Coverage Pointers - Volume XXI, No. 18

Volume XXI, No. 18 (No. 556)
Friday, February 21, 2020

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.

Not a lot from our New York courts in this week’s issue, although there is no good reason why they were so quiet.  But we offer whatever is available from the Empire State, as well as case summaries from New Jersey, Connecticut, the federal circuit courts throughout the country and the Canadian courts.  Thanks for subscribing.


Hurwitz & Fine Names a New Managing Partner -- Congratulations to Jody Briandi:

As of May 1, Jody E. Briandi will assume that role, This event will mark only the third change in management in Hurwitz & Fine’s 43-year-history.  She succeeds Ann Evanko, who has held that role, with distinction, for over a decade.

Her ascension was covered nicely in the New York Law Journal on Wednesday.

“I am honored to take on the role of Managing Partner and fortunate to be supported by an outstanding and talented team of attorneys, along with a dedicated staff,” she said. “This is an exciting time for the Firm as we continue to add attorneys, expand into new cities, and launch new practice groups while continuing to provide high quality and excellent legal services to our clients.”

Jody has spent her entire legal career at Hurwitz & Fine, joining the Firm in 1997.  She has been an important part of the Firm and its growth, most recently serving on its Board of Directors. She co-chairs the Firm’s Litigation Department, and is an experienced trial attorney in state, federal and appellate courts across New York. In addition, she leads the Firm’s 24-Hour Emergency Response Team, Premises Liability, Retail & Hospitality Liability, and Trucking & Commercial Transportation practice groups.


40t Years is a Long Time to Do ANYTHING:

This past week, Ann Evanko, Larry Ross and I celebrated our 40th anniversary as practicing attorneys.  That’s a long time to do anything!  Thanks to our friends, partners, clients and colleagues for making these four decades of practice a real joy.

I love what I do and it’s because folks like you make it a real treat.


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, AZ on March 3, 2020. 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 FDCC Insurance Coverage Training Academy: CGL Boot Camp, which will be held in Scottsdale, AZ on March 3, 2020. 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 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.

PLRB Claims Conference:

Joined by my good friend, John Hanlon from Selective Insurance, we’ll be speaking on Contractual Liability, Additional Insured and Risk Transfer issue at the annual Claims Conference and Insurance Services Expo at the Gaylord in Washington, DC, from March 8 – 11. To find out more, click here.


Free Publication on Public Speaking Tips (from some of the best around):


Public speaking is a crucial skill for attorneys. Download this Federation eBook with more than 100 public speaking tips, courtesy of fellow FDCC members, ahead of the inaugural FDCC Public Speaking Workshop in Scottsdale.  I’m one of 100 members who contributed speaking tips.  The download is free:


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:  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.


Cara’s Canadian and Cross-Border Connections (with Heather Sanderson):

Our first Canadian column is presented in this week’s issue.  Cara Cox and Heather Sanderson bring you legal news from our northern neighbors.  Enjoy their offerings!


Pitchers and Catchers Soon to Report:

The Springfield News-Leader
Springfield, Missouri

21 Feb 1920

Carl Mays Leaves Mansfield For Annual Training Season

Carl Mays, former member of the Red Sox twirling staff and whose name has become known throughout the country through the famous suit which resulted  when he was sold to the New York Yankees, left Mansfield Thursday for Jacksonville, Fla., where he will join the Yankees in their spring training camp at that place.

The famous “hold-out” is journeying overland to Memphis, where Mrs. Mays will meet him.  From there they will make the rip together.  Carl and his wife have an attractive winter home near Mansfield in Wright county and frequently visit the resort.  He is a product of the Ozarks.

He is will pleased over the purchase by the Yankees of his former teammate, Babe Ruth, and hope that the Yankees will be successful in their efforts to land Lefty Williams, Springfield twirler, who played with the White Sox.  Mays is confident that with two Ozarkers on the team the Yankees are certain of a pennant.

The Yanks seem intent on spending oodles of case that they may build one of the strongest pitching staffs in either league.  Mays purchased cost them a figure that few ball players have brought on the open market and that of Babe Ruth set a new record.  Now Colonels Huston and Ruppert are after Lefty Williams, White Sox dependable.

Carl Mays is a product of Douglas county,” according to Orville B. Davis of the Douglas County Democrat.  The little post office at Basher, northwest of Ava sought to erect a monument in honor of Mays.

“You never can tell how far a frog will jump by counting the spots on his back and here in America you can never tell where a dirty, ragged little urchin will land.”


Peiper on Property and Potpourri:

We join Dan in congratulating Jody Briandi’s promotion to our Managing Partner.   I have had the great opportunity of working on several firm initiatives with Jody over the past few years, and could not think of a more prepared, deserving person to take over the role.

We also take a moment to comment on a case reviewed in my column this week.  The Turner v. Higgins case involves a plaintiff’s attempt to vacate/withdraw a default judgment they entered against the plaintiff. That application was opposed by the defendant’s insurer who intervened in the matter.  Why would they do such a thing, you might ask.

We have a theory.

Recall the amendments to Insurance Law 3420 which created, for the first time, a requirement that a carrier establish prejudice before denying coverage due to late notice.  Where a default was entered prior to the judgment, prejudice is automatically established as a matter of law.  To avoid a late notice disclaimer, plaintiffs started withdrawing the default to destroy the presumption of prejudice.  Here, plaintiff tried to withdraw the default after it allegedly learned of the possibility of insurance.

The court rejected the idea, however, and noted that the plaintiff should have been aware of insurance at the time they made the initial default application.  As such, the court refused to let plaintiff withdraw the judgment against defendant.  As a result, notice the carrier (if in fact late, was also prejudicial).  This is an aggressive move by the carrier, but one which resulted in a truly late notice from its insured being upheld as a viable policy defense.  A good case to keep in mind when this inevitably comes up again.

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

Steven E. Peiper

[email protected]


Suffrage Amendment – Still Counting States:

The Tulsa Tribune
Tulsa, Oklahoma

21 Feb 1920



NEW MEXICO has ratified the Susan B. Anthony amendment and 32 states have made known their wish that the women of the United States have their full suffrage in 1920, just one hundred years after the birth of that great and sweet woman who gave her life to advance this day.  One hundred years, and the world waits on four states to make it 36.

The United States is already 39 years late in granting full suffrage to its women.  Since 1881 twenty-four European governments have enfranchised their women.  It seems almost incredible that a nation which has accorded so much recognition to its women in all other lines could be so slow in that of suffrage.  And now the prospect that women may vote in the 1920 Presidential election hangs on the whim or cussedness of a few individuals.  Both great national parties are urging the ratification because each knows that if not this year then next year the women will vote, and women remember.

There are other reasons than that women have waited a hundred years for that which is their right, why the machinery of government should move so as to give them their suffrage in this Presidential year.  With infinite pride and gratitude in our hears for those men who fought the great fight, let us know forget that it is the mothers, the wives, the sisters and sweethearts at home who suffer the terrors and heartaches of danger and death to their loved ones.  And the suffering is long.  Those women have a right to speak now.  They have a right, above all others, to lend their voice to the demand for policies and instruments which will most hopefully assure no repetition of so criminal and needless a holocaust as the world was plunged into by greed and a brutally false philosophy.  The women who sat at home, the women who left their homes to take the places made vacant by fighting men, the women who offered up their lives in the same sacred sacrifices our men so wonderfully gave, are waiting.  The United States of America cannot let them wait longer. 


Wilewicz’ Wide-World of Coverage:

Greetings from sunny Phoenix! I’m currently attending the ABA TIPS Insurance Coverage Litigation Committee Mid-Year Meeting at the lovely Arizona Biltmore. Unlike last February, when it was 55 degrees and raining the whole week (snowing just north of here in Scottsdale!), today it is a clear 78 with that classic dry heat. Much better. The conference itself thus far has been fantastic. Full of experienced and informative panelists, discussions of some of the latest coverage issues from around the country, and wonderful networking, as always. As I’ve written before, the ABA Tort Trial and Insurance Practice Section has many opportunities throughout the year for CLEs, publishing, and networking. Please drop me a line if you’re interested in learning more or want to get involved!

In terms of substantive coverage decisions, I did scour not only our own Second Circuit, but also the Ninth Circuit Court of Appeals, which hears appeals from the Arizona District Courts. Alas, there have been no coverage decisions of interest of late. I’ll continue to keep on the lookout for you all.

Until next time!

Agnes A. Wilewicz

[email protected]


Kentucky Did Help:

Kentucky Advocate
Danville, Kentucky

21 Feb 1920

State Suffrage Sidetracked.

With only six more states required to ratify equal suffrage and permit women to vote in the Federal elections, there is a good deal of speculation as to the attitude of the women of Kentucky toward the four-flushing of the Republicans in the Senate and House in regard to putting forward the State Suffrage amendment. This amendment has been pledged, women here working for its enactment claim, by both parties, and thus far the only help they have received is from the Democrats, regardless of the fact that most of the state suffrage forces are Republican women.

Playing both ends against the middle is a time-honored Republican policy at Frankfort. Their little game has been to get their two pet amendments, the one to make the Superintendent of Public Instruction selective, instead of elective, and the other to redistribute the school fund, out on a clear track, and to side-track the state suffrage resolution, introduced buy A. L. Hamilton, Democrat in the House, and by Senator Will Stoll, Republican, in the Senate.  As only two amendments can be offered by any session, they figure that the two advanced by the administration will pass, which would prevent the state suffrage amendments and the resolution for a referendum to the people of future Federal amendments from being enacted. 


Barnas on Bad Faith:

Hello again:

I’m enjoying a long weekend in Tampa with some old college friends this weekend.  We have a couple of rounds of golf lined up, as well as a trip to Steinbrenner Field for the Blue Jays and Yankees in the spring training opener for both teams.  I bought a new driver for this golf season, so I surely will be striping the ball consistently 290 yards down the middle of the fairway this weekend.  I like to think that it’s never my fault on the golf course, and that my consistent poor play is attributable to things like my clubs, golf balls, or golf apparel.  Golf Galaxy loves my way of thinking.

Congratulations are in order for Jody Briandi who will be assuming the position of managing partner with our law firm.  We’re all looking forward to the continued growth and success of our firm in the future under Jody’s skillful leadership.

In my column this week I have a case from Indiana where the Court of Appeals held that an insurer owes a duty of good faith and fair dealing to an individual who qualifies as an insured under the policy, not just a named insured.  In so doing, the court overturned the decision of the trial court, which largely relied upon federal case law.  An interesting decision to be sure.  Give it a read.

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

Brian D. Barnas

[email protected]


Arizona as Well:

The Crowley Signal
Crowley, Louisiana

21 Feb 1920


PHOENIX, Ariz., Feb. 16.—Under suspension of the rules the house of representatives of the Arizona legislature this afternoon unanimously adopted a resolution ratifying the woman suffrage amendment to the national constitution.


Off the Mark:

Dear Readers,

The DRI Product Liability Conference in New Orleans went well.  I decided to bring the wife as New Orleans has been on our bucket list for a long time.  We really enjoyed the city and the food was excellent.  We ate as many po’ boys and as much crawfish as possible.

This edition of “Off the Mark” brings you a recent construction defect case from the US District Court for the Northern District of Alabama, Southern Division.  In Barton v. Nationwide Mut. Fire Ins. Co., the Court examined a carrier’s duty to defend and indemnify its insured relative to claims arising out of faulty workmanship related to the construction of a new home, including what constitutes an "occurrence".

Until next time …

Brian F. Mark

[email protected]


Alienation of Affections have been be Worth It? – 100 Years Ago:

New York Herald
New York, New York

21 Feb 1920



Verdict Returned for Mrs. Seaman in Alienation Case

A sheriff’s jury yesterday assessed at $30,000 the damages of Mrs. Adele G. Seaman against Miss Willie Maude Ballinger, a nurse.  Mrs. Seaman sued for alienation of the affections of her husband, Merritt Garland Seaman.  The defendant did not answer the complaint and her whereabouts is unknown.

The Seamans lived in Atlanta, where Seaman was a flour broker.  “We had a good home and I was the happiest  woman in the world,” Mrs. Seaman testified yesterday, “and my husband was the best of husbands.  He became ill and Miss Ballinger was called as a nurse.”

After his recovery, Mrs. Seaman explained, her husband took the nurse automobile riding at different times.  Finally he left home and she located him at a distant point with Miss Ballinger.  He returned and was reconciled, but later departed again.

Mrs. Seaman, who has a daughter of twelve, testified that she and the girl came to New York and found her husband and Miss Ballinger.  The plaintiff had him summoned to appear in the Domestic Relations Court, but he disappeared without answering. 


