Coverage Pointers - Volume XXI, No. 13

Volume XXI, No. 13 (No. 552)
Friday, December 13, 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’s a winter wonderland in the Land of the Blue Martinis.

From all of us to all of you:  Happy Chanukah and Merry Christmas to all of you and your families.  This is the last issue before the holidays are upon us.  We wish all of you the most joyous and healthiest of holiday seasons.  It is Friday the 13th and all is well in CP Land.

Great seeing many of you at the DRI Insurance Conference in the City last week.  Lots of folks greeted me with “I have a situation”.

There is an important “operative acts” case out of the First Department in my column and there is a “troubling” decision on “consequential damages”, also out of the First Department.  Brian Barnas covers it in his column and Steve Peiper comments on it in his cover note below.  Speaking of columns …


New Columns and a New Columnist:

This week we introduce a new column which will cover Child Victims Act cases as well as a review of United States District Court cases from the four New York federal districts.  C.J. Englert will take that column. He had been covering Serious Injury Threshold cases and that column has been dished to Michael Dischley from our Melville, Long Island office.

All good news from your friends at H&F, and we thought we would share.


Three New Hires Enhance the H&F Team with Diane Bucci Joining the Coverage Team:

We are delighted to announce that we have hired three experienced attorneys who will join our firm officially January 2, 2020!  We now have about 50 lawyers on our team, scattered throughout New York State and Connecticut and continue to serve those states and New Jersey with greater expansion coming in the new year. Our coverage team continues to search for and retain top-notch coverage lawyers.  Likewise, our Labor Law, premises, auto defense, commercial litigation, professional liability and general defense groups are also expanding with terrific legal practitioners.

Joining our Insurance Coverage Department and working on complex and sophisticated coverage matters is Diane Bucci, admitted to practice in New York and Connecticut.  She will be joining Lee Siegel, in the Nutmeg State.

Diane is well known nationally and most recently has been with SIS Insurance. Some of you know her already through your associations with DRI, the ABA, and other organizations. She brings a depth of knowledge in complex insurance matters, risk management and litigation issues, including good faith obligations as well as primary excess allocation.  Diane has been inhouse with an insurer for the past years, and before that worked at a great New England coverage firm.  Diane is a 1998 graduate of Pace University Law School where she was case note and comment editor of the law review.

Joining primarily our Labor Law Department is Timothy Welch.  In addition to his work in Labor law, he will add 20 years’ worth of experience in risk management, construction litigation, toxic torts, employment discrimination and other defense work.  He will be resident in Rochester, New York, and will be working out of a home office. He is a graduate of Albany University Law School.

Finally, we are very pleased to announce that we have hired Brenna Gubala, who also has been recently associated with excellent law firms. Brenna is a graduate of the University of Pittsburgh where she majored in art history, received a Master of Arts degree at the University of New Mexico, Albuquerque, New Mexico, with a major in Latin American Contemporary Art. She then worked as an Assistant Gallery Director in Albuquerque and continues to teach at NCCC as an adjunct professor in Contemporary Art.  She graduated from New York Law School, magna cum laude, and was a member of its law review. She will be working primarily with Jody Briandi’s Team as well as Todd Bushway, Chris Potenza, and Andrea Schillaci in general litigation defense.


FDCC Insurance Coverage Training Academy:  CGL Boot Camp:

I am excited to be part of the planning committee and faculty of the inaugural program of the FDCC Insurance Coverage Training Academy:  CGL Boot Camp, which will be held in Scottsdale, Arizona, on March 3, 2020.  I’ve attached the save-the-date for your reference while the formal registration materials are being finalized.

The program is designed for insurance adjusters and coverage attorneys with 1-5 years of experience, and also experienced defense attorneys who want to learn CGL coverage protocols.  The substantive program will be one day, March 3rd, from 8 am – 5 pm, with a welcome reception on March 2nd and a closing reception after the program on March 3rd.  The receptions will be part of the FDCC winter conference and will combine several groups for networking.

The program is built around a construction project fact pattern, with property damage and bodily injury, multiple claimants, multiple insureds, and risk transfer issues among the defendants.  The day will include six substantive lectures, three interactive breakout sessions with faculty members, and three recap/lessons learned panels.  The six lectures are:

  • Coverage 101 – Introduction to Coverage

  • Issue Spotting – Substantive Topics

  • Duty to Defend Considerations

  • Risk Transfer – Additional Insured and Contractual Indemnity Issues

  • Good Faith Claim Handling – Extracontractual Considerations

  • Considerations for Coverage Litigation

The program will include a writing exercise, and students will be given exemplar coverage position and tender letters to use for future reference.

Registration is complimentary for in-house insurance/corporate attendees, and the hotel rate is $199 for industry attendees.  To reserve a spot, please contact Danielle Scott at the FDCC office at (610) 992-0022, [email protected].

I am happy to answer any questions you might have about the program, or please feel free to reach out to the program chair, Lauren Curtis of the Traub Lieberman firm, at [email protected], (727) 388-4039.



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.


    Jen’s Gems:

    It is amazing that we are less than two weeks out from Christmas (and, also amazing, how much shopping I still have left to do).  

    This week I report on a decision from New York County Supreme.  It is a decision which addresses, among other things, the duty to defend a claimed additional insured.  In prior newsletters, we have highlighted certain decisions coming out of the First Department which have found that the duty to defend can be triggered based upon the allegations in a claimed additional insured’s third-party complaint.  This case law is troubling because it allows the allegations in a claimed additional insured’s own pleadings to be considered enough to trigger a defense in its favor.  The case I report on this week relies upon that case law in finding a defense for a property owner under a general contractor’s policy for a lawsuit that the general contractor was not a named defendant.  In my opinion, a troubling trend.

    Until next issue…

    Jennifer A. Ehman

    [email protected]


    Lloyds Insures Against the Weather, 100 Years Ago:

    The Buffalo Enquirer
    Buffalo, New York

    13 Dec 2019


    Lloyds May Insure Games

                New York, Dec. 13. —Lloyds, of England, may insure the major league clubs against rainy days.  They’ll have to have a weather umpire to decide just what constitutes a rainy day.  Some days a few drops of rain any time during the night or morning are sufficient to bring a postponement, especially when the attraction doesn’t look good for a comfortable gate and the chance for a profitable double header is offered.  There were several games postponed around New York last summer that would have drawn a yell of protest from Mr. Lloyd, or whoever it is that owns this insurance business. 


    Peiper on Property and Potpourri:

    In this penultimate issue of 2019, I am reluctant to bring negative energy to the group.  That said, we are duly compelled to present happenings in the insurance world as they occur.  A moment, then, to comment on a troubling trend in extra-contractual litigation in this State.

    Brian Barnas’ column reports on a recent decision from the Appellate Division, First Department, which further opens the door to the reconfiguring of consequential damages in New York.  In that case (Underwriters v. BioEnergy), the Court explains that the policyholder and Underwriters could not reach a resolution on the value of damages owed under business interruption coverage.  When a compromise could not be reached, the matter was submitted to appraisal.  Upon receipt of the award, Underwriters challenged the appraisal award, presumably, in a special proceeding.  In response, the policyholder counter-claimed for consequential damage and Underwriters promptly moved to dismiss said claims.

    The First Department’s decision to deny Underwriters’ motion is troubling and, respectfully, it is incorrect.  Let us assume that for a party to be entitled to consequential damages there must be a breach of a contractual relationship.  For an insurer, we might go a step further and suggest that a mere breach of contract is insufficient to trigger consequential damages.  Rather, the movant must also establish the breach of the insuring agreement was akin to a violation of the duty of good faith and fair dealing.

    Here, the matter at bar stems from a dispute over the value of a loss.  There obviously was no argument as to coverage because appraisal, as we all know, is limited to the value and scope of damages.  Thus, the policyholder stakes their claim for consequential damages upon something other than a upon a breach of the contract.  Indeed, by acceding to appraisal Underwriters actually ACTED WITHIN THE TERMS OF THE CONTRACT.

    By even entertaining the argument that participating in appraisal is a potential breach of the duty of good faith and fair dealing, the Appellate Division weakens the holding and direction of the Court of Appeals’ decision in Bi-Economy Food Markets.  The Appellate Division, apparently, extends it’s the concept further by suggesting that a party to a dispute (here the appraisal) risks extra-contractual exposure if it seeks appellate review of an adverse ruling.  Again, it is respectfully submitted this is beyond the appropriate scope of consequential damages.

    We are also troubled by the Court’s suggestion that attorneys’ fees might be properly characterized as consequential damages.  That concept was rejected by the Court of Appeals more than 60 years ago.  In Doyle v. Allstate, the High Court noted:

    The legal expenses necessarily incurred by the plaintiff beyond the taxable costs in seeking legal redress for the wrong, while a loss in a sense resulting from the wrongful act of the defendant, are not recoverable as general or special damages. The law considers, as a general rule, the taxable costs as adequate recompense (citing cases). * * * Even the taxable costs are not to be included in the damages assessed, but are to be recovered in the taxation, and consequently no evidence as to such costs is relevant on the trial.

    Attorneys’ fees, absent a contractual obligation to pay the same, are simply not recoverable under New York law.  This is the case regardless of how they are characterized.

    Bah humbug!

    That’s it for now.  On to better days, and best wishes on a peaceful and joyous Holiday Season.

    Steven E. Peiper

    [email protected]


    A Christmas Poem:

    Finally, it’s been several years since we offered you our favorite Yule time ditty, first published here perhaps 10 years ago:


    Christmas Coverage
    A Policy for Saint Nicholas

    Dan D. Kohane

    With apologies to Clement Moore (or less)

    T'was the night before Christmas, and all through the land.
    Few coverage advisors were still in demand.
    The policies still showed on both desk and on screen,
    My eyes only open with thanks to caffeine.

    Most company's adjusters had left for the day.
    And most coverage lawyers had little to say.
    It was surely the moment to turn out the light,
    Shut down the computer, put work out of sight.

    Then the phone started chirping, it startled my poise,
    Not the typical ring-tone, but an odd sounding noise.
    It jingled like sleigh bells, instead of a "ding,"
    I knew I must answer, despite everything.

    A Christmas Eve caller?  What could be the need?
    But the sound of the music, would just not recede.
    I was really not looking for Christmas Eve banter,
    Imagine my shock when the caller was Santa!

    "I need some advice, sir" said a somber Saint Nick,
    "My Christmas Eve Policy is three inches thick."
    I don't mean to bother, but I'm wrought with confusion
    "I don't understand this new 'Gifting Exclusion.'"

    "It carves out the nasties, the mean and the haughty.
    It favors the good ones and leaves out the naughty. 
    My coverage appears to have holes like Swiss Cheese,
    I'm afraid if I'm sued, I will twist in the breeze."

    "A products exclusion? A chimney one too?
    Elf employment exception, I'm screwed through and through.
    Just what is still covered? I sure am confounded,
    With all of these issues, I'm fear that I'm grounded."

    "With a sleigh full of sacks and reindeer at the ready,
    I'm starting to feel just a tad too unsteady.
    My belly has acid, my knees are a 'quiver
    With millions and millions of toys to deliver."

    "I want you to help me, I fear a disclaimer.
    This policy's scary; I need you to tame her.
    We must surely save Christmas, for good girls and boys,
    And Amazon won't refund "squat" on the toys.

