Coverage Pointers - Volume XXI, No. 5

Volume XXI, No. 5 (No. 544)
Friday, August 23, 2019

A Biweekly Electronic Newsletter  


As a public service, Hurwitz & Fine, P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York State appellate courts.  The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.  

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.


Dear Coverage Pointers Subscribers:

Do you have a situation?  We love situations.

Just a brief note today.  Summer hiatus is on for the courts, but not for us.

The appellate courts are quiet in August, but decisions will gear up again in mid- to late September.  That’s the annual traditional lull and you’ll note that some of our columnists offer only passing greetings in this week’s issue.  In fact, I was shut out of any offerings until yesterday, Thursday, but the one decision on which I report was well worth the wait.

It is really an important statement from the courts.  For insurers whose claim professionals are facing depositions in SUM (supplementary uninsured/underinsured cases), do make certain that your counsel reads the McCulloch v, New York Central Mutual, decision out of the Fourth Department.  It’s a gem.  It opens the door to the kind of file production resistance we urge and support.  Basically, it’s this: assuming no bad faith claim, an insurance company’s opinion on “serious injury”, causation and for that matter, settlement or verdict value is absolutely irrelevant and that testimony should not be permitted.

I cover it in my column but let me give you the guts of it.

McCulloch sues New York Central Mutual (NYCM) for SUM benefits.  He had the option of either suing or proceeding to arbitration; the plaintiff chose to sue. The matter comes on for trial and plaintiff’s counsel wants to emphasize (your author’s view) that the defendant is an insurance company (of course, it is) and tried to get the claim representative on the stand to talk about his analysis and approach to the question of whether or not the plaintiff suffered a no fault “serious injury”.  A “serious injury” is as important in a SUM case as it is in a personal injury action.

Defense counsel (kudos to Matt Lenhard of the Rupp, Baas firm) objected to having the claim rep testify.  He argued that the claim rep was not necessary to establish the terms of the policy (it was stipulated into evidence), there was no bad faith claim, that the claims rep was not a doctor and had no personal knowledge of the facts and therefore isn’t qualified to testify on whether or not the plaintiff suffered a “serious injury”.  Supreme Court Justice Frank Caruso, up in Niagara County, agreed and did not permit the claim rep to testify.

The Fourth Department affirmed finding that NYCM’s “internal investigation and evaluation of plaintiff’s claim is therefore irrelevant to the issue of where the plaintiff suffered a serious injury which, along with the issue of whether any such injury was causally related to the accident, were the primary issues before the jury”.

This is an incredibly important decision.

In virtually every SUM arbitration and trial, the plaintiff seeks to secure testimony from the claim rep (and review the claim file) to try to smoke out the insurer’s evaluation of the injuries.  That testimony, on value and causation, is as irrelevant as the claim rep’s view on serious injury and causation.  It is the factfinder who needs to make that decision, the arbitrator, judge or jury.  What the carrier thinks or doesn’t is interesting but totally irrelevant.

Anyway, you heard it here first.


Child Victims Coverage:

The coverage questions are coming in.  If we can help you devise a strategy to approach these claims, contact us. For those of you who are not familiar with New York’s special and Draconian coverage protocol rules, please remember that you have about 30 days from the time you are placed on notice of an occurrence, claim or lawsuit to send out a coverage denial or partial denial (what most states call reservations of rights).  You need to copy the right folks.  A failure to follow the rules can be fatal to certain coverage defenses.  Don’t wait for the last minute to start thinking about how you will respond.

Don’t forget to subscribe to our other publications:

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.

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!).  Contact Jody Briandi at [email protected]  to be added to the mailing list.


The Tea Leaves Proved Wrong:

The Evening World
New York, New York

23 Aug 1919



Mother of Kidnapped Child Gets Anonymous Letter That It Will Be Returned

Mrs. Elsa Wentz, desperate because of the failure of her month-long search for her stolen baby, is now seeking consolation and hope by visiting fortune tellers.  She said to-day that she was much encouraged by what she was told yesterday by one of these “seers.”

“The fortune teller told me,” said Mrs. Wentz, “that my baby was stolen by a friend of mine who passes my house at No. 725 Home Street a dozen times a day and that the baby will soon be returned.”

This morning she received an anonymous letter saying that the child would be returned if she placed the carriage where it was when the baby was stolen – in front of a department store at 150th Street and Third Avenue.

Editor’s Note:  In 1920 a baby was allegedly handed to a stranger with a note that read “for the Love o’ Mike” take this baby”, Mrs. Wentz, desperate to find her kidnapped son, claimed it was he.  However, it soon became clear that the baby belonged to a Lena and Henry Lisa, and it was Henry turned the “Love o ‘Mike” baby into authorities and it was he who authored the note and was seeking to rid himself of the child.

Sadly, the Wentz baby was never recovered.

Jen’s Gems:


Hope everyone is enjoying the last few weeks of summer.  We still have about two weeks before my oldest goes back to school (2nd grade).  In Buffalo, the kids don’t go back until after Labor Day.  You would think my daughter would be really excited about a few more days of freedom, but to the contrary, she is ready for school to start.  She is already talking about how she is going to do swim team this year and see all of her friends.  My youngest is starting pre-K, which will also be a change.  

In terms of my column, the courts are pretty quiet this week.  Hopefully, they will pick back up after by next issue.

Until then…

Jennifer A. Ehman

[email protected]

Weddings Galore:

Democrat and Chronicle
Rochester, New York

23 Aug 1919


District Attorney’s Telephone Clerks Have Mania for Getting Married.

The District Attorney’s office in the Court House seems to have been made for matrimonial ventures.  No less than three girls, who have been the telephone operators since 1911, have quit their jobs to get married.

In the fall of 1911 Miss Florence Bud long decided that married life was preferable to being a telephone operator in the district attorney’s office.  Then Miss Theresa Buckley took the job.  She stayed for several years but finally succumbed to the matrimonial malady.  Miss Anna Lannin came next and two months ago she resigned to become the bride of Herbert Thomas, assistant district attorney.

Miss Mary A. McKissick has succeeded Miss Lannin.  Asked yesterday if she would be the next one to get married, she laughingly replied:

“Not if I know it.”

According to Frank Schmidt, confidential clerk in the office, they all get the fever sometime.

“It’s a habit that can’t be stopped,” he said yesterday.  “The telephone girl here can’t seem to get away from being married.  The worst of it is that I always have the job of breaking a new one in.”

