facie entitlement to summary judgment, that motion was denied. 

 

BARNAS ON BAD FAITH
Brian D. Barnas
[email protected]

11/26/19       Northfield Ins. Co. v. Rockhill Ins. Co.
United States District Court, Middle District of Florida
Excess Insurer Sufficiently Stated Claims for Statutory Bad Faith and Bad Faith by Equitable Subrogation but not Common Law Bad Faith by Assignment

This case involves claims of common law and statutory bad faith in failing to settle an underlying lawsuit against First Coast Association Management, LLC.  During the relevant period, both Rockhill and Northfield had policies that provided coverage to First Coast.  In a prior coverage action, it was determined that Northfield’s policy was excess and Rockhill’s policy was primary.  Northfield sued Rockhill for bad faith to recover $890,000 it expended in settling the underlying lawsuit, claiming that it would not have needed to spend that amount had Rockhill acted in good faith.  The Complaint alleged three claims: common law bad faith via equitable subrogation, common law bad faith via assignment, and statutory bad faith. Rockhill moved to dismiss.

Insurers in Florida are obligated to act in good faith toward their insureds in handling claims.  Under the doctrine of equitable subrogation, an excess insurer has the right to maintain a cause of action for damages resulting from the primary carrier’s bad faith refusal to settle the claim against their common insured.

Northfield alleged that Rockhill acknowledged First Coast as an insured under the Rockhill policy, that Northfield’s policy with First Coast was excess to Rockhill’s policy, and that Northfield is equitably subrogated to the rights of First Coast.  Further, Northfield alleged that Rockhill was presented with several opportunities before and after the underlying suit was filed to settle within its policy limits, and that it was required to pay $890,000 as the excess insurer based on its failure to settle.  According to the Complaint, Rockhill could have settled the claim within the primary policy limits had it acted in good faith, and Rockhill acted in bad faith in failing to settle the claims.  Thus, the complaint sufficiently alleged a bad faith equitable subrogation claim.

Northfield’s bad faith claim via assignment was dismissed.  An excess judgment is required to bring a bad faith in Florida.  First Coast did not suffer a judgment greater than all of the insurance coverage available to it.  As an excess insurer, Northfield was not permitted to bring a claim as an assignee of First Coast for bad faith because it was undisputed that First Coast did not suffer a judgment exceeding all available insurance. Thus, Count II was dismissed.

Rockhill also argued that the statutory bad faith claim should be dismissed because Northfield’s statutorily-required Civil Remedy Notice (CRN) was invalid.  Rockhill contended that Northfield’s CRN, which was filed after the settlement in the underlying action, was invalid as a matter of law because Rockhill had already tendered its full policy limits in payment of the settlement.  The court rejected this argument.

The essence of a third-party bad faith cause of action is to remedy a situation in which an insured is exposed to an excess judgment because of the insurer’s failure to properly or promptly defend the claim.  If an insurer could preclude a statutory bad faith claim by paying the policy limits at any time regardless of its conduct during settlement, then the statute would be ineffectual in third-party cases.  Under Rockhill’s interpretation, an insurer could act in bad faith in settling a claim to try for a lower payout, then, if it fails, pay the policy limits and leave the insured exposed to an excess judgment without any statutory recourse against the insurer.  Such a result is not allowed under the common law, and the statute codifies the common law with respect to third-party bad faith.  Thus, the statutory bad faith claim survived the motion to dismiss.

 

JOHN’S JERSEY JOURNAL
John R. Ewell
[email protected]

 

11/18/19       Nesby v. Fleurmond et al.
New Jersey Superior Court, Appellate Division
Injured Driver Not Entitled to PIP under Policies Issued to Tortfeasor’s Relatives

Plaintiff, Nesby, was injured in an automobile accident when the car he was driving was struck from behind by the vehicle driven by defendant Fleurmond, owned by defendant Decaro, and insured by Progressive.