    The holiday challenged, I sure knew my mission
    We needed to craft a new ISO edition
    Santa needed an ally, a comrade, a fighter,
    On the opposite side was a Grinch Underwriter.

    I am sure you'd imagine how hard it would be
    To secure for Saint Nick a late night policy,
    Without coverage gaps, so that Santa could fly,
    To save Christmas Day, we were destined to try.

    The person in charge of the coverage for Nick,
    Had left the shop early, was feeling quite sick.
    Perhaps it was sadness, or guilt or just gumption,
    He thought he'd killed Christmas, a well-placed assumption.

    In order to soften his hardening heart,
    We had to play coy, we had to be smart.
    We needed to dazzle that Grinch with our guile,
    To show him the risk was sure worth his while.

    Worse yet, betwixt and between stood a broker,
    A bloodsucker culled from the mind of Bram Stoker.
    Through him we must go, around or about,
    He'd bring pressure to bear, he's really got clout.

    "It's Santa," we'd say, "who'd sue him for cash?" 
    "Another broker can get us a better deal in a flash.
    We'll go to the market if a deal can't be made;"
    The Grinch saw his bonus beginning to fade.

    From the cream of the crop, a new team we'd assemble,
    To get Santa protection, to weaken his tremble.
    We'd send out the e-mail, we'd tweet and we'd twitter
    We needed to find the best of the litter.

    The other apt choice, as the time slipped on by,
    Was to use those fine people, to make him comply.
    By plane and by car, by boat and by train.
    We beckoned this family to join in refrain.

    And gather they did, first a few then a score,
    Lawyers and brokers, claims folks and more
    More than a choir, it was surely a throng,
    Together they gave voice to a beautiful song.

    And they reached that man's spirit, his heart and his soul,
    And in no time at all, they'd accomplished their goal.
    "Give me my pen", the Grinch yelled to his clerk.
    I knew then and there that our ploy it had worked.

    "Exclusions begone!  Limitations not there!
    We'll provide him his coverage, no need to beware."
    And so it was written, and Santa could jet,
    And Christmas was saved, the best Yuletide yet.

    On cold winter night, when you're hearing his jingle,
    When the children are sleeping and in comes Kris Kringle,
    Remember that coverage protected his flight,
    Happy Christmas to all, and to all a good night.

    Special Editorial Thanks to the Christmas Elves:  Tim Sullivan, John Intondi, Mike Perley and Rich Traub

    100 Years Ago – “Lawyering” Was Not a Word:


    The Daily Notes

    Canonsburg, Pennsylvania

    13 Dec 2019



    Dictionary Has No Word to Describe Just What Lawyer’s Work Can Be Called.

                            One thing about his profession that probably not even a lawyer can explain is the singular neglect which the lawyer’s trade suffers at the hands of the dictionary.  Apparently, the act of performing the professional duties of a lawyer has never been considered sufficiently worthy to deserve a name of its own, for there isn’t any polite name for it in the English language.  No other learned profession has been so slighted.

                What a minister does when he attends to business is called ministering.  What a doctor does when he prescribes a pill is called doctoring.  The engineer goes in for engineering and the soldier for soldiering, and even the newest of all professional men engages in what we are pleased to call profiteering.  Not so the lawyer.  Participially, he is not there.  Lawyering? There’s no such word.  Whatever his business is, the dictionary evidently will have nothing to do with it—which, if not actually an indictment, is at least evidence strongly circumstantial. —New York Times.

    Editor’s Note:  The first reference I found to the word “lawyering” was in an April 17, 1824, edition of Cobbet’s Weekly Political Register, a London publication. The word is certainly found in modern dictionaries.  I also found reference to the word “lawyerling” which appears to indicate young or inexperienced lawyers.

    Wilewicz’ Wide-World of Coverage:

    Dear Readers,

    It’s that time of year again … holiday décor, seasonal delicacies, office parties, and flu season just ramping up. It seems like everyone in the office is coughing or sneezing these days, and the cacophony makes for great office Musak. I unfailingly always get sick around this time of year, either from the frequent travel or just my uncanny ability to pick up any germs that are floating around. I was hoping I would beat the odds this year, but alas, I can already feel myself starting to get worn out just in time for Christmas.

    Now, in the Wide World of Coverage here, you know we bring you cases from the Circuit Courts around the country, with a focus on our own Second Circuit that covers the upper tri-state area (as it were) of New York, Connecticut, and Vermont. This week, however, we found one from our neighboring Third Circuit Court of Appeals, which covers Pennsylvania, Delaware, and New Jersey.

    So, in Pennsylvania National Mutual v. Everest Reinsurance, at issue was whether arbitration could be compelled as to one panel over another. There, simply put, the court reiterated basic contract principles which state that the arbitration agreement’s terms dictated the panel selection and decision-making. In a decision very brief on the facts, it serves as a simple reminder that the terms of a contract govern. If the parties also agreed that the procedural aspects of an arbitration (such as whether two similar cases could be consolidated) were to be decided by arbitration, the court’s hands were tied, and it could only compel arbitration based upon those terms.

    Until next time, stay well!


Agnes A. Wilewicz

[email protected]


Not My Daughter:

Poughkeepsie Eagle News

Poughkeepsie, New York

13 Dec 1919




Irate Father, Who Objected To Daughter’s Suitor, Gets Stiff Sentence for Assault.



            Joseph Palmer, of Stoneco, who shot John Robertson several weeks ago because he was showing too much attention to his daughter, was sentenced to serve a term of not less than four years and six months nor more than six years and six months in Sing Sing prison by County Judge C. W. H. Arnold on Friday when he pleaded guilty to the charge of assault in the first degree.

            Robertson is still in Vassar Brothers’ Hospital, where he was removed shortly after the shooting, and although he is still unable to leave the hospital it is stated he is out of danger.  There is still another indictment against Palmer which will be held until he has served his present term.


Barnas on Bad Faith:

Hello again:

I’m not sure when the middle of December got here, but it is apparently here.  Time sure seems to be flying these days, and there is quite a bit of coverage analysis to be done around these parts.  Time flies when you’re reading insurance policies.

On Sunday, I’m making the trip down the 90 and 79 for the Bills’ first appearance on Sunday Night Football since 2007 against the Steelers at Heinz Field.  If the Bills win this game, or any of their last three, they will be in the playoffs for the second time in three seasons.  It should be a great atmosphere at one of the great football venues in the country against another team in playoff position.

Circumstances are a little different than the last time the Bills played on SNF.  On November 18, 2007, the 9-0 New England Patriots rolled into Orchard Park to take on the plucky 5-4 Bills in a game that was flexed to Sunday night.  The game was 14-7 in the second quarter after a J.P. Losman 47-yard touchdown pass to Roscoe Parrish.  Unfortunately, that was the high point of the night for the Bills, as the Patriots went on to win 56-10 behind four touchdown passes from Tom Brady to Randy Moss in the first half alone.  Hopefully the results are far different this Sunday, as well as next weekend when the Bills head to Foxboro to take on New England in another nationally televised game.

I have an interesting bad faith decision from the Eleventh Circuit in my column today.  We also have a New York Appellate Division decision where the court allowed a bad faith counterclaim to stand largely based on the reasoning and decision from the Bi-Economy case.  Check both out if you are so inclined.

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

Brian D. Barnas

[email protected]


A Shortage of “Hello Girls”:

Buffalo Courier

Buffalo, New York

13 Dec 1919



            New York, Dec. 12.—Hearing on complaints of poor telephone service throughout the state was given here today by the Public Service Commission of the Second District.  Most of the witnesses summoned were telephone company employees.

            H. C. Carpenter, chief plant engineer of the New York company, said relief was in sight but he could not promise it would be provided before June.  He attributed conditions to greatly increase demands for service and a famine in operators.  He said the company was short 1,000 girls in New York city alone.


Off the Mark:

Dear Readers,

This year’s late Thanksgiving has really thrown me off.  I can’t believe we are already well into December.  With the holidays fast approaching, my kids are starting to get really excited.  Their lists are done and the tree is up.  Luckily for me, the wife does most of the holiday shopping.  Time is ticking away for me to come up with a gift for the wife showing my gratitude and appreciation for all she does.  Ideas are always welcome.

Unfortunately, the construction defect front remains quiet and there are no noteworthy decisions to report on in this edition.

Until next time …

Brian F. Mark
[email protected]


Huge Insurance Policy Acquired:

The Fort Wayne Journal-Gazette

Fort Wayne, Indiana

13 Dec 1919



            A fire, cyclone and lightning insurance policy totaling $400,000 on the Allen county court house was taken out this week by the county commissioners.  The policy is divided among thirty-seven different Fort Wayne agencies.


Boron’s Benchmarks:

For those of you new to Coverage Pointers, I provide coverage of the latest rulings of the high courts of the 49 states not named New York in my column, Boron’s Benchmarks.  In this edition, I cover an opinion issued just last week by the Arkansas Supreme Court affirming summary judgment awarded to an insurer, where arguments of the claimants asserting policy ambiguity and public policy violation against the insurer were rejected by the court.  You can find my write up and a link to the full Arkansas Supreme Court opinion in Coverage Pointers.  

On a personal note, I hope you had a great Thanksgiving.  I certainly did.  I also hope – with less than a fortnight now left between this writing and Christmas – that you’ve finished, or nearly finished, your holiday shopping.  To be honest … (to quote so many witnesses I have deposed or EUO’d over the years) … I haven’t wrapped mine up quite yet (pun intended).  Let me just go with the arguably ambiguous “nearly finished” descriptor as to my holiday shopping status.

Ambiguity. OK in small talk. Not OK in insurance policy provisions.

Have a great two weeks! 

Eric T. Boron
[email protected]


Unusual in the South, 100 Years Ago – A White Man Arrested as Suspicious:


Weekly Town Talk

Alexandria, Louisiana

13 Dec 1919



(From Thursday’s Daily)

            H. Walton, a white man, was arrested last night by Officer Bordelon of the local police department, on the charge of being a dangerous and suspicious character.  He was arraigned in the city court this morning, convicted and sentenced by Judge Hooe to serve ten days in the city jail.

            It was charged that the accused sold four half-gallon bottle of grape juice to a colored man for the sum of $1.50.  He told the officer that the grape juice had been sitting on the sidewalk never the l. R. & N. depot for several days, that nobody claimed it and he thought he had the right to sell it.  He told the court a different story this morning, however, stating that he had been working for a man who had a soft drink concession at the street carnival last week; the man owed him and had left the city without paying him.  He had also left the grape juice with him, and he did not think it was wrong to sell it.  The accused admitted that he was a drug addict and had come here to get treatment.

            It is stated that bottles of grape juice the size sold by Walton are worth $1.50 each, and it is believed by the police that they were stolen from some drug store or other establishment that handle such goods.


Barci’s Basics (On No Fault):

Hello Subscribers!

I hope you all had a lovely Thanksgiving and are eagerly preparing for/celebrating whatever winter holiday you celebrate! In my house we do Christmas, so it’s been a busy few weeks of decorating and then trying to stop the cats from destroying the decorations and knocking ornaments off the tree. My shopping is mostly done, save for cookie ingredients and presents for my Dad and Brother. Usually these guys are pretty easy to give gifts to, but I’m tired of giving them the same theme of gifts (beer, sports tickets, and/or sports-themed clothing). If you have any creative suggestions, I am listening! For everyone else on my list, they will likely be receiving some sort of art. Last weekend I attended the Queen City Market and the Roycroft Holiday Craft Show, both of which were packed and filled with great art, crafts, food and other fun items for gift-giving. If you’re in the area next year, I recommend a stop at both for your holiday shopping needs!

