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Coverage Pointers - Volume XXII, No. 10

Volume XXII, No. 10 (No. 575)
Friday, October 30, 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, New Jersey, and Connecticut appellate courts and Canadian 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. 

We hope all is well with you.  We love the calls, people telling us that they have situations.  We do our best to unravel them and make them easier to handle. Yes, sometimes they come from claims professionals and lawyers who are not client and even still, if we can help, we do indeed.

 

New York Coverage Protocol Training Now Available for You and your Colleagues

Tuesday 11/17 at 1:00 PM EST:

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We have, on many occasions, provided New York Coverage Protocol training for local, state and national bar associations, at insurance trade conferences and for insurance companies.  In discussing that training in previous issues of Coverage Pointers, several claim professionals, attorneys and other subscribers have asked whether they can sit in on such a program.

Accordingly, we are scheduling a Zoom program for all who wish to attend, limited to 50, on a first-come, first-serve basis.  The program will be on Tuesday, November 17th at 1:00 PM Eastern Time. It will be a 60-minute presentation with time for Q&A, thereafter.  Written guidelines will be provided as well.

For out-of-state insurers that issue policies to insureds that have a New York presence, you need to know the rules as well.

I announced this program on LinkedIn and we have a cache of attendees already.  We are limiting attendance to 50 and we’re about half subscribed already. If you’re interested, contact me at [email protected]

 

Coverage Lawyers Needed – Help Wanted.

At Hurwitz & Fine, P.C., we are always looking for qualified candidates to join our dynamic team – anywhere in New York State. We are committed to growing our firm with high caliber coverage lawyers and offer competitive benefits, office perks and events, mentorship opportunities, yearly trainings and more. Do you have what it takes to be part of our team? Send your resume to our HR department at [email protected] or call me at 716-849-8942.  Inquiries will be confidential.

 

Newsletters:      

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

  • Employment & Business Pointers aims to provide our clients and subscribers with timely information and practical, business-oriented solutions to the latest employment and general business law developments.  Contact Joseph S. Brown  [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!).  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.
     

  • Medical & Nursing Home Liability Pointers.  Hurwitz & Fine, P.C.’s newest legal alerts contain timely news on the impact of COVID-19 on medical and nursing home liability claims.  Contact Chris Potenza at [email protected] to subscribe.

 

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Peiper on Property and Potpourri:

Greetings from the wonderful world of property insurance. We’ll be back again next time.

Steve
Steven E. Peiper

[email protected]

 

English as a First Language:

Daily News
New York, New York
30 Oct 1920

 

MEMORY TEASERS
Can You Answer Them?

ENGLISH.

  1. Correct the solecism in this sentence:  “Pardon me reaching in front of you.”

  2. How would you improve this American provincialism:  “I’m kind of tired”?

  3. Which is proper, “They exchange confidence among one another” or “among themselves”?

  4. What is incorrect in this colloquialism, “He was nothing like as handsome as his brother”?

  5. What is a “bete noire”?
     

Editor’s note:  Answers Below

 

Wilewicz’ Wide-World of Coverage:

Dear Readers,

Happy Halloween! I do have to admit that I’m not typically a fan of the holiday, but this year we really did get into the spirit (for lack of anything better to do perhaps). Beyond the décor and trick-or-treating set up I reported on last time, we have also gotten some costumes together, in the hopes of scaring whoever does venture to the house this year. Given that we typically get between 300-400 pilgrims each Halloween (we live in the city, on a corner), we figured we would get at least some this time around as well, despite the pandemic. We’ll either throw the candy at them from the porch, or down the candy chute.

My partner will be dressing as a plague doctor, as he already has a long black cloak from our daughter’s Harry Potter obsession days. Meanwhile, I will be dusting off my vampire witch ensemble. Our daughter is now “too old” at 14 to participate, so she’s planning to work at a neighbor’s house in her new job as babysitter on Saturday. She did recently get a little into the spirit of things, and we watched Hocus Pocus for the first time together last week. It was kitschy and campy, and just light enough to provide some escapism for 90 minutes. Highly recommended.

Now, this week in the Wide World of Coverage, we bring you a quick unpublished one from Nevada, namely from the Ninth Circuit Court of Appeals. In National Fire & Marine v. Scott Hampton, the issue was whether a professional liability policy’s exclusion for willful violation of law was 1) unambiguous and applicable, and 2) whether the doctor’s criminal plea or evidence from the underlying wrongful death action could be used as support for a finding of no coverage under an exclusion for willful violation of law. In short, the court found first that the exclusion was indeed unambiguous, and barred coverage for such willful violations. Moreover, since the doctor had pled to the intentional act, it was undeniable that the willfulness requirement had been fulfilled. This happens to come up fairly frequently, particularly in the context of medical malpractice or other intentional torts. Evidence from those tangentially related cases can be used in the coverage determinations, as they are highly persuasive, if not binding, determinations of intent.

Until next time, Happy Halloween!

Agnes
Agnes A. Wilewicz

[email protected]

 

As promised:

Daily News
New York, New York
30 Oct 1920

MEMORY TEASERS

Here Are the Answers to the Questions On Preceding Page

ENGLISH.

  1. “Pardon my reaching in front of you.”

  2. “I am somewhat tired.”

  3. “They exchange confidences among themselves.”

  4. “Nothing like” should not be used for “not nearly.”  “he was not nearly as handsome as his brother.”

  5. Literally, a black beast; figuratively, a “bugbear” or special abhorrence.

 

Barnas on Bad Faith:

Hello again:

As any loyal reader of this publication knows, Dan has been keeping a running count for years on how long it has been since any New York appellate court has affirmed a finding of bad faith against any carrier, under any policy, for any reason.  The last time such a decision was rendered was on June 11, 1998 in Smith v. General Accident Insurance Company.

In my column this week is a case that does not break that string, but it came pretty close.  After a corporate acquisition gone wrong, Liberty disclaimed coverage to its insured for the resulting lawsuit based on an insured versus insured exclusion.  The lawsuit settled after a confession of judgment was entered and an assignment of rights was executed.  The jury in the breach of contract and bad faith action against Liberty awarded Plaintiff $2,282,000 based on Liberty’s breach of contract and breach of the covenant of good faith and fair dealing.