Fleurmond neither owned a vehicle nor had her own automobile insurance policy; she lived with her mother and sister. GEICO issued a policy to Fleurmond's sister and AAA MAIC issued a policy to her mother. Neither vehicle was involved in the accident. It was undisputed that Fleurmond was not listed as an insured on either policy.

Plaintiff claims his medical costs exceed $400,000 for the injuries he suffered as a result of the collision. After his $15,000 personal injury protection (PIP) benefits were exhausted, the remainder of plaintiff's medical bills were paid by his personal health insurance carrier. Plaintiff then tendered a claim to Progressive, which offered him the full $25,000 policy limit of Decaro's policy. In exchange, plaintiff agreed to release Fleurmond and Decaro

from any and all claims, actions, causes of action[],

demands, rights, damages, costs, property damage, loss

of wages, expenses, hospital, medical and nursing

expenses, accrued or unaccrued claims for loss of

consortium, loss of support or affection, loss of society

and companionship on account of in any way growing

out of, any and all known and unknown personal

injuries and damages resulting from [the present]

automobile accident . . . .

Plaintiff's counsel placed GEICO and AAA MAIC on notice of the accident.  Both carriers denied coverage.

Plaintiff then sued Fleurmond and Decaro, seeking damages for injuries he sustained in the accident. Although plaintiff did not specifically name GEICO or AAA MAIC as defendants, the fourth count of his complaint sought to "[c]ompel [i]nsurance [c]overage" from both carriers. Plaintiff moved for declaratory judgment against GEICO and AAA MAIC, seeking coverage under the policies issued to Fleurmond's sister and mother. GEICO and AAA MAIC cross-moved for a declaration Fleurmond was not insured under their policies. The trial judge found plaintiff settled his claims with Fleurmond and Decaro, and he had no relationship with GEICO and AAA MAIC, which would otherwise entitle him to coverage under their policies. Thus, the trial judge denied Plaintiff’s motion denied and granted the insurers’ motions.

On appeal, the Appellate Division framed the issue as “whether plaintiff can somehow seek PIP coverage for his unpaid medical expenses under policies issued by GEICO and AAA MAIC to the tortfeasor's resident relatives, covering vehicles that were not involved in the accident – after plaintiff settled any and all claims arising from the accident with the tortfeasor.” The Court answered the question in the negative.

The Court found that plaintiff was not an insured under the GEICO or AAA MAIC policies because he did not live with either insured and was not driving a vehicle insured under either policy. Since he did not fall within any of those categories, plaintiff was not entitled to PIP benefits under either the GEICO or AAA MAIC policy. Furthermore, New Jersey law, NJSA 39:6A-4.2, expressly prohibits an insured from recovering PIP benefits from multiple policies or “stacking” PIP coverage.

Finally, even if plaintiff could have sought coverage under the GEICO or AAA MAIC policies, he settled his claims with Fleurmond, fully releasing the driver of the vehicle from "any and all claims" arising from the accident.

In sum, plaintiff was not a named insured under the GEICO or AAA MAIC policies, did not reside with the named insureds, did not occupy a vehicle insured under those policies, and released the tortfeasor from any and all claims arising from the accident. The Appellate Division affirmed the denial of summary judgment to plaintiff and affirmed the grant of summary judgment to the insurers.


LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]

10/22/19       Justin Lollar v. Progressive Direct Ins. Co.
Connecticut Superior Court, Hartford
UM/UIM Exclusion for Rental Vehicles Void and Unenforceable

In a case of first impression, a Hartford Superior Court judge determined that an exclusion barring uninsured and underinsured motorist coverage to rental vehicles violates Connecticut law. Justin Lollar was a passenger in a rental vehicle and was injured by an uninsured driver. His claim for UM/UIM benefits was denied. Pursuant to the driver's insurance policy with Progressive, UM/UIM coverage for rental vehicles is excluded. The policy included an endorsement unambiguously changing the definition of a covered automobile for UM/UIM coverage to those owned by the insured driver, thereby excluding rental vehicles. Lollar argued that Progressive’s exclusion violated Connecticut law making UM/UIM insurance mandatory.