On the no-fault front, I have three cases for you. First, a case that discusses what a covered person is under the MVAIC guidelines. Next, a more procedural issue of a declaratory judgment in one court vs. summary judgment in another and which prevails for a condition precedent on the policy. Finally, there is a constitutional issue the court discusses between the Insurance Law and the Legislative Statute regarding fee schedule defenses.

That’s all folks (Happy Holidays!),

Marina A. Barci

[email protected]


Luxury Car Not a Luxury:

Press and Sun-Bulletin

Binghamton, New York

13 Dec 1919



            If one resident of Charlotte, N. C., is permitted to be heard, his plaint will go far toward convincing the world—if, indeed, it has not already been convinced—that the motor car is actually a necessity.  He recently wrote a distributer in Charlotte as follows:

            I want my Cadillac.  I need my Cadillac.  I miss my Cadillac.  The neighbors miss by Cadillac.  My children cry for the Cadillac, and the police miss my Cadillac, while the gasoline men watch for my Cadillac. It has been three weeks, almost, since my Cadillac left me.  I yearn for the Cadillac in its old accustomed place.  People say, ‘Where is your Cadillac?”  I have the Cadillac fever.  Send the medicine at once, lest, at any time, I forget myself and commit violence, so much so, that we have a ‘recall’ election.  Please hurry back with my Cadillac.  When will you bring it back?

I want you to paint the letter ‘T’ on it.  Put it in a diamond, or anything that becomes a Cadillac, and bring back my Cadillac.”


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

This past weekend, the Maxwells’ had their annual tree cutting ceremony. I made short work of this year’s tree—mostly because Lorraine, Phillip, and Logan were “very cold” as Phillip articulated perfectly. This tree will likely be the first that Phillip may, in fact, remember, and the first of Logan’s short stint on this earth. It’s truly the most wonderful time of the year.

Speaking of wonderful times, welcome to the 2019 NCAA Division I Women's Volleyball Sweet 16! It’s an exciting period for those volleyball fanatics out there in coverage land like me. Roll call: raise those hands up high if you’re among us? —and then put them right back down because this is a print medium and I can’t see you. I guess … email me if you want to chat about volleyball or coverage (or both).

We have the perennial power houses back at it again in 2nd ranked Texas, 3rd ranked Stanford, 4th ranked Wisconsin, 5th ranked Nebraska, 7th ranked Minnesota, 10th ranked Florida, and 11th ranked Penn State. Nebraska, of all teams, had a second-round scare against Missouri. In the Sweet 16 matches to come, Penn State squares off against the unranked Cincinnati Bearcats, coming off a five-set upset over 6th ranked Pitt. The Florida-Minnesota match should prove exciting given the caliber of teams.

Speaking of Minnesota, the Golden Gophers have had an interesting path from my personal perspective. It started with a three-set victory over the 24-6 Fairfield Stags—a team coached by former University at Buffalo head coach, Todd Kress. Then I caught an absolutely fantastic round of 32 match between Minnesota and the Creighton Blue Jays, where the Blue Jays had two match points thwarted by a monster Minnesota block to force a decisive fifth set victory.

Although I have no dog in the fight, I will predict a Stanford Cardinal National Championship, because … well, its Stanford. Prove me wrong, field, prove me wrong. Ahhhhhhhh, tournament time.

In this edition of Ryan’s Capital Roundup, the Legislative List includes new affirmative defenses for farmers with respect to genetically modified seeds, etc. In the Regulatory Wrap-Up, I outline new regulations regarding mandatory e-filing of certain insurance industry forms that will take effect in May of 2020. Finally, From the Filings Cabinet provides an overview of a DFS filing disapproval involving an apparent impermissible pairing of group accident and health coverage with “individual” property travel coverage.

Until next time,

Ryan P. Maxwell

[email protected]


Cutting the Jail Bars with a Torch:

Buffalo Evening News

Buffalo, New York

13 Dec 1919


JAIL DELIVERY PLAN FOILED Men Try to Cut Bars to Free Condemned Boy

            ROCHESTER, Dec. 13. —A bold attempt to free Howard Baker, the Rochester boy who was found guilty of murder in the first-degree Thursday night, from the Lyons county jail by burning through the bars with an acetylene torch, stirred the whole town last night.

            Two men, one of whom is said to have been recognized as a relative of Baker, engineered the attempt. In the gun play that followed the discovery of the men a Lyons resident. Berne Lynn, was shot but not seriously injured.

            The men escaped after failing in their attempt to release Baker.

Editor’s Note:  Baker was executed the following year at the tender age of 20, for killing a night watchman.  The fellow who was shot during the jailbreak was not involved in it and eventually reached a settlement for the injuries he sustained, some $1,400.


CJ on CVA and USDC(NY):

Hello again readers,

As you can see my column has changed focus. I’ll now be reporting on the Child Victims Act (CVA), focusing on New York, but I’ll also touch on other jurisdictions where CVA-type legislation is passed. The focus of  my column will be the insurance implications of these laws and I will report on decisions handed down by state and federal courts. In New York, we are only a few months into the look-back period and while many cases have been filed. All are still in the very early stages of litigation. This edition I highlight two recently passed pieces of CVA-type legislation, one in Pennsylvania and one in New Jersey, as well as a case from the Central District of Illinois which interprets a sexual misconduct/molestation liability exclusion and could have an impact on how such exclusions are interpreted by courts in the future.

In addition to any interesting CVA-type developments, I’ll also be taking over Larry Waters’ District Court column. My plan going forward is to write about each topic once a month, so have no fear, next issue will be chock full of the latest and greatest from the District Courts of New York.

Happy Reading,

Charles J. Englert, III

[email protected]


“Bait and Switch” 100 Years Ago:

Reno Gazette-Journal

Reno, Nevada

13 Dec 1919



            CHICAGO, Dec. 13. —Executives of five of Chicago’s leading retail stores yesterday fixed a “fair price” list for clothing.  A man’s suit should sell for $24.50, they announced, and other articles in proportion.

            A newspaper reporter, sent out to buy one of the $24.50 suits, reported today, after two day’s effort, that it could not be done.

            “The best I could find,” he reported, “was one place where they offered me a cut-price vest—just reduced to $24.50.”

Dishing Out Serious Injury Threshold:

Dear Readers,

For those of you who don’t know me, I am Michael Dischley and I work out of the firm’s Melville office. I have been given the nearly impossible task of taking over this renowned Serious Injury Threshold column. For those of you disappointed to not see CJ’s name above, don’t fret: CJ has only moved a few paragraphs and will be handling a CVA-based column. In the meantime, I will keep you up to date on all the serious injury threshold issues going forward.

But first, this past week I was part of the firm’s retinue that attended the DRI (Defense Research Institute) conference in New York City. It was my first time attending a DRI conference and it was great meeting many new people from across the country, and even some from very nearby. This week I will be traveling up to Buffalo for the firm’s holiday party, which is another wonderful occasion to see my colleagues in Buffalo while I attempt to survive the cold weather with some wings and craft beer.

The cases I selected this week are both recent decisions out of the Second Department pertaining to the requirement that plaintiff’s expert specifically address findings of defendant’s expert as to plaintiff’s degenerative and pre-existing injuries with regard to causation. The failure of plaintiff’s expert to specifically address these findings is fatal to plaintiff’s claim as plaintiff would have failed to raise a triable issue of fact. Additionally, one case also addresses what happens when plaintiff’s allegations of returning to work with restrictions and inability to perform daily activities are not consistent with the objective medical evidence when considering plaintiff’s 90/180-day claim.


Michael J. Dischley

[email protected]  


A Will’s a Will:

Reno Gazette-Journal

Reno, Nevada

13 Dec 1919



            NEW YORK, Dec. 13.—A stipulation on the will of Frank Work, contemporary capitalist with Jay Gould, who left an estate valued at $13,000,000 that his twin grandsons, Francis and Edmund Burke-Roche, should change their surname to Work; keep out of England and become naturalized citizens of the United States on reaching twenty-one, had never been complied with according to a report of the trustees of the estate filed today in the surrogate court.

            Technical forfeiture of their share in the estate was indicated by the trustees.  However, each will receive $2,716,917 under a family agreement. 


John’s Jersey Journal:

To those who are sick and battling the nasty cold going around, I hope you feel better soon. My wife and I both have been sick for the past week, so our house sounds like a hospital clinic with all the coughing. Our dog, Donald, is most annoyed because it is interrupting his sleep habits. Every time our coughing wakes him up, he takes a deep sigh of disgust. Lately, he’s been avoiding me, choosing to hang out by himself on a different couch. You know you’re sick when even the dog won’t hang out with you. Despite my cold and the weather, I haven’t let it get me down. I have been enjoying relaxing in the hot tub. There is something peaceful about sitting there watching the snow gently fall. I think I’ve found a new way to deal with winter.

For those of you who are curious what insurance developments have transpired in the Garden State, New Jersey courts haven’t left us in the cold. We have yet another Hurricane Sandy claim. The legal issue was whether New Jersey Transit was entitled to the $100 million flood sublimit or the entire $400 million policy limit.

NJ Transit secured a $400 million property insurance program through various insurers. The policy provided a $100 million sublimit for damage caused by flood and defined “flood”. As NJ Transit’s existing policy was expiring, its broker negotiated a new policy and highlighted the changes. As part of the changes, the broker added a “named windstorm” endorsement. For whatever reason, the broker declined to highlight this endorsement for the insurers but sent it on to the insurers to review. The insurers agreed to terms, apparently without realizing the introduction of that endorsement.

Hurricane Sandy hit on October 29, 2012, causing damage to NJ Transit’s properties. The insurers advised NJ Transit that they would only be paying the $100 million sublimit and nothing more. The broker disputed this, citing that a “named windstorm” was a specifically covered peril. A DJ action ensued with the primary issue being whether the damage was caused by a flood or a named windstorm, and thus, whether there was $100 million or $400 million in coverage.

The insurers argued that sublimit applied. NJ Transit focused on the fact that the “named windstorm” endorsement provided coverage for “wind driven water, storm surge and flood associated with a ‘named windstorm’”. The Appellate Division (as did the trial court) ruled that the $400 million policy limit applied. The Appellate Division ruled that the insurers agreed to cover damage caused by a “named windstorm”, including storm surge and flood associated with it. The Court further explained that had the insurers desired the flood sublimit to apply, the insurers could have done so in plain language (somewhat ironic as the insurers did not put the windstorm endorsement in the policy).

Sneaky move by the broker? At least one of the insurers thought so and sued for fraud and reformation of the policy, which did not gain any traction with the Court. In the Court’s view, the insurers had no reason to trust the broker and should have reviewed the proposed policy changes more closely.

I wish you all a happy and healthy holiday season.