The trial judge set aside the verdict, and the Second Department affirmed.  The verdict was set aside because Plaintiff had taken contradictory positions during the course of the litigation about whether the acquisition had been completed.  Plaintiff previously took the position that it had, and that the underlying defendant had breached the contract.  However, this led to the applicability of the insured versus insured exclusion, because the plaintiff became an officer of the defendant in the underlying action.  At trial, Plaintiff changed course and argued that the deal had not been completed, and thus, he was not an officer of the insured.  The court applied the doctrine of judicial estoppel, found the exclusion applied, set aside the verdict, and dismissed the lawsuit.

That’s all for now.  Stay healthy and stay safe.

Brian
Brian D. Barnas

[email protected]

 

Drunks During Prohibition, too Common for Judge:

The Evening World
New York, New York
30 Oct 1920

FIVE DRUNKS IN DAY TOO MANY FOR DODD

So He Fines ‘Em—Compares Record With October a Year Ago—It’s a Shock.

            Magistrate Dodd, sitting in the Adams Street court, registered executive bewilderment to-day, when five men were brought before him, charged with drunkenness.

“Home come?” asked the Judge, when a perusal of the records revealed that last year in October there were but twenty-five cases of drunkenness, while seventy-seven cases have been recorded so far this month.  “Five in one day is all out of proportion,” continued Magistrate Dodd.  “One dollar from each of you, or the booby hatch.”  They paid.

 

Off the Mark:

Dear Readers,

Happy Halloween everyone!  This year seems like it will be a dud as neither of my kids have any interest in trick-or-treating due to Covid.  While not much would have stopped me from going when I was their age, I obviously never had to deal with a pandemic.  Strange times.

There were no noteworthy construction defect decisions to report on in this edition.  I’m sure I’ll find an interesting case by next edition.

Stay safe everyone and be sure to vote…

Brian
Brian F. Mark

[email protected]

 

Murderer Cheats Death but the Grim Reaper Catches Him:

Daily News
New York, New York
30 Oct 1920

WANDERER, WIFE SLAYER, CLOATS  AS HE CHEATS NOOSE

Jury Is Scored by Chicago Judge for Its  Verdict

(Special to DAILY NEWS.)

            Chicago, Ill., Oct. 29.—Carl Wanderer is guilty of murdering his young wife and her unborn babe.

            For that crime he will be sentenced to serve twenty-five years imprisonment.

            Such was the verdict returned to Judge Hugo Pam tonight by twelve jurors who deliberated on the case for twenty-three hours.

 

PRISONER IN HIGH SPIRITS.

            The jurors decided that the red-haired butcher boy, former overseas lieutenant, is sane. They decided that he committed what Assistant State’s Attorney James C. O’Brien termed the “most atrocious crime in the history of Cook County.” And then they decided that he should pay by serving twenty-five years in the penitentiary.

            “I knew they couldn’t crack me,” said Wanderer, as he left the court room.  “I owe everything to my attorney, Ben Short.  He told me not to worry—and I knew I’d never swing.”  The young man was in high spirits.  An ovation greeted him as he entered the third tier of  cells in the county jail.  The criminals held there should their approval of the verdict.

            The decision aroused the ire of Judge Pam.  He criticized the jurymen.

 

SCORED BY JUDGE.

            “You have erred,” the Chancellor asserted.  “You tell me now that you believed him insane but that you were afraid an insanity verdict would not have kept him locked up.  Whey, men, I would have sent him away for such a long time that he would never kill again.  A grievous error—you call him a wife murdered and say that he shall pay with twenty-five years imprisonment.  A regrettable error—and mind you, I don’t want to be in the position of criticizing a jury.”

 

Editor’s Note (with thanks to Wikipedia):

On June 21, 1920, Wanderer and his wife were returning home from the Pershing Theater in Lincoln Square when shots rang out in the hallway of the Johnson apartment. Ruth's mother heard the shots and rushed to the scene, finding Wanderer pummeling the body of a man in ragged clothing with his gun. Ruth lay dying with several shots in her chest, and reportedly said "My baby is dead" before dying. According to Wanderer's account, the man had been tailing them and followed them into the vestibule of their apartment, presumably to rob them, and Wanderer drew his military service pistol—a Colt M1911—and exchanged fire with the intruder. Wanderer killed the assailant, but his wife was killed by the shooter, who was not immediately identified.

Throughout his first trial, Wanderer's defense attempted to prove that he was insane, and that Wanderer's confession had been coerced. His father and sister testified to the family history of mental illness, while an Army colleague claimed that Wanderer suffered a head injury during his military service. In his testimony, Wanderer denied both killing Ruth (claiming the police had beaten him into confessing) and knowing Julia Schmitt.

Wanderer's first trial ended in a hung jury, but he was convicted of killing his wife in a second trial and was given a 25-year sentence for manslaughter, which outraged many Chicagoans. At the second trial, the prosecution called Julia Schmitt as a witness; the prosecutor was said to have stormed "Kisses for Julia; bullets for Ruth" in his summation.

Wanderer was tried separately for killing the "ragged stranger" and was convicted of first-degree murder. The court rejected efforts to proclaim him insane (after Wanderer claimed he saw visions of his dead wife in prison) and sentenced him to death. He was executed on September 30, 1921, singing "Dear Old Pal O' Mine" before being hanged.

 

Boron’s Benchmarks:

Looking for something new – even if it is old – to start watching on TV with the weather cooling off?  You could do worse than Breaking Bad, the 62-episode AMC series that ran from 2008 to 2013, starring the remarkable Brian Cranston.  However, this series is not for the squeamish.  It is a dark and violent series with disturbing plot lines including methamphetamine production by its main character and sale of methamphetamine on the streets.  What brings this series to mind is one of the two cases that this edition of Boron’s Benchmarks offers for your consideration.  You’ll recall that my beat within our Coverage Pointers newsletter monitors and reports on the latest insurance coverage decisions of the high courts of the 49 states not named New York.  In this edition, we report on the Supreme Court of Nebraska’s decision issued at the end of last week in Kaiser vs. Allstate Indemnity Company, a case concerning, coincidentally, whether damage to the insured owner’s rental property caused by his tenants’ production and/or use of methamphetamine was excluded from coverage.  Sticking with this week’s theme of providing you cases concerning illegal controlled substances, I’ve also provided for your review and consideration Wright’s Case, a Supreme Judicial Court of Massachusetts slip opinion issued this week ruling on the issue of whether an insurance company may be ordered to reimburse an employee for medical marijuana expenses pursuant to a portion of the Massachusetts workers’ compensation scheme requiring reimbursement of reasonable medical expenses.

Until next time, be well.  