Barnas on Bad Faith:

Hello again:

Last weekend I had the chance to visit Philadelphia for the first time, and I must say I really enjoyed the City of Brotherly Love.  I took in two Phillies games, one of which featured a walk-off grand slam by Bryce Harper against the Cubs.  I really liked the sports complex with the arena, football stadium, and baseball park all in the same area.  We also did all of the touristy stuff, including Independence Hall, the Rocky Steps, Geno’s and Pat’s, and the Liberty Bell.  I’m looking forward to going back sometime soon to do some of the more off-the-grid stuff the city has to offer.

One thing Philly certainly had to offer was hot and humid weather.  It has started to cool off here in Buffalo the last couple days though, and it feels like fall is in the air.  That means football is coming, and that is always a good thing.

I have two cases in my column this week.  One is a Delaware case where Michigan law applied to the dispute.  As such, the claims for bad faith and punitive damages were dismissed as not recognized under Michigan law.  I also have a Ninth Circuit case that reminds us that a good faith dispute over coverage immunizes a carrier from a bad faith claim based on an improper denial of coverage.

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

Brian D. Barnas

[email protected]

Important New Skills – a Century Ago:

Glens Falls Post Star
22 August 1919

Plans for Teaching Women to Shop

New York – Aug. 22 – A plan by which women buyers will be taught to “shop” instead of being mere “order givers” was announced here today by Mrs. Charles C. Rumley, of the Fair Price Committee, who is working with 400 women’s clubs through Greater New York, to establish community centers where “intelligent shopping methods” will be taught.

John’s Jersey Journal:


New Jersey Governor Signs Bills into Law Allowing Injured Motorists Who Do Not Buy Sufficient PIP Insurance to Sue the Tortfeasor for Unpaid Medical Expenses.

These bills effectively overturn the New Jersey Supreme Court’s decision in Haines v. Taft (March 2019). We reported on that decision here. In Haines v. Taft, the New Jersey Supreme Court ruled the opposite and said injured motorists cannot sue for medical expenses that exceed their elected PIP limits. The Supreme Court reached this conclusion for several well-thought-out reasons:

  • Creating a private cause of action to sue for unpaid medical expenses where the claimant did not have sufficient PIP coverage would “foster” “cottage industries of expensive litigation” and congest court dockets

  • The goal of no-fault system is quicker payment of benefits, quicker adjudication of claims, and cost containment. This would increase the cost of automobile insurance

  • To rule otherwise, would allow someone to choose to buy less PIP yet receive a higher overall reimbursement. An unjust result.

The Court closed out its decision saying if the Legislature disagreed, they could pass a law. So that’s what the Legislature did. On August 15, 2019, Governor Murphy signed two companion bills into law overturning Haines v. Taft.

Senate Bill 2432 – Authorizes Claim for Unpaid Medical Expenses in Excess of PIP

The first, Senate Bill 2432 (“S-2432”), created a private cause of action for injured motorists to sue tortfeasors for unpaid medical expenses in excess of their PIP limits. Governor Murphy signed the bill to ensure that “low-income drivers, who must settle for lesser PIP coverage options because they cannot afford better coverage, will not be denied the ability to recover their unreimbursed medical expenses from those who caused their injuries.”[1]

This bill went into effect immediately and applies to causes of action pending as of August 15, 2019.

The problem is this law effectively allows people who do not buy enough PIP to pass the cost on to New Jersey automobile liability insurers. These claims will be covered under automobile liability insurance, causing additional exposure to New Jersey auto insurers and, inevitably, insurance rate hikes.

Further, it creates the absurd result that someone who fails to buy sufficient PIP coverage will be able to obtain a higher overall reimbursement than someone who had purchased full coverage with a $250,000 PIP limit.

For example, if a driver has $80,000 in treatment costs, but only $40,000 of those expenses are deemed medically necessary under no-fault, the driver would receive $40,000 in reimbursements and be considered fully reimbursed by the no-fault guidelines if he or she maintained the $250,000 “full coverage” policy. If, however, the driver had only $15,000 of PIP coverage, he or she would have a cause of action for the remaining $25,000 of medically necessary expenses and can now sue the other driver for the remaining costs that would not otherwise be reimbursable – allowing the driver with less PIP coverage to receive a higher overall reimbursement.

This is an absurd result. Sound fair? The law rewards persons who fail to purchase sufficient insurance.

Senate Bill 3963 – Applies Cost Containment Measures

Recognizing this change in law will have a “negative impact” on automobile insurance rates,[2] Governor Murphy signed a second bill, Senate Bill (“S-3963”), to help with cost containment. This bill makes clear that the collateral source rules still applies. Previously, the bill as drafted expressly allowed for the injured motorist to recover for medical expenses that health insurance covered, giving the motorist a double recovery. Who was bankrolling this Bill? The Plaintiffs’ bar?

The Governor refused to sign until the bill was revised to remove that provision. As enacted, the collateral source rule will bar injured motorists from getting double recovery.

In addition, S-3963 applies the no-fault fee schedule to unreimbursed medical expenses in excess of the driver’s PIP policy. The bill also prohibits balance billing of any medical expenses claimed as damages and paid pursuant to the medical fee schedule. Together, Governor Murphy believes this will contain insurance premium rates.

This act took effect on August 1, 2019 and applies to all automobile accidents occurring on or after that date.

Such measures may help with keep costs down, but ultimately someone is going to bear the costs of these suits. Who? New Jersey auto insurers.

The Bills are available here: S-2432 and S-3963.

Feel free to write with questions or your thoughts. And if we can help you with a New Jersey insurance coverage matter, please let us know. We handle New Jersey situations too.

John R. Ewell

[email protected]

Amazing Changes in History – as Viewed 100 Years Ago:

Bisbee Daily Review
Bisbee, Arizona

23 Aug 1919


          It used to be that our grandfathers and grandmothers monopolized the conversation when it came to comparing present days with the past.

          They had to go back to Civil War times and pioneer experiences when they brought up mellow pictures for our envy and delight.

          Now any adult can recall a period so radically different from this that it seems like another age.  The century is young, yet look what has happened since young men and women of this generation were youngsters!

          It wouldn’t do to attempt a list of the amazing changes, from national prohibition to trans-Atlantic flights; from wireless telephones to the actors’ strike.

          Memory, the great artist, is overwhelmed with dramatic material.

          The whirl and flare of modern existence make us gasp.  When will history in the making slacken its speed?