John R. Ewell

[email protected]


Founded in 1898, the Company Continues to Serve African Americans Today:

The New York Age

New York, New York

13 Dec 1919


Largest Negro Insurance Company

            Florence, S. C.—A. M. Moore, M. D., President of the North Carolina Mutual Life Insurance Co. of Durham, passed through the city recently, returning from a business trip throughout South Carolina and Georgia.  The company has added more than seven million dollars of insurance.  It is the largest Negro insurance company in the world, operating in ten states. 


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies,

I write to you this fortnight sailing upon the clouds, making my way to Buffalo for our firm Holiday Party. It’s always great when the Firm comes together from across the region to celebrate the accomplishments of the year passed, to look with excitement upon the year to come, and enjoy the friendship of colleagues. Here at the Connecticut Chronicles, we wish our readers a happy and healthy holiday season, filled with friends and family.

Lee S. Siegel
[email protected]


Headlines from this week’s issue, attached:

Dan D. Kohane
[email protected]

  • Where Jury in Underlying Lawsuit found that Contract was Not Responsible for Accident, Additional Insured Coverage Does Not Require Indemnity.  However, Defense Costs Owed until Jury Determination

  • Insurance Broker Free from Liability without “Special Relationship”

  • Operative Act” was Covered by Exclusion

  • In Action Against Broker, Issue of Fact as to Whether “Special Relationship” Existed, Allowing E&O Claim


Steven E. Peiper

[email protected]

  • Failure to Update Address with the Secretary of State is Sufficient Excuse for Failing to Appear in Litigation


Michael J. Dischley
[email protected]

  • Summary Judgment Granted Where Plaintiff's Expert Failed to Address the Findings of Defendant’s Expert

  • Plaintiff’s Claim or Significant Work Restrictions Unsupported by Medical Evidence, Fails to Raise Triable Issue of Fact


Agnes A. Wilewicz

[email protected]

  • Third Circuit holds that Arbitration Should be Compelled before a New Panel of Arbitrators, Pursuant to the Arbitration Agreement Terms (PA Law)


Jennifer A. Ehman

[email protected]

  • Court Finds General Contractor’s Insurer Owes Primary Defense Obligation; Court Relies Upon Allegations in the Third-Party Complaint


Brian D. Barnas

[email protected]

  • Proposing Release that Insured Objected to is Not Bad Faith under Florida Law

  • Bad Faith Counterclaim based on Failure to Advance Business Interruption Coverage Survives Motion to Dismiss


John R. Ewell

[email protected]

  • New Jersey Transit Entitled to Full $400 Million Policy Limit for Hurricane Sandy Damage


Lee S. Siegel

[email protected]

  • Subcontractor Owes General Contractor a Defense


Brian F. Mark
[email protected]

  • It remains very quiet on the construction defect front.


Eric T. Boron

[email protected]

  • Summary Judgment to Insurer on Plaintiffs’ Medical Expenses Claim Affirmed; Coverage Provisions at Issue are neither Ambiguous nor Against Public Policy


Marina A. Barci

[email protected]

  • Insurer’s Letter stating that a Claimant is a “Qualified Person” is Prima Facie Evidence that the Person is Covered

  • Declaratory Judgment from Nassau County is Binding on Summary Judgment Issue in Kings County

  • Fee Schedule Defense must be Raised within 30-Day Time Period after Receipt of Claim or No-Fault Carrier is Precluded


Ryan P. Maxwell

[email protected]

The Legislative List

  • Law Creates Affirmative Defense for Unknowing and Unintentional Introduction of Genetically Engineered/Modified Organisms into Crops


Regulatory Wrap-Up

  • Insurance Regulation 195 Promulgates New Part 6 of NYCRR Title 11 Governing Required Electronic Filings and Submissions for Specified Documents


From the Filings Cabinet

  • DFS Disapproves Attempt to Package Individual Property Travel Policy with Group Accident and Health Policy as Violation of Ins. Law § 3452


CJ on CVA and USDC(NY)
Charles J. Englert III

[email protected]

  • Ambiguities in Exclusionary Language Place Alleged Sexual Misconduct into Coverage 

  • Statute of Limitations in Pennsylvania for Child Victims Extended to 55

  • Statute of Limitations in New Jersey for Child Victims Extended to 55, Two Year “Look-Back” Period Created


Earl K. Cantwell

[email protected]

  • Can a Racoon be a Vandal?


Happy Happy and Merry Merry.


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.

Dan D. Kohane

[email protected]


Agnes A. Wilewicz

[email protected]


John R. Ewell

[email protected]


Dan D. Kohane, Chair
[email protected]


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

Michael F. Perley

Jennifer A. Ehman

Agnieszka A. Wilewicz

Lee S. Siegel

Brian D. Barnas

Brian F. Mark

John R. Ewell

Eric T. Boron

Marina A. Barci

Diane F. Bosse

Joel R. Appelbaum


Steven E. Peiper, Team Leader
[email protected]


Michael F. Perley

Eric T. Boron

Brian D. Barnas


Jennifer A. Ehman, Team Leader
[email protected]

Marina A. Barci


Jody E. Briandi, Team Leader
[email protected]


Diane F. Bosse

Topical Index

Kohane’s Coverage Corner

Peiper on Property and Potpourri
Dishing out Serious Injury Threshold

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 on CVA and USDC(NY)

Earl’s Pearls


Dan D. Kohane
[email protected]


12/11/19       Port Authority v. Brickman Group, Ltd., LLC
Appellate Division, First Department
Where Jury in Underlying Lawsuit found that Contract was Not Responsible for Accident, Additional Insured Coverage Does Not Require Indemnity.  However, Defense Costs Owed until Jury Determination

Underlying verdict in personal injury lawsuit found Port responsible for accident and not contractor.  The First Department finds that allegations in complaint broad enough to require defense of lawsuit but jury finding determinative on indemnity.


12/11/19       MAAD Construction, Inc. v. Cavallino Risk Management, Inc.
Appellate Division, Second Department
Insurance Broker Free from Liability without “Special Relationship”

Cavallino is a licensed insurance broker. In March 2011, MAAD requested that Cavallino procure insurance for the plaintiff's trucking and hauling business and all related equipment. On March 31, 2011, Cavallino, through an intermediate insurance broker—the defendant Marketscout Wholesale, Inc.—procured three insurance policies for the plaintiff: (1) an auto liability policy underwritten by National Union Fire Insurance Company (National Union), (2) a general liability policy also underwritten by National Union, and (3) an inland marine physical damage comprehensive policy underwritten by the defendant Allianz (AGCS). The AGCS policy, which provided coverage for the plaintiff's equipment, had a termination date of January 18, 2013. The plaintiff obtained financing from First Insurance Company of New York (hereinafter First Insurance) to purchase the policies, making a down payment to Cavallino and thereafter making installment payments toward the balance directly to First Insurance.

On October 1, 2011, the plaintiff purchased a 2012 Mack tractor and requested that it be added as an insured item under the AGCS policy. The 2012 Mack tractor was added to the AGCS policy as requested but MAAD failed to pay the additional premium. AGCS sent a notice of cancellation to the plaintiff on December 19, 2011 for nonpayment of the premium. The plaintiff claims that it did not receive the notice of cancellation issued by AGCS, and was not informed by the insurance brokers, including Cavallino, of the cancellation. The plaintiff asserted that it learned of the cancellation for the first time in October 2012, upon submitting a claim after Hurricane Sandy for damage to its fleet.

The plaintiff commenced the instant action against Cavallino and AGCS, among others. The plaintiff alleged that it entered into a "professional agency relationship" with Cavallino and that, as part of that relationship, Cavallino was obligated to provide the plaintiff with notice of cancellation of the AGCS policy, which it failed to do.

Insurance brokers have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so; however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage. In the ordinary broker-client setting, the client may prevail only where it can establish that it made a particular request to the broker and the requested coverage was not procured. The plaintiff’s claim hinges on the existence of a special relationship.

Where a special relationship develops between the broker and client, the broker may be liable, even in the absence of a specific request, for failing to advise or direct the client to obtain additional coverage. The Court of Appeals has identified three exceptional situations that may give rise to a special relationship, thereby creating an additional duty of advisement: (1) the agent receives compensation for consultation apart from payment of the premiums; (2) there was some interaction regarding a question of coverage, with the insured relying on the expertise of the agent; or (3) there is a course of dealing over an extended period of time which would have put objectively reasonable insurance agents on notice that their advice was being sought and specially relied on. None existed here.


12/11/19       The Automobile Ins. Co. of Hartford v. Damadian
Appellate Division, First Department
“Operative Act” was Covered by Exclusion

The underlying wrongful death action alleged that Damadian's negligence in not providing proper life preservers at his premises, and failure to properly check and maintain the kayaks he allowed the occupants renting his lake house to use on a nearby pond, caused Jonathan Tang to fall into the water and drown.

NCIC issued an insurance policy to Damadian, which insured the premises the decedent rented during the relevant time period. Pursuant to the watercraft provision, the insurance policy excluded coverage for bodily injury "resulting from the use, occupancy, renting, loaning, or entrusting" of watercraft while not ashore.

"To be relieved of its duty to defend on the basis of a policy exclusion, the insurer bears the heavy burden of demonstrating that the allegations of the complaint cast the pleadings wholly within that exclusion, that the exclusion is subject to no other reasonable interpretation, and that there is no possible factual or legal basis upon which the insurer may eventually be held obligated to indemnify the insured under any policy provision".

In this matter, because the kayak was not ashore, the exclusion applied. Thus, NCIC has no duty to defend or indemnify Damadian in the underlying action.

Editor’s Note:  This is an important decision.  In 1996, the Court of Appeal, in Mt. Vernon Ins. Co. v. Creative Housing, 88 NY2d 347, looked beyond raw allegations in the complaint and focused on the “operative act” that caused the loss.  That case involved an assault and battery in a building with an “assault and battery” exclusion.  The claim against the building owner was “negligent security”.  The high court determined that without the assault and battery, there would have been no loss.  This case, while it doesn’t cite to Mt. Vernon, is of similar ilk.

While the allegations were of failure to provide life preservers, the “operative act” was the use of the boat on the lake and hence, allegations aside, there was no coverage.


12/03/19       STB Investments Corp. v. Sterling & Sterling, Inc.
Appellate Division, First Department
In Action Against Broker, Issue of Fact as to Whether “Special Relationship” Existed, Allowing E&O Claim

Issues of fact exist as to whether a special relationship arose between plaintiff STB Investments Corporation and its managing agent on the one hand, and defendant insurance broker, on the other, that imposed on defendant a duty to advise plaintiffs as to insurance coverage that would have included the loss arising from plaintiffs' demolition project.

STB and its managing agent contended that the special relationship arose from an interaction with defendant in which they relied on defendant's expertise as to coverage. There is evidence that plaintiffs' property manager, who allegedly had never before purchased insurance for a demolition project, requested that defendant obtain adequate coverage for that particular risk, and that defendant agreed to do so, reviewed the demolition contract as part of its efforts, and discussed with plaintiffs the demolition contractor's coverage in the larger context of determining the appropriate level of coverage to obtain.


Steven E. Peiper

[email protected]

12/03/19       Figueroa v. Relgold, LLC
Appellate Division, First Department

Failure to Update Address with the Secretary of State is Sufficient Excuse for Failing to Appear in Litigation

Defendant’s appealed from the denial of its motion to vacate a default judgment.  In support of its application, defendant established that the Complaint was sent to an old address and that it had not updated its business address with the Secretary of State.  The court reasoned that this was a reasonable excuse for the default.