Boron’s Benchmarks:

Dear Subscribers:

I hope you and yours had a great Valentine’s Day.  My Valentine, my wife, as usual, sent out a slew of Valentine’s Day cards to friends and family this year, making me look good in the process, because she signed my name next to hers on every one of them.  She’s been making me look good for over 37 years now.  So lucky. 

For this edition of Boron’s Benchmarks, I have selected for your perusal and consideration a decision issued February 13, 2020, by the Supreme Court of Wisconsin.  Consider it my little valentine to you.  It is a duty to defend case that the insurers won at every level, from the trial court to the Court of Appeals, and now at the Wisconsin Supreme Court.  I think it is an interesting read.  You do know that I am an insurance coverage geek, don’t you?  Now, don’t be scared off by the number of pages of the opinion. The last 10 of the 41 pages are the dissent, and the entire decision is double-spaced. 

Have a great next two weeks, folks.

Eric T. Boron

[email protected]


Celebrating the Presidents – a Century Ago:

The Standard Union
Brooklyn, New York

21 Feb 1920



Judge MacMahon Talks to Insurance Brokers on the Double Anniversary.

Judge J. Grattan MacMahon addressed the Insurance Brokers’ Association of Kings County at noon today at the Prudential Insurance Company office, 1219 Fulton street, on the virtues of Washington and Lincoln.

“Washington and Lincoln!  These men will have no successors,” he said’ “like Hercules, they were great in their cradles; they were confronted with great problems, they performed great deeds, they overcame great difficulties.  Washington stands along amongst the conquerors of the world, the hero without a stain, the patriot without a blemish; a man without a model and without a shadow.

“It matters little whether we regard Lincoln as a rail splitter, a master of a flat boat, a captain of volunteers, a surveyor or a lawyer, a debtor or an orator, a legislator, a Congressman or a President, in every capacity he displayed the same sensible, honest  sincerity, a soul swelling with patriotic energy and stamped with the patent of the Deity.  He loved the philosophy of Shakespeare—the morality of the Bible—the sweet simplicity of Burns—the virtue of Washington and the irony of Aesop.  His fame shall be young when our government shall have perished, the glory of our name be but legend of tradition and the light of our achievement live only in song.

“The spirit of Washington sleeps not in the tomb at Mount Vernon—Lincoln is not dead.  The principles for which they struggled are not made of clay, and did not perish with the organs that conveyed them.  Immortal men—universal patriots—no land can claim them.  They were the gift of Providence to the human race, and their deeds and sacrifices have been a blessing to the family of men.”


Barci’s Basics (On No Fault):

Hello Subscribers!

I am happy to report that the mock trial team I coach won their first trial of the season!  It was especially exciting given that the part of the team who competed is all brand new this year except for one. The other part of the team is on deck to try the prosecution side of the case next weekend, so hopefully I’ll have more good news to report next issue.

On the no-fault front, I have two Fourth Department cases to report that discuss the requirement for a carrier to provide affirmative evidence of timely denials of coverage based on nonappearance at EUOS. This includes a detailed affidavit from a claims specialist, the actual denials forms, and an affidavit from the third-party claims processor, if there is one. This standard in the Fourth Department is higher to prove timely denials than in other departments, which only require the affidavit of a claims specialist, so it is important to keep in mind if you are moving for summary judgment as a carrier.

That’s all folks,

Marina A. Barci

[email protected]


Buffalo -- A Beer Town Now, A Beer Town 100 Years Ago:

Press and Sun-Bulletin
Binghamton, New York
21 Feb 1920



Buffalo, Feb. 21.—Thousands of gallons of alleged “real beer” were seized late yesterday in the plant of the Buffalo Brewing Company by federal prohibition agents.  It is alleged the brewery was manufacturing beer containing from 2.75 percent alcohol to 4 per cent.  The law allows one-half of one per cent.  No arrests were made.

Officials of the brewery deny they have been violating the law.


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

This past weekend, the Maxwells took in the Buffalo Museum of Science, and I must say, I was impressed. Who knew there could be so much science in one building? And then, because it was National Engineers Week, they brought in the scientists. My son’s head has never been on so much swivel. 10 out of 10, would recommend for your family with young kids who just so happen to be in our “hidden gem” that is the City of Good Neighbors. It won’t be a secret for long, as I think the cat's out of the bag.

Action packed edition. The Legislative List includes a bill that would eliminate the ad damnum requirement of Summons With Notice under the CPLR, another that would require consumer and employment arbitrators to itemize the issues at hand, as well as issue findings of fact and conclusions of law, and a discussion of a third bill that amends a 2019 law granting immunity from civil liability to individuals informing on fraudsters. In the Regulatory Wrap-Up, we discuss the proposed repeal of Insurance Regulation No. 107, in favor of a consolidated Public Access to Records Part 3 of the Financial Services Law (23 NYCRR), and lastly, a proposed amendment to Insurance Regulation No. 118 Proposed requiring insurers exceeding a certain premium threshold to establish and maintain an internal audit function modeled after that promulgated by NAIC.

Until next time,

Ryan P. Maxwell

[email protected]


Love O’ Mike Passes:

Press and Sun-Bulletin
Binghamton, New York

21 Feb 1920


Death Claims Love o’ Mike For His Own

Pneumonia Takes Life of Boy Mother Abandoned and Reclaimed


New York, Feb. 21.—Death has rung down the curtain in the drama of “Love o’ Mike,” a babe whose mother abandoned him and then fought successfully in the courts for his return after another woman had claimed him as her kidnaped son.

The heart of New York was touched last December when a tiny mite of humanity was left in the Grand Central Terminal with a note pinned to his clothing says:

“For the Love of Mike, take this kid.”  The note also set forth that the mother was too poor to buy milk for the child.  The babe was taken to a hospital and christened “Love o’ Mike.”

A few days later, a distracted woman, Mrs. August Wentz, whose seven weeks’ old baby had been kidnaped, claimed the child as her own.  Her husband also identified him.  Meanwhile, mother-love asserted itself and the baby’s mothers, Mrs. Lena Lisa, reclaimed her child.

The Wentz’ were loath to return the boy, court action followed and a Solomon-like justice awarded the laughing, red-haired youngster to Mrs. Lisa.

Yesterday “Love o’ Mike” succumbed to pneumonia.

Editor’s note:  we told about “Love O’ Mike” in a previous issue:


CJ on CVA and USDC(NY):

Hello all,

It’s back to the District Courts of New York this week. As mercury is once again falling in the North East, I thought it apropos to discuss a case involving the sinking of a 34-foot motor yacht due to the owner’s failure to properly winterize his vessel. While the case specifically discusses a marine policy, it shares some similarities with property policies when it comes to protecting the insured risk against damages as a result of freezing.

I can only hope that temperatures continue to drop in our neck of the woods as I am traveling to the Adirondacks at the end of the month for a Leap Day wedding. I’m also hoping to sneak a couple days skiing the famed Whiteface Mountain, home of the alpine skiing events at the 1980 Winter Olympics. An Olympiad made famous by the United States’ ice hockey victory over the Union of Society Socialist Republics. An event that some historians (read: this armchair historian) credit as the beginning of the end of the Soviet Union.

Happy Reading!

Charles J. Englert, III

[email protected]


The Trial that Led to a Famous SCOTUS Opinion – What is a “Clear and Present Danger?”:

Bakersfield Morning Echo
Bakersfield, California

21 Feb 1920


OAKLAND, Feb. 20.—A verdict of guilty was returned by the jury in the syndicalism trial of Miss Anita Whitney shortly before 11 o’clock tonight.  The jury had been out nearly six hours.

Miss Whitney was the first woman in the state to be tried under the California criminal syndicalism act, which makes it a felony to advocate violence as a means of accomplishing a political or industrial change.  She was arrested Dec. 31, after she had made an address before the Oakland Civic center.  It was charged that she was an organizer for the Communist Labor party.

The verdict of guilty was brought in on only one of the five counts in the complaint, “being a member of a criminal syndicalism organization.”  The other four counts charged “advocating syndicalism by spoken words, justifying syndicalism by personal contact, and distributing syndicalisist literature.”

Judge Quinn after receiving the verdict set Tuesday for pronouncing sentence and remanded the defendant to the custody of the sheriff without bail. Because of Miss Whitney’s prominence as clubwoman, lecturer and authority as well as because of her sex, the case had attracted wide attention.

Editor’s note:   Whitney's conviction was unanimously upheld by the Supreme Court in Whitney v. California, 274 U.S. 357 (1927). The ruling featured a landmark concurring opinion by Justice Louis Brandeis that only a "clear and present danger" would be sufficient for the legislative restriction of the right of free speech. His opinion would be employed again in cases revoking the restrictions against the communists after a subsequent wave of imprisonments during the 1950s.


Dishing Out Serious Injury Threshold:

Dear Readers,

Hope everyone had an enjoyable Valentine’s Day. This year continues to fly by and seeing family and friends come back from trips has me itching to escape the Northeast winter. Thankfully, I have a trip to New Orleans coming up in March. It will be my first time there so if anyone has any travel tips, please let me know.

It remains to be a slow time for decisions on threshold. I only have one case for you this week. This case pertains to plaintiff’s expert failing to provide an objective basis for concluding that plaintiff’s degenerative conditions were not the cause of the claimed injuries. This has been prevalent in caselaw recently that, even when plaintiff presents medical expert findings of limitation, plaintiff’s failure to have their expert specifically rebut claims of pre-existing or degenerative conditions are fatal to plaintiff’s claims.


Michael J. Dischley

[email protected]  


Men – NOW You Can Understand What NOT to Do:

Democrat and Chronicle
Rochester, New York

21 Feb 1920


To the Man of the House

One good way of getting into the good graces of the womenfolk in your home is to show a real concern for their health and comfort.

There is no better way of manifesting your concern for their welfare than by providing for them the things that make the work of the home easy and pleasurable.


Get a “Hoover” Electric Vacuum Cleaner

It is clean, is fully guaranteed as to workmanship, durability and cleaning efficiency.

The price at which this clean is being sold and the liberal payment terms offered place this health conserving device within the reach of modest means.

Price $65.00

Let us send you one on trial.  You will not be obligated in any way and we will thank you for having tried the cleaner should you desire to return it.


Bucci on “B” :

Hi folks.  I’m here in lovely, sunny Arizona attending the ABA ICLC conference. I’m looking forward to interesting topics (although no Coverage B) and seeing good friends.  Because they are redoing the property (large lawn in the middle of the hotel buildings), they have taken away our lovely fire pits and outdoor heating lamps.  Oh well, still good wine, good food, good friends. Well, adequate wine, good food, and friends.  If you are here too, give me a holler.  I’m always interested in meeting Coverage Pointers readers.

This edition contains an interesting Second Circuit decision regarding the application of Hartford’s IP Exclusion, which precludes coverage for any claims asserted in an action that also contains intellectual property violations.  The case is short, so I included a link to the lower court case. 

See you next time.

Diane L. Bucci

[email protected]


Admiral Peary Passes:

New York Herald
New York, New York

21 Feb 1920





Succumbs After Long Illness and Many Operations for Blood Transfusion.


Stood “on Top of Earth” in Ninth Attempt—Made Rear Admiral.

Special to The Sun and New York Herald.

WASHINGTON, Feb. 20.—Rear Admiral Robert E. Peary, discoverer of the North Pole, died early to-day at his Washington residence.  For more than two years he had been suffering with pernicious anemia, which repeated blood transfusions failed to alleviate.  Recently the disease because acute finally proving fatal.

Admiral Peary, who retained consciousness almost to the end, was surrounded by members of his immediate family when he died.  With him were his wife, Mrs. Josephine D. Peary; his daughter, Mrs. Marie A. Stafford, and her husband, Edward Stafford; and his niece, Miss Madge Diebitsch.

The disease which caused Admiral Peary’s death made its appearance after he had finished a lecture tour in the interest of aerial preparedness, of which he was an ardent advocate.  Since then blood transfusion operations have been performed thirty-five times, the last being at the naval hospital only a few days ago.  These kept up his waning strength but did not check the process of the disease.

After the last operation Admiral Peary’s strength appeared to revive for a time and there was hope of his ultimate recovery, but yesterday he suffered a relapse and died early this morning. 


John’s Jersey Journal:

How are the New Jersey courts dealing with the doldrums of winter? By deciding insurance coverage cases, it seems. Today’s issue is chock full of New Jersey coverage cases raising questions like:

  • Can a UIM insurer exclude coverage for resident relatives that are covered by another policy? Yes, Allstate shows us the way, read on.