          Why, there are high school youths in Bisbee who can recall when big, juicy watermelons were 10 cents apiece!

          There are debutantes who remember Walter Wellman was laughed at for proposing to fly over the ocean!

          There are men in their twenties who attended movies when every film depicted a wild chase and neck-breaking tumbles.

          The feelings of old folk must be hurt when children can hark back to conditions in a world so much slower, easier and less exciting than the one we now inhabit.

Piper’s Pause:

We return this week after a brief absence.  At the time Coverage Pointers went to presses last issue, your humble author was entering week 3 of trial that would eventually come to its conclusion at the start of week #4.  Brooklyn is my personal favorite of the five boroughs (and Long Island, for that matter), but after 14 out of 18 days at a hotel in and around Brooklyn Point, I was ready to come back to the mothership.

I am happy to report my desk, chair, monitor and Keurig were right where I had left them 5 weeks earlier.  I was disappointed, however, to learn that someone has wrongfully exercised control over MY coffee mug.   By late Tuesday, I had responded to all stashed e-mails.  Wednesday of this week marked my review of all mail I received over the past month, and just today I think I have now returned all wayward phone calls.

Now, back to work.

See you in two weeks. 

Steven E. Peiper

[email protected]

Ford had a Better Idea – a Century Ago:

The Richfield Reaper
Richfield, Utah

23 Aug 1919


Farmer Jury Which Has Spent Three Months in Court Is Out Ten Hours And Then Finds Paper Guilty of Libel

          Mt. Clemens, Mich.—Henry Ford is not an anarchist!

          A jury of 12 farmers have said so by their verdict, in which they found The Chicago Tribune guilty of libel when it attached that stigma to the name of the great manufacturer.

          “We find the Chicago Tribune guilty and attach a verdict of six cents.”

          This sentence from the foreman of the jury which for three months has listened to the most famous case of its kind in history and which debated more than 10 hours before it arrived at its conclusion, were the lines of the final act in the dramatic event which has attracted the attention of the entire country.


Dear Subscribers:

There are no cases this week as the Courts are in the late August doldrums. Hopefully there will be more for the next edition in September.

My wife, a teacher and the kids have a little less than two weeks to go before back to school.  But are trying to enjoy every minute going to Adventureland, the beach, the pool, movies and outdoor concerts. I hope you enjoy the rest of the unofficial ending of summer and have a good Labor Day.                                     

Until next issue,

Robert Hewitt

[email protected] 

Lincoln, Lincoln, I’ve been Thinking, What the Heck Have You Been Drinking:

The Buffalo Enquirer
Buffalo, New York

23 Aug 1919


(Chicago Tribune Service for


          Madison, Wis., August 23. —Beers and wines that are non-intoxicating may be sold in the western federal district of Wisconsin, and it will be for the prosecuting attorney to prove before a jury in each case that the liquor consumed was intoxicating.  This is the effect of a decision rendered by Federal Judge A. L. Sanborn today.  The United States district attorney will appeal, but meantime there will be no further prosecutions.

          Charges filed against six saloon keepers at Glidden, Wis., that they sold beer containing 2.02 to 3.39 per cent alcohol failed to state that such beer “was intoxicating.”

          Because of that failure motions to quash the charges were granted today by the judge, who rendered the following decision:

          “I think the plain purpose of Congress in the act of 1918 was to conserve the man power of the nation by preventing intoxication or drunkenness and that the word ‘beer’ in the statute means only such beer as actually is intoxicating.  I am satisfied that the better reasoning is that used by the judges of the second circuit court in New York.  The motion to quash is granted.”

Wilewicz’ Wide-World of Coverage:

          Across the pond, or heading in that direction.

Agnes A. Wilewicz

[email protected]

Early Drones:

The Ithaca Journal
Ithaca, New York

23 Aug 1919

Aircraft Controlled From Ground.

          For some time, experiments have been carried out in various countries with the object of controlling aircraft from the ground, and a French machine succeeded recently—on a prescribed source with certain specified detours—in covering a distance of 180 kilometers (about 110 miles), and in landing, when required, in a certain airdrome.  A similar machine has been developed in the United States which, according to a recent statement, can travel without a pilot some 100 miles and land close to a designated post.

Off the Mark:

Dear Readers,

There are no noteworthy construction defect decisions to report on this edition as it seems the courts are enjoying the final weeks of the summer.  The lull gives me time to pack for our family vacation to Myrtle Beach next week.  We are all looking forward to some much-needed rest and relaxation.

I hope all our readers have been enjoying the summer.

Until next time …

Brian F. Mark

[email protected]

Insurance Contest Winner:

The Buffalo Enquirer
Buffalo, New York

23 Aug 1919


          Mrs. Rose Cohen No. 711 Richmond Avenue, employed by the New York Life Insurance company, had made what is called by the insurance underwriters “The $200,000 Club” and had been awarded a trip to the convention of Underwriters to be held in Del Monte, Cal., during the month of September.  Mrs. Cohen is one of seven women in the United States and Canada and the only woman outside of New York city in the eastern division to hold this honor.

          The minimum amount of insurance which was to be written and paid for is $200,000 for the year, while Mrs. Cohen’s record for the year somewhat exceeds $250,000.  Last year the woman underwriter was successful in the competition for a trip to the Thousand Islands for selling the required quota during April and May.  Although the amount was placed at $35,000, Mrs. Cohen succeeded in selling $50,000 for the two months.

Wandering Waters:

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

The USA Men’s team looks dominant throughout the exhibition play.  After a shaky first half against the Australian Men’s team, America turned up the pressure in the second half.  While it is only an exhibition game, the American team has shown flashes of dominance.

Prior to the USA’s recent play, there has been much speculation that the USA team would have trouble achieving a gold medal as many of the NBA mega-superstars decided to forgo the tournament to prepare for the upcoming season.

However, commenters seem to forget that the NBA is the best basketball league in the world and is made up of the top basketball players on earth.  Not to be discounted, the USA team is made up of max level players, including Kemba Walker.  Kemba has shown at the college level and the NBA level that he is a big game performer and one of the top point guards in the NBA.  Further, the USA Men team consist of young budding superstars who continue to grow with each game.

As the roster stands now, the USA Men team has a legitimate chance to achieve gold in the FIBA basketball tournament.