In addition, defendant established the existence of a meritorious defense.  Here, the motion papers upon which the default judgment was taken was deficient.  In addition, defendant established that the area were plaintiff fell was in the control of his employer and further that plaintiff’s employer was also responsible for indemnifying defendant for any liability arising out of the use of the premises. 


Michael J. Dischley
[email protected]

11/27/19       Lisa A. Gash v. Jena Leigh Miller, et. al.
Appellate Division, Second Department
Summary Judgment Granted Where Plaintiff's Expert Failed to address the Findings of Defendant’s Expert

Plaintiff alleged that, as a result of an accident involving defendants' vehicle, she sustained injury to her cervical and lumbar spine, and both shoulders. Defendant moved for summary judgment to dismiss the complaint on the threshold issue of serious injury under Insurance Law §5102(d). The Supreme Court granted defendants' motion and plaintiff appealed. In support of defendant’s motion, defendant submitted competent medical evidence establishing, prima facie, that the plaintiff's alleged injuries were degenerative in nature and not caused by the subject accident. Specifically, Defendant’s expert radiologist found that the injuries alleged by plaintiff were degenerative in nature, revealed no evidence of recent post-traumatic injury and not related to the subject accident. In opposition, the plaintiff's expert failed to address the findings of the defendant’s expert radiologist that the alleged injuries were degenerative in nature. Accordingly, the Appellate Division affirmed the Supreme Court’s decision because the conclusions of the plaintiff's expert as to causation were insufficient to raise a triable issue of fact.


12/05/19       David M. Deneen v. Wilson A. Bucknor, et. al.
Appellate Division, Second Department
Plaintiff’s Claim or Significant Work Restrictions Unsupported by Medical Evidence, Fails to Raise Triable Issue of Fact

Plaintiff alleged that, as a result of an accident involving defendants' vehicle, he sustained injury to his cervical and lumbar spine, and other consequential injuries. In addition to dismissal of plaintiff’s claims based on an analysis of causal relation between his spinal condition and the accident (similar to the above analysis, in which plaintiff’s expert failed to rebut defendant’s prima facie showing that plaintiff's spinal conditions were preexisting and degenerative in nature), the Appellate Division further opined that the Supreme Court properly dismissed plaintiff's 90/180-day claim. In its analysis, the Appellate Division noted that plaintiff returned to work on a light duty basis two weeks after the accident and continued to work. However, the Appellate Division also noted that plaintiff’s statements, that he has significant restrictions at work and in performing his usual activities and hobbies, were unsupported by the objective medical evidence. Accordingly, the Appellate Division affirmed the Supreme Court as properly dismissing plaintiff’s 90/180-day claim.


Agnes A. Wilewicz

[email protected]

12/06/19       Pennsylvania National Mutual v. Everest Reinsurance Co.
United States Court of Appeals, Third Circuit
Third Circuit holds that Arbitration Should be Compelled before a New Panel of Arbitrators, Pursuant to the Arbitration Agreement Terms (PA Law)

Everest Reinsurance and Pennsylvania National Mutual were in a coverage dispute that went to arbitration. In a decision scant with facts or background, at issue was simply whether Everest had to submit to a new panel of arbitrators, if its dispute was the same as a previously arbitrated dispute between Penn National and two other reinsurers. If the disputes were indeed the same, then pursuant to the parties’ agreements, they could be consolidated and heard by the same panel. If they were not the same, then a new panel would have to hear the matter.

Interestingly, however, both parties agreed that whether the two disputes had to be consolidated was a “procedural” question that only an arbitrator could answer. Thus, the role of the court was simply to determine which panel would be selected to choose that answer. Everest argued that a new panel should be sent the dispute, instead of the panel that had previously issued the decision with the other reinsurers. However, the court noted that when they are faced with motions to compel arbitration, they must “enforce covered arbitration agreements according to their terms”. Here, the agreement in fact stated that: “‘Each party shall appoint an individual as arbitrator and the two so appointed shall then appoint a third arbitrator.’ If the arbitrators cannot agree on the third, neutral arbitrator, the contract provides further procedures. And, critical to this appeal, the agreement provides for consolidation of disputes in certain circumstances: “If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute and act as one party for the purposes of [arbitration]”.

Accordingly, the court was bound to comply with these contractual terms and compel the parties to follow the procedure they set forth in that contract. “Consistent with the agreement’s terms, the two disputes must be consolidated if and only if: (1) a new panel determines that Everest’s dispute is “the same” as the dispute at issue in the Hartford Arbitration, and (2) the panel that decided the Hartford Arbitration is still extant such that it can handle this new dispute.” As such, the appellate court had to affirm the lower court’s decision to compel the arbitration of the consolidation question before a new panel of arbitrators.


Jennifer A. Ehman

[email protected]

12/06/19       Greater N.Y. Mut. Ins. Co. v. State Natl. Ins. Co., Inc.
Supreme Court, New York County
Hon. Robert R. Reed
Court Finds General Contractor’s Insurer Owes Primary Defense Obligation; Court Relies Upon Allegations in the Third-Party Complaint

This decision arises out of an underlying labor law case.  An employee of New City Construction (“New City”) sustained injury when a wood plank fell from a scaffold and struck him.  The employee sued the property owner, 299 Owner Corp. (“299”), and the property manager, Blue Woods Management Group (“Blue”).  The owner and management company were insured under a policy issued by Greater New York Mutual Insurance Company (“GNY”).  GNY tendered to the insurer for the general contractor, State National Insurance Company (“SNIC”).  When the tender was denied, GNY commenced this litigation and moved for summary judgment.  It is important to note that while the general contractor had hired New City, the court in the underlying matter already determined that “[a]t no time before plaintiff’s accident did anyone from [the general contractor] direct, supervise, or control the means or method of New City’s work at the site.”

The court began by considering whether GNY had standing to sue SNIC.  GNY argued that based upon the concept of equitable contribution it had standing.  The court agreed dismissing any argument based upon Lang v. Hanover noting that Lang involved a stranger to the insurance contract (i.e., the injured plaintiff).  In comparison, here, GNY was relying upon the concept of equitable contribution wherein “[i]f several insurers bind themselves to the same risk and one insurer pays the whole loss, the one paying has a right of action against his coinsurers for a ratable portion of the amount paid by him because he has paid a debt which equally and currently due by the other insurers.”

Next, the court dismissed SNIC’s argument that the contract relied upon by SNIC was not properly authenticated finding that it was admitted through an attorney affidavit as documentary evidence. 

The court them moved on to whether SNIC had a defense obligation in favor of 299 and Blue.  The SNIC policy contained an additional insured endorsement which afforded coverage for a person or organization shown on the schedule, identified as “Blanket basis Where Required By Written Contract” “but only with respect to liability arising out of ‘your work’ for that additional insured by or for you and only where required by written contract.”

The court began with a consideration of the specific language in the additional insured endorsement noting that the phrase “arising out of” has been interpreted very broadly to mean “originating from, incident to or having connection with.”  Despite the fact that SNIC’s named insured was not referenced in plaintiff’s complaint, the court still found the duty to defend triggered.

Specifically, and in my view troubling, the court relied upon the Indian Harbor Ins. Co. v. Alma Tower, LLC decision noting that in that case, the court examined a third-party pleading against a subcontractor to establish that the insurer had knowledge of facts establishing a reasonable possibility of coverage and defense for the additional insureds.  Here, 299 and Blue filed a third-party action against the general contractor alleging negligence and seeking indemnification and contribution.  Based upon those allegations, and the fact that the general contractor retained plaintiff’s employer, a defense was owed to 299.

However, with regard to Blue, the court agreed with SNIC that there was no contractual obligation to afford that entity coverage.  While the general contractor agreed to afford the owner coverage, and the owner was identified as 299 c/o Blue, this reference did not confer any title ownership on Blue.

Lastly, the court discussed priority.  SNIC argued that it did not have a defense obligation because the employer’s carrier, Tutor, had that obligation.  The court highlighted that Tudor was no longer in this action, and that its appearance was not necessary in order to determine priority between SNIC and GNY.  It also noted that SNIC was free to seek equitable contribution as against Tudor in a different declaratory judgment action.  Ultimately, it found that the primary noncontributory endorsement in the SNIC policy did not apply since priority of coverage was not required by the trade contract.  However, the coverage still found the coverage to be primary based upon the policy’s default other insurance language.  Turning to the GNY policy, the court found that policy excess based upon language providing that “[t]his insurance is excess over…Any other primary insurance available to [299] covering liability for damages arising out of a premises or operation…for which [299] ha[s] been added as and additional insured by endorsement.

The matter was then sent to a special referee for a finding on the amount of defense costs incurred by 299 from the date of tender, and ordered interest be paid from the date each legal bill was paid.


Brian D. Barnas
[email protected]


12/10/19       Martin v. Allstate Property & Cas. Ins. Co.
United States Court of Appeals, Eleventh Circuit
Proposing Release that Insured Objected to is Not Bad Faith under Florida Law

Martin is a police officer for the City of Pinellas Park.  He was directing traffic at an intersection on July 17, 2008, when Sengthong Liamsavay drove through it and struck him with his car.  Martin suffered serious injuries.

Liamsavay had an automobile insurance policy through Allstate. Allstate received notice of the accident the same day it happened and assigned adjuster Cynthia Fletcher to work on the case. The day after the accident, Fletcher ordered the police report, spoke with Liamsavay, and contacted Martin’s wife and employer. Soon after, she received a statement from Liamsavay about the accident and sent him a letter providing more information about his policy and the next steps involved in the process. The letter informed him that the value of Martin’s bodily injury claims appeared to exceed Liamsavay’s policy limits ($50,000) but that Allstate would try to settle the case within those limits. It also informed him that he had the right to hire his own attorney.

On July 29, Fletcher sent Martin a copy of the insurance policy, a check made payable to him for $50,000, and a release form that covered his claims and the claims of his wife. There was a dispute about whether the $50,000 should be applied to a workers’ compensation lien.  On December 3, Fletcher retained attorney Tom Bopp to assist her in handling Martin’s claim.

On April 9, Eduardo Jimenez sent a letter to Allstate informing it that he was representing Martin. The letter requested certain information, including affidavits from Liamsavay about his insurance policies and assets, and it also stated that “if there is no real property owned by [Liamsavay] that is not [protected by Florida law], [Martin] will agree to resolve all his claims with [Liamsavay] in exchange for all applicable policy limits being tendered” by the end of April. But the letter stated that Martin would release only his bodily injury claim and that he would not agree to a release containing a hold harmless or indemnity provision. The letter also emphasized that he would not release any other person’s or entity’s claims, that strict performance with the terms of the offer was required for acceptance, and that a release that failed to comply with the terms of the letter would be treated as a rejection of this good faith offer.

Bopp worked to obtain the requested information after Allstate received the letter on April 13. On April 30, Bopp hand delivered a letter to Jimenez which included a settlement check, a proposed release, an affidavit from Liamsavay, an affidavit from the insurance agent, and the insurance disclosure from Allstate. Martin, through Jimenez, rejected the proposed release and settlement. Jimenez stated in a May 7 letter that he was surprised and dismayed that Bopp had attempted to settle claims of other persons or entities other than my client when doing so was a rejection of our good faith offer, citing language in the release releasing heirs, personal representatives, successors, and assigns” language as problematic. Jimenez said Martin had told him to move forward with a lawsuit.