  • In a construction defect case, can the insured successfully assert a Continuous Trigger theory of coverage? Not without some evidence of property damage during the policy period.

  • In a fight case, does the lack of an “occurrence” and the “ expected or intended injury” exclusion bar indemnity coverage for the alleged tortfeasor?  Yes, particularly, where the claimant only had speculation to support his claim the punch to his face was accidental.

If you follow me on LinkedIn, you saw two of them already. Like Dan, I post “Coverage Pointers Advance” cases on my LinkedIn page. I check the New Jersey dockets nearly each day. As cases come down, I post them there first. So for those who want an “advance copy” or a succinct one-sentence on why the case is important, feel free to add me or follow me.

Getting back to this edition…

The Deras case is noteworthy for UIM insurers. Allstate created an exclusion that removes coverage if a resident relative is insured under another auto policy. The exclusion was challenged on a variety of grounds. The Court enforced the exclusion, finding it to be unambiguous and not contrary to public policy. Since UIM coverage is optional in New Jersey, UIM insurers have freedom to modify the coverage provided (Unlike New York, where the exclusions are statutory).

Construction defect is one of my favorite coverage cases. New Jersey courts apply the “continuous trigger” theory in third-party construction defect cases where it is difficult to ascertain precisely when the damage was caused (as with asbestos and pollution cases). In recent years, New Jersey’s Supreme Court addressed when the final “pull” of the trigger occurs—i.e., the last policy triggered.

But when does the first “pull” of the trigger occur? An elusive concept, apparently. In Rigid Global Buildings, the District of New Jersey addressed when it does not occur. It does not occur where there is no evidence of property damage during the policy period.

Platinum Dollz was a fight outside a “gentlemen’s club”. Claimant alleged Kulesza negligently or intentionally assaulted him. Kulesza had no recollection. Claimant’s memory was foggy as well, but he did remember “someone” punched him in the face. Kulesza’s insurer sued for a declaration it had no indemnity obligation. Claimant tried to avoid summary judgment claiming that it was possible the two could have negligently collided or accidently fell into each other. Or maybe claimant flicked a lit cigarette into Kulesza and he responded in self-defense with reasonable force. The court wasn’t buying it and declared there was no coverage.

Keep those New Jersey cases coming in. If you have a New Jersey claim slide across your desk, we’d be happy to help. We handle all types: construction accident injury, construction defect, commercial auto, UM or UIM claim, Child Victims claim—to name a few. We would love to work through the coverage issues with you. Just pick up the phone or drop us a note.

John R. Ewell

[email protected]


FDR, to Speak – Long Before he was President:

Press and Sun-Bulletin
Binghamton, New York

21 Feb 1920


Roosevelt Will Speak on Naval Lessons of War

Assistant Secretary of Navy Will Address Men’s Forum Tomorrow Night

Franklin D. Roosevelt, Assistant Secretary of the Navy, will address the Men’s Forum in the auditorium of the First Congregational Church tomorrow night at 7:30 o’clock on “Some Lessons of the War with Reference to Our Future Naval Policy.”  Mr. Roosevelt’s address is especially pertinent at this time in view of the Daniels-Simms controversy.  He has been in the Navy Department for seven years and probably no other man is better qualified to speak on the subject he has chosen.

Mr. Roosevelt received the degree of A.B. in 1904 from Harvard, and was graduated from Columbia University Law School in 1911.  He was elected a member of the New York Senate in 1910 from which he resigned in 1913 to become assistant secretary of the navy.  He was a member of the Hudson-Fulton Celebration commission in 1909; of the Plattsburgh Centennial in 1913, and of the National Commission on the Panama and Philippine Island Exposition in 1915.

The doors of the church will be open at 6:45 o’clock.  Miss Britton will give a brief organ recital preceding the lecture. 


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

It’s been cold in Connecticut lately, really cold. So cold, that the well of insurance coverage cases has frozen solid. This fortnight we chipped away a retread of sorts, as a desperate pair of homeowners search in vain for an insurer to repair their crumbling concrete foundation. They will find no love from the District Court this Valentine’s Day, as their motion to reargue and attempt to reshape the Connecticut Supreme Court’s epic collapse rulings will go down in defeat. Maybe a trip to Foley Square is in their future. If that happens, you’ll hear it first at Lee’s Connecticut Chronicles. Until then, stay warm, we’re less than a month from the start of Spring 2020!

Lee S. Siegel

[email protected]

Car Racing a Century Ago – a Tad Slower:

The Tampa Tribune
Tampa, Florida

21 Feb 1920




Roller, in his specially constructed Ford racer, made a clean sweep of the automobile races at the South Florida Fair yesterday, his dust being taken by a field that included two Buicks, a Stutz, a National and two other Fords.  The races were hotly contested, but Roller always had something in reserve when he was crowded.  The half mile running race was accounted for by J. B. Henry’s Fannie, while Ty Cobb, owned by Dr. Fernandez, was returned the winner in the mile running race that closed the sport program for the day.  This event was marred by a false start that resulted in two of the entries, Trumpeter and Stalwart Model, running away a mile before they could be gotten under control.  In spite of this Trumpeter, ridden by Mrs. David Jackson, received third money.

The summaries:

Five-mile auto race:  Roller (Ford), won; Chapman (Buick), second; Koetzler (Buick), third, time.  Time 7:11 1/4.  (The Buick driven by Koetzler lost a front tire on the third mile, running the last two miles on the rim.)  Marsicana (Ford), Praig (Stutz), Zimmerman (Ford), and Warrenberg (National) also ran.

Five-mile automobile race:  Roller (Ford), won; Koetzler (Buick), second; Praig (Stutz), third.  Time 7:23 1-2.  Chapman (Buick), also ran.

Editor’s Note:  the winning speed was a blazing 41.76 mph.


Cara’s Canadian and Cross-Border Connections (with Heather Sanderson):

Hello subscribers,

I am happy to bring you the first column for Cara’s Canadian Cross-Border Connections – welcome! This past Sunday, I spent time with friends at the inaugural CollaBEERation Fest at Resurgence Brewing Company’s Chicago Street location, one of the many Buffalo breweries. The festival, organized by Buffalo Beer Geeks, paired craft beer enthusiasts with WNY breweries to create unique beers ranging from imperial stouts to coffee porters. I regularly enjoy West Coast style IPAs but am a novice when it comes to the heavier end of the beer spectrum. I thoroughly enjoyed the festival, but I am excited for the warmer months when lighter beers, such as sours, goses and hefeweizens, will be more abundant. 

Cara A. Cox

[email protected]


Hard to believe that it is mid-February. I returned from the Canadian Defence Lawyers Insurance Coverage Symposium in Toronto at the start of the month (where Dan Kohane and myself were speakers) to Calgary’s sunny skies, cool temperatures and lots of deep powder snow. Perfect ski conditions. Lake Louise & Sunshine ski areas each have a base of about 5.5’ of packed powder snow and more keeps falling. I pulled away from all of that fun to assist Cara with her new column. We hope to bring you some news and insight on issues impacting the Canadian P&C industry and by extension, the American carriers that have Canadian exposures. Don’t hesitate to let us know what you think.

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]


Headlines from this week’s issue, attached:

Dan D. Kohane

[email protected]

  • Who is a Special Employee?
  • No Automatic Assignment of Rights When Resolving a Claim against MVAIC
  • In Pre-Prejudice Case, Late Notice Established and Coverage Lost


Steven E. Peiper

[email protected]

  • Entry of Default  Cannot be Withdrawn/Vacated by Plaintiff


Michael J. Dischley

[email protected]

  • Plaintiff’s Expert Failed to Provide Objective Basis for Concluding Plaintiff’s Degenerative Conditions Were Not Cause of the Claimed Injuries


Agnes A. Wilewicz

[email protected]

  • In Arizona for ABA TIPS Coverage Committee conference.


Jennifer A. Ehman

[email protected]

  • On holiday.


Brian D. Barnas

[email protected]

  • Insurer’s Obligation of Good Faith and Fair Dealing Extends to All Insureds under the Policy


John R. Ewell

[email protected]

  • New Jersey Appellate Court Enforces UIM exclusion Barring Coverage for Resident Relative insured under Another Policy
  • Construction Defects Not Covered by CGL policy where No Evidence of Property Damage, says New Jersey Federal Court
  • Alleged Tortfeasor Not Covered for Battery at Strip Club. Claimant’s Recollection that “Someone Punched Him in the Face” Did Not Defeat Insurer’s Summary Judgment Motion


Lee S. Siegel

[email protected]

  • Crumbling Concrete Collapse Coverage Controversy Cancelled


Brian F. Mark
[email protected]

  • US District Court Finds Resulting Property Damage Caused by Faulty Work Could Constitute an Occurrence Under the Policy.


Eric T. Boron

[email protected]

  • Supreme Court Affirms Finding That Insurers Did Not Breach the Duty to Defend


Marina A. Barci

[email protected]

  • Although Insured’s Failure to Appear for EUO is a Complete Defense, Insurer Must Establish that Denial Was Timely


Ryan P. Maxwell

[email protected]

The Legislative List

  • Senate Delivers Bill to Assembly That would Eliminate Requirement under CPLR 305(b) to Specify Ad Damnum Requirement of Summons with Notice
  • Assembly Passes Bill Proposing Mandatory Inclusion of Itemized Issues in Dispute and Findings of Fact and Law in Consumer and Employment Related Arbitrations Proposed Amendment to Chapter 656 of the Laws of 2019, which Granted Immunity for Reports of Suspected Fraud Made to the National Insurance Crime Bureau


Regulatory Wrap-Up

  • Proposed Consolidated Rulemaking Repealing 3 NYCRR SP G 106 and 11 NYCRR 241 (Insurance Regulation No. 71) and Adding New Part 3 to 23 NYCRR
  • Proposed Rule Making Requiring Insurers Meeting a Certain Premium Threshold to Establish and Maintain an Internal Audit Function


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

[email protected]

  • Damage to Sunk Yacht Not Covered by Marine Insurance Policy where Insured Breached “Lay-Up” Warranty


Diane L. Bucci

[email protected]

  • Unfair Competition Claim Barred by IP (infringement) Exclusion


Cara A. Cox

[email protected]

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]

  • Canadian Insurers No Longer Automatically Left with Insured’s Legal Bill in Duty to Defend Litigation
  • British Columbia is about to Become the Next Canadian No-Fault Jurisdiction


Earl K. Cantwell

[email protected]

  • Insured Has Hail of a Time Pinpointing Date of Loss


Spring is just around the corner.  I can taste it.

We love your feedback and comments.


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 F. Mark

Diane L. Bucci

Brian D. Barnas

John R. Ewell

Eric T. Boron

Marina A. Barci

Ryan P. Maxwell

Charles J. Englert

Cara A. Cox

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)

Bucci On “B”

Cara’s Canadian and Cross-Border Connections (with Heather Sanderson)

Earl’s Pearls


Dan D. Kohane
[email protected]

02/20/20       Ramos v. 110 Bennett Avenue, LLC
Appellate Division First Department
Who is a Special Employee?

Not really a coverage decision, but close enough.

Ramos was the Superintendent of the owner’s property.  When he was injured, Ramos sued the owner.  The owner moved for summary judgment claiming that the superintendent was its “special employee” and that as a result (presumably because of the exclusivity of Workers Compensation).

The court found that while there was some proof that the owner gave him instruction on how to clean and maintain the building,, the owner failed to establish that plaintiff was its special employee when plaintiff's accident occurred on Owner's property. There was no evidence that owner assumed exclusive control over the manner, details and ultimate result of the employee's work  Rather, the evidence shows that employees of defendant Rose Associates, Inc. (Rose) supervised and directed plaintiff's work.

The general instructions did not establish sufficient control and direction of the manner and details of plaintiff's work to establish a special employment relationship owner's representative testified that she visited the property only four times a year, and made only general observations about the property's condition. Moreover, owner's reimbursement of plaintiff's wages, benefits, and worker's compensation insurance were insufficient to show that a special employment relationship existed, absent other evidence showing that it directed and controlled plaintiff's duties.

The fact that Rose, as general employer, exerted the amount of control that it did over plaintiff's work established that it did not cede exclusive control to owner, the management agreement between Owner and Rose specifically stated that plaintiff was deemed an employee of Rose and not an employee of the owner.

Editor’s Note:  I’m surprised that the court did not suggest that this question should be resolved at the Workers Compensation Board.