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

Larry E. Waters

[email protected]

Promotor of Negro Equality Badly Beaten
Shillady, Secretary Advancement League, Leaves Austin

Rochester Democrat & Chronicle
August 23, 1919

Austin, Texas, Aug 22. – John R. Shillady, of New York, secretary of the National Association for the Advancement of Colored People, was severely beaten in front of his hotel here today, and ordered to catch the first train out of town.  The beating was administered by several men, following a meeting held with negroes by Shillady. He agreed to leave town at once.

Two weeks ago local officials ordered the disbanding of a local branch of the National Association for the Advancement of Colored People on the ground that the association had no permit to do business in Texas.  At that time feeling ran high and it was reported that both whites and negroes were purchasing arms.

Shillady, who is a white man, came to Austin yesterday and had a conference with Attorney General C.M. Cureton regarding a chapter for the association…

Boron’s Benchmarks:

Dear Subscribers:

You’ve heard it said, “Ignorance is Bliss” and/or “What you don’t know won’t hurt you”.  But not from liability insurers.

It is a liability insurer’s nightmare when its insured is sued, no one informs the insurer of the suit, and a default judgment is taken against the insured.  To avoid such nightmares, insurers include, as you well know, notice provisions in liability policies making it a condition precedent to coverage that the insurer be promptly notified of a lawsuit against its insured so the insurer can properly investigate and defend against or otherwise respond to the suit.

A recent decision issued by the Supreme Court of South Carolina, Neumayer v Philadelphia Indemnity Ins. Co., provides in-depth analysis of South Carolina case law concerning notice and cooperation clauses of automobile liability insurance policies, and consideration of and application to statutory laws of the state designed to protect the rights of innocent third-parties to recover from tortfeasor drivers.  By reviewing Neumayer you will learn that South Carolina is a “notice-prejudice” state, which puts it among the vast majority of jurisdictions in our country.  In South Carolina, even if an auto insurer can show substantial prejudice in not receiving notice, auto insurers nonetheless are obligated to pay a judgment up to the mandatory minimum limits of liability coverage required by South Carolina statutory law.

Without giving away too much in advance of your actually clicking on and reading the case, let me just say that South Carolina auto liability insurance law was well on its way to a veritable sea change based on the circuit court’s decision which led to the appeal to the Supreme Court. “Notice” how I am intentionally withholding from you whether the insurer prevailed at the South Carolina Supreme Court in Neumayer?  I’m doing so not because “Ignorance is Bliss” and/or “What you don’t know won’t hurt you”, but rather, because I know your curiosity about the outcome is going to increase the chance you actually click the case link and read the case.  It is one worth reading.

Eric T. Boron

[email protected]

Barci’s Basics (On No Fault):

Hello Subscribers!

I am just getting back from vacation, where I spent a week at Disneyworld with a few friends. It was very hot, very humid, and a lot of walking, but overall was a fun time. If you’ve not been to Disney as an adult (without children) I’d recommend it, although maybe not in August. While I was there, I pondered quite a bit about the insurance coverage that Disney must have and what their liability exposures must be like. One ride in particular really gave me pause – the Tomorrowland Speedway in Magic Kingdom. Basically, you get in a little motorized car and drive around a windy track. Now, the “ride” requires the rider to do some work, i.e. push the gas pedal to get the car moving and to steer. The ride also has warning signs up telling you not to bump into other cars. This got me thinking, if one rider bumps into another rider and causes injury, could you make a claim to your no-fault carrier? Now, to my detriment, I don’t know anything really about Florida’s no-fault laws, but technically there’s a car and an injury in the scenario I presented. I am sure Florida has some sort of exception for being on a ride at an amusement park, but I haven’t done the research. If you have any thoughts on this let me know!

On the no-fault front I have four cases for you, all out of the Second Department’s Appellate Term where timely denials of claims were a hot button issue last Friday. Three of the four cases discuss timely denial issues, while the other discusses res judicata and how it allowed an insurer to deny coverage of no-fault benefits after the Supreme Court determined in a separate action that the underlying accident was staged and the carrier had no exposure.

That’s all folks,

Marina A. Barci

[email protected]

Now, we Spend Four Hours and Ten Minutes at the JetBlue Terminal in JFK:

Fast Flight from Buffalo
Pathfinder Covers 440 Miles in 4 Hours, 10 Minutes

New York Times
August 22, 1919

J.D. Hill, a pilot aviator, of Buffalo, arrived in Mineola, L.I. yesterday in a Curtiss Oriole machine, after flying from Buffalo, a distance of 440 miles in four hours and ten minutes.

The time established a record for a flight of that kind, although it was not officially recorded as such.  Hill made the flight as a pathfinder for the Toronto-New York race which will start Monday.

Editor’s Note.  From wheels up to wheels down the flight from Buffalo to JFK takes one hour today.

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Back and fresh from a respite at the Jersey Shore, we jump into this edition of Lee’s Connecticut Chronicles with another case involving carriers sparring with their third-party administrator. Endurance Am. Specialty Ins. Co. v. William Kramer & Assoc., LLC, (D. Conn. August 15, 2019). Reviewing this case from District Court of Connecticut gives us the chance to examine Connecticut’s narrow approach to common law indemnity and contribution, and the relatively high pleading bar in order to survive a motion to dismiss. Another Connecticut native who turned on his would-be allies was Benedict Arnold. Arnold was born in Norwich, Conn., to an old and distinguished New England family. At an early age, Arnold escaped from his apothecary apprenticeship to join the army where he distinguished himself. With the onset of the Revolutionary War Arnold quickly decamped from his New Haven apothecary to join the fighting, leading a group of Connecticut and Massachusetts soldiers to victory in upstate New York, capturing Fort Ticonderoga and Quebec from the British. But Arnold was not particularly politic, feuding with Ethan Allen, Gen. Horatio Gates, and others. He faced down Congressional inquiries against charges of misconduct and war profiteering and was passed over for promotion. Historians speculate that it was Arnold’s arrogance and sense of victimization that led to his treasonous, but failed, partnership with the British. Perhaps carriers and their TPAs can work harder at staying on the same side.

Lee S. Siegel

[email protected]

Headlines from Today’s Issue, Attached:

Dan D. Kohane
[email protected]

  • Read this Decision and Save it for a Rainy Day.  Insurance Claims Professional’s Evaluation of Serious Injury IRRELEVANT and Should not be Allowed by Fact Finder.  Thousands Cheer.


Robert E.B. Hewitt III

[email protected]

  • No highlights this edition. Dog days of summer at the Courts.