Bopp responded shortly after by arguing that no court or reasonable person would consider the release’s language to cover any other person’s claim, and that Martin did not even have the power to release the claims of any other person or entity. He also asserted that the release applied only to Martin’s bodily injury claim but offered to remove the objectionable language anyway. Alternatively, he suggested that Jimenez scratch out the language he objected to. Jimenez did not respond to Bopp’s letter.

Jimenez (at Martin’s direction) instead filed a lawsuit in state court. The state court lawsuit was resolved by a consent judgment of $1,500,000 against Liamsavay on March 20, 2013. Martin then filed a lawsuit against Allstate in Florida state court and Allstate removed to federal court.  The trial court granted Allstate’s motion for summary judgment to dismiss the bad faith claim.

The Eleventh Circuit affirmed.  Martin argued that there was a dispute as to whether Allstate acted in bad faith by failing to settle his bodily injury claim in April 2009. The court disagreed because Allstate’s proposed release did not include any language that Martin had asked to be excluded.  Allstate’s release did not cover Martin’s wife’s potential claim (despite Jimenez incorrectly suggesting that it did). Nor did it release any other individual’s or entity’s claims.

Moreover, even if Allstate’s proposed language did vary from Martin’s instructions such that it was not an acceptance of his offer under Florida contract law, the totality of the evidence did not support a finding of bad faith given Allstate’s actions. This was not a case where the insurer required an overbroad release to settle. Instead, the undisputed record evidence indicated that Allstate was responsive to the April 9 offer; clearly complied with every other condition of the offer; believed that the release language complied with the April 9 offer (but still made clear the release could be altered and it was not meant to add new terms); and offered to change the language immediately after Martin objected. Allstate did not retain obviously problematic language such as a hold harmless clause.

12/05/19       Certain Underwriters at Lloyd’s v. BioEnergy Dev. Group LLC
Appellate Division, First Department
Bad Faith Counterclaim based on Failure to Advance Business Interruption Coverage Survives Motion to Dismiss

Lloyd’s commenced an action against BioEnergy.  The first counterclaim alleged breach of the insurance policies' escalation clauses and breach of the implied duty of good faith and fair dealing.  Lloyd’s moved to dismiss the counterclaim that alleged breach of the implied duty of good faith and fair dealing.

The motion was denied.  The breach of the implied duty part of the counterclaim was based on allegations that plaintiffs refused to advance more than $6,806,725 in business interruption coverage until an appraisal panel awarded more than double that amount and refused to pay the full amount of the property damage claim as determined by the appraisal.  This part of the counterclaim sought consequential damages to account for the delayed reconstruction of defendants' plant and for the attorneys' fees caused by plaintiffs' delayed interim payments or denial of payments.  The court ruled that the counterclaim could proceed, because, given the purpose and circumstances of the property damage and business interruption policies, it was foreseeable that excessive delay would cause defendants to incur, as alleged, tens of millions of dollars in uncovered business interruption losses and attorneys' fees.


John R. Ewell
[email protected]

11/18/19       New Jersey Transit v. Certain Underwriters at Lloyd’s et al.
New Jersey Superior Court, Appellate Division
New Jersey Transit Entitled to Full $400 Million Policy Limit for Hurricane Sandy Damage

New Jersey Transit (NJT) purchased coverage from various insurers that were in effect in October of 2012. The policies insured against “all risks” and provided coverage in four layers resulting in a property insurance program with $400 million of coverage. Certain Underwriters at Lloyd's, London and various other insurers (collectively, “Certain Insurers”) and Torus Specialty Insurance Company (Torus) provided excess coverage in the third and fourth excess layers.

The flood sublimit in the policies limits liability for "losses caused by flood" to $100 million "per occurrence." In Certain Insurers' policies and the Torus policy, "flood" is defined as:

[A] temporary condition of partial or complete inundation of normally dry land from:

1. The overflow of inland or tidal waters outside the normal watercourse or natural boundaries [;]

2. The overflow, release, rising, back-up, runoff or surge of surface water; or

3. The unusual or rapid accumulation or runoff of surface water from any source.

[S]uch . . . flood shall be deemed to be a single occurrence within the meaning of this policy.


Certain Insurers' policies included an endorsement which covered a "[n]amed [w]indstorm", defined as:

… wind or wind driven water, storm surge and flood associated with, or which occurs in conjunction with, a storm or weather disturbance which is named by the National Weather Service or any other recognized meteorological authority.

Such storm or weather disturbance shall be considered to be a Named Windstorm until the time such storm or weather disturbance has been downgraded, meaning that the storm or weather condition is no longer considered by the U.S. National Weather Service or any other recognized meteorological authority to be a hurricane, typhoon, tropical storm or cyclone.

An endorsement in the Torus policy also covered a “named windstorm”, defined as:

… direct action of wind including ensuing storm surge when such wind/storm surge is associated with, or occurs in conjunction with a storm or weather disturbance which is named by the National Oceanic and Atmospheric Administration's (NOAA) National Hurricane Center or similar body until sustained wind speeds drop below the parameter for naming storms.

Storm surge is defined as water driven inland from coastal waters by high winds and low atmospheric pressure.

On October 29, 2012, Superstorm Sandy struck New Jersey, causing significant damage to NJT's properties. After the storm, NJT notified its insurers of its losses. Certain Insurers and Torus issued a coverage letter advising that NJT's claimed losses for water damage were limited by the $100 million flood sublimit in the policies. NJT disagreed with the insurers' interpretation of the policies. NJT explained that none of the sublimits in the policies applied to losses caused by a "named windstorm," which was a separately defined peril. NJT asserted that it was entitled to the full $400 million in coverage under the program for its Sandy-related property damage.

NJT sued its insurers seeking a judgment declaring that the $100 million flood sublimit did not apply to its claims for property damage associated with Superstorm Sandy, and asserting that the insurers were in anticipatory breach of their insurance contracts. Certain Insurers and Torus filed answers asserting that they had no contractual obligation to provide coverage for any water-related damage caused by "flood" that exceeded $100 million. NJT, Certain Insurers, and Torus filed motions for summary judgment. The granted NJT's motion and denied Certain Insurers' and Torus's motions.

On appeal, Certain Insurers and Torus argued that the trial court erred by granting NJT's motion for summary judgment. They contended the water damage to NJT's properties, which occurred during Superstorm Sandy, were "losses caused by flood," and therefore, subject to the $100 million flood sublimit in the policies.

It was undisputed that during Superstorm Sandy, a surge of water inundated and damaged various NJT properties. The question on appeal was whether the Sandy-related water damage to NJT's properties is subject to the $100 million flood sublimit, or whether the policies provide coverage for such damage up to the $400 million limit of NJT's insurance program.

Certain Insurers and Torus argued that the Sandy-related inundation of NJT's properties met two separate definitions of "flood" in the policies. They asserted NJT's properties were damaged by either "[t]he overflow, release, rising, back-up, runoff or surge of surface water;" or "[t]he unusual or rapid accumulation or runoff of surface water from any source." Defendants therefore contended the water damage to NJT's properties were "losses caused by flood," which are subject to the $100 million flood sublimit in the policies. The Appellate Division disagreed.

As set forth above, the flood sublimit in the policies applies to "losses caused by flood." The policies define "flood" to include the "surge of surface water," as well as "the rapid accumulation or runoff of surface water from any source.” However, the Certain Insurers' policies separately define "named windstorm" to include "wind driven water, storm surge and flood associated with, or which occurs in conjunction" with a "named windstorm." Similarly, the Torus policy defines "named windstorm" to mean the "direct action of wind including storm surge when such wind/storm surge is associated with or occurs in conjunction with" a named windstorm.

The policies do not define "flood" to include "storm surge" and "wind driven water" associated with such a "named windstorm." Although the definition of "flood" includes "surge," the definition of "named windstorm" more specifically encompasses the wind driven water or storm surge associated with a "named windstorm." Under New Jersey law, where two provisions of an insurance policy address the same subject, "the more specific provision controls over the more general." As such, the named windstorm provision controlled.

The Court further found that:

If the parties had intended that damage from a "storm surge" would be subject to the flood sublimit, the policies would have stated so in plain language. Moreover, if the term "flood" already included damage from a "storm surge" associated with a "named windstorm," as [the insurers] claim, there would have been no need for the parties to include the "named windstorm" provision in the policies.

The policies in NJT's program provided a definition of "named windstorm," which includes "wind or wind driven water, storm surge and flood associated with" such storms. Therefore, the policies plainly provide that water damage associated with a "named windstorm" are to be treated differently from "losses caused by flood." Therefore, such losses are not subject to the flood sublimit.

The Appellate Division found that plain language of the policies provides that water damage resulting from a "storm surge" associated with a "named windstorm" does not fall within the definition of "flood." Therefore, the water damage to NJT's properties that occurred during Superstorm Sandy was not subject to the $100 million flood sublimit.

NJT argued that even if the Appellate Division concluded that NJT's losses were caused by both a "flood" and a "named windstorm," it would nevertheless be entitled to coverage under New Jersey's efficient proximate cause doctrine. The Appellate Division agreed.

When there is a conflict as to whether, for coverage purposes, losses should be considered to be "caused by" an excluded risk or by a covered peril, New Jersey courts employ the efficient proximate cause test. Under this test, if an exclusion bars coverage for losses caused by a particular peril, the exclusion applies only if the excluded peril was the “efficient proximate cause” of the loss.

Here, the "storm surge" associated with Superstorm Sandy was a "peril specifically insured against… ." Because Sandy's "storm surge" caused, "in an unbroken sequence," any losses that might otherwise not be covered under the flood sublimit, the storm surge is "regarded as the proximate cause of the entire loss."

Accordingly, the Appellate Division concluded that if NJT's losses are deemed to have been caused both by "flood" and by a storm surge associated with a "named windstorm," and the efficient proximate cause doctrine is applied, NJT's claims for Sandy-related water damage would not be subject to the $100 million flood sublimit in the policies.

Lee S. Siegel

[email protected]

11/13/19       Henry v. C.E. Floyd Company, Inc
Superior Court of Connecticut, Hartford County

Subcontractor Owes General Contractor a Defense

A Hartford Superior Court judge found that a construction contract required a subcontractor to defend the general contractor for a construction accident. The injured plaintiff alleged that while standing on a makeshift wooden platform it shifted causing him to fall eleven feet. The plaintiff alleged that C.E. Floyd (CEF), the general contractor, was negligent (under various theories) for the failure of the platform constructed by subcontractor Red Thread. The complaint also alleged that Red Thread and its subcontractor were negligent. Red Thread contracted to install wood flooring, but it disputed that it was responsible for the ladder or its collapse. [The opinion does not indicate by whom the plaintiff was employed.]