02/19/20       Archer v. Beach Car Service, Inc.
Appellate Division, Second Department
No Automatic Assignment of Rights When Resolving a Claim against MVAIC

Archer, a pedestrian, allegedly sustained serious personal injuries in a hit-and-run accident that occurred on January 18, 2008. After the accident, the driver of the offending vehicle transported plaintiff to the hospital, but then fled the hospital without identifying himself.

It was determined at the hospital that the vehicle that struck the plaintiff was a livery cab associated with the defendant Beach Car Service, and the telephone number for Beach Car Service was contained in the plaintiff's emergency room record.

Archer was unable to discover the identity of the driver. In February 2008, plaintiff served a notice of intention to make a claim against the Motor Vehicle Accident Indemnification Corporation (“MVAIC”)

In January 2011, Archer sued Beach Car Service and John Doe (intended to be the owner and operator of the vehicle that hit him). Thereafter, the complaint was amended to add as defendants, among others, eight drivers whom the Beach Car defendants informed the plaintiff were on duty the night of the accident.

In March 2011, Archer was granted permission to file an action against MVAIC  and eventually settled it for $25,000, the statutory maximum, and executed a general release and stipulation of discontinuance.

A number of the alleged drivers then moved to dismiss the complaint against them on the ground that the plaintiff lacked standing to prosecute this personal injury action against them since he executed a general release which effected an assignment of his claim to MVAIC. They also argued that, by operation of Insurance Law § 5103(b), plaintiff, upon receipt of the settlement amount from MVAIC, automatically assigned his personal injury claim to MVAIC.

In opposition, plaintiff submitted an affidavit from the manager of the Recovery Department of MVAIC. He averred that, when MVAIC settled the matter with the plaintiff, the plaintiff's attorneys advised that the identity of the offending driver was still unknown, and that the plaintiff's attorneys were still conducting an investigation in the instant action. The manager claimed that MVAIC, after it settles a claim, still has an interest in identifying and obtaining a recovery from a financially irresponsible or unidentified driver. Thus, according to the manager, upon settling the MVAIC action with the plaintiff, MVAIC made a deliberate determination not to take an assignment of the plaintiff's personal injury claim because the identity of the driver was not known to MVAIC at that time, and since, if the plaintiff succeeds in identifying the driver and obtaining any recovery, then the plaintiff will reimburse MVAIC the $25,000 it paid in settlement.

The general release executed by the plaintiff did not contain any provision assigning any and all causes of action arising out of the subject accident to MVAIC  The court held that Archer did not assign his personal injury claim to MVAIC by operation of Insurance Law § 5103(b).

Insurance Law § 5213(b) provides: "As a condition to the payment of the amount of the settlement the qualified person . . . shall assign his claim to the corporation which shall then be subrogated to all of the rights of the qualified person against the financially irresponsible motorist." Thus, the statute provides that, upon payment of the settlement amount by MVAIC, the "qualified person," i.e., the plaintiff, shall assign his personal injury claim to MVAIC. However,  acceptance of payment operates as an assignment by operation of law; neither does it make execution of an assignment a condition precedent to the receipt of payment. Rather, the statute obligates an individual who receives payment to assign her claim to MVAIC, giving MVAIC the enforceable right to obtain such assignment." Thus, although the plain language of Insurance Law § 5213(b) requires the plaintiff to assign his claim to MVAIC as a condition of receiving a settlement from MVAIC, such language does not make the assignment automatic.


02/13/20       Dritsanos v. Mt. Hawley Ins. Co.
Appellate Division, Second Department
In Pre-Prejudice Case, Late Notice Established and Coverage Lost

On July 18, 2008, Dritsanos was stabbed at a Brooklyn nightclub, owned and operated by Ambela. Ambela was insured under a CGL policy issued by Mt. Hawley.  On December 9, 2008, Dritsanos commenced an action against Ambela and others to recover damages for personal injuries.

Mt. Hawley was first notified of the personal injury action by letter dated June 22, 2009 from Robert Pollack, an insurance broker. In the letter, Pollack referenced the policy number and the name of the insured (Ambela). Pollack asserted that his office did not receive notice of the occurrence until June 8, 2009, and that no injury occurred on the subject premises. Enclosed with Pollack's letter was a copy of the plaintiff's supplemental summons and amended verified complaint served on Ambela by delivery to the Secretary of State on February 17, 2009.

By letter dated July 1, 2009, Mt. Hawley disclaimed coverage on the basis of Ambela's untimely notice of claim. On December 12, 2014, the plaintiff was awarded a default judgment in the principal sum of $75,000 against Ambela and the alleged assailant. In May 2016, the plaintiff commenced a direct action, pursuant to Insurance Law § 3420(a)(2), against Mt. Hawley.

Insurance Law § 3420(a)(3) requires the injured party to demonstrate that he or she acted diligently in attempting to ascertain the identity of the insurer, and thereafter expeditiously notified the insurer. However, where an injured party fails to exercise the independent right to notify an insurer of the occurrence, a disclaimer issued to an insured for failure to satisfy the notice requirement of the policy will be effective as against the injured party as well.

This was a pre-prejudice case (amazing that there are still some of those around), and the insurer need not demonstrate prejudice for policies issued or renewed prior to 1/17/09.

Late notice was established and the plaintiff did not demonstrate that it acted diligently in attempting to ascertain the identity of the insurer, and thereafter did not expeditiously notify the insurer.

Steven E. Peiper

[email protected]

02/07/20       Turner v. Higgins
Appellate Division, Fourth Department
Entry of Default  Cannot be Withdrawn/Vacated by Plaintiff

In this interesting decision, plaintiff moved to vacate his own default against plaintiff.  The application was made within a year of the entry.  We trust, of course, defendant did not oppose the application.

Defendant’s insurer, Farmers, however, intervened and did present opposition.  Essentially, Farmers appears to have argued that plaintiff was aware that defendant likely had insurance at the time he elected to proceed with default proceedings.  As such, where, as here, plaintiff elected to pursue a default, he could not reverse his course.

Peiper’s Point – This is an interesting decision, and worth noting.  We trust that plaintiff sought to withdraw the default so that he could then press defendant’s carrier to acknowledge coverage.  By taking a default, he likely triggered a denial based upon late notice (with an irrebuttable presumption of prejudice).  When plaintiff wasn’t able to withdraw the default, the disclaimer stands and the carrier is protected.   Good lawyering on this one. 


Michael J. Dischley

[email protected]

02/18/20       Reynoso v. Tradore
Appellate Division, First Department
Plaintiff’s Expert Failed to Provide Objective Basis for Concluding Plaintiff’s Degenerative Conditions Were Not Cause of the Claimed Injuries

Plaintiff appealed from a Supreme Court, Bronx County decision that granted defendants' motion for summary judgment.

The Court found that defendant satisfied her prima facie burden to show that plaintiff did not sustain a serious injury to her cervical spine by submitting the reports of her experts, including a radiologist and orthopedist, who found that plaintiff's own MRI report showed preexisting degenerative changes not causally related to the accident.

In opposition, plaintiff offered an affidavit from her orthopedic surgeon who provided only a conclusory opinion as to causation, and a physician, who examined her recently, acknowledged generally that plaintiff may or may not have degenerative conditions, but did not address the particular conditions identified in plaintiff's own records, and offered no objective basis for concluding that those conditions were not the cause of the claimed injuries. Nor did that physician reconcile his findings of limitations in range of motion, with the surgeon's earlier finding of "full" normal range of motion within a month after the accident.

Accordingly, the Appellate Division found that the Supreme Court properly granted defendant's motion for summary judgment dismissing the complaint.


Agnes A. Wilewicz

[email protected]

In Arizona for ABA TIPS Coverage Committee conference.


Jennifer A. Ehman

[email protected]

On holiday.

Brian D. Barnas
[email protected]

02/12/20       Schmidt v. Allstate Property and Cas. Ins. Co.
Indiana Court of Appeals
Insurer’s Obligation of Good Faith and Fair Dealing Extends to All Insureds under the Policy

Schmidt was a passenger in a vehicle driven by Fisher.  A vehicle driven by Bromley collided with the Fisher vehicle, and Schmidt was injured.  Bromley was insured by Progressive for $50,000 per person and $100,000 per accident.  Fisher was insured by Allstate with liability coverage of $100,000 per person and $300,000 per accident.  The Allstate policy also had Underinsured Motorist coverage of $100,000.  Importantly, Schmidt qualified as an insured under Fisher’s policy with Allstate.

Schmidt sued Bromley and Fisher.  Allstate defended Fisher, and Schmidt demanded Fisher’s policy limits for underinsured motorist coverage from Allstate.  After unsuccessful settlement negotiations, Schmidt amended her complaint to include an underinsured motorist claim against Allstate and a bad-faith claim based on Allstate's handling of that claim.

Allstate filed a motion for summary judgment asserting that it did not act in bad faith in handling the underinsured motorist claim.  The trial court concluded that there was an issue of material fact.

Allstate then filed a second motion alleging that it could not have acted in bad faith because it did not owe Schmidt a duty of good faith because she was not a named insured.  The trial court granted the motion because Schmidt was not a policyholder who was entitled to assert a claim for bad faith.

The Court of Appeals reversed.  At the outset, the court noted that no published Indiana Supreme Court or Court of Appeals case had ever held that an insurer does not owe a duty of good faith and fair dealing to an insured, named or unnamed, who is not the policyholder.

In deciding whether such an obligation exists, the court examined three factors that courts analyze to determine if an insurer has breached the duty of good faith with an insured in Indiana: (1) the relationship between the parties, (2) the reasonable foreseeability of harm to the person injured, and (3) public policy concerns.  Schmidt and Allstate had a relationship of insured and insurer even without a contract.  That relationship imposed certain duties upon Schmidt, such as cooperation, honest representations, and submitting to a medical examination.  Second, the court found that it was foreseeable that Schmidt, who had a contractual right to underinsured motorist benefits, would be harmed by the insurer not honoring that claim.  Finally, the court concluded that Indiana law treats all insureds equally when protecting them from unscrupulous behavior by insurers.

Thus, the court held that an insurer owes a duty of good faith and fair dealing to an insured who is not a policyholder and remanded the case for further proceedings on whether Allstate had acted in bad faith.


John R. Ewell
[email protected]

02/11/20       Deras v. Hamwi and Allstate New Jersey Ins. Co.
New Jersey Superior Court, Appellate Division
New Jersey Appellate Court Enforces UIM exclusion Barring Coverage for Resident Relative insured under Another Policy

Plaintiff suffered an injury while she was a passenger in a car (host vehicle) involved in an accident with another car (tortfeasor's vehicle). The host vehicle, insured by GEICO, was owned and driven by plaintiff's friend. The tortfeasor's vehicle was insured by Plymouth.

Plaintiff sought UIM coverage from Allstate as a resident relative living in the household of her deceased husband's family. The family's cars were insured under a policy issued by Allstate (Policy). Allstate denied plaintiff's UIM claim based on an exclusion in the Policy, prohibiting coverage for resident relatives who are not occupants of a car insured under the Policy, and who are insured under another policy. Allstate relied on this exclusion, known as Exclusion C, stating it would not "provide underinsured motorists coverage to any resident relatives who are not occupants of the insured auto described on the Policy Declarations, . . . and who are insured under another auto policy."

Allstate suggested plaintiff provide notice to GEICO of her UIM claim because "GEICO [was] the host carrier involved" in the accident. If GEICO provided UIM coverage and plaintiff recovered under the GEICO policy, Allstate reasoned plaintiff would be insured by GEICO, and therefore, ineligible for UIM benefits from Allstate.

Plaintiff's counsel wrote to Allstate, confirming coverage by GEICO and advising Plymouth made a settlement offer. Counsel also advised of plaintiff's intent to proceed with her UIM claim against Allstate. Allstate repeated its denial of UIM coverage for plaintiff's claim.

Plaintiff sued Allstate. Allstate moved for summary judgment, seeking dismissal of plaintiff’s complaint because she was not covered under the Policy. Plaintiff filed a cross-motion for summary judgment, seeking UIM coverage under the Policy. The trial judge agreed with Allstate's denial of UIM coverage, granted Allstate's motion, and denied plaintiff's cross-motion.

On appeal, the Appellate Court affirmed that no UIM coverage was owed. The plain language of Exclusion C states UIM coverage is not available for any resident relatives who (1) "are not occupants of the insured auto described on the Policy Declarations," and (2) "who are insured under another auto policy." Absent a statutory prohibition, Allstate had the right to relieve itself of liability, as in this situation, by imposing conditions prior to assuming an obligation. The Court did not find the exclusion to be contrary to public policy. Since there was no dispute that plaintiff was covered by the GEICO policy, the Court enforced Allstate’s exclusion to bar coverage.