Eric
Eric T. Boron

[email protected]

 

Huge Wrongful Death Verdict  -- 100 Years Ago:

The Buffalo Commercial
Buffalo, New York
30 October 1920

Children and Widow  Given $15,000 Verdict

            In Justice Laing’s part of Supreme Court this morning a jury gave the wife and five of the children of the late Harry Bresine a verdict for $15,000 against the New York Central and the Director General of Railroads.

            Bresine, a switch cleaner, was killed in the West Seneca yards February 12th of this year during a heavy snowstorm.  It would appear that one of his feet got caught in a switch for the reason that a foot was found 90 feet from where the body was found.  Hamilton Ward was attorney for the plaintiff.

            The verdict was apportioned according to instructions from the court, $7,000 to the widow and the rest among the minor children.  Two children more than 21 get nothing. 

 

Barci’s Basics (On No Fault):

Hello Subscribers!

I hope you are all still staying healthy and safe! Last time I asked what song always makes you happy when you hear it. One of mine is Dental Care by Owl City. It is a rather odd song, but the tune us upbeat, and I just find the lyrics hilarious. My favorite line is “golf and alcohol don't mix and that's why I don't drink and drive because good grief I'd knock out my teeth and have to kiss my smile goodbye.” It makes me smile every time I sing it. If you’ve never heard the song, I would recommend giving it a listen!

Speaking of smiling, for next time consider:  when was the last time you remember making someone smile? What was it for? When was the last time you remember someone making you smile?

On the no-fault front, I’ve got one case for you that discusses whether or not additional evidence of a staged accident can be included in a motion to renew summary judgment, which would ultimately prevent all the individuals and medical providers from obtaining no-fault benefits. Enjoy!

That’s all folks,

Marina
Marina A. Barci

[email protected]

 

World Series Winnings:

New-York Tribune
New York, New York
30 October 1920

Each Giant Receives $688 From Big Series

            Checks for second place money arrived at the office of the New York Giants yesterday.  The gross amount for the team is $16,160.20.  The money will be divided among thirty-two players and a full share amounts to $688.30.  Those who have been voted a half share will receive $344.15.

            Secretary Joe O’ Brien got busy with the check book and played mail order Santa Claus to the members of the club.

           

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers—

We meet again. How’s your week going? The Maxwell house is filled with sick children, so we are doing about as well as it sounds. 2020, am I right?

This week’s Regulatory Wrap-Up contains a bit of a repeat. We had previously written about a proposed rulemaking by DFS that would implement new measure for Audited Financial Statements, including various internal audit requirements. Well, the time has come, so brush up on what’s coming in November for carriers.

Until next time,          

Ryan
Ryan P. Maxwell

[email protected]

 

Dealing from the Bottom of the Deck:

The Daily Oklahoman
Oklahoma City, Oklahoma
30 Oct 1920

Card Shark Lawyer Amazed Court Room

            NEW YORK, Oct. 29.—Assistant Attorney McGrath today amazed a crowded courtroom by accepting a challenge of counsel for Louis Krohnberg, indicated on a charge of cheating at poker, and “reading” a deck of marked cards from their backs before Judge McIntyre in general sessions court.

            Max D. Steurn, Krohnberg’s attorney, in arguing for dismissal of the indictment declared there was no fact to show that Krohnberg knowingly used marked cards in the game last December in which he was charged with winning a stud poker pot of $13,000 through “card reading.”

            McGrath shuffled the deck and then read the cards backs, one by one, as he handed them to the judge on the bench.  He did not make one mistake.

            Judge McIntyre reserved decision on Mr. Steurn’s motion to dismiss the Krohnberg indictment. 

 

CJ on CVA and USDC(NY):

On paternity leave.

CJ
Charles J. Englert, III

[email protected]       

 

Judge’s Verdict – Don’t Spare the Rod”

The Brooklyn Daily Eagle
Brooklyn, New York
20 Oct 1920

WOULD SPANK BOY

            Strenuous application of a slipper was recommended by Justice Wilkin In the Children’s Court today for 13-year-old Peter Nagurnen of 77 Meserole St..  Peter was brought up before the Court on a charge of entering P. S. 43, 95 Boerum St., behaving there in a disorderly manner, and then biting the right thumb of a teacher, Meyer M. Jacobs, who tried to put him out.

"That teacher should have laid him across his knees and given him a good lacing," Justice Wilkin said. "That’s what I should have done in the teacher’s position, and that’s what would have done him the most good. Sometimes I wish I were a teacher myself." The boy’s case was continued to Nov. 3 for examination.

 

Dishing Out Serious Injury Threshold:

Dear Readers,

Happy almost Halloween everybody. I hope everyone is preparing their socially distant costumes and stockpiles of candy. As we move into November, I am, as I’m sure many are, totally ready for 2020 to be over and move into 2021 on a positive note.

In the Serious Injury Threshold world, there was an in-depth decision from the Third Department identifying how specific questioning at plaintiff’s deposition as to the 90/180-day category is necessary in order to be successful on a motion for summary judgment.  

Stay safe,

Michael
Michael J. Dischley

[email protected]  

 

Not Likely that This Remedy would be Used Today:

The Ithaca Journal
Ithaca, New York
30 Oct 1920

Boxing Gloves to Be Used to Settle School Disputes

            Chicago, Oct. 30—Plans to put a set of boxing gloves in every Chicago school for the use of pupils in settling their disputes are being made by George B. Arnold, chairman of the finance committee of the board of education.

            Mr. Arnold announced his plan today in answer to critics of Miss Alice M. Hogge, principal of the Webster school, who refereed a bout between two of her pupils.  He said that as far as he was concerned for the efforts of the attorney for Mrs. Rose Selon, to have Miss Hogge discharged because she permitted the battle would prove of no avail.  Mrs. Selon’s son Abe was defeated in the scrap by Salvatore Sortino.

 

John’s Jersey Journal:

A blackboard sign on a wall

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Dear Subscribers:    

Happy Fall! Erin and I have continued our pandemic-inspired hiking series. If nothing else, we are outside, enjoying the fresh air and moving. This weekend took us to Taughannock Falls State Park, near Ithaca, New York. With the leaves changing, it was a beautiful time to go and while I took a picture, it doesn’t do it justice.   

A close up of a tree

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It was a beautiful place to hike and my watch logged 5.5 miles. The waterfall is three stories taller than Niagara Falls. Our hound dog, Donald, named after Donald Duck, loves hikes – especially where there are rock walls. He often puts jumps up and puts his front paws on the rock wall so he can see where we’re going. I’ve never seen a dog so interested in exploring the outdoors.