The court agreed with Lollar. UM/UIM coverage is mandatory in Connecticut and may not be excluded unless expressly permitted by statute or regulation. The court concluded that, “an exclusion of UM/UIM coverage for such rental vehicles is not authorized by state statute or agency regulation. As such, the exclusion is unenforceable.”

 

OFF THE MARK
Brian F. Mark
[email protected]

No noteworthy decisions to report on this edition.

 

BORON’S BENCHMARKS
Eric T. Boron
[email protected]

11/21/19       Sanders v. Illinois Union Ins. Co.
Illinois Supreme Court
Trigger for Coverage of Malicious Prosecution is the Date the Malicious Prosecution was Instituted; Dismissal of Insured’s DJ Action Unanimously Affirmed

Good writing immediately captures your interest and imagination, and makes you want to know more.  And so it is with Illinois Supreme Court Justice Theis’ opinion, which begins, “In 1994, based on doctored evidence from the City of Chicago Heights Police Department, Rodell Sanders was charged with murder, attempted murder, and armed robbery.”  We next immediately learn from the opinion that “Sanders was wrongfully convicted and imprisoned for approximately 20 years before being exonerated in 2014.”  I don’t know about you, but that opening to the opinion made me want to read on to know more.  Especially about the insurance coverage issues analyzed by the opinion!

Other background facts pertinent to the insurance coverage issue before the Illinois Supreme Court include the following.  After his 2011 exoneration, Mr. Sanders filed a federal civil rights action against the City of Chicago Heights, in January 2013, asserting, eventually, through an amended complaint, malicious prosecution.  For the November 2011 to November 2014 time period, the City of Chicago Heights had primary liability insurance from Illinois Union Insurance Company (“Illinois Union“) and excess liability insurance from Starr Indemnity & Liability Company (“Starr”).  The primary Illinois Union insurance policy covered damages arising out of the “offense” of “malicious prosecution.”

Illinois Union responded to the City of Chicago Heights' notice of claim in December 2014, notifying the city it was declining to provide coverage because no covered events occurred during the policy periods. One year later, Starr similarly sent a declination, claiming that the malicious prosecution did not fall within their policy periods. Chicago Heights asked the insurers to reconsider their decisions, arguing that the date of Sanders's exoneration was a discrete date of loss.

The “general liability coverage part” of the Illinois Union policy provides:

The Insurer will indemnify the Insured for Damages and Claim Expenses in excess of the Retained Limit for which the Insured becomes legally obligated to pay because of a Claim first arising out of an Occurrence happening during the Policy Period in the Coverage Territory for Bodily Injury, Personal Injury, Advertising Injury, or Property Damage taking place during the Policy Period.

(Emphases in original).

With respect to Personal Injury, “occurrence” was defined in the policy as “only those offenses specified in the Personal Injury Definition.” (Emphases in original).

“Personal injury” was defined as “one or more of the following offenses … [f]alse arrest, false imprisonment, wrongful detention or malicious prosecution … wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of the owner, landlord or lessor.” (Emphasis in original). The policy provided that “[a]ll damages arising out of substantially the same Personal Injury regardless of frequency, repetition, the number or kind of offenses, or number of claimants, will be considered as arising out of one Occurrence.” (Emphases in original).

In September 2016, a consent judgment was entered in Sanders's favor in the federal civil rights action for $15 million. The City of Chicago Heights agreed to contribute $2 million, and United National Insurance Company (Chicago Heights' insurer from 1994) agreed to contribute $3 million toward the judgment. Additionally, the City of Chicago Heights assigned its rights against Illinois Union and Starr to Sanders in exchange for his agreement not to seek the remaining $10 million from the city.