Steven E. Peiper

[email protected]

  • J.H.O. has Express Authority to Preside Over, and Render Opinion On, Discovery Disputes


Agnes A. Wilewicz

[email protected]

  • On holiday.

Jennifer A. Ehman

[email protected]

  • Trial courts were quiet…no gems this issue.


Brian D. Barnas

[email protected]

  • Bad Faith and Punitive Damage Claims Dismissed under Michigan Law

  • Genuine Dispute Doctrine Barred Bad Faith Claim


Lee S. Siegel

[email protected]

  • Common Law Right of Indemnity Is a High Bar in Connecticut


Brian F. Mark
[email protected]

  • Quiet on the construction defect front this week.


Larry E. Waters

[email protected]

  • Court adopts Report and Recommendation; Plaintiff Concedes that his State Court Proceedings were Pending and Therefore was Unable to Demonstrate the Relief Sought Pursuant to Section 3420


Eric T. Boron

[email protected]

  • Reversal of Circuit Court Decision Finding the Notice Clause in an Auto Liability Policy Void Under South Carolina Statutory Law


Marina A. Barci

[email protected]

  • Conceding that Claim Was Filed Timely Gets Carrier’s Summary Judgment Motion Denied

  • Provider’s Entitlement to No-Fault Benefits Barred by Res Judicata

  • Failure to Establish that Claims Were Not Timely Denied or were Improperly Denied Gets Plaintiff’s Summary Judgment Motion Denied

  • Failure to Establish that IME Scheduling Letter Was Timely Gets Carrier’s Summary Judgment Motion Denied


Earl K. Cantwell

[email protected]

  • Insurance Claimants Must Have Standing and Interest in Property/Policy


That’s all she wrote.  Enjoy the last few weeks of summer.  I surely enjoy every day the sun shines.

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]

Jennifer A. Ehman

[email protected]

Dan D. Kohane, Chair
[email protected]

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

Michael F. Perley

Jennifer A. Ehman

Agnieszka A. Wilewicz

Lee S. Siegel

Brian D. Barnas

Brian F. Mark

John R. Ewell

Larry E. Waters

Eric T. Boron

Marina A. Barci

Diane F. Bosse

Joel R. Appelbaum


Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley

Eric T. Boron

Brian D. Barnas

Larry E. Waters

Jennifer A. Ehman, Team Leader
[email protected]

Marina A. Barci

Jody E. Briandi, Team Leader
[email protected]

Diane F. Bosse

Topical Index

Kohane’ Coverage Corner

Hewitt’s Highlights on Serious Injury

Peiper on Property and Potpourri

Wilewicz’s Wide World of Coverage

Jen’s Gems

Barnas on Bad Faith

John’s Jersey Journal

Lee’s Connecticut Chronicles

Off the Mark

Wandering Waters

Boron’s Benchmarks

Barci’s Basics (on No Fault)

Earl’s Pearls


Dan D. Kohane
[email protected]

08/23/19       McCullouch v. New York Central Mutual
Appellate Division, Fourth Department
Read this Decision and Save it for a Rainy Day.  Insurance Claims Professional’s Evaluation of Serious Injury IRRELEVANT and Should not be Allowed by Fact Finder.  Thousands Cheer.

A truly wonderful decision from the Fourth Department.  Save this one!

Plaintiff commenced this action seeking to recover supplementary uninsured/underinsured motorist (SUM) benefits from New York Central Mutual (“NYCM”).  The jury returned a verdict finding that the accident was not "a substantial factor in causing an injury to [plaintiff]."  Thereafter, the Supreme Court denied plaintiff's motion to set aside the verdict as against the weight of the evidence.

The Fourth Department upheld the lower court’s decision which prohibited the plaintiff from calling, as a witness, any claims representatives employed by NYCM or from entering into evidence any proof of insurance.  It was undisputed at trial that plaintiff carried SUM coverage pursuant to a policy issued by defendant and that the SUM coverage was applicable to plaintiff's motor vehicle accident, and thus there was no need for plaintiff to offer further evidence establishing the existence of the policy.  Similarly, there was no indication in plaintiff's pleadings or elsewhere in the record that she was alleging that defendant denied her claim for SUM benefits in bad faith and thus the investigation regarding plaintiff's claim was not relevant to the issues at trial.

The court held:

Here, we agree with defendant that its representatives were not witnesses to the accident, have no personal knowledge of the facts of the accident, and are not medical doctors qualified to testify regarding plaintiff's alleged injuries. Thus, NYCM’s investigation and evaluation of plaintiff's claim is therefore irrelevant to the issue whether plaintiff sustained a serious injury, which, along with the issue whether any such injury was causally related to the accident, were the primary issues before the jury.

The court upheld the verdict as supported by the evidence.

Editor’s Note:  This is a HUGE decision.  How often, in SUM arbitrations and trials, does the plaintiff want to take the testimony of the claims representative and get his or her evaluation of the claim, the injuries, etc.  The evaluation by the claims professional is IRRELEVANT.  Use this decision to fight back when the testimony of a SUM claims rep is sought to discover evaluation decisions.  The claims professionals are “not witnesses to the accident, have no personal knowledge of the fact and are not medical doctors”.  Their evaluation, therefore, is irrelevant.

Robert E.B. Hewitt III

[email protected]

No highlights this edition. Dog days of summer at the Courts.

Steven E. Peiper

[email protected]

08/21/19       Ruiz v. Darren Corporation
Appellate Division, Second Department
J.H.O. has Express Authority to Preside Over, and Render Opinion On, Discovery Disputes

Plaintiffs commenced the instant action in Kings County Supreme Court in the Summer of 2012.  In January of 2017, the defendants served a 90 day demand requiring plaintiff to resume prosecution of the action or file the Note of Issue.  When no discovery was undertaken, and plaintiff likewise failed to file the Note of Issue, defendants filed an application in May of 2017 seeking dismissal of plaintiff’s Complaint pursuant to CPLR 3126.

Plaintiff, thereafter, promptly moved to restore the matter to the trial calendar, and opposed defendants’ motion to dismiss.  The matter was ultimately heard by a Judicial Hearing Officer in the King County Centralized Compliance Part (“CCP”).  Upon deliberation, the J.H.O. denied the defendants’ motion and granted plaintiff’s request to compel additional depositions.    