Over the years, I’ve seen numerous bumper stickers saying: “Ithaca is Gorges”, a pun on gorgeous. It’s true.

In the world of New Jersey coverage, we have a unique SUM claim. Or more accurately, a case that is no SUM case at all. Driver pulled up to a full-service gas station where the attendant pumped his gas. Driver drove off prematurely, while the nozzle was still attached to his car. The attendant was injured and sought SUM coverage under the driver’s policy. The New Jersey Appellate Division ruled that the attendant did not qualify under the driver’s SUM policy because the attendant was not “occupying” the vehicle.

The New Jersey claims keep rolling in and we are happy to help you work through the coverage analysis and the strategy going forward. If you have a New Jersey situation, feel free to reach out. My cell is (716) 220-1478.     

John
John R. Ewell

[email protected]

 

The Black Sox Scandal:

New York Herald
New York, New York
30 Oct 1920

 

TRUE BILLS RETURNED AGAINST BALL POOLS

CHICAGO, Oct. 20.—True bills against three owners of baseball pools were voted to-day by the special Grand Jury investigating baseball.  Owners of the Great Wester, Universal and American – National pools are named in the bills.  All are Chicago men—William Chelius, Martin Carlin and F. C. Walters.

Investigation of the pools resulted from numerous complaints received by the Grand Jury from men holding winning tickets who were unable to collect on their slips.

The special Grand Jury adjourned late this afternoon until November 6, when it will be dissolved unless further evidence is brought up for consideration.

Two indictments charging thirteen persons with operating a confidence game and conspiracy were returned to-day by the Grand Jury. Seven members of the Chicago White Sox, three former baseball players, a boxer and two gamblers are named. The charges grew out of the alleged "fixing" of last year's world series between the White Sox and Cincinnati.

Those indicted are Eddie Cicotte. Joe Jackson, Claude Williams, Fred McMullin, George Weaver. Oscar Felsch, Charles Risberg, Arnold 'Chick" Gandil, Hal Chase, Abe Attell, Joseph "Sport" Sullivan of Boston and Bill Burns.

Chief Justice McDonald announced that he would fix bail at $5,000 on each indictment, or $10,000 for each of those named.

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Well, the courts have let us down, giving us nothing over which to ruminate. There was an interesting decision on additur – not the side of things we’re usually on, but the appellate court reversed. So, nothing to see here.

COVID is returning to the Constitution State, and with a vengeance. Over the last two weeks, according to the New York Times (which is still the paper of record), Connecticut has seen a 70% increase in cases, 71% increase in hospitalizations, and a 200% increase in COVID deaths. Positivity has also doubled since we last reported to you, rising from roughly 2% to 4.1%. Still, we are nothing like the Midwest, with positivity rates in the double digits and beyond (Nebraska and Montana, both over 20%). The revised Connecticut travel advisory now extends to basically the entire country, with the exception of New York, New Jersey, and non-Massachusetts New England. With 42 restricted states, there’s not much sightseeing in our future. That’ll just give us more time to hunt down an interesting case or two for our next edition.

Continue to be smart and stay safe.

Lee
Lee S. Siegel

[email protected]       

 

Only Seven to 10 for Murdering Husband:

Boston Post
Boston, Massachusetts
30 Oct 1920

DECLARES SHE SLEW HUSBAND

Gets 7 to 10 Years for Her Crime

            NEW HAVEN, October 29.—Mrs. Alexandria Sokolowsky, indicted for murder of her husband, Frank, by throwing acid in this face while he slept on June 25, today pleaded guilty to manslaughter and was sentenced to State prison for seven to 10 years.

            Sokolowsky was a labor leader employed by the Connecticut Federation of Labor, was a linguist and a man of many accomplishments.  He is said to have had an adventuresome career in Russia.  Mrs. Sokolowsky said after her arrest in New York that she threw the acid “to spoil Frank’s good looks,” after finding in his pocket a letter from another woman.  Her defense was looked after by Russian organizations.  The exact story of her husband’s career has never been divulged. 

 

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

Dear Subscribers,

The paperwork has been filed and checks issued, and I’m happy to announce to all our subscribers that Jim and I are officially homeowners! Special shout out to Evan Bussiere and Kim Rose from the real estate group of the Firm for making this a reality – thank you! Like many people, we were looking for more space now that we are spending most of our time at home instead of in bars, at concerts, travelling, etc. So, of course it was competitive. But we lucked out because seemingly no one wanted to put in the blood, sweat, and tears into a house where there was carpet in the bathroom and wallpaper in every room, including the ceiling! However, Jim and I are still relatively spry and figured we could take on such an endeavor.

Before the ink even dried on the stack of closing documents, Jim went over to the 100-year-old house and started ripping out the rug in the bathroom. I joined him and started working on taking down the wallpaper. Although I’ve heard the horrors of taking down wallpaper, a friend was prepared and came over with two steamers and it has made the process a lot easier. In fact, I think it is therapeutic to take down wallpaper. May be cheaper than therapy. There’s still a lot to do, but the outpouring of offers to help from friends and family is a lovely reminder that even if we are seeing less of each other nowadays, there are still people who are willing and able to help when needed. I’m sure most of my updates for the next couple issues will be about the house, but if anyone has any tips or lessons on updating old houses, please reach out. We are doing a lot of this on our own, along with the aforementioned help, but any additional insight is happily welcomed (e.g. does anyone know how to bring a little life back to a rusty 100-old-year tub?). Until next time, stay active and call a friend or loved one.

Cara A. Cox
[email protected]

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]

 

Epidemics – 1920 Style:

The Daily Reporter
Greenfield, Indiana
20 Oct 1920

EPIDEMICS HAVE BEGUN

Usual Closing of Schools has Begun Says Dr. J. N. Hurty.

            Seasonable epidemics among school children have begun closing some Indiana schools as usual about this time of the year, according to Dr. J. N. Hurty, secretary of the state board of Health. Smallpox and scarlet fever are the most prevalent. Some schools are closed in Bedford, Cambridge City, two rural points in Decatur county and elsewhere, Dr. Hurty said.

“If Indiana had a school medical inspection law,” said Dr. Hurty, “much of this disease could be prevented reached the epidemic stage." He said the cases mostly are mild and that no deaths have been reported.