The Circuit Court granted Illinois Union’s motion to dismiss Mr. Sanders’ action, as assignee of the insurance coverage rights of the City of Chicago Heights against Illinois Union, to try to collect on the 2011-2014 policy of Illinois Union, observing that, under the policy, Illinois Union and Starr had to provide coverage to the City of Chicago Heights for damages for personal injury first arising out of an occurrence during the policy period. The court determined that the policy focused on a requisite act and injury during the policy period, rather than the accrual of a completed cause of action. The court acknowledged that, to prevail on a tort claim of malicious prosecution, a plaintiff must establish, among other things, that the prior proceeding terminated in his favor. But it also noted the vast majority of courts to consider the issue have ruled that the filing of the underlying malicious suit was the occurrence causing personal injury under a liability insurance policy.

The Circuit Court’s dismissal was appealed by Mr. Sanders and the City of Chicago Heights.  On appeal, a split panel reversed.  The Illinois Supreme Court reversed the appellate court judgment and affirmed the Circuit Court dismissal.

However, based upon the Policy’s terms, the Illinois Supreme Court’s November 21, 2019 opinion concludes that any coverage for malicious prosecution would have been triggered when Mr. Sanders was prosecuted in 1994, not the date he was exonerated.  The Supreme Court held that although the cause of action for malicious prosecution did not arise until the exoneration, the underlying event that triggered the obligation to provide coverage occurred in 1994, which was not during the Illinois Union policy period.

The Illinois Supreme Court reasoned that a typical occurrence-based policy, containing multiple references to coverage for occurrences or offenses happening during the term of the policy, reflects the intent to insure only for the insured’s acts or omissions that happen during a policy period. If exoneration were deemed to trigger for coverage of a malicious prosecution insurance claim, liability could be shifted to a policy period in which none of the acts or omissions giving rise to the claim occurred, which would violate the intent of the parties to an occurrence-based policy.

 

BARCI’S BASICS (ON NO FAULT)
Marina A. Barci

[email protected]

11/15/19       Ultra Ortho Prods., Inc. v. GEICO Ins. Co.
Appellate Term, Second Department
No-Fault Insurer Secures Case Dismissal where Assignor Failed to Appear for EUO

No-fault provider sued GEICO to recover assigned no-fault benefits. GEICO moved for summary judgment dismissal because the assignor failed to appear for EUO. GEICO submitted proof of mailing of the EUO scheduling letters and the denial of claims forms, which was also sufficient to establish that the letters and denials were timely mailed. Plaintiff failed to rebut this evidence, thus GEICO’s motion for summary judgment dismissing the complaint was granted.

 

11/15/19       Bronx Med. Diagnostic, P.C. v. Global Liberty Ins. of N.Y.
Appellate Term, Second Department
Stay Halting Prosecution of Actions Does Not Prevent Recovery of No-Fault Benefits where Judgment Already had been Entered

Bronx Medical made a claim to recover no-fault benefits to Global as assignee for services it provided to Diaz as a result on an October 2014 motor vehicle accident. In 2015, Bronx Medical moved for summary judgment and Global failed to submit any opposition, so the court granted the motion in February 2016.

Prior to entry of the court’s order granting summary judgment, Global commenced a declaratory judgment action seeking a declaration that there was no coverage for the October 2014 accident. Subsequent to the commencement of the DJ action, judgment was entered for Bronx Medical in the amount of $1,758.40 for the summary judgment motion in March 2016. Then, in May 2016, the court in the DJ action stayed all proceedings involving the October 2014 MVA and vacated any judgments.

On the basis of the May 2016 order, Global moved to vacate the March 2016 judgment and, upon vacatur, to deny Bronx Medical’s motion and dismiss the compliant. However, because Bronx Medical’s summary judgment motion was granted well in advance of the stay, and the entry of that order was on the court clerk, not the parties in this case, there was no violation of the stay order. Thus, Global’s motion to vacate was denied and Bronx Medical is entitled to recover the no-fault benefits in the amount of $1,758.40.