CEF and Red Thread entered into a subcontract in which Red Thread agreed to defend, indemnify, and hold harmless CEF from any claims “directly or indirectly arising out of or resulting from performance of the Subcontractor’s Work….but only if the claim… is caused by, connected with, arising out of or resulting from an act or omission of the Subcontractor…” The subcontract also required the purchase of insurance for the protection of the general contractor “from all claims which may arise out of or result from the Subcontractor’s operations….on a primary and non-contributory basis…”

In a cross-claim, CEF alleged that Red Thread was in breach of the subcontract by failing to accept its tender of defense and indemnity. CEF argued that it was entitled to a defense as a matter of law because the allegations in the plaintiff’s complaint arose out of Red Thread’s work on the project. Red Thread countered that there were disputed material facts as to what caused the accident and whether it was actually involved the ladder.

The court applied Connecticut’s duty to defend standards, relying on Connecticut’s four corner rule, to reject Red Thread’s evidence. The duty to defend, under Connecticut law, is driven by the allegations of the complaint. “An insurer’s duty to defend is triggered if at least one allegation of the complaint falls even possibly within the coverage…” Connecticut does not consider extrinsic evidence in assessing a defense obligation, even if the evidence indicates that the claim is meritless or not covered. Reliance on extrinsic facts is permitted only if those facts support the duty to defend. Accordingly, after comparing the allegations in the complaint to the subcontract language, the court held that Red Thread owed CEF a defense because the complaint alleged CEF’s liability arising from Red Thread’s work. The court, however, refused to determine that Red Thread owed indemnity, finding CEF’s motion premature because indemnity is based on the actual facts established at trial.

Note: While the litigants were two contractors, surely their respective carriers were behind the coverage dispute. The principles set forth by the court are clearly lifted from those applicable to insurers. This is an unreported decision. Please contact me if you would like a copy of the decision.


Brian F. Mark
[email protected]

It remains very quiet on the construction defect front.

Eric T. Boron

[email protected]

12/05/19           Crockett v. Shelter Mut. Ins. Co.
Supreme Court of Arkansas  
Summary Judgment to Insurer on Plaintiffs’ Medical Expenses Claim Affirmed; Coverage Provisions at Issue are neither Ambiguous nor Against Public Policy

Within the past week, the Arkansas Supreme Court affirmed a 2018 Circuit Court order granting summary judgment in favor of Shelter Mutual Insurance Company (Shelter) on the medical expenses claims of appellants Mark Crockett and Macon Carter following an automobile accident.  Appellants’ primary contention on appeal was that the trial court erred in granting summary judgment to Shelter because the medical expense coverage provision at issue is ambiguous or, alternatively, because the provision is against public policy and should be declared void.

In 2016, appellants were passengers in a 2014 Nissan Versa owned by non-party Johnny Carter and being driven by non-party Frank Ross. The vehicle was involved in an accident. Carter had taken out a policy of insurance on the vehicle with Shelter. The policy contained a provision providing medical expense benefits of up to $5000 per person. Neither Crockett nor Carter had automobile medical payment coverage. In 2017, appellants filed suit against Shelter contending that they were entitled to a greater amount of medical benefits under Carter’s policy with Shelter than the amounts, which were well within the $5,000 per appellant policy limits, that  Shelter had paid to medical providers in a negotiated resolution of the medical care providers’ bills.  Appellants asserted Shelter had “failed, refused and neglected in bad faith” to make payments in violation of Arkansas Code Annotated section 23-89-202, which provides, in pertinent part:

Every automobile liability insurance policy covering any private passenger motor vehicle issued or delivered in this state shall provide minimum medical and hospital benefits, income disability, and accidental death benefits under policy provisions and on forms approved by the Insurance Commissioner to the named insured and members of his or her family residing in the same household injured in a motor vehicle accident, to passengers injured while occupying the insured motor vehicle, and to persons other than those occupying another vehicle struck by the insured motor vehicle, without regard to fault, as follows:

(1) Medical and Hospital Benefits. All reasonable and necessary expenses for medical, hospital, nursing, dental, surgical, ambulance, funeral expenses, and prosthetic services incurred within twenty-four (24) months after the automobile accident, up to an aggregate of five thousand dollars ($5,000) per person, and may include any nonmedical remedial care and treatment rendered in accordance with a recognized religious method of healing. Expenses for hospital room charges may be limited to semiprivate accommodations;

Crockett alleged that he had incurred medical expenses in the amount of $4,165.80, and that Shelter had paid only $2,706.68 to his medical care providers and refused to pay him the difference. Macon Carter alleged that he had incurred medical expenses in the amount of $10,443.47, that Shelter had only paid $915 in benefits to his medical care providers, and that Shelter refused to pay him the balance up to the policy limit of $5000. In addition, appellants sought a statutory penalty, fees, and interest.

Part II, Coverage C of the policy at issue states:

we will pay the reasonable charges for necessary goods and services for the treatment of bodily injury sustained by an insured.” (emphasis original). The policy defines “reasonable charges” as the lesser of:

(a) The amount for which we can discharge the insured’s entire obligation to the person providing the goods and services; or

(b) The charges incurred for goods and services that in our judgment, are within the range of charges for the same or similar goods and services, in the geographic area where the services are rendered or the goods are purchased.

(Emphasis original.)

The policy defines “we” to mean the Shelter.

Shelter’s argument in support of its summary judgment motion was that appellants’ medical providers had been paid at a reduced rate that satisfied appellants’ medical expenses in full, relying upon, in pertinent part, subsection “(a)” (above) of Part II, Coverage C of the policy at issue.  Appellants’ ambiguity argument was “rooted in the fact that their counsel negotiated with the medical providers to take less than the full amount of the bills in satisfaction of the debt”.  Appellants asserted the phrase “the amount for which we can discharge” in the definition of “reasonable charges” could, in addition to Shelter’s interpretation of the language, be reasonably interpreted to mean the amount for which Shelter itself was responsible for discharging, up to the $5,000.00 limit. The asserted ambiguity in the policy language must bar summary judgment for Shelter, according to appellants, and provide grounds for granting appellants’ cross-motion for summary judgment and awarding appellants payment from  Shelter of the respective differences between what Shelter had paid the medical providers and what the medical providers had billed for medical services provided to appellants.

The affirmance of the Arkansas Supreme Court cited a number of Arkansas cases collectively reflecting a familiar framework for analyzing the issue of whether or not as a matter of law insurance policy language is ambiguous;  a framework any of us would expect to be applied by courts in our own home states:

  • Language is ambiguous if there is doubt or uncertainty as to its meaning and it is susceptible to more than one reasonable interpretation;

  • Ordinarily, the question of whether the language of an insurance policy is ambiguous is one of law to be resolved by the court;

  • When a contract is unambiguous, its construction is a question of law for the court; and

  • When contracting parties express their intention in a written instrument in clear and unambiguous language, it is the court’s duty to construe the writing in accordance with the plain meaning of the language employed.

The Supreme Court ruled that appellants were incorrect in their assertion that the applicable policy language is ambiguous, noting that in the context of a debt, to “discharge” means “to get rid of (as a debt or obligation) by performing an appropriate action (as payment)”, citing Merriam-Webster’s Collegiate Dictionary.  Supreme Court held that there was no reasonable interpretation of the term “discharge” that could render it applicable to negotiating a lower amount as opposed to paying the amount.  Because Shelter discharged appellants’ debts through its payments, the trial court did not err in granting summary judgment on this basis.

As for the public policy argument of the appellants, Supreme Court, after noting it to be “somewhat difficult to discern”, rejected the argument, holding that the “clear intention of section 23-89-202 is to afford those covered under an applicable policy of insurance a minimum of $5000 in available coverage so that their medical expenses can be covered up to that amount. There is nothing in the statute that would permit appellants to receive the difference between what the providers billed and what they accepted as full satisfaction of the debt. Nor would such a decision reflect sound public policy, as it would result in insurers providing benefits in addition to medical benefits, which is neither required by the statute nor contemplated under the insurance policy provisions at issue.”

Marina A. Barci

[email protected]

11/27/19       Kenion v. MVAIC
Supreme Court, Kings County
Insurer’s Letter stating that a Claimant is a “Qualified Person” is Prima Facie Evidence that the Person is Covered

On January 7, 2017, the petitioner was crossing an intersection in Brooklyn, NY when she was suddenly struck by a motor vehicle. The vehicle who struck the petitioner did not stop and was never identified. The collision caused the petitioner to sustain injuries, including the need to undergo right knee surgery. Within 90 days of the accident, a notice of intention to make a claim was served upon MVAIC. MVAIC affords injured parties the same protections that they would have had if the driver had been covered by insurance. Because the driver was never identified, this case is treated as once where there is no insurance at play.


On March 1, 2018, MVAIC sent a letter to the petitioner informing here that it had determined her to be a “qualified person.” At some point, MVAIC did not pay the benefits sought by the petitioner so the petitioner filed an order to show cause against MVAIC, which MVAIC never appeared for or submitted opposition to. Thus, MVAIC did not raise any triable issues of fact and the order to show cause and petition for an order allowing petitioner to bring a direct action against MVAIC was granted.

12/02/19       Psychology After Acc., P.C. v. State Farm
New York Civil Court, Kings County
Declaratory Judgment from Nassau County is Binding on Summary Judgment Issue in Kings County

In August 2019, State Farm moved for summary judgment on the basis that Plaintiffs failed to appear for EUO. In March 2019 the court denied State Farm’s motion. State Farm moved to reargue the court’s decision on the basis that in August 2018, Nassau County Supreme Court made a final determination on the same issue in a declaratory judgment, which was a final judgment and thus barred by res judicata.

Initially, this court found that the Nassau County order did not have preclusive effect because it was entered on default. State Farm correctly argued however, that the fact that an order was granted on a default is irrelevant to its preclusive effect. Although this court found that the Nassau County order was lacking in detail, it was sufficient to articulate a final determination concerning plaintiff’s failure satisfy a condition precedent to receiving no-fault benefits. Although the order did not mention the failure to appear for EUO, State Farm’s complaint explicitly stated that it sought a declaratory judgment on the EUO issue. Thus, State Farm’s summary judgment motion was granted in this court.

12/06/19       MUA Chiropractic Healthcare, PLLC v. State Farm
Suffolk County District Court, Third District
Fee Schedule Defense must be Raised within 30-Day Time Period after Receipt of Claim or No-Fault Carrier is Precluded

The sole issue presented to the court was whether 11 NYCRR 65-3.8 (g)(1)(ii) is inconsistent with the New York Insurance Law, and therefore, constitutionally void. The Attorney General was served with a copy of the motion and chose not to intervene. The section in dispute stands for the proposition that the no payment from an insurer is required for medical services that exceed the fee schedule. 11 NYCRR also establishes that defenses to claims not raised within 30 days of receipt of a no-fault claim are precluded. This preclusion rule is consistently upheld and enforced. § 65-3.8 (g) makes no mention of the 30-day time period, which was the basis for the argument that it is unconstitutional. The Court found that “removing the fee schedule defense from the statutory preclusion rule via regulation is an unconstitutional overreach, and shall be disregarded by this Court as being invalid and in contravention of the historical statutory 30-day time period given to defendants to pay or deny claims (or be subject to preclusion)”

The Court therefore concluded that State Farm’s fee schedule defense was non-viable 30 days after the claim was received without denial or demand for further verification, thus State Farm’s motion for summary judgment was moot and Plaintiff’s cross-motion was granted.

Note: I imagine that this case will receive some attention considering it finds a statutory provision inconsistent with the intent of the Insurance Law. Plus, it is common practice for insurer’s to be allowed to argue fee schedule defenses at any time in a claim for no-fault benefits as it is typically a factual and verifiable issue. We will keep an eye out for appeal.