 

Headlines from this week’s issue:

KOHANE’S COVERAGE CORNER
Dan D. Kohane

[email protected]

  • Rare Case Discussion of Common Law Waiver and Estoppel with Regard to Disclaimer.  Insurance Law Section 3420(d)(2) Did Not Apply to Non-Bodily Injury Claims.  Here, however, the Court finds that the Mere Passage of Time May Constitute Both Waiver and/or Estoppel.  Thousands Flee.

  • Uninsured Motorist Coverage -- Carrier Did Not Meet its Burden of Proving that Hit-and-Run Did Not Occur and, in Any Event, Its Disclaimer was Late

  • Proof of Qualification for Uninsured Motorists Coverage went Unrefuted

  • Application to Stay Uninsured Motorist Fails Due to Lack of Proof that Carrier Insured the Offending Motorist
     

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • Reformation of Property Policy Established By Mistaken Acts of the Insurer’s Authorized Agent; Insured’s Failure to Cooperate Does not Impact Mortgagee’s Independent Claim


DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley

[email protected]

  • Defendant’s Failure to Adequately Address Plaintiff’s 90/180 Day Claim During Deposition was Fatal to Motion for Summary Judgment

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz

[email protected]

  • Ninth Circuit Holds that a Doctor’s Criminal Plea in Malpractice Suit Could be Used to Support a Position of No Coverage Under Clear and Unambiguous Willful Violation of Law Exclusion

 

BARNAS ON BAD FAITH
Brian D. Barnas

[email protected]

  • Lower Court’s Decision to Set Aside Verdict in Favor of Plaintiff for Breach of Contract and Breach of the Covenant of Good Faith and Fair Dealing Affirmed on Appeal

 

JOHN’S JERSEY JOURNAL
John R. Ewell

[email protected]

  • Gas Station Attendant, Injured when Driver Drove Away with Nozzle Still Attached, Did Not Qualify for SUM Benefits under Driver’s Policy

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • No insurance coverage or interesting Connecticut cases to report on this edition. Check back next time!

 

OFF THE MARK
Brian F. Mark
[email protected]

  • No noteworthy construction defect decisions to report on this edition.

 

BORON’S BENCHMARKS
Eric T. Boron

[email protected]

  • Rental Property Insurance – Summary Judgment for Insurer Affirmed

  • Workers’ Compensation Insurance – Health Insurance – Reviewing Board Denial Upheld - Medical Marijuana – Federal Preemption of State Law

 

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

[email protected]

  • Videotaped Confession of Limo Passenger Proves Accident Was Staged, Meaning No No-Fault Benefits Were Owed

 

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell

[email protected]

Legislative List

  • New Rule Making Requires 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]

  • Out on paternity leave.

 

CARA’S CANADIAN AND CROSS-BORDER CONNECTIONS (WITH HEATHER SANDERSON)
Cara A. Cox

[email protected]

 

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]

  • 2020 Spring Break at Home: School Trip Refunds

 

Stay healthy and go vote!

We did.

Dan

 

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

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


NEWSLETTER EDITOR
Dan D. Kohane

[email protected]

ASSOCIATE EDITOR
Agnes A. Wilewicz

[email protected]

ASSISTANT EDITOR
John R. Ewell

[email protected]

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

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

Michael F. Perley

Jennifer A. Ehman

Agnieszka A. Wilewicz

Lee S. Siegel

Brian 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

 

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

Michael F. Perley

Eric T. Boron

Brian D. Barnas

 

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

Marina A. Barci
 

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

Diane F. Bosse
 

Topical Index
 

Kohane’s Coverage Corner

Peiper on Property and Potpourri

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)

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

 

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

10/28/20       County of Suffolk v. Ironshore Indemnity, Inc.
Appellate Division, Second Department
Rare Case Discussion of Common Law Waiver and Estoppel with Regard to Disclaimer.  Insurance Law Section 3420(d)(2) Did Not Apply to Non-Bodily Injury Claims.  Here, however, the Court finds that the Mere Passage of Time May Constitute Both Waiver and/or Estoppel.  Thousands Flee.

In 2008, the Long Island Power Authority (“LIPA”) requested proposals for solar power installations in Long Island. EDF Renewable Development, Inc. (“EDF”), and its subsidiary, Eastern Long Island Solar Project, LLC (together with EDF, the EDF companies), were selected as the successful bidder. The EDF companies entered into an agreement with LIPA to construct the solar installations and entered into lease agreements with the County of Suffolk for various locations, including a site in Ronkonkoma (hereinafter the Ronkonkoma lease). However, the County failed to issue the building permit which was necessary for the EDF companies to complete their obligations under the Ronkonkoma lease, and the project was not completed.

For the 2012 calendar year, the County held a self-insured liability retention of $3 million and purchased excess liability policies from, among others, the defendants Ironshore Indemnity, Inc. (“Ironshore”) with $5 million in coverage, followed by and Lexington Insurance Company (“Lexington”) with a $25 million follow form excess policy.

In December 2012, the County notified Ironshore and Lexington of a "potential claim/zoning" by the EDF companies. In January 2013, Ironshore purported to disclaim coverage of the subject loss on the ground that the anticipated claim sought only non-monetary relief. Lexington also acknowledged the notice in January 2013, but did not issue a disclaimer.

In June 2013, EDF commenced an action against the County in the United States District Court for the Eastern District of New York (“EDNY”) seeking damages for breach of contract (“loss”). Counsel for the County forwarded a copy of EDF's federal complaint to Ironshore on June 19, 2013. Ironshore issued a second disclaimer on December 10, 2013, taking the position, inter alia, that the subject loss did not fall within the scope of its policy and/or fell within its exclusion for contract claims. On November 14, 2014, Lexington disclaimed on the same basis.

In a decision dated November 17, 2016, after a nonjury trial, the Eastern District awarded EDF damages for almost $11 million which judgment was affirmed.

In March 2017, the County sued the carriers for coverage. Ironshore and Lexington separately moved, in effect, for summary judgment declaring that they are not obligated to indemnify the County in the underlying action, arguing that the County's loss was not covered by Ironshore's policy or Lexington's follow form policy, and/or that coverage was unavailable under Ironshore's contract exclusion.

In general, the insured has the initial burden to establish that an insurance policy covers the subject loss and the carrier has the burden to prove that an exclusion defeats coverage. Typically, insurance policies require "'fortuity' and thus implicitly exclude coverage for intended or expected harms.

Ironshore's policy provides, inter alia, errors and omissions coverage encompassing the County's own "wrongful act[s]," including, among other things, "breach of duty" and "malfeasance." In its decision, the Eastern District determined that, acting "with eyes wide open," the County "failed to . . . comply with its contractual duty," and "made contractual compliance by EDF impossible." These acts clearly fit within the definitions of "breach of duty" and/or "malfeasance".