Note: This is an unpublished decision and does not constitute binding precedent and its use in other cases is limited pursuant to local rule.


02/13/20       Travelers Lloyds Ins. Co. v. Rigid Global Buildings
U.S. District Court, District of New Jersey
Construction Defects Not Covered by CGL policy where No Evidence of Property Damage, says New Jersey Federal Court

Grand Slam hired Beta to develop an indoor tennis center. Beta in turn contracted with Rigid to manufacture a pre-engineered metal building. The tennis center was built in 2009. In 2015, Grand Slam sued the contractors, including Rigid, alleging water leaks (the “Grand Slam Action”).  At oral argument on motions in limine, Grand Slam’s counsel agreed that it would not introduce “any receipts or any costs for” damages between 2009 and 2011. The trial court entered an order that Grand Slam was “prohibited from presenting evidence of any damages from events in 2009 to 2011.” Curiously, the motion in limine was specifically offered by Rigid.

At trial, the central theory of liability was that Rigid did not construct the roof to code. Rigid’s pre-engineered metal structure was missing bolts, the rod bracing was not tight, and the frame was “deflected” and “deformed.” The jury awarded $1.6 million.

Travelers issued two consecutive occurrence-based CGL policies to Rigid, which were in effect from 2009 to 2011. Rigid sought insurance coverage for the verdict from Travelers, who filed a declaratory judgment action against Rigid, seeking a declaration that Travelers was not required to defend or indemnify Rigid for the claims in the Grand Slam Action.

Travelers moved for summary judgment asserting the lack of an “occurrence”. As explained above, Grand Slam could not—and indeed, was barred from—presenting any evidence of damages from the 2009 to 2011 time period. The $1.6 million verdict against Rigid was based exclusively on the costs to repair structural damage to the tennis center from the partial roof collapse in February 2014 and the business losses that flowed from that collapse. Damages that occurred after the Travelers policies expired.

In an attempt to survive summary judgment, Grand Slam argued that an “occurrence” took place under the “continuous trigger” theory of injury.

New Jersey applies the Continuous Trigger theory in cases of progressive disease or injury. The general rule is that the timing of an “occurrence” is “not the time the wrongful act is committed but the time when the complaining party is actually damaged.” Thus, “when progressive indivisible injury or damage results from exposure to injurious conditions for which civil liability may be imposed, courts may reasonably treat the progressive injury or damage as an occurrence within each of the years of a CGL policy.” New Jersey courts have expanded the continuous trigger theory to numerous other progressive forms of third-party injuries, including construction defect cases.

The Court ruled that Rigid was not entitled to coverage under a continuous trigger theory. Property damage must, in fact, occur before an insurer’s liability on a CGL policy can be invoked under the “continuous trigger” theory. Here, all of the damages attributed to Rigid in the Grand Slam Action related to the 2014 partial roof collapse. Indeed, Grand Slam offered absolutely no proofs of damages from 2009 to 2011—the Travelers Policy Periods.

The Court further ruled that Grand Slam’s assertion that there were “water leaks at the Tennis Center . . . as early as 2009,” even if accepted as true, was insufficient to trigger coverage. The Court reasoned that Grand Slam’s reports of early leaks at the tennis center—devoid of any evidence whatsoever that they contributed to the damages assigned to Rigid in the Grand Slam Action—were “too tentative” to trigger coverage. Thus, because any evidence of injury during the Travelers Policy Periods was “merely tentative,” it cannot constitute an occurrence giving rise to a continuous trigger theory of coverage. Accordingly, the Court granted the insurer’s motion for summary judgment.

Note: This is a “Not for Publication” decision and does not constitute binding precedent.


02/14/20       Matari v. Platinum Dollz and New Jersey Mfrs. Ins. Co.
New Jersey Superior Court, Appellate Division
Alleged Tortfeasor Not Covered for Battery at Strip Club. Claimant’s Recollection that “Someone Punched Him in the Face” Did Not Defeat Insurer’s Summary Judgment Motion

Radoslaw Kulesza is an insured under a New Jersey Manufacturers (“NJM”) insurance policy providing personal liability coverage. Plaintiff, Ayman Matari claims he was injured outside of the Platinum Dollz Gentlemen’s Club (the “bar”). He sued Kulesza—another patron of the bar. Plaintiff alleged that Kulesza “negligently” “and/or purposely assaulted” him. In the criminal prosecution, Plaintiff testified that he had no recollection of the evening and that the only thing he could remember is that some unidentified individual punched him in the face with a fist.

NJM filed a complaint seeking declaratory judgment that it had no duty to indemnify Kulesza based upon the assault allegations. The court consolidated the personal injury and declaratory judgment actions. NJM moved for summary judgment, asserting that there was no “occurrence” and the Expected or Intended Injury Exclusion applied to bar coverage. The trial court granted that motion.

On appeal, Plaintiff argued NJM was not entitled to summary judgment because there are genuine issues of material fact as to whether his injuries were caused by an accident, and thus, fall within coverage.

Plaintiff theorized that "if the jury were to believe that there was a melee where plaintiff and Kulesza had incidental contact that resulted in plaintiff falling to the ground and suffering an injury," there would be coverage under the policy. He also argued "if the jury believed that [plaintiff] 'flicked a cigarette' and lunged at defendant," the policy would provide coverage because plaintiff would have "used reasonable force to repel" Kulesza. Plaintiff further argues that the reasonable force exception to the intended act exclusion applies based on his supposition that "Kulesza was defending himself in some other way, and that a punch was a reasonable way to do so."

Last, plaintiff hypothesized "there could have been a verbal disagreement" during which Kulesza "negligently trip[ped] and [fell] forward colliding with [plaintiff] and forcing him to the ground causing the injuries," or plaintiff's and Kulesza's bodies "could have collided" and caused plaintiff to fall and sustain his injuries.

The Court found that Plaintiff's suggested scenarios—each premised on the notion his injuries were caused accidentally or by Kulesza's use of reasonable force—were not supported by the undisputed facts. There was no competent evidence plaintiff's injuries were caused by falling to the ground or were the result of an accident, or that plaintiff lunged at Kulesza or took any other action allowing Kulesza's use of reasonable force—indeed, any physical force—against him. In fact, there was no evidence explaining the manner in which plaintiff suffered his injuries other than his trial testimony. Accordingly, the Court granted the insurer’s motion for summary judgment since the plaintiff’s unsubstantiated inferences were insufficient to defeat summary judgment.

Note: This is an unpublished decision and does not constitute binding precedent and its use in other cases is limited pursuant to local rule.


Lee S. Siegel

[email protected]

01/29/20       Gilmore v. Teachers Ins. Co.
United States District Court, District of Connecticut

Crumbling Concrete Collapse Coverage Controversy Cancelled

The homeowner-plaintiffs were shut-out from coverage by the District Court once again. The homeowners sought reconsideration of the court’s order dismissing their complaint for failure to state a claim. The homeowners argued that their insurer, Teachers Insurance Company, was obligated to repair their crumbling concrete foundation under the policy’s collapse coverage; and that if the policy does not respond to their claim it provided illusory coverage.

Putting aside the rules courts follow on reconsideration motions, they are thrilling trust me, what’s of value is the court’s treatment of the recent pair of Connecticut Supreme Court cases on crumbling concrete. See Jemiola v. Hartford Casualty Insurance Co., 2019 WL 5955904 (Conn. Nov. 12, 2019), and Karas v. Liberty Insurance Corp., 2019 WL 5955947 (Conn. Nov. 12, 2019). We did a whole blog thing on this in November.

Back to the present. The homeowners argued, perhaps in some alternate reality, that the Supreme Court decisions actually support their argument that the collapse provisions of their policy were illusory. They argued that Jemiola and Karas stand for the proposition that “an inquiry into whether insurance coverage is illusory turns on whether the policy provides unitary or separate coverage for the building superstructure and foundation.” The trial court did not agree. “[T]he recent developments in Connecticut law are not in Plaintiffs’ favor. In both cases cited by Plaintiffs, the Connecticut Supreme Court ruled against the homeowners and concluded that their insurance policies did not cover the deterioration of concrete foundations.” The court went on to follow Karas, writing about the Teachers policy’s collapse provision, “Although this exclusion may limit the collapse coverage afforded by the policy, it does “not eviscerate all coverage under the policy.”

As a result, the District Court did not take up the homeowners’ tacit invitation to limit the significance of the Connecticut Supreme Court’s decisions through reinterpretation.


Brian F. Mark
[email protected]


2/14/20         Barton v. Nationwide Mut. Fire Ins. Co.
US District Court for the Northern District of Alabama, Southern Division
US District Court Finds Resulting Property Damage Caused by Faulty Work Could Constitute an Occurrence Under the Policy

This declaratory-judgment action arises out of an underlying construction defects action related to the construction of a home.  In 2006, the plaintiffs, Robert and Mindy Barton, contracted with Stacy Alliston Design and Building, Inc. ("SADB") to build a home.  SADB acted as the general contractor, and hired subcontractors to perform the work involved in building the home.

At closing, the plaintiffs identified deficiencies with the home and listed them on a punch list which was provided to SADB.  After the plaintiffs moved into the house, during 2006 and 2007, they noticed additional concerns, which were "mostly water issues," particularly with a window in the foyer and dormer windows in the attic.

In August of 2010, an expert retained by the plaintiffs inspected the home and identified numerous deficient areas of construction in his report, including, among other things, the following:

1. Water damage substrate and roof decking on all front elevation dormers with evidence of fungal growth;

2. Unsealed toe board nail holes; and

3. Water staining on the front foyer wall, Palladium window appear[ed] to be leaking.

Ultimately, the plaintiffs had to replace the roof, which was rotting due to unfixed toe board nail holes, and had to cut into sheetrock to evaluate water damage from the issues with the dormer windows.  According to the plaintiffs, the water intrusion issues had been identified within the one year warranty period. 

In July of 2012, the plaintiffs hired an expert to perform a full home inspection.  The expert’s inspection of the plaintiffs' home revealed numerous construction defects and failures to adhere to code requirements by the home's builder, as well as resulting damages.

Because SADB failed to correct the structural deficiencies, the plaintiffs claimed to have incurred significant expense to remedy the problems.  In January of 2011, the plaintiffs commenced suit against SADB, alleging: (1) negligent/wantonness: construction; (2) negligent/ wantonness: repair; (3) negligent/wantonness: hiring/supervision/training; (4) negligence/ wantonness; (5) fraudulent misrepresentation and/or innocent misrepresentation; (6) suppression; (7) breach of warranties; (8) third-party beneficiary; (9) nuisance; (10) breach of contract; (11) deceptive trade practices; and (12) deceit.

In July of 2014, the plaintiffs moved for summary judgment against SADB.  SADB did not respond to the motion and judgment was entered against SADB in the amount of $900,000.

SADB was insured by Nationwide Mutual Fire Insurance Company (“Nationwide”).  The policy became effective on December 18, 2005 and was in effect until it was cancelled on March 15, 2009.  The 2006 and 2007 policies are essentially identical.  The 2008 and 2009 policies are also essentially identical to each other and included new endorsements that changed relevant provisions from the 2006 and 2007 policies.

The plaintiffs commenced suit against Nationwide seeking to satisfy the underlying judgment against SADB.  Nationwide filed a motion for summary judgment and argued entitlement to summary judgment for five reasons: (1) defective work is not an "occurrence," and is therefore not covered under the applicable policies; (2) there was no accident, and therefore no "occurrence" triggering coverage; (3) there is no applicable subcontractor exception because the exception was removed by an endorsement; (4) the plaintiffs cannot show an "occurrence" manifested during the policy period; (5) damages related to mold were excluded; and (6) there is no coverage for intentional conduct.

In response, the plaintiffs argued that: (1) damage to other property constitutes an "occurrence" under the policy; (2) leaks and moisture constitute "accidents"; (3) the 2006 and 2007 policies contained the subcontractor exception which negated the "your work" exclusion for those policy years; (4) SADB paid for $2,000,000 "Products Completed Operations" coverage for each policy year; (5) the "property damage" manifested during the initial policy period; and (6) the intentional conduct exclusion does not apply.

In turn, Nationwide argued that defective work, or faulty work, is not considered an "occurrence" under Alabama law, thus barring the plaintiffs’ claim.  The plaintiffs responded that SADB performed faulty work that caused additional damage to their home in the form of water damage so severe as to require the plaintiffs to add a new roof.