Ryan P. Maxwell
[email protected]

The Legislative List

12/06/19       Affirmative Defense for a Farmer’s Unknowing Introduction of Genetically Modified Organisms
New York State Legislature
Law Creates Affirmative Defense for Unknowing and Unintentional Introduction of Genetically Engineered/Modified Organisms into Crops

On December 6, Governor Cuomo signed into law assembly bill no. A01104A (same as S04206-A), which amends the General Obligations Law to allow for an affirmative defense against any liability if the party can show that he or she did not knowingly and intentionally introduce the genetically engineered or genetically modified organisms into his or her plants or seeds.

The purpose of the law is to assist farmers who, prior to its passage, faced potential liability for planting genetically modified organisms or genetically engineered plants without purchasing the rights to do so.

The newly enacted GOL § 9-107 “provide[s] an affirmative defense against any liability if the party who is sued for damages . . . on the ground that the

party possessed or used seeds or plants that contained genetically engineered or genetically modified organisms shows that he or she did not knowingly and intentionally introduce the genetically engineered or genetically modified organisms into [the] plants or seeds or onto [onto] property and [] did not knowingly gain from the distinctive traits due to genetic modification or genetic engineering.” (Sponsor Memorandum).

According to § 2 of the law, this affirmative defense is available immediately.

Regulatory Wrap-Up

12/06/19       DFS Institutes Mandatory E-Filings and Submissions For Carriers
Department of Financial Services
Insurance Regulation 195 Promulgates New Part 6 of NYCRR Title 11 Governing Required Electronic Filings and Submissions for Specified Documents

On November 7, Superintendent of Financial Services, Linda A. Lacewell, certified the new 11 NYCRR 6 (Insurance Regulation 195) requiring the electronic filing of specified carrier documents by way of SERFF, the DFS portal, email, and other methods. This new mandatory e-filing regulation will be effective on May 25, 2020.

Specifically, the new 11 NYCRR 6.2(a) provides that “[e]xcept where the Insurance Law requires a filer to submit a hard copy, a filer shall submit to the superintendent the [documents listed] electronically, in a form and manner acceptable to the superintendent.”

Among the forms specified are the following:

  • Insurance Fraud Prevention Plans and Reports under Insurance Law §§ 405(a), 409(a), (d), (g).

  • Rates and Forms (through SERFF).

  • Agent and Broker Compensation Schedules under Insurance Law § 4216(e) and 11 NYCRR §§ 185.9,187.8.

  • Annual and Quarterly Statements pursuant to Insurance Law § 1124 or Insurance Law Article 47. (In addition, the filer also shall file the statements as hard copies).

  • Risk Retention and Purchasing Group Documents under Insurance Law §§ 5903, 5904, 5908(a)&(d).

  • Various Holding Company and Parent Corporation Applications and Reports.

  • Agreements for an advance or borrowing; surplus note or principal or interest payments under Insurance Law § 1307(d) and an application for approval of the issuance of a surplus note or principal and interest payments under Insurance Law § 1307.

  • Dividend distributions.An application or notice of intent to declare and distribute a dividend when required to notify the superintendent.

  • Medicare supplement insurance advertising filing under 11 NYCRR § 215.5(d)

  • Free trade zone reports under 11 NYCRR § 16.7(a)

  • To NAIC: annual and quarterly statements under Insurance Law §§ 307, 308; New York supplement or New York data requirement, with regard to health maintenance organizations; and audited financial statement.

DFS has instructed that “[o]ther than the filings the rule requires to be made through SERFF, DFS will provide instructions for how a person should make a specific filing electronically.” (Assessment of Public Comments). Additionally, those carriers seeking an exemption from an electronic filing or submission above may apply to do so by way of a written request at least 30 days prior to the deadline for the relevant filing. The instructions for applying for such an exemption are outlined in 11 NYCRR § 6.3(b), and requires a detailed explanation as to why electronic filing should be exempted due to an undue hardship, impracticability, or otherwise good cause.

From the Filings Cabinet

12/04/19       Group Property Travel Policy Cannot Offer Annual Coverage
Department of Financial Services

DFS Disapproves Attempt to Package Individual Property Travel Policy with Group Accident and Health Policy as Violation of Ins. Law § 3452

A recent DFS form filing disapproval declined approval of a Dive Accident Insurance Policy form in part because of the carrier’s intention to issue such form in conjunction with separate group accident insurance coverage.

In reaching this conclusion, the disapproval relied upon, inter alia, an apparent violation of Insurance Law § 3452(a)(5), which provides that “coverage under this policy shall be limited to the group member’s risks with respect to a particular trip.” DFS noted that “[w]hile a group accident and health policy may be approved by our Health Bureau, to package an individual property travel policy with a group accident and health policy would appear to convert the individual policy to a group policy.” By doing so, it appeared that the carrier exceeded any one particular diving trip with respect to its intended scope of coverage to members of the group policy.

Although the carrier advised that “options allow the coverage to be personalized for the specific needs of the applicant based upon the experience of the diver and extent of the intended diving trip,” DFS noted that this type of form could potentially and impermissibly allow “hundreds of the same versions of the same policy with the same form number.”

CJ on CVA and USDC(NY)
Charles J. Englert III
[email protected]

08/06/19       Netherlands Ins. Co. et al. v. Macomb Community Sch. Dist.
United States District Court, Central District of Illinois
Ambiguities in Exclusionary Language Place Alleged Sexual Misconduct into Coverage 

Plaintiffs issued policies of insurance to defendant school district. Defendant was seeking defense and indemnity through those policies for a lawsuit in which a student alleged they were sexually assaulted by a peer (the Underlying Suit). In the Underlying Suit, it was alleged that the school district violated Title IX of the Education Amendments Act through the various action as and inactions, undertaken with deliberate indifference to the underlying plaintiff’s right to a safe and secure education environment. Plaintiffs brought an action in federal court seeking a declaration of their rights and obligations as to defendant, specifically that plaintiffs have no duty to defend and indemnify the defendant. Plaintiffs issued a Sexual Molestation/Misconduct Liability (SMML) provision in connection with an occurrence-based Commercial General Liability (CGL) policy and a claims-made School Leaders Errors and Omissions Liability (SLEOL) policy. Plaintiffs issued an Umbrella Policy which provided sexual misconduct coverage only if the underlying Package Policy’s SMML coverage part affords coverage, and SLEOL coverage only if the underlying SLEOL policy affords coverage. The CGL and SMML policies also contain a Sexual Misconduct or Molestation Exclusion.

Under Illinois law, an insurer must defend an action against its insured unless it is clear that the alleged claims do not fall within the terms of the policy. Nautilus Ins. Co. v. 1452–4 N. Milwaukee Ave., LLC, 562 F.3d 818, 821 (7th Cir. 2009). In order to meet their burden and succeed on a motion on the pleadings the plaintiffs must prove that the allegations in the complaint are clearly outside the bounds of policy coverage. Defendants only argue that the SLEOL policy provides coverage for the Underlying Suit. Plaintiffs highlight that the Sexual Molestation or Misconduct Exclusion (the Exclusion) in the SLEOL policy unambiguously excludes coverage for allegations that a person’s civil right have been violated. Defendants argue that because the Underlying Suit alleges sexual misconduct of a student with relation to another student the Exclusion does not apply. The SLEOL policy provides coverage for “wrongful acts” by “any person for whose acts the insured is legally liable, while in the course of performing ‘educational institution’ duties.” The court held that even though one sentence in the Exclusion applies directly to acts perpetrated by employees, the remainder of the exclusion is applicable to any person if the alleged act occurred in a way that the defendant could be legally liable for the outcome. The court reiterated that, “[b]ecause it is not clear and free from doubt the Exclusion applies, its presence in the Package Policy does not bar coverage for the [Underlying] lawsuit that the SLEOL coverage part provides.”

11/26/19       House Bill 962
State of Pennsylvania
Statute of Limitations in Pennsylvania for Child Victims Extended to 55

On November 26, 2019, Governor of Pennsylvania, Tom Wolfe, signed into law a bill that extends the statute of limitations for child sex abuse claims. The new law allows a child victim to bring a civil action up until they are 55 years old. The law also allows victims who are between the ages of 18 and 24 to commence civil litigation for sexual abuse until they are 30 years old. This new law does not create a “look-back” period where claims that are time barred can be brought, as the New York CVA did.

This creates many challenges for insurers and insureds as claims that occurred upwards of 50 years ago can be brought. Policies, especially those from the pre-digital era are very difficult to find. An insured may be able to find a declarations page or proof of premium payments in their records, then placing the burden on the insurer to recreate the policy of insurance.

12/01/19       State Senate Measure S477
State of New Jersey
Statute of Limitations in New Jersey for Child Victims Extended to 55, Two Year “Look-Back” Period Created

On December 1, 2019, New Jersey Bill S477 went into effect. This law extended the statute of limitations allowing victims of child sex abuse to file a civil claim up until they are 55 years old. Prior to this law, victims had two years from the time they realized their abuse caused harm to bring a suit. In addition to extending the statute of limitations the law also provides victims a two year “look-back” period beginning on the law’s effective date (December 1, 2019). This revives time barred claims against both the actual perpetrator and the institutions the victim claims were responsible for the abuse. The new law also removes a prior immunity granted to charitable organizations and religious institutions for negligent hiring, supervision, or retention. This has the potential to open hundreds of institutions to liability who were immune and believed they would continue to be.

Earl K. Cantwell
[email protected]

09/19/19       Capital Flip, LLC v. American Modern Select Ins. Co.
United States District Court, Western District of Pennsylvania
Can a Racoon be a Vandal? 

Capital Flip owned a building in the Pittsburg area and racoons somehow entered the building and caused a substantial amount of damage to the interior. Coverage was sought for the damage as a loss arising out of “vandalism or malicious mischief”. In litigation, the insurance company filed a motion to dismiss under FRCP 12(b)(6) in support of its denial of coverage. Generally, the carrier contended that racoons could not commit vandalism or engage in malicious mischief, and therefore, there was no coverage under the policy. Capital Flip contended that the policy was ambiguous because it did not specifically define vandalism or malicious mischief, and such terms could include damage caused by animals.

As viewed by the Court, it was being asked to determine whether the acts of animals can reasonably be understood to constitute vandalism or malicious mischief as used in the insurance policy, and the Court refused to find coverage.

The Court first turned to dictionary definitions of vandalism and malicious mischief which all in part incorporated an element of intent to harm, which the Court concluded an animal cannot develop or possess. The Court next turned to the Pennsylvania Criminal Code with respect to crimes associated with vandalism or malicious mischief, and they also all incorporated an element of intentional, willful conduct. Lastly, the Court turned to other decisions where courts declined to interpret vandalism and malicious mischief as encompassing animal behavior because, as a matter of law, such behavior can only apply to human conduct. In particular, it quoted a New Mexico case dealing with a property damage claim caused by a bobcat in which the court poetically concluded as follows:

Alas, it is written in law

That an animal with the paw

Does not have the mind

To do the damage of this kind.

And so, I am sorry, the Plaintiff won’t get paid.

That’s how the contract was made.

This policy does not apply

When the bobcat runs awry.

Hurwitz & Fine, P.C.
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