Note: The moral of this story is – respond to motions seeking payment of benefits if you do not want to pay those benefits.

 

11/15/19       Excel Surgery Ctr., LLC v. Metropolitan Prop. & Cas. Ins. Co.
Appellate Term, Second Department
Summary Judgment Granted to Insurer where New Jersey Treatments were Paid under New Jersey Fee Schedule; Provider’s Timeliness Argument Rejected

Excel Surgery rendered services to the assignor in February 2015 in New Jersey and brought this action to recover no-fault benefits related to those services. Metropolitan moved for summary judgment dismissing the complaint on the grounds that the disputed medical services had been rendered in New Jersey and that it had paid the claims fully in accordance with the New Jersey Auto-Medical Fee Schedule. Plaintiff, in opposition, argued that Metropolitan failed to establish timely denials.

First, insurers are not required to establish timely denials of claim in order to preserve a fee schedule defense, so plaintiff’s opposition was moot. Second, Metropolitan supported its fee schedule argument by submitting the affidavit of a certified medical coder, which sufficiently established that Metropolitan fully paid the plaintiff’s claim in accordance with the New Jersey fee schedule. Thus, Metropolitan was granted summary judgment and the complaint dismissed. 

 

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell
[email protected]

Legislative List

11/25/19       “Storm Chaser” Bill Protects Roofing Scams
New York State Assembly
Law Intends to Curtail Unscrupulous Roofing Contractors from Fleecing Those with Property Damage Following Catastrophic Storms

On November 25, 2019, Governor Cuomo signed assembly bill no. A7531 (same as S1405) to combat con artists posing as legitimate contractors and using high-pressure sales tactics door-to-door following a storm to compel roof repairs that wind up extremely substandard.

Chapter 550 of the Laws of 2019 establishes a prohibition on roofing contractors advertising or promising to pay or rebate all or any part of an insurance deductible as an inducement to the sale of any goods or services. In addition, a residential property owner under the new law is permitted to cancel a roofing contract within three days of receiving notice from an insurance carrier of a denial of coverage in whole or in part. Upon cancellation, a roofing contractor is required to return payments made by the insured, although the roofing contractor is entitled to compensation for emergency repair work.

 

11/25/19       Residential Structure Fire Prevention Act of 2019 Vetoed
Governor Andrew Cuomo
Governor Cuomo Vetoes Bill Offering Tax and Insurance Premium Incentives for Increased Fire Safety Measures

On November 25, 2019, Governor Cuomo vetoed senate bill no. S4398 (same as A4406-B), which sought to provide a tax credit to homeowners who repair cock loft fire hazards and premium rate reductions for the inclusion of a smoke alarm within an existing cock loft. The bill sought to reduce the threat of quickly spreading fires among row houses with existing cock lofts—a feature that is no longer designed and built into such housing.

As an incentive to rebuild/remodel these structures, which homeowners currently have no desire to begin, the legislature had hoped to give homeowners the tax incentive they may need to correct this building flaw, which may one day prove useful in avoiding another catastrophe.

A prior version of the bill was vetoed in 2018. It appears that the legislature will have to wait to pass such legislation once again.

 

11/25/19       Active Membership in Statewide Professional Insurance Association Alone Will Not Garner CE Credit Per Governor’s Veto
Governor Andrew Cuomo
Governor Cuomo Vetoes Bill That Would Have Allowed Continuing Education Credit for Merely Being a Member of a Professional Association

On November 25, 2019, Governor Cuomo vetoed a bill that would have allowed insurance producers to earn continuing education credit for active membership in a statewide professional insurance producer association. Governor Cuomo vetoed a previous version of the bill because it had sought to allow six continuing education credits. Although this version reduced the amount of credits to three, the Governor took issue with any credits being offered for mere membership.