The Court noted, that under Alabama law, when a contractor performs faulty work, there is no accident or occurrence, but, when the contractor's faulty work creates a condition that in turn damages property, that damage results from an accident.  If faulty workmanship "subjects personal property or other parts of the structure to 'continuous or repeated exposure' to some other 'general harmful condition' and, as a result of that exposure, personal property or other parts of the structure are damaged" that may be an "occurrence" under a CGL policy.  Therefore, although faulty workmanship itself is generally not an "occurrence" under Alabama law, faulty workmanship can cause an occurrence.

The Nationwide policies all define "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."  The Court determined that in this case, the "accident" which is the "occurrence" is the repeated exposure to water and moisture caused by the improperly constructed dormers and windows.

Although some of the damage which makes up the $900,000 judgment against SADB may be excluded under the legal principles discussed above, it is undisputed that at least some of the resulting property damage caused by the faulty work could be considered an occurrence under the policy. Therefore, the Court held that Nationwide was not entitled to summary judgment based on the "your work" exclusion or the absence of an "occurrence."

Nationwide further argued that there was no subcontractor exception in the policies because it was removed by endorsement.  However, the plaintiffs presented evidence that the 2006 and 2007 policies contained the subcontractor exception, and it was not until the 2008 and 2009 policies went into effect that the exception was removed.  Nationwide did not respond to this argument and evidence or even further mention the subcontractor exception.

The Supreme Court of Alabama has explained the interaction between the "your work" exclusion and subcontractor exception as follows:

In practical effect, the your-work exclusion and the subcontractor exception operate to exclude coverage for property damage caused by work performed by the insured contractor on his own behalf but to restore coverage for property damage caused by work performed by a subcontractor on behalf of the insured contractor.

Here, SADB acted as the general contractor and hired subcontractors to perform the work in building the plaintiffs' home.  Thus, to the extent there was faulty work which caused an "occurrence" during the term of the 2006 and 2007 policies, the "subcontractor exception" restored coverage for damage caused by work performed by subcontractors.  The plaintiffs have presented evidence that some of the damage at issue manifested itself between October 2006 and October 2007.  Therefore, the Court determined that the subcontractor exception may provide coverage for damages which would otherwise be excluded by the "your work" exclusion.  Factual issues regarding damages must be determined by a jury.  Therefore, the Court held that Nationwide was not entitled to summary judgment — even related to damage which would otherwise be excluded as damage to "your work" during the effective period for the 2006 and 2007 policies.

Nationwide also argued that it was entitled to summary judgment because the plaintiffs failed to establish that any resulting damages manifested or occurred during the applicable policy period.  The plaintiffs responded that there was Rule 56 evidence that "the damages at issue either 'occurred' or 'first manifested' during the 2006 and 2007 policy periods" because the plaintiffs testified that "the water infiltration issues occurred and/or manifested during the first year they were in the home."  The Court noted that the 2008 policy went into effect on December 18, 2007 and that the 2006 and 2007 policies expressly provide that "'property damage' which occurs during the policy period includes any continuance, change or resumption of that 'property damage' after the end of the policy period."  Thus, the Court determined that 2006 and 2007 policies may cover some damages that continued subsequent to those policy coverage periods.

"Alabama law is clear that, in determining the timing of an 'occurrence' for insurance coverage purposes, the relevant inquiry is when the property damage took place, not when the underlying work was performed."  In this case, the plaintiffs testified that they were first damaged during the 2006 and 2007 policy periods.  Therefore, based on this evidence, Nationwide was not entitled to summary judgment on the basis that there was no "occurrence" during the applicable policy period.

Each of the Nationwide policies included $2,000,000 in "products-completed operations" coverage.  The Court noted that the Supreme Court of Alabama has held that a "your work" exclusion identical to the one in Nationwide's policy did not apply if the policy's declarations indicated that the insured had purchased Products-Completed Operations coverage.  In fact, that court agreed with the following summary:

Simply put, the 'your work' exclusion applies if and only if the policy's declarations fail to show any coverage for 'products-completed operations.' That is not the case here. Clearly, [SADB] bargained and paid for up to a total of $[2],000,000 in coverage for [its] 'products-completed operations,' which nullifies and renders inapplicable the 'your work' exclusion here.

Thus, for this additional reason, Nationwide was not entitled to summary judgment based on the "your work" exclusion.

The parties agreed that damages relating to mold are excluded from coverage.  However, the Court stated that it is up to a jury to determine what portion of the award against SADB was related to damage from mold.

Lastly, Nationwide had argued that it was entitled to summary judgment because the plaintiffs' underlying complaint, and its summary judgment arguments in the underlying action asserted that the plaintiffs were damaged by SADB's intentional conduct.  However, the plaintiffs' complaint against SADB clearly alleged negligence claims.  Therefore, Nationwide was not entitled to summary judgment on this basis.


Eric T. Boron

[email protected]

02/13/20       Choinsky et al. v. Employers Ins. Co. of Wausau et al.
Wisconsin Supreme Court
Supreme Court Affirms Finding That Insurers Did Not Breach the Duty to Defend

Mr. Choinsky was one of a set of retired teachers who sued their former school district employer for breach of contract, alleging the district had wrongfully terminated the retirees’ long-term care benefits. The school district tendered the defense of the breach of contract action to its insurers, Employers Insurance Company of Wausau and Wausau Business Insurance Company.  The insurers denied the tendered claim, asserting in a denial letter to the district that the policies at issue covered the district for negligent acts, not deliberate ones, and the breach of contract suit never alleged negligent acts of the district, but rather, only deliberate acts.  The insurers then employed a well-established “judicially preferred method” (in Wisconsin) of resolving insurance coverage disputes, by moving to: 1) intervene in the underlying contract action;  2) bifurcate the coverage issue from the underlying merits of the contract case; and 3) stay the contract dispute litigation until the insurance coverage issue could be litigated and decided. The trial court agreed to bifurcate the issues but denied the motion to stay the contract dispute litigation because in the trial court’s eyes there was unique urgency required in resolving the underlying contract dispute, which had ramifications to retiree employee benefits. The insurers thereafter agreed to provide a defense to the district on the contract case under a reservation of rights, and agreed to reimburse the district’s reasonable costs of defending the breach of contract action to that point.

The Wisconsin Supreme Court affirmed the trial court and Court of Appeals decisions that had been in the insurers’ favor by holding on February 13, 2020 that the insurers’ initial denial of coverage followed by a decision to defend under a reservation of rights did not constitute any breach of the duty to defend, because the insurers “promptly followed a judicially-approved method to resolve the coverage dispute”, and defended the district upon the denial of the stay motion, plus agreed to reimburse the district for reasonable defense costs retroactive to the date of the tender.

There are some notable takeaways from this case.  First, Wisconsin has a somewhat unique way of treating these situations.  There is in Wisconsin this so-called judicially-approved method to get underlying actions stayed so that coverage issues can first be resolved, and, if an insurer follows the judicially-approved method, the insurer will avoid being found to have breached its duty to defend and thereby avert exposure to a cost of defense attorney fee award potentially being made against the insurer.  (Compare this to New York, where if the insurer’s DJ action against its insured is resolved in the insured’s favor, the insured is entitled to its attorney’s fees incurred in defending the coverage matter.)  Second, the aforementioned judicially-approved method represents, from the view of the courts of Wisconsin, “a fair balance between the respective interests of insurers and insureds”.  Third, the aforementioned judicially-approved method, which, if employed by the insurer, insulates the insurer from the risk of being found to have breached its duty to defend, actually consists of four variations on the “judicially approved method”:

  • Defend under a reservation of rights;

  • Defend under a reservation of rights but seek a declaratory judgment on coverage;

  • Enter into a nonwaiver agreement under which the insurer defends the insured but the insured acknowledges that the insurer has the right to contest coverage;

  • File a motion with the circuit court requesting a bifurcated trial on coverage and liability and a stay of the proceedings on liability until coverage is determined.

It was the fourth option that the insurers were relying on in the matter at hand.  A problem was caused when the trial court denied the requested stay.  The Supreme Court admonished the trial court for not having granted the stay.

The Wisconsin Supreme Court’s actual analysis of when the duty to defend arises is not remarkable.  The same kinds of legal principles you might typically see cited in a court opinion in any state are employed by the Wisconsin Supreme Court.  That is, the insurer should compare the allegations of the underlying complaint with the provisions of the liability insurance policy to determine if a covered claim has been alleged, and all doubts about the duty to defend are resolved in favor of the insured (the duty to defend is broad). 


Marina A. Barci

[email protected]

02/07/20       Nationwide v. Jamaica Wellness Med., P.C.
Nationwide v. PFJ Med. Care, P.C.

Appellate Division, Fourth Department
Although Insured’s Failure to Appear for EUO is a Complete Defense, Insurer Must Establish that Denial Was Timely

Both of these cases deal with Nationwide’s denials of coverage based on a failure to appear at requested EUOs. In order to prevail on an EUO nonappearance defense, an insurer must provide evidence that they issued timely denials. This defense is a preclusion remedy that does not give a carrier the right to deny all claims retroactively if timely denials were not issued. Originally in these cases, Nationwide only provided for proof of timely denial was an affidavit from a claims specialist that asserted the company issued timely denial forms for nonappearance at the EUOs. The court determined this was conclusory and unsupported by any actual denial forms. Thereafter, Nationwide submitted a more detailed affidavit of the claims specialist, the subject denial of claim forms, and affidavits of the operations manager of their third-party claims processor, which the court found was enough to establish the company issued timely denials. Thus, Nationwide’s motions for summary judgment were granted on the basis that the defendants breached a material condition precedent necessary to coverage. 


Ryan P. Maxwell
[email protected]

The Legislative List

02/10/20       Proposed Amendment to Summons With Notice Under CPLR
New York State Senate
Senate Delivers Bill to Assembly That would Eliminate Requirement under CPLR 305(b) to Specify Ad Damnum Requirement of Summons with Notice

A recent bill passed by the New York State Senate and delivered to the Assembly, Bill No. S5574, legislators hope to close “an historical anomaly that serves no purpose, [and] is a trap for the unwary that could potentially result in the dismissal of an action.” McKinney’s Practice Commentary, C3017:10A. That anomaly, following an amendment to the language of CPLR § 3017(b) in 2003, currently requires a pleader in personal injury and wrongful death actions to specify “the sum of money” sought, otherwise known as an ad damnum.

In 2003, CPLR § 3017(b) was amended to eliminate the need to include in a personal injury and wrongful death Complaint an ad damnum specifying the damages sought by plaintiff, and providing that instead, a defendant would be entitled to obtain that information on demand. The amendment was brought about by several different concerns:

One concern was that the prior practice encouraged inflated demands since (a) plaintiffs were incentivized to make their ad damnum large enough to encompass any potential recovery, and (b) the severity of the injury was not always known at the time of commencement of the suit.  Additionally, the prior practice led to undue focus, especially in the media, upon ad damnum demands that were essentially meaningless and often misleading. Finally,

the defendant naturally wanted to know and was entitled to know far more than the gross figure plaintiff would claim as his or her total damages, and the more sensible course was to require the plaintiff to provide such information as the defendant demanded during discovery.

Despite this 2003 amendment to CPLR § 3017(b), CPLR R 305(b) remained intact, and specified that in instances where “the complaint is not served with the summons,” such as a Summons With Notice under CPLR § 3017(b), the plaintiff is required to specify “the sum of money” sought except in actions of medical malpractice.

This legislation would simply amend CPLR rule 305(b) to exempt personal injury and wrongful death actions from the requirement that the pleader specify

"the sum of money" sought, thus eliminating the inconsistency with CPLR § 3017(b).

As a potential unwary pleader, I would preemptively like to thank the Senate for attempting to protect me from myself.


02/11/20       Bill Proposing Mandatory Inclusion of Findings in Consumer and Employment Arbitrations
New York State Assembly
Assembly Passes Bill Proposing Mandatory Inclusion of Itemized Issues in Dispute and Findings of Fact and Law in Consumer and Employment Related Arbitrations

A recent bill passed by the New York State Assembly, Bill No. A7572, proposes an amendment to CPLR § 7507 to require arbitrators who decide consumer or employment-related disputes to set forth the basis for their awards. Specifically,

That section would be amended to provide that:

In  a  matter  involving  a consumer dispute . . . or an  employment  dispute  between  an  employer and employee . . . ,  where arbitration  was  held pursuant to a contract, the award shall state the issues in dispute and shall contain the arbitrator's  findings  of  fact and  conclusions  of  law.  Such award shall contain a decision on all issues submitted to the arbitrator.  The provisions of this subdivision shall not apply to agreements negotiated with any labor union through collective bargaining.