However. Ironshore and Lexington both invoked the contract loss exclusion provision of Ironshore's policy, which excluded coverage for "[t]he actual or alleged failure to perform or breach of any contract, agreement or other guarantee or promise."

Here, the subject loss sounded in contract, and the Eastern District awarded damages on that basis. In addition, there is no ambiguity in the language of Ironshore's policy excluding, inter alia, coverage for "breach of any contract." Accordingly, if Ironshore and Lexington issued timely disclaimers, this exclusion defeats coverage.

Insurance Law § 3420(d)(2) imposes strict requirements on an insurer to give timely written notice if it is disclaiming liability or denying coverage for death or bodily injury arising out of an accident,  but that section only applies to bodily injury and wrongful death claims.

When the statutory rules do not apply, an insurer's delay in disclaiming coverage should be considered under common-law waiver and/or estoppel principles.

A waiver is the voluntary abandonment or relinquishment of a known right and the intentional relinquishment of a known right, a waiver 'should not be lightly presumed.  In contrast, "estoppel is a bar which precludes a party from denying [that] a certain fact or state of facts exists to the detriment of another party who was entitled to rely on such facts and had acted accordingly.

Here, the County proffered evidence that it provided a copy of EDF's complaint to Ironshore and Lexington on June 19, 2013, and the carriers did not rebut that showing. Ironshore did not respond to this notice until December 10, 2013, and Lexington did not respond until November 14, 2014, approximately 6 months and 17 months, respectively, after they were notified of the subject loss. In addition, neither Ironshore nor Lexington proffered evidence demonstrating that they neither waived the contract exclusion nor induced the County to rely, to its detriment, on their failure to invoke that provision.

Therefore, neither Ironshore nor Lexington met its prima facie burden of demonstrating that its disclaimer was timely.

There is a question fact as to waiver and estoppel so both motions for summary judgment denied.

Editor’s Note – the Court correctly stated the rules on waiver and estoppel as well as properly allocating the burden of proof.  However, the Court set an impossible standard.  Carrier demonstrated that the insurer disclaimed coverage and made its coverage position clear – therefore, never knowingly sacrificed its right to rely upon an exclusion.  What proof could the insurer produce to demonstrate the negative, that the County never relied its conduct to the County’s detriment?

 

10/22/20       GEICO v. Pellot
Appellate Division, First Department
Uninsured Motorist Coverage  -- Carrier Did Not Meet its Burden of Proving that Hit-and-Run Did Not Occur and, in Any Event, Its Disclaimer was Late

The insurer did not meet its burden of showing that a hit-and-run accident did not occur. The hearing court's determination that there was physical contact between Pellot's motorcycle and an alleged hit-and-run vehicle is supported by a fair interpretation of the evidence.

SAFECO's three-month delay in disclaiming coverage was unreasonable as a matter of law, as the ground for the disclaimer was or should have been readily apparent from the face of the arbitration request and could have been asserted at any time.


10/22/20       Brioso v. Motor Vehicle Accident Indemnification Corporation
Appellate Division, First Department
Proof of Qualification for Uninsured Motorists Coverage went Unrefuted

Brioso sustained her initial burden of demonstrating that she was a "qualified" person under Insurance Law § 5218[a], based on her statement that she was injured in an accident involving a motorcycle, the owner of the vehicle could not be ascertained, she did not own a motor vehicle and she lived with her daughter, who was not an "insured person".

MVAIC failed to provide sufficient evidence to raise a triable issue of fact as to whether petitioner was an "insured person" based on her residence with individuals who were supposedly insured relatives. MVAIC did not present evidence that the named alleged relatives were covered by insurance and lived with Brioso at the time of the accident.

 

10/21/20       Country-Wide Insurance Company v. Adams
Appellate Division, First Department
Application to Stay Uninsured Motorist Fails Due to Lack of Proof that Carrier Insured the Offending Motorist

Country-Wide commenced this proceeding to permanently stay a claim for uninsured motorist benefits made by its insured, Adams. Adams's claim arose from a motor vehicle accident she had with a vehicle driven by Joel. Country-Wide claimed that Joel was in fact insured by GEICO.

The party seeking a stay of arbitration has the burden of showing the existence of sufficient evidentiary facts to establish a preliminary issue which would justify the stay. Here, the evidence submitted by the Country-Wide failed to demonstrate that GEICO ever insured Joel.

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

10/22/20      Imrie v. Ratto
Appellate Division, Third Department
Reformation of Property Policy Established By Mistaken Acts of the Insurer’s Authorized Agent; Insured’s Failure to Cooperate Does not Impact Mortgagee’s Independent Claim

Plaintiff owned an auto repair business and garage which he leased to Ratto Restorations.  In 2010, plaintiff formally sold the garage to Ratto’s principal, Andrew Ratto.  In connection with that deal, plaintiff retained two mortgage security interests on the property and requested that Ratto procure fire insurance naming plaintiff as a mortgagee/payee under the policy. 

At the time of the closing, Andrew Ratto’s spouse (also a principal in Ratto Restorations) advised Erie Insurance Company’s agent, Howard, to attend to including Imrie as an insured under the policy.  It is established that Howard in fact attempted to add Imrie as mortgagee on a liability policy Erie had also issued.  Erie, however, never responded to Howard’s initial request, nor did Erie respond to Howard’s follow up request approximately one month later.  Not surprisingly, Imrie was not added as a mortgagee on the Erie property policy nor any of the subsequent renewal policies.   

Several years later, the property was destroyed by fire and Imrie provided notice of a claim under the relevant Erie policy.  At that point, he was advised that he had never been added as mortgagee to the policy.  Erie denied the claim to Mr. Ratto and Ratto Restoration due to an alleged breach of the cooperation clause, and further denied Imrie’s claim on the basis that he was not named as a mortgagee on the property.

Plaintiff commenced a lawsuit suing Ratto for breach of contract, and also seeking a declaratory judgment against Erie, or, in the alternative, reformation of the relevant property policy securing his rights a mortgagee.   

Imrie also obtained an assignment of Ratto’s interest in the property policy, and commenced a second lawsuit against Erie seeking therein recovery under theories of breach of contract, reformation and/or unjust enrichment.  Imrie also sued the Howard, as agent, as well as Howard’s employer Adirondack.