The sponsor memorandum of the bill notes that “New York's insurance producer associations promote professionalism, best practices, ethical compliance, continuing education training and networking opportunities to their members. In addition, membership in these associations provide younger members an opportunity to be mentored by more established insurance producers thereby enhancing their business prospects.” However, the Governor’s veto memorandum countered that “it is [not] good public policy to trade away necessary and valuable learning opportunities in the form of continuing education credits as an inducement to drive membership at dues-collecting organizations.”

Regulatory Wrap-Up

11/20/19       Bail Bond Regulations Amended to Increase Consumer Protections
Department of Financial Services
DFS Amends Insurance Regulations to Provide Greater Protections for Consumers and Raise the Standards of Integrity in the Bail Business

On November 20, 2019, the Superintendent of Financial Services promulgated amendments to Insurance Regulation(s) 42, 76, and 120 relating to the bail business. Such amendments were made to improve consumer protection and raise the standards of integrity in the bail industry. They will take effect 120 days after publication in the State Register.

Title 11 of the NYCRR will contain several new protective measures. 11 NYCRR § 28.3 will provide language dictating when a bail agent’s license becomes invalid, including upon suspension or revocation by the superintendent, or expiration and non-renewal. 11 NYCRR § 28.4 will require that a bail agent either use their legal name or a name approved by the superintendent.

11 NYCRR § 28.5 requires bail agents to keep insurers or charitable bail organizations appointing the agent, and the superintendent apprised of changes in the bail agent’s business name, business address, business telephone number, business e-mail address, home address, personal e-mail address, or personal telephone number. This section also requires that bail agents keep the superintendent apprised of any administrative action taken against the bail agent or its sublicensee or employee in another jurisdiction or by another governmental agency in this State, as well as any criminal prosecution of the bail agent taken in any jurisdiction.

11 NYCRR § 28.6 requires at least one supervisor present and responsible for each place of business during all or a substantial part of the business hours each day. That person may be responsible for multiple locations provided that at any one time, only one such location is open to the public. Section 28.6 also requires prominent display of the license of every bail agent doing a bail business in a particular location and signage indicating that any complaint against the bail agent, insurer or charitable bail organization may be filed with DFS.

11 NYCRR §§ 28.7 & 28.8 will govern the premium and compensation for bail agents. In order to receive compensation as a bail agent, including any commission, a bail agent must be licensed. Compensation or consideration running to a bail agent or insurer must take the form of a premium based on rates in effect pursuant to Insurance Law §§ 2314, 6904. Although a bail agent may seek reimbursement for the out-of-pocket costs expressly permitted in 11 NYCRR § 28.8(a)(2), she may not use the collateral as the source of those funds because, as DFS noted in response to public comment, collateral is pledged to secure the bond, not to ensure payment for the bail agent or a third party.

Interestingly, a coalition of advocate organizations voiced concern over the elimination of former section 28.8(b), which stated that “[n]o interest, fee, or other financing or service charge shall be permitted for payment of premium by installment unless the bail agent is licensed as a premium finance company pursuant to Banking Law section 555(1).” However, DFS noted that bail agents may not offer interest-free financing and loans to clients because it would constitute an impermissible inducement under Insurance Law § 2324(a). See OGC Opinion 07-06-10 (June 12, 2007).

11 NYCRR § 28.9 requires an insurer or bail agent to return the full premium if to the indemnitor if the principal is not released from custody within 14 days, and 11 NYCRR § 28.10 requires the bail agent to obtain the prompt release of a principal following the execution of the bail agreement. In response to public comment, DFS provided that the purpose of 11 NYCRR § 28.10 is to prevent a bail agent from imposing fees on consumers for effectuating the release of principal (including, but not limited to, fees for courier services) and to effectuate a principal’s prompt and actual release from custody.