Although I am intrigued by what the Assembly has against applying the above to collectively bargained agreements, this type of requirement should go a long way in creating transparency in the arbitration procedures for consumers and employees alike. Such individuals should be allowed to know the basis for awards rendered in hearings in which they have participated so that those arbitration participants may know whether any grounds exist to vacate the arbitration award pursuant to CPLR § 7511.

The bill purports to have been modeled after 11 NYCRR 65-4.5(s), which provides for similar transparency in arbitration awards issued in the no-fault context under Article 51. I’ll leave it to the no-fault experts to opine as to whether modelling consumer and employment arbitrations after no-fault arbitrations in the automobile context is a worthwhile endeavor.


02/11/20       Proposed Amendment to 2019 Law Combatting Fraud
New York State Legislature
Proposed Amendment to Chapter 656 of the Laws of 2019, which Granted Immunity for Reports of Suspected Fraud Made to the National Insurance Crime Bureau

In a prior installment of the Legislative List, (CP Volume XXI No. 14), we reported on the signing of Chapter 656 of the Laws of 2019, which granted immunity for reports of suspected fraud made by or to the National Insurance Crime Bureau, a nonprofit dedicated to the investigation and prosecution of insurance fraud. That latest amendment to Financial Services Law § 405 added a new subsection (d) indicating that civil immunity is also extended to those individuals who provide information furnished to or from the National Insurance Crime Bureau.

This proposed amendment, which has passed both houses and awaits delivery to the Governor, would modify the existing language to explicitly reference that it concerns the granting of immunity to individuals providing information “relating to insurance fraud as defined in section 176.05 of the penal law furnished to the National Insurance Crime Bureau.” Additionally, it would clarify that the National Insurance Crime Bureau is a nonprofit dedicated to “the prosecution of insurance fraud and vehicle crime,” rather than to “investigation and enforcement of the banking law or the insurance law.”

The bill, if passed, would take effect immediately.


Regulatory Wrap-Up

02/11/20       Proposed Consolidated Rules for Public Access to DFS Records
Department of Financial Services
Proposed Consolidated Rulemaking Repealing 3 NYCRR SP G 106 and 11 NYCRR 241 (Insurance Regulation No. 71) and Adding New Part 3 to 23 NYCRR

On February 11, 2020, the New York Department of Financial Services filed with the Secretary of State a proposed amendment to the Banking and Insurance Regulations to consolidate the rules governing public access to DFS records under a new part of the Financial Services Regulations (23 NYCRR Part 3). This proposed regulatory action appears to suggest a repeal 3 NYCRR SP G 106 and 11 NYCRR 241 (Insurance Regulation No. 71). Insurance Regulation No. 71 is titled “Availability of Department Records” and contains provisions concerning the procedure for requesting certain records, the public nature of records produced, and the protection of trade secrets and appeals procedures.

Your author was unable to access further information regarding this proposed action by DFS at the time of publication, except that it appears the proposed regulatory activity is scheduled to be published in the State Register on February 26, 2020.


02/19/20       Audited Financial Statements
Department of Financial Services
Proposed Rule Making Requiring Insurers Meeting a Certain Premium Threshold to Establish and Maintain an Internal Audit Function

As published in the New York State Register on February 19, 2020, the Department of Financial Services has proposed an amendment to 11 NYCRR Part 89 (Insurance Regulation No. 118) which currently serves to apply audit and reporting standards upon insurers, fraternal benefit societies and managed care organizations, as modeled by the standards required by the Sarbanes-Oxley Act of 2002.

The amendment would modify the text of 11 NYCRR 89.1(c) and (t), and add a new subdivision (x).

11 NYCRR 89.1(c) defines “Audit committee” and would eliminate the bald use of the term “auditing” in favor of new, extrapolated language providing that

(c) Audit committee means a committee (or equivalent body) established by the board of directors of a company for the purpose of overseeing . . . the internal audit function of a company or group of companies, if applicable, and external audits of financial statements of the company or group of affected companies . . . .

11 NYCRR 89.1(t) defines a “SOX complaint” and would be modified to replace the use of “a company” in favor of “an entity”, such that the new definition would be

(t) SOX compliant company means an entity that either is required to be compliant with, or voluntarily is compliant with, [select, listed provisions] of the Sarbanes-Oxley Act of 2002 . . . .

Finally, 11 NYCRR 89.1(x) would be a new definition of the term “internal audit function”, indicating that

(x) Internal audit function means the role of applying a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control, and governance processes so as to add value, improve a company’s operations, and accomplish its objectives.

There are also various proposed amendments to 11 NYCRR Part 89 in order to expound upon the new internal audit function and those to which it applies. Those amendments serve to implement various suggestions promulgated by the NAIC. As provided in DFS Regulatory Impact Statement:

In 2014, the NAIC amended its model regulation to require companies that meet a certain premium threshold to establish and maintain an internal audit function. The NAIC noted that an internal audit function generally is considered a key component of an effective internal control framework, and that international standards recognize the importance of an internal audit function within Insurance Core Principles (“ICP”) 8 – Risk Management and Internal Controls.

This internal audit function requirement became an NAIC accreditation standard starting January 1, 2020. NAIC accreditation is a certification that a state receives once it demonstrates that it has met and continues to meet certain legal, financial, and organizational standards. The purpose of the NAIC accreditation program is to ensure effective insurer financial solvency regulation across the United States.

This rule requires companies that meet a certain premium threshold to establish and maintain internal audit functions. It also fixes an error in the definition of “SOX compliant company.”

The proposed requirements of internal audit function would be codified under 11 NYCRR 89.16, and would include:

(a) . . . performing general and specific audits, reviews, and tests and by employing other techniques deemed necessary to protect assets, evaluate control effectiveness and efficiency, and evaluate compliance with policies and regulations.


(c) . . . [submitting a] report to the audit committee regularly, but no less than annually, on the periodic internal audit plan, factors that may adversely impact the internal audit function’s independence or effectiveness, material findings from completed internal audits, and the appropriateness of corrective actions implemented by management as a result of internal audit findings.        

This proposed internal audit function would exempt from its purview, under 11 NYCRR 89.16(e):

(1) the company has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than $500 million; and

(2) the company is a member of a group of companies and the group has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than $1 billion.

The public comment period for this proposed regulation is scheduled to expire on April 27, 2020.


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

01/29/20       Clark v. The Travelers Companies, Inc.
U.S. District Court, Eastern District of New York
Damage to Sunk Yacht Not Covered by Marine Insurance Policy where Insured Breached “Lay-Up” Warranty

Plaintiff notified defendant that his 36-foot motor yacht, insured by the defendant, sank at its slip on February 23, 2015. Defendant immediately made arrangements for an inspection of the vessel to determine the cause of sinking. It was determined that the vessel sank as a result of the air conditioning system freezing, which caused the cracking of a raw water inlet, and allowed seawater to flow into the vessel through an open valve. Plaintiff did not fill the air conditioning system with antifreeze, but instead heated the interior of the vessel with space heaters. The space heaters were connected to plaintiff’s home, which lost power prior to the loss, thus preventing the heaters from producing any heat. During its inspection of the vessel, defendant’s investigator opened and closed the valve, noting that when the valve is in its closed position no seawater intruded into the vessel. Defendant denied any insurance coverage to plaintiff on account of plaintiff’s failure to properly winterize the vessel in accordance with the lay-up provision in the subject insurance policy.

Defendant filed a motion for summary judgment on the grounds that there was no material issue of fact as to plaintiff’s breach of the terms and conditions of the policy. The specific provision of the policy at issue is as follows:

You expressly warrant that you will lay-up your yacht for the period of time as shown in the declarations. The warranty applies to all insureds. During the lay-up period, your yacht must be maintained for the conditions reasonably expected during the lay-up. In addition, your yacht cannot be used for any boating activities or as living quarters during the lay-up period.

The policy goes on to explain that “lay-up” is the “taking your yacht out of active service and decommissioning it for the period of time as shown in the declarations. Lay-up can include either storage on land or afloat.” In addition, the Policy’s general exclusions explain that the Defendant does “not cover loss of damage caused by or resulting from . . . [t]he insured’s failure to property winterize the yacht or dinghy in accordance with the manufacturer’s specifications or customs in the area.”

In support of its motion defendant proffered a report of an expert who opined that it is the custom in the area to introduce antifreeze into the air conditioning system, and that the use of space heaters is expressly prohibited by local custom due to the risk of fire and the space heater’s inability to effectively heat the vessel’s systems located below the waterline. In response plaintiff offered his expert report. The court found this report unconvincing due to the expert analogizing plaintiff’s pleasure yacht to a much larger commercial fishing vessel and the expert’s agreement that antifreeze would normally be introduced into a vessel’s air conditioning system during winterization. As a final note, the court looked to a similar case which opined that “lay-up” provisions are unambiguously intended to encourage owners to not just stop using their boats during the winter, but to take affirmative steps to winterize their boats. New Hampshire Ins. Co. v. Dagnone, 475 F.3d 35, 38 (1st Cir. 2007). The court therefore granted defendant’s motion for summary judgment agreeing that there was no issue of fact as to the plaintiff’s failure to meet the terms and conditions of his marine insurance policy.


Diane L. Bucci
[email protected]


02/07/20       Nanette Lepore v. Hartford Fire Insurance Company
United States Court of Appeals for the Second Circuit
Unfair Competition Claim Barred by IP (infringement) Exclusion

The underlying plaintiffs allegedly entered into a purchasing and licensing agreement with clothing designer Lepore (“Lepore”), Lepore was alleged to have breached the agreement and she, her husband and two other entities were defendants  in the underlying state court action and plaintiffs in the action at bar (“Lepore Parties”).

Through the purchasing agreement, the underlying plaintiff purchased Lepore’s core assets including substantially all her trademarks, copyrights, social media accounts, and other Intellectual property rights including her primary namesake trademark.  Lepore obtained through the purchase very limited licensing rights.  For example, she could sell certain bespoke clothing but only through limited channels.  It also provided NHLE the very limited right to use three forms of Lepore’s trademark and related logos with certain conditions.

Briefly stated, the underlying plaintiffs alleged that the Lepore Parties breached the licensing agreement in a number of ways, including “flouting all contractual requirements” governing the use of the intellectual property, breaching a non-compete agreement, disparaging the Lepore brand in several ways, making inappropriate statements on her social media accounts by making inappropriate public remarks and damaging the value of the brand by publicly supporting Hillary Clinton for President.  

The Lepore Parties demanded coverage from the Hartford under various general liability and umbrella policies purchased by a Lepore Party.  The Hartford denied coverage based on its IP (infringement) and breach of contract exclusions.  Of note, the IP exclusion provided as follows:

(1) Personal and advertising injury arising out of any actual or alleged infringement or violation of any intellectual property right, such as copyright, patent, trademark, trade name, trade secret, service mark or other designation of origin or authenticity; or

(2) Any injury or damage alleged in any claim or `suit' that also alleges an infringement or violation of any intellectual property right, whether such allegation of infringement or violation is made by you or by any other party involved in the claim or suit, regardless of whether this insurance would otherwise apply.

The Lepore parties argued that the infringement exclusion did not apply because the suit did not specifically allege trademark infringement or cite to the Lanham Act, which governs trademark infringement.  They also alleged that the claims of unfair competition and tortious interference with advantageous business relationship could not be considered IP claims.  They admitted that certain of the claims were not covered.  See Lepore v. Hartford, 374 F.Supp.3d 334 (S.D.N.Y. 2019.

The Court held that because the Hartford’s IP exclusion contained a paragraph precluding coverage for “any injury or damage alleged in any claim or ‘suit’ that also alleges an infringement or violation of any intellectual property rights, the exclusion was enforceable.  Although the underlying complaint did not have an infringement cause of action, the court noted that it was rife with allegations of intellectual property violations. The court did not address the breach of contract exclusion, stating, “if any one exclusion applies there can be no coverage.” (citations omitted).


Cara A. Cox
[email protected]

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]


01/15/20       West Van et al. v. Economical Mut. Ins. Co., et al.
Leave Denied by the Supreme Court of Canada
Canadian Insurers No Longer Automatically Left with Insured’s Legal Bill in Duty to Defend Litigation
Cara’s Canadian Cross-Border Connection: Heather

It all started quietly & innocently.

Lions Gate is a neighbourhood dry cleaner in West Vancouver. You will find it on a tree-lined, tiny residential street, uphill from Marine Drive and within sight of Burrard Inlet. Lions Gate had taken over the lease for the business from another dry cleaner in 1976 and the lease continued, year after year. In 1988, West Van bought the building and Lions Gate, by then a neighbourhood fixture, kept on keeping on.