In response, the defendants filed a second application, this time pursuant to CPLR 3104(d), which sought to vacate the J.H.O.’s earlier decision.  Their argument was premised upon the position that a J.H.O. was not empowered to render determinations on a motion to dismiss/strike.  The trial court denied the motion to vacate, and the Appellate Division agreed.  In support of its ruling, the Appellate Division noted that a reference is explicitly authorized by CPLR 3104 to “supervise all or part any of disclosure procedure.”  Ruling that the defendant’s initial motion was a discovery motion, and the reply/cross-motion of plaintiff was also a discovery motion, the Court concluded that the J.H.O. had not exceeded his authority.

In addition, the Court further affirmed the J.H.O.’s Order by noting that sanctions under CPLR 3126 are “extremely forgiving.”  With this in mind it was not an abuse of discretion in reopening discovery where, as here, the plaintiff established a meritorious argument and a justification for delay.

Agnes A. Wilewicz

[email protected]

On holiday.

Jennifer A. Ehman
[email protected]

Trial courts were quiet…no gems this issue.

Brian D. Barnas
[email protected]

08/19/19       Buhl Building, L.L.C. v. Commonwealth Land Title Insurance Company
Superior Court of Delaware
Bad Faith and Punitive Damage Claims Dismissed under Michigan Law

Buhl sued Commonwealth, its title insurer, after the failed $43 million sale of a skyscraper located in downtown Detroit.  The Complaint had three counts: (1) breach of insurance contract seeking money damages; (2) declaratory relief; and (3) bad faith.  Buhl asserted that the Defendants breached the implied covenant of good faith and fair dealing by refusing Buhl’s request for indemnification without a reasonable justification. In addition, Buhl contended that the Defendants acted in bad faith because the Defendants delayed in addressing a discrepancy in title and refused to indemnify Buhl.  Buhl also sought punitive damages on its bad faith claim.

First, the court determined that Michigan law applied because the contract involved a commercial property located in Michigan and much of the performance of the contract at issue took place in Michigan.

Having concluded that Michigan law applied, the court dismissed the claims for bad faith and punitive damages.  Michigan does not recognize claims for bad faith breach of insurance contracts and punitive damages.  Thus, those claims were dismissed.

08/12/19       Genesis Insurance Company v. National Union Fire Insurance Company of Pittsburgh, PA
United States Court of Appeals, Ninth Circuit
Genuine Dispute Doctrine Barred Bad Faith Claim

The court below granted National Union summary judgment on Magma’s claims for breach of contract and breach of the covenant of good faith and fair dealing.  The Ninth Circuit affirmed.

Previously, the court had concluded that National Union was liable to Magma on a theory of equitable subrogation.  It had not concluded that National Union breached its contract.  Magma had incurred liability in the underlying litigation, and Genesis made a $5 million payment to Magma.  Subsequent litigation determined that National Union was ultimately legally responsible to the insured for the loss.  Therefore, National Union was liable under a theory of equitable subrogation.  That court had not determined that National Union had breached its contractual obligations.

The court below also correctly held that Magma could not prove damages.  First, Magma was not responsible for any portion of the settlement.  Genesis contributed $5 million to the settlement of the claims and National Union repaid Genesis $5 million plus interest.  Second, Magma’s damages claim fails because the asserted damages could not have been proximately caused by National Union’s alleged breach.

Summary judgment was also appropriately granted on the claim of breach of the covenant of good faith and fair dealing.  Magma argued that National Union violated the covenant by litigating coverage.  National Union’s dispute over its coverage liability, however, is protected under the “genuine dispute” doctrine, which holds that an insurer does not act in bad faith when it mistakenly withholds policy benefits, if the mistake is reasonable or is based on a legitimate dispute as to the insurer's liability.

John R. Ewell
[email protected]

Update on New Jersey insurance legislation in cover letter.

Lee S. Siegel

[email protected]

08/15/19       Endurance Am. Spec. Ins. Co. v. William Kramer & Assoc., LLC
United States District Court, Connecticut
Common Law Right of Indemnity Is a High Bar in Connecticut

The right to common law indemnity is curtailed in Connecticut and permitted in certain limited circumstances. Generally, it is only available when brought by a passive tortfeasor against an active tortfeasor. Here, once again in the context of carriers feuding with their third-party administrators, the District Court struck a third-party complaint seeking common law indemnity.

Hurricane Matthew struck the South Carolina coast in October 2016, causing significant damage to The Caravelle Resort, in Myrtle Beach. Endurance American Specialty Insurance Company, the lead carrier on a $10 million primary quota share property policy, with $34 million in excess coverage, retained William Kramer & Associates (WKA) as loss adjuster for the Market. WKA, eschewing the concept of under promise and over deliver, continually increased its estimate of the damage to the resort. Its first estimate came in at $2.9 million and then grew steadily to $18 million. Apparently frustrated, the Market retained a construction consultant, Madsen Kneppers and Associates, Inc., to assist the investigation. The Market settled with the resort for $24 million.

The Market sued WKA, claiming that it failed to disclose material facts about the loss, namely that much of the claimed damages were preexisting or not proximately caused by the hurricane. The Market alleged that WKA’s repair estimates included rooms unaffected by the storm, and that the Market paid to renovate the entire resort rather than only storm-caused damage. WKA pointed the finger at Madsen, literally and legally, commencing a third-party action seeking common law indemnity. “Madsen’s negligence was [the] direct and proximate cause of any damages allegedly due to the Market from WKA,” its complaint alleged. WKA claimed that Madsen controlled the process and it relied on Madsen’s estimate of damages. Madsen moved to dismiss.

There is no right of indemnity or contribution between joint tortfeasors under Connecticut law. However, where one defendant exercises control and is the proximate cause of injury and the other defendant’s negligence is passive, Connecticut courts will allow common law contribution. A cognizable claim has four elements: 1) negligence, 2) that was the direct, immediate cause of the accident and injuries, 3) control over the situation to the exclusion of the passive defendant, and 4) the passive defendant lacked knowledge  of the negligence, had no reason to anticipate the negligence, and reasonably relied on the active tortfeasor not to be negligent.

Here, the court found that WKA’s claim missed the mark on three of the four elements and dismissed its complaint. First, the court found that WKA failed to allege facts establishing that Madsen’s negligence was primary and its own only passive. “Passive negligence is generally limited to constructive or technical fault, as where the owner of property is held liable for an injury on his property resulting from a dangerous condition caused by another working on his property,” the court explained. The facts alleged in its complaint, moreover, revealed that WKA took an active role in the estimate of damages. Likewise, WKA failed to show that Madsen exercised exclusive control over the estimating process and, since WKA was involved in the estimating process, that it lacked knowledge of Madsen’s negligence.