All parties, absent Ratto, moved for summary judgment at the conclusion of discovery.  The trial court granted Imrie’s claims for breach of contract against Ratto, and awarded $25,000 in attorneys’ fees (even though plaintiff requested $145,000).  Erie’s motion for summary judgment was granted on the basis that Imrie was not a mortgagee under the policy, which, in turn, meant Imrie’s motion for reformation was denied.  Finally, Howard and Adirondack’s motions for summary judgment were granted as well.

On appeal, the Appellate Division noted that a successful reformation argument required “clear and convincing evidence” of a mutual mistake in the formation of the policy.  This required Imrie to establish “in no uncertain terms, not only that mistake or fraud exists, but exactly what was really agreed upon by the parties.”  In this case, plaintiff adduced evidence that Ratto, Mrs. Ratto and Erie’s Agent, Howard, all agreed that Imrie should have been added to the policy as a mortgagee.  Indeed, no one disputed that the request to add Imrie was relayed to Mr. Howard.  No one, likewise, disputed that Howard understood the request, and attempted to effectuate the amendment to the Erie property policy.  Howard’s only mistake was that he notified Erie of the change on a liability form, as opposed to a correct property form. 

Plaintiff also introduced evidence from the agency’s file that acknowledged Ratto’s request and Mr. Howard’s attempts to amend the policy.  All of which showed actions in and around the time of the sale, as Ratto had alleged. 

Even more  compelling, plaintiff presented deposition testimony from Erie’s employees which stated it was impossible to add a mortgagee to the liability policy, and that Erie should have recognized the error made by Howard.  Its failure to follow up with Howard was inconsistent with Erie’s procedures. 

Under these compelling facts, the Court reversed the trial court and granted Imrie’s motion for reformation.  In so holding, the Court noted that Adirondack (and, thus Howard) are agents of Erie.  As such, Howard’s notice was imputed to Erie.  As stated directly by the court, “asking Erie’s agent for a change was the same as asking Erie.” 

Erie also raised an estoppel type argument which, in effect, suggested that Imrie should have realized he had not been named as a mortgagee and, as such, was compelled to take action to protect his interest.  The court rejected this argument by noting that Imrie’s actions have no impact on whether the policy should have been reformed due to an error at the time of the coverage’s supposed inception. 

After having been added as mortgagee, the Court also noted that his rights were separate and independent from the policyholder/insureds.  As such, the alleged non-cooperation by Ratto was irrelevant as to whether Imrie’s coverage attached.  Having decided he was an insured, and having decided there was no basis to remove coverage for Imrie, the Court granted Imrie’s demand for a declaratory judgment and resulting damages. 

Plaintiff also sought recovery and litigation expenses from Adirondack/Howard.  However, the claim against the agent, for negligence, means they effectively “stand in the shoes” of Erie.  Because the Erie policy provided coverage to Imrie, it likewise followed that there was no longer an agent malpractice claim.  With regard to the claim for attorneys’ fees, the Court applied the American Rule which requires litigants to bear their own costs.   However, Imrie argued that an exception to the American Rule, based upon wrongful conduct of the target litigant authorizes the Court to fix damages for litigation expenses. The exception referenced by Imrie, however, only applies to third-parties. As noted above, the claims against Adirondack and Howard arise when they “stand in the shoes” of Erie.    As such the exception was not applicable, and Imrie was not entitled to recovery costs from Erie, Adirondack or Howard.

Finally, with respect to plaintiff’s judgment for counsel fees pursuant to the Imrie/Ratto purchase agreement, the Court noted that the trial court is permitted discretion in assessing what constitutes reasonable attorneys’ fees.  Factors to be weighed include “the time, effort and skill required; the difficulty of the questions presented; the responsibility involved; counsel’s experience, ability and reputation; the fee customarily charged in the locality; and the contingency or certainty of the compensation.”  

Here, recall the trial court awarded fees against Ratto but reduced them from the $145,000 demanded by Imrie to $25,000.  The trial court’s decision, however, provided an insufficient explanation for its decision.  Although the Appellate Division is loath to disturb the trial court’s decision based upon discretion, it may do so where there is abuse of said discretion.  Where, as here, there was no basis to evaluate the Court’s reasoning, the matter was remanded to the trial court for further proceedings.

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley

[email protected]

10/22/20 – Shalyn S. Harris v. Gregory A. Vogler, et al.
Appellate Division, Third Department
Defendant’s Failure to Adequately Address Plaintiff’s 90/180 Day Claim During Deposition was Fatal to Motion for Summary Judgment

On June 2, 2016, as plaintiff was attempting to exit a parking lot, her vehicle was rear-ended by a vehicle driven by defendant. Plaintiff subsequently commenced this personal injury action alleging that she sustained serious and permanent injuries, as defined by Insurance Law § 5102, to her shoulders, lower back and neck. Following completion of discovery, defendants moved for summary judgment dismissing the complaint, claiming that plaintiff's injuries failed to meet the serious injury threshold. Supreme Court granted the motion, and plaintiff appeals.

In support of their motion, defendants submitted the parties' deposition transcripts, plaintiff's medical reports and an independent medical examiner report from orthopedic surgeon Robert C. Hendler. Hendler's sworn report concludes that, although plaintiff may have sustained cervical and lumbosacral sprains due to the accident, she has no disability or permanent findings in her back or neck that are causally related to it, and that "she is able to work and participate in all activities of daily living without restrictions."

As to the 90/180-day category of serious injury, the Court noted that Hendler, who examined plaintiff more than two years after the accident, failed to address plaintiff's condition or limitations within the first 180 days following the accident, which is necessary to foreclose the 90/180-day category. Defendants contend that Hendler's omission in this respect is cured by their submission of plaintiff's deposition and medical records. However, the Court disagreed. During her deposition, plaintiff testified that on the date of the accident, she was employed in two different jobs — as a home health care aide and a medical transportation driver — and that, as a result of the accident, she was out of work for six weeks. Due to insufficient questioning, it is unclear from her deposition when she returned to work, although it is clear that when she returned, her hours were significantly reduced. Plaintiff further testified that, for the six-month period following the accident, she needed help caring for her household in terms of cooking, laundry and activities with her children as a result of her injuries.