Then, Shoppers Drug Mart opened on a lot downhill from Lions Gate. You know what happened next… the owners of the Shoppers drug store found dry cleaning solvents in the soil underneath their building and in their ground water. Shoppers Drug Mart pointed their finger at West Van & Lions Gate, but West Van said that the various prior dry-cleaning businesses that operated on the property before they purchased the property failed to properly store their chemicals and that caused the contamination.

Under British Columbia legislation, the owners and operators of land from where contaminants have migrated are deemed to be liable for the contamination – regardless of when the migration started. The owners of the Shoppers Drug Mart filed a lawsuit against West Van (and Lions Gate).

West Van defended on the basis they did not cause the contamination – they said those who owned the building before them were liable – but also claimed that it was owed a defence under its CGL policies as it was jointly liable under statute for the migration along with the previous landowners.

Two of West Van’s successive CGL insurers denied any obligation to either defend or indemnify, as the damage either occurred outside the coverage of their policies or, even if it did occur within their policies, it was excluded by variously worded pollution liability exclusions.

At the trial level, West Van succeeded in obtaining a defence and was awarded full indemnity for legal costs against the insurers.

The insurers jointly appealed to the British Columbia Court of Appeal.

The Pollution Exclusion

The Court of Appeal unanimously reaffirmed the longstanding principle that the obligation to defend will be determined by analyzing the allegations advanced against the insured against the policy wording. In this case, the allegation was that West Van was statutorily liable, placing the claim within the coverage of the CGLs. An obligation to defend would exist unless it was excluded.

However, if West Van is correct that the contamination occurred before they owned the property, then there could not be no recovery under its liability policies, as those occurrence-based policies only cover property damage occurring within the policy period. To the extent that West Van is jointly liable with the previous owners, then the language of a pollution liability exclusion that reads:

“Property Damage” arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants”

included property damage arising out of the migration of pollutants, even though it does not expressly state that the migration of pollutants is not excluded. The exclusion uses the language “arising out of” and the damage is alleged to have arisen from a release or escape of pollutants.

Although the affirmation of the four-corner rule, as it is known, and its interpretation of the pollution liability exclusion confirms that in Canada, allocation of defence costs and indemnity follow the injury-in-fact principle, is important, the real significance of this case lies in its decision as to who between West Van and its insurers bear the costs of the duty to defend proceeding.

Costs Recovery

The Canadian common law provinces and territories (i.e., all provinces and territories other than Quebec) employ the ‘loser pays’ rule. Under this rule, the losing party in any legal proceeding, at any court level, whether the legal proceeding is just an application in the lawsuit, or determines the lawsuit, is liable for the winning party’s legal costs and disbursements. The legal costs awarded are the out-of-pocket expenses associated with the issue (if it is a trial, expert fees, travel costs, printing costs, delivery, and filing fees) and a portion of the legal fees that the winning party actually paid. The portion of the fees payable are set by a tariff or schedule found in the rules of court of each province and territory. A general rule of thumb is that the schedule will repay 25-30% of the actual fees incurred. As a result, the schedule allows for partial indemnity of the fees incurred. However, the judge hearing the matter has the discretion to increase the fee portion of the legal costs award from partial indemnity to full indemnity depending upon a myriad of factors that differ in each Canadian common law province and territory. The purpose of a legal costs award is to deter frivolous proceedings and foster negotiation rather than litigation. As a result, the ability of the winning party to recover costs becomes an enormous tactical issue for both parties to a Canadian civil dispute.

With that said, the general or default position is that the winning party receives partial indemnity costs according to the tariff or schedule in that particular province. The tantalizing issue is whether in any given lawsuit, a party has the ability to persuade a court, for one reason or another, that the costs should be increased to something approaching full indemnity.

In British Columbia, substantial (not full) indemnity legal costs are only awarded where there is some form of reprehensible conduct on the part of the parties. But understand that a legal cost award is not a substitute for punitive damages and cannot be conflated with awards for damages for breach of contract. A party wishing to recover punitive damages must persuade the court that there is a basis to award that type of damages.

Against the usual costs rules is a line of authority from across common law Canada that an insured who is successful in legal proceedings initiated to oblige its insurer to defend an underlying lawsuit is entitled to full indemnity costs – in other words, in that type of proceeding, the insurer must pay the insured’s legal bills to enforce coverage.

In West Van, the Court of Appeal offered a meticulous analysis of those decisions and held that there is no justification for a separate legal costs recovery rule in ‘duty to defend’ cases. A duty to defend case is just another civil dispute and “… an insurer facing a duty to defend claim should be treated no differently than any other litigant who may breach a contract.” There is a good reason for this position: “…If a losing party faces full indemnity costs irrespective of their litigation conduct, the incentive for good conduct is correspondingly diminished.” In making this finding, the Court of Appeal overruled four British Columbia trial level decisions on the point and declined to follow those cases from outside British Columbia supporting the award of full indemnity costs in a duty to-defend case.

The West Van case was appealed to the Supreme Court of Canada and on January 16, 2020, leave to appeal was refused. As is almost always the case, the Supreme Court did not give reasons for its refusal to hear this appeal. It could be that the Supreme Court did not view the issues to be of national importance that warranted a hearing or that the issues under appeal were not sufficiently unsettled as to warrant a hearing. Regardless, the fact that the West Van decision will remain undisturbed is significant. Although other provincial and territorial courts of appeal are not bound by this decision, it is powerful, persuasive authority for an important principle that impacts the tactical decision of a Canadian P&C insurer that is contemplating a denial of its obligation to defend.

Under the authority of West Van, an insurer that has a true factual and legal basis to deny coverage can file a declaratory action and act precipitously to have the issue heard (perhaps under a sealed action to protect the insured’s interests in the underlying litigation) without fear that if it is wrong, it will have to pay the full legal bill of the insured to defend the duty to defend action. This opens the field to negotiation over an insurer’s duty to defend and increases the risk to the insured of contesting an insurer’s position.  We will see if this leveling of the playing field in ‘duty to defend’ cases will reverberate across Canada.

My friend, Neo Tuytel argued West Van’s case. Neo died suddenly on May 7, 2019. I expect he was working on the Supreme Court leave to appeal application when he died. Neo was a worthy opponent in any case he took on. His passion for the rights of policy holders is a loss. I will miss him.

Cara’s Cross-Border Connection: Cara

Although some may celebrate the West Van case, the ones who are likely left dismayed are the policyholders. As Heather noted above, (American) insureds with Canadian policies may think twice before commencing litigation against their insurer. Insureds may feel jilted by the West Van decision given the premiums paid to carriers, especially when faced with a cost-benefit analysis on whether to commence an action to enforce a Canadian insurer’s duty to defend.

Those who are less acquainted with the nuances of limitations, exclusions, conditions, etc. will likely learn the duty to defend is not always guaranteed and quickly learn of the potentially additional costs associated with attempting to enforce an insurer’s duty to defend.

Prior to West Van, if a Canadian insurer made the decision to neither defend nor indemnify an insured, the risk had been that the insurer is exposed to the full legal bill that the insured incurred to pursue the insurer in the event that the insured was successful.  This placed Canadian insurers in the same position as those in New York, where there is a notable exception to the rule that attorneys’ fees and costs are nonrecoverable. In Mighty Midgets, the New York Court of Appeals held that when an insured is placed in a defensive position by an insurer and the insurer loses, the insurer pays the insured’s costs incurred for defending an action an insurer commenced to “free itself from its policy obligations.”[1]

West Van is powerful Canadian authority to refute any obligation to pay the insured’s legal bill to enforce the insurer’s duty to defend or indemnity. However, insurers must remain cautious and continue to exercise good faith practices when analyzing and deciding coverage—even though the financial burden of a denial may be reduced. 


02/06/20       Ins. Corporation of British Columbia’s No-Fault Announcement
British Columbia is about to Become the Next Canadian No-Fault Jurisdiction
Cara’s Canadian Cross-Border Connection: Heather

An important change in British Columbia’s auto insurance is in the offing.

On February 6, 2020, the provincial auto insurer, Insurance Corporation of British Columbia, announced that effective May of 2021, it will change its administration of claims from a tort-based system to a no-fault system.

Under the proposed model, those injured in a car accident occurring in British Columbia, can only retain counsel and sue if the accident was caused by a Criminal Code violation or if a repair shop or social/commercial host contributed to the accident that caused the injuries complained of. Legislation will be introduced capping the lifetime award under the no-fault legislation at $7.5 million per claimant. Existing claims (which are estimated at about 90,000) and those that originate between the date of the announcement and the implementation of no-fault will continue as before. It is estimated that it will take about 5 years for those claims to run their course, then the basis of practice for many lawyers in British Columbia, both on the plaintiff side and the defence side, will fall away. If no-fault goes ahead, British Columbia will join Manitoba, Saskatchewan and Quebec as no-fault jurisdictions.

Stay tuned to this column for information on how the new system will impact American carriers whose insureds are involved in British Columbia road accidents. This announcement will not impact the financial responsibility requirement of British Columbia residents who are involved in out-of-province claims. Residents of British Columbia will be required to carry out-of-province coverage, which will continue as before to provide liability protection in the event they are involved in road accidents in the United States.


Earl K. Cantwell

[email protected]

10/25/19       Surfside Japanese Auto Parts v. Berkshire Hathaway Ins. Co.
U.S. District Court, Northern District of Oklahoma
Insured Has Hail of a Time Pinpointing Date of Loss

Plaintiff was insured under a Berkshire Hathaway commercial property insurance policy from August 15, 2016 to August 15, 2017.  The insured owns an automobile repair facility in Tulsa, Oklahoma with three metal roof sections.   The insured claimed that a hailstorm damaged its metal roofs in April or May 2017.  Plaintiff retained a weather expert and a roofing contractor who both sought to opine the damage was caused by hailstorms that occurred in April 2017.   Therefore, it was important to the claim to establish a date of loss within the policy, i.e. April 2017. 

Berkshire Hathaway moved to preclude the opinions of the experts retained by the insured.   The test was whether the expert witnesses were qualified to offer opinions, and whether the witnesses had proven by a preponderance of evidence that their opinions were both relevant and reliable under the Federal Rules of Evidence.  An expert’s testimony may be excluded where it is based on subjective belief, or unsupported speculation which is little more than guesswork.   In short, expert testimony may be excluded where there is simply too great an analytical gap between the data and the opinion offered.  The insurance company asserted that the plaintiff’s experts’ testimony that the hail damage occurred during the covered policy was not based on sufficient facts or data, and was not the product of reliable principles and methods.

The insured’s first expert alleged that the roofs sustained the hail damage in April or May 2017 based upon the estimated size of the hail necessary to inflict the observed damage, and various storm reports showing that hail at or near that required size occurred during the covered policy period.   However, the expert admitted the age of the hail marks on the roof could not be determined by visual observation, and his opinion was essentially that the damage occurred “somewhere between several months and two years” before he inspected the property in August 2017.   Therefore, the roof inspection itself could not establish (and was not really helpful with regard to) the date of loss. 

The storm weather data likewise was problematic identifying at least three possible dates of loss with requisite storm conditions and hail size.   The expert’s opinion was precluded as to the date of loss because it was not based on sufficient facts or data, nor was it the product of reliable principles and methods.

Likewise, the testimony of a roofing contractor retained by the insured was barred.   He based his testimony on the inspection of the roof damage, damage to other buildings located nearby, and other factors.   His testimony was more directed to the location of the property damage juxtaposed with the damage or lack of damage to other buildings in the area.   However, the Court also excluded his testimony as not being based on sufficient facts, or reliable principles and methods.

Without the projected expert testimony, it is likely that the insured’s claim was then subject to dismissal or could not be proven in any significant respect.

There are several ways to, in effect, move to dismiss a complaint.  There are actual motions to dismiss and motions for summary judgment addressed to the pleadings and proof.   In this case, the motion struck the expert witness testimony which was likely the only evidence the insured could present on the timing of the loss.

This case establishes that hail damage is often difficult to ascertain and pinpoint unless it is immediately noted and cataloged.   The insured’s experts were not able to definitely put the loss/damage within the policy.   Their projected testimony with respect to the date of loss amounted to surmise and guesswork. 

This case also indicates that the federal courts are more procedural and evidence oriented and they will entertain various motions such as this one to strike/preclude the expert witness testimony in the course of litigation.

The final point in question in this case is how an auto shop named “Surfside” came to be located in Tulsa, Oklahoma?


[1] Mighty Midgets v. Centennial Ins. Co., 47 N.Y.2d 12, 21 (1979).

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