Brian F. Mark
[email protected]

Quiet on the construction defect front this week.

Larry E. Waters
[email protected]

08/19/19       John Edward Bowe v. Tom Wilson, Chairman, CEO, President, All State Insurance, Allstate Ins. Cop.
District Court, Northern District of New York
Court adopts Report and Recommendation; Plaintiff Concedes that his State Court Proceedings were Pending and Therefore was Unable to Demonstrate the Relief Sought Pursuant to Section 3420

In this action, a pro se Plaintiff alleged that his demands of defendant to provide the release of the $100,000 Allstate liability insurance coverage went unanswered in connection with an alleged incident on or about August 20, 2015, when a motorist insured by Allstate struck him as he was walking.

Plaintiff moved to proceed in forma pauperis and the court granted Plaintiff’s motion.  Based upon an initial review of the claims alleged in Plaintiff’s complaint, the Magistrate judge recommended that Plaintiff’s complaint be dismissed.  Despite Plaintiff’s objection to the recommendation, the Court adopted the September 4, 2018 Report-Recommendation and Order in its entirety.

Following the decision, Plaintiff filed an amended complaint on October 24, 2018. At that time, Defendant moved to dismiss the amended complaint pursuant to the Federal Rules of Civil Procedure 12(b)(6). On November 19, 2018, Plaintiff filed a second amended complaint. Upon the filing of the second amended complaint, the Court ruled defendants’ pending motion to dismiss pursuant to the Federal Rules of Civil Procedure 12(b)(6) was deemed moot.

Thereafter, on December 11, 2018, the Magistrate reviewed Plaintiff’s second amended complaint pursuant to Section 1915(e)(2).  Upon a review, the Court recommended that Plaintiff’s claims be dismissed without prejudice with a final opportunity to amend should he be able to demonstrate the existence of a judgment against the insured party.

Subsequently, Plaintiff filed objections to the December 11, 2018 Report-Recommendation and Order and filed a third amended complaint.  On January 9, 2019 the Court adopted the December 11, 2018 Report-Recommendation and Order in its entirety.

The Magistrate reviewed the third amended complaint and issued a Report-Recommendation and Order on March 15, 2019. In light of the third amended complaint and Plaintiff’s previous objections to the Report-Recommendation and Orders, the Magistrate concluded that further amendments of the Complaint would be futile.  In support, the Magistrate reasoned that the third amended complaint appeared to concede that his state court proceedings were pending, which demonstrated that he is unable to seek relief in this Court to pursuant to Section 3420.  While Plaintiff stated  that “he is not seeking to proceed under Section 3420”, the Court found this argument failed as Plaintiff had not set forth a basis for this Court’s jurisdiction.  Further, the Court noted that a judgment against the insured is a condition precedent to a direct action against the insurance company.  Therefore, the court recommended that Plaintiff’s third amended complaint be dismissed without prejudice to plaintiff seeking to commence a new action and should Plaintiff obtain a state court judgment against the insured but without leave to file and further amended complaints in the action.

Upon review of the Report-Recommendation de novo, the court adopted the Magistrate’s recommendations for the reasons stated in the report.

If you would like a copy of this decision, just let me know.

Eric T. Boron
[email protected]

07/24/19       Neumayer v. Philadelphia Indemnity Ins. Co.
Supreme Court of South Carolina
Reversal of Circuit Court Decision Finding the Notice Clause in an Auto Liability Policy Void Under South Carolina Statutory Law

A bus driven by Defendant Partman struck Neumayer, a pedestrian, injuring Neumayer.  Partman worked for Defendant Primary Colors Child Care Center.  Neumayer sued both defendants.  Neither defendant answered or responded in any fashion.  A default judgment was entered, and after a damages hearing, Neumayer was awarded $622,500.

Over eighteen months after the entry of default, Philadelphia Indemnity Insurance Co. (Philadelphia), Primary Colors' insurance carrier, received notice that its insured was involved in a lawsuit that culminated in a default judgment. Neumayer's counsel sought to collect $622,500 from Philadelphia, which declined to pay that amount, instead asserting its indemnification obligation was limited to $25,000 under South Carolina jurisprudence requiring an insurer to pay only the minimum limits when it is substantially prejudiced by its insured's failure to provide notice of a lawsuit. Philadelphia also argued its failure to receive notice of the underlying lawsuit prevented an opportunity to investigate and defend.

Neumayer filed a declaratory judgment action asking the court to require Philadelphia to pay the judgment in full.   Philadelphia answered with a counterclaim against Neumayer, and cross-claimed against officials at Primary Colors, arguing that its indemnity obligation was limited to $25,000.  Both parties moved for summary judgment, and after a hearing, the circuit court found in favor of Neumayer. The circuit court framed the issue as “whether or not Philadelphia can properly reduce the available coverage to the statutory minimum through a cooperation provision in the Policy.”

The notice and cooperation provision at issue in this case is located under the “Business Auto Conditions” section and states:

2. Duties In The Event Of Accident, Claim, Suit Or Loss

We have no duty to provide coverage under this policy unless there has been full compliance with the following duties:

  1. In the event of “accident”, claim, “suit” or “loss”, you must give us or our authorized representative prompt notice of the “accident” or “loss.”

* * *

  1. Additionally, you and any other involved “insured” must:

* * *

(2) Immediately send us copies of any request, demand, order, notice, summons or legal paper received concerning the claim or “suit”.

The South Carolina Code cited to by the circuit court’s decision is Section 38-77-142(C), stating:

“Any endorsement, provision, or rider attached to or included in any policy of insurance which purports or seeks to limit or reduce the coverage afforded by the provisions required by this section is void.”

The South Carolina Supreme Court’s decision recaps and analyzes the history and use of notice clauses in liability insurance policies in South Carolina.  There’s also discussion of the notice-prejudice rule and South Carolina’s adoption of the same after the state extensively amended its laws governing automobile insurance in 1974.

In reversing the circuit court, South Carolina’s Supreme Court determined the circuit court erred in ruling that Section 38-77-142(C) invalidates the standard notice clause contained in the insurance policy issued to Primary Colors by Philadelphia.   Supreme Court held that while an insurer must provide the statutorily-mandated minimum coverage, an insurer may continue to invoke notice clauses to deny coverage above the statutory limits, providing the insurer can prove that it was substantially prejudiced by its insured's failure to comply with the provision.