11 NYCRR § 28.11 will provide that the collateral required by a bail agent, insurer, or charitable bail organization shall be reasonable in relation to the amount of the bail, and providing that collateral equal to or less than ten percent of the bail amount is presumed to be reasonable. The advocate coalition requested that in cases where bail agents are currently in possession of collateral exceeding 10% of the bail amount, DFS should require bail agents and insurers to return to consumers all collateral that violates the new “reasonable” standard. However, DFS was unwilling to alter a contract into which the parties entered prior to the amendment being promulgated.

From the Filings Cabinet

11/18/19       “Defense Expenses” Exception to Exclusion Requires Proper Licensing
Department of Financial Services

DFS Advises Insurers Must be Licensed to Issue Legal Services where Policy contains “Defense Expenses” Exception to Exclusion

On August 18, 2019, DFS issued a filing disapproval that, in part, relied upon the licensing requirements for carriers issuing legal services insurance as defined in N.Y. Ins. Law § 1113 (a)(29).

Under N.Y. Ins. Law § 1113 (a)(29), “[l]egal services insurance” means insurance providing legal services or reimbursement of the cost of legal services.” Pursuant to N.Y. Ins. Law § 1102, an insurer must obtain a license to do the kinds of insurance business authorized under § 1113 unless otherwise exempted from such a requirement. Therefore, without an exemption, insurers issuing legal services insurance must be licensed to do so.

The proposed form contained an exclusion with exception language stating in relevant part that “this Exclusion shall not apply to ‘defense expenses’ unless and until a final or non-appealable judgment or adjudication in any underlying proceeding or action establishes such an act or omission or violation.” The proposed form defined the term “defense expenses” as the reasonable and necessary legal fees and expenses including attorney fees and expert fees incurred by the ‘insurer’ or the “insured” (other than regular or overtime wages, salaries, fees or benefits of ‘insured individuals’) in the investigation, defense, settlement and appeal of a ‘”claim”, including but not limited to cost of consultants and witnesses, premiums for appeal, injunction, attachment or supersedes bonds regarding such “claim”.

DFS advised that “this type of provision is considered legal services insurance which may only be provided for incidental amount (no more than 25% of the limit of liability)” and requires that the insurer be “licensed for line 29 legal services.” Thus, since the carrier was not licensed to issue legal services insurance as defined under N.Y. Ins. Law § 1113(a)(29), the proposed form was not permissible unless that provision was removed.

 

CJ AT THE THRESHOLD
Charles J. Englert III
[email protected]

11/21/19       Morales v. Cabral
Appellate Division, First Department
Cessation of Treatment Must Be Explained to Survive Summary Judgment

Defendant moved for summary judgment to dismiss the complaint against her on the threshold issue of serious injury under Insurance Law § 5102(d). The trial court denied the motion as to the claims of “permanent consequential” injury to plaintiff’s cervical spine, serious injury to plaintiff’s left shoulder, and a 90/180-day injury. Plaintiff appealed. In support of her motion, defendant submitted radiologists’ reports finding neither injury nor preexisting conditions, and emergency room medical expert’s finding that the plaintiff’s post-accident complaints and post-accident treatment were inconsistent. Additionally, defendant introduced plaintiff’s primary care records that showed plaintiff exhibited no complaints contemporaneous to the accident, and that plaintiff ceased treating for her injuries one year after the accident. In response plaintiff failed to raise an issue of fact with respect the injuries to her left shoulder and failed to explain why she ceased treating for her injuries one year after the accident. Accordingly, the Appellate Division ruled in favor of the defendant as to the “permanent consequential” limitation and 90/180-day categories but found that plaintiff had made a prime facie case as to the “significant limitation of use” category.