Further, the Court held that plaintiff's medical records do not provide the requisite showing for defendants to carry their initial burden with respect to this category. Although defendants may properly rely on the unsworn medical records of plaintiff to support their motion, the records must be "sufficiently complete and, combined with other proof, demonstrate that the plaintiff did not suffer a serious injury". Even though defendants point to plaintiff's chiropractic summaries, which regularly include "patient is currently working" under the heading "Work/Disability Status," other records include a post-accident MRI indicating that plaintiff has herniated discs at C5-6 and L4-5, and there are records of her treating physician indicating significant restrictions on plaintiff's range of motion. Simply put, the Court found that plaintiff's records are far too inconsistent to prove that defendants are entitled to judgment as a matter of law on the issue of serious injury under the 90/180-day category.

Thus, the Court found that defendants failed to meet their burden as to this category. Further, the Court found that even if defendants met their burden on this category, plaintiff's testimony "raises triable issues of fact whether [s]he had been curtailed from performing [her] usual activities to a great extent during the statutory period".

As to the two other statutory categories, significant limitation of use and permanent consequential limitation of use, pursuant to plaintiff's medical records and a physical examination on June 20, 2018, Dr. Hendler opined that, due to the accident, plaintiff "may have sustained cervical and lumbosacral sprains, with possible temporary exacerbation of a pre-existing lower back condition." As for a preexisting back condition, Hendler observed that plaintiff's medical file showed that she sustained "an acute lower back injury" at work in December 2014. Hendler found "evidence of degenerative joint disease and degenerative disc disease in both the neck and back areas." Upon examination, Hendler determined that plaintiff had full range of motion in her cervical spine and lumbar spine. He concluded that plaintiff had no disability and could work without limitation. This proof satisfied defendants' initial burden of establishing that plaintiff did not sustain a serious injury to her back or neck in either the significant limitation of use or permanent consequential limitation of use categories.

In opposition, plaintiff submitted a January 2018 affirmed letter report of one of her treating physicians, Steven K. Jacobs. Jacobs opined that the herniated disc at the C5-6 level was caused by the accident. He differentiated the condition from a preexisting degenerative disease and explained that "[i]t is this soft disc herniation that led to [plaintiff] becoming symptomatic with persistent neck pain." On the other hand, he characterized the August 2016 MRI of the lumbar spine as "unremarkable." To avoid worsening of the C5-6 disc, Jacobs recommended a permanent limitation that plaintiff not lift "anything over 30 pounds or bend or stoop excessively." In addition, the medical evidence reveals substantial limitations of cervical range of motion remaining several months following the collision, and a "foraminal compression test was positive bilaterally." Plaintiff underwent a series of epidural injections from mid-September 2016 through mid-October 2016 without any relief of her neck pain, and she "continues to have weakness in the upper extremities." This evidence, viewed in a light most favorable to plaintiff as the nonmoving party, raised a triable issue of fact as to whether plaintiff's neck injury constitutes a serious injury under the significant limitation of use and permanent consequential limitation of use categories.

As such, the Court found that defendants' motion should also have been denied as to these two categories.

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz

[email protected]

10/21/20       National Fire & Marine Ins. Co. v. Scott Hampton
United States Court of Appeals, Ninth Circuit
Ninth Circuit Holds that a Doctor’s Criminal Plea in Malpractice Suit Could be Used to Support a Position of No Coverage Under Clear and Unambiguous Willful Violation of Law Exclusion

National Fire & Marine had issued a professional malpractice policy to Dr. Steven Holper in Nevada. He was sued in a wrongful death action, and subsequent coverage litigation ensued to determine the extent of coverage under the National Fire policy. Scott Hampton, as representative of the estate of Diana Hampton, intervened in the coverage action as a party in interest to that policy. Ultimately going as high as the Ninth Circuit Court of Appeals, at issue was principally the application of willful violations of the law exclusion.

The policy excluded coverage for “[a]ny loss arising from, or in connection with . . . any event, health care event, or managed care event when intertwined with, or inseparable from . . . any willful violation of any law, statute, or regulation.” (emphasis omitted). The Court found this language to be unambiguous and, when applied, it excluded coverage for any willful violations of the law. The wrongful death complaint here alleged (and Dr. Holper’s plea agreement in the criminal action supported) the fact that he willfully violated federal controlled substances law and that this violation resulted in the death of Diana Hampton.

As a result of the application of the policy exclusion, the carrier thus had neither the duty to defend nor duty to indemnify, because there was no reasonable possibility of coverage, or “no potential for coverage”, as the Court wrote. Under the policy, there was no duty to indemnify because the insured’s activity and resulting loss or damage did not fall within the policy’s coverage. Where there is no duty to indemnify, consequentially there cannot be a duty to defend.

 

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

10/21/20       Riconda v. Liberty Insurance Underwriters, Inc.
Appellate Division, Second Department
Lower Court’s Decision to Set Aside Verdict in Favor of Plaintiff for Breach of Contract and Breach of the Covenant of Good Faith and Fair Dealing Affirmed on Appeal

Plaintiff had won a jury verdict in the amount of $2,282,000 in a lawsuit in Supreme Court, Suffolk County alleging breach of contract and breach of the covenant of good faith and fair dealing.  The court below granted Defendant’s motion to set aside the verdict and for judgment as a matter of law dismissing the complaint.

Liberty had issued a directors and officers liability policy to QSGI, Inc. in July 2007.  In May 2008 QSGI created a special purpose vehicle called QSGI-CCSI, Inc. to complete the acquisition of CCSI.  Riconda was the president and owner of CCSI.  The stock purchase agreement was executed in May of 2008.  Liberty issued a renewal of the policy on July 8, 2008 to QSGI.

After the sale was close, CCSI ceased to exist.  After QSGI failed to pay Riconda the agreed upon compensation for the purchase, QSGI declared bankruptcy.  Riconda commenced an action against the officers of QSGI for fraud, self-dealing, and breach of fiduciary duty.  Liberty disclaimed coverage to the officers of QSGI based on an insured versus insured exclusion.  Liberty disclaimed because Riconda was an officer of the insured.

The underlying action was settled when a former officer of QSGI entered into a confession of judgment in favor of Riconda and assigned his right to proceed against Liberty for failure to indemnify him as an insured.  Riconda commenced an action against Liberty alleging that it breached the policy by failing to provide coverage and failing to pay the amount due under the confession of judgment.  Riconda also argued that Liberty breached its duty of good faith and fair dealing.

Documents introduced at trial demonstrated that Riconda had joined the executive management team of QSGI after the completed transfer.  Riconda had previously testified that the transaction occurred and had claimed multiple times that it was a breach of contract based on a completed deal.  However, at trial, he changed his testimony and argued to the jury that the transaction never occurred based on the failure of a condition precedent to the deal and that he