No sea change in South Carolina automobile liability insurance law.  Crisis averted.

Marina A. Barci

[email protected]

08/16/19       Sunrise Acupuncture, P.C. v. Hertz Claim Mgt. Corp.
Supreme Court, Appellate Term, Second Department
Conceding That Claim Was Filed Timely Gets Carrier’s Summary Judgment Motion Denied

Hertz moved for summary judgment to dismiss the complaint on the ground that Plaintiff failed to submit their claims for no-fault benefits within 45 days of the dates of the services provided. An adjuster from Hertz submitted an affidavit that they timely mailed all of their denial forms for timeliness reasons. By contrast, Plaintiff did not provide any evidence that their claims were timely and only submitted an affidavit from their counsel, which did not assert that the counsel had personal knowledge of the facts of the case, thereby failing to raise an issue of fact. However, on appeal Hertz conceded that Plaintiff did indeed timely submit the claim at issue. Thus, summary judgment was denied.

08/16/19       Charles Deng Acupuncture, P.C. v. Allstate Ins. Co.
Supreme Court, Appellate Term, Second Department
Provider’s Entitlement to No-Fault Benefits Barred by Res Judicata

Allstate filed a declaratory judgment action in Supreme Court against the plaintiff-assignor that sought a declaration that the underlying accident was staged and that Allstate was not liable in any respect for damages arising out of the accident, which was granted. Thereafter, Charles Deng Acupuncture brought this action in Civil Court to recover no-fault benefits related to services they provided to the plaintiff-assignor as a result of the underlying accident.

Allstate moved for summary judgment in this action based on res judicata – meaning they moved for summary judgment based on the argument that there had already been a final adjudication of a claim on the merits that precludes re-litigation of that claim and all claims arising out of the same transaction or occurrence by a party or those in privity with a party to that action. Basically, Allstate was arguing that they did not owe any no-fault benefits to Charles Deng because its services were provided to the other party in the declaratory judgment action, where it was already decided they were not on the hook for any claims arising out of that accident.

The Court here agreed with Allstate that this claim was barred by res judicata, as any judgment in favor of Charles Deng would impact its rights established in the Supreme Court action, and thus granted its summary judgment motion.

08/16/19       American Chiropractic Care, P.C. v. Hereford Ins. Co.
Supreme Court, Appellate Term, Second Department
Failure to Establish That Claims Were Not Timely Denied or Were Improperly Denied Gets Plaintiff’s Summary Judgment Motion Denied

Hereford moved for summary judgment dismissing the complaint on the grounds that the plaintiff-assignor failed to appear for duly scheduled IMEs.  American Chiropractic Care cross-moved for summary judgment.  The lower court found that Hereford’s motion failed to establish that the first IME scheduling letter sent to plaintiff-assignor was timely as the record indicated that it was mailed more than 30 days after Hereford had received the claims at issue. Thus, it denied Hereford’s motion and granted American Chiropractic Care’s cross-motion.

This Second Department however found that American Chiropractic Care failed to demonstrate its entitlement to summary judgment as the proof submitted in support of its motion failed to establish either that the claims at issue had not been timely denied or that Hereford had issued timely denials of claims that were conclusory, vague, or without merit. Just overcoming Hereford’s motion for summary judgment is not enough to establish their own burden on summary judgment. Thus, the Court reversed and vacated the lower court’s decision on American Chiropractic Care’s motion and denied it summary judgment.

08/16/19       Lida's Med. Supply, Inc. v. Hereford Ins. Co.
Supreme Court, Appellate Term, Second Department
Failure to Establish That IME Scheduling Letter Was Timely Gets Carrier’s Summary Judgment Motion Denied

In essentially the same case as above, Plaintiff moved for summary judgment on its entitlement to no-fault benefits and Hereford cross-moved for summary judgment on the grounds that the plaintiff-assignor failed to appear for duly scheduled IMEs. The lower court granted Plaintiff’s motion and denied Hereford’s cross-motion.

Hereford appealed, arguing that Plaintiff’s motion should have been denied as the proof submitted failed to establish that the claims had not been timely denied or that a timely denial was conclusory, vague or without merit. This Court agreed and reversed the lower court’s judgment to the extent that it granted Plaintiff’s motion. Unfortunately, the court found that Hereford failed to establish that its follow-up IME scheduling letter was timely and thus its denial of Hereford’s summary judgment motion stood.

Earl K. Cantwell

[email protected]

04/30/19       Liberty Transportation, Inc v. Massachusetts Bay Ins. Co.
Connecticut Appellate Court
Insurance Claimants Must Have Standing and Interest in Property/Policy

The Plaintiff’s property suffered damage during a hurricane in August 2011, and the Plaintiff claimed damages for lost income and rental value and tendered an insurance claim. The claim was declined, litigation ensued, the insurance company filed a motion to dismiss arguing that the Plaintiff lacked standing to bring the claim because the Plaintiff sold the property to a third party in January 2012 and assigned any insurance money damages existing at the time of the real estate closing. The argument was that the Plaintiff therefore lacked standing to maintain the action on its own behalf.

In opposition, the Plaintiff argued that the loss of rental income occurred before the real estate purchase agreement. Plaintiff also contended that it had retained an interest in the damaged property as the result of a leaseback provision in the real estate purchase agreement.

The trial court ruled in favor of the insurance company, finding that the plaintiff lacked standing as a result of the assignment of any claim or proceeds. The trial court argued that an assignment is a transfer of property or some other right from one person, the assignor, to another, the assignee, which confers a complete and present right in the subject matter.

The trial court was not persuaded by the arguments that plaintiff was entitled to the insurance proceeds because damage had occurred before the real estate purchase agreement, or because of the execution of the leaseback provision in the real estate purchase agreement establishing some remaining or continuing interest in the property.

This decision was affirmed on appeal with the appellate court taking the rather novel approach of simply adopting wholesale the trial court’s memorandum of decision which was viewed as a “proper statement of the facts and the applicable law”.

The ruling in this case was that an insurance claimant must have standing to recover on a claim or policy. This is related to a similar doctrine that a claimant must be the real party in interest to the claim. In some situations, contracts allocate the risk or the rights to pursue or claim insurance proceeds. In other instances, such rights can be divested by assignment, release, or intervening commercial transactions, such as occurred in this case.

In settling claims, adjusters should be careful to make sure that the claimant is a proper party in interest who has “standing” to recover on a claim, and there are no other third persons or parties who might also have an interest in the claim or policy proceeds.


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