 

11/13/19       Yu Feng Jiang v. Francois
Appellate Division, Second Department
Contemporaneous and Current Objective Findings of Injury Raise a Triable Issue of Fact 

Defendant moved for summary judgment arguing that plaintiff’s alleged injuries were not sufficient to qualify as a serious injury as defined by Insurance Law § 5102(d). The trial court granted the motion and plaintiff appealed. The Appellate Division agreed that defendant of three IME reports—one from an emergency medicine expert, one from a radiologist, and one from an orthopedic surgeon—did meet establish her prima facie burden. In opposition, plaintiff introduced affidavits of four treating physicians. In short, these affidavits showed that plaintiff had limited ranges of motion in her cervical spine at the time of the accident and at examinations more contemporaneous with the motion. These affidavits also directly contested the defendant’s arguments regarding plaintiff’s alleged injuries. In defendant’s papers further supporting their motion, she addressed only the plaintiff’s assertions that defendant did not meet her prima facie burden of proof and that plaintiff sustained a qualifying 90/180-day injury. Defendant failed to address any other opposing arguments of the plaintiff.  As such, the Court ruled that the plaintiff had brought forth sufficient proof to raise a triable issue of fact and overturned the trial court decision.

 

EARL’S PEARLS
Earl K. Cantwell
[email protected]

07/29/19       Borchardt v. State Farm Fire and Cas. Co.
United States Circuit Court, Eighth Circuit
Misrepresentations on Proof of Loss Void Claim  

The Borchardts were financially stressed and at one time even had their home up for sale. Mr. Borchardt lost his job and Mrs. Borchardt had medical issues precluding her employment. Utilities were being disconnected at the house. Then on September 13, 2014, their house suffered a major fire which State Farm asserted was “incendiary” in origin, the most probable cause being application of an open flame to combustible materials. However, the decision does not say much more about the cause and origin than that.

The Borchardts made a claim to State Farm for $330,000 for the damaged house plus other structures, and a claim for $202,177 for damaged personal property. State Farm denied the claim for two reasons: 1) it was an arson fire, and 2) there was concealment and misrepresentation of material facts or circumstances concerning the insurance contrary to the State Farm policy and/or Minnesota statutory provisions with respect to submission of claim.

At trial, State Farm identified several items in the proof of loss that it argued were material misrepresentations including the value of a wedding ring, the number of lawn mowers the family had, the number of televisions in the house, number of computers, and even the number of pairs of “designer sunglasses”. The jury determined that there was sufficient evidence to establish a willful intent to defraud State Farm, but the Borchardts moved against the jury verdict arguing that no reasonable juror could have found misrepresentations about their personal property to be “material”. The basis for the appeal was an essential argument that the jury did not have a legally sufficient basis to return a verdict in State Farm’s favor because State Farm presented no evidence on the issue of “materiality”.

Minnesota law provides that an insurer has an affirmative defense if the insured misrepresents any material fact with intent to deceive or defraud, or if the misrepresentation increases the insurer’s risk of loss. For example, a misrepresentation may increase the risk of loss if it impairs the insurer’s ability to make a reasonable decision to assume the risk and amount of coverage. The jury was instructed that material meant that it must be sufficiently substantial to matter to a reasonable insurer. Intent to defraud was defined to mean acting with the purpose or intent of deceiving or cheating someone else.

The Borchardts admitted at trial to misrepresenting a number of the items they claimed were lost in the fire including the televisions, DVDs, etc. The Appellate Court concluded that there was ample evidence for a reasonable jury to find that the Borchardts misrepresented material facts – that is they were substantial enough to matter to a reasonable insurer. Therefore, the trial court judgment was affirmed.

As stated, this case focused upon material misrepresentations in a proof of loss. In this case there were several relatively minor misrepresentations, and the question is raised how many misrepresentations suffice to be “material”, or if one major misrepresentation would be sufficient to be “material”. Whether the misrepresentations were material was left to the jury to decide and did not require proof of “industry custom or practice”.

State Farm’s arson defense was seemingly abandoned and did not go forward at trial, nor raised on the appeal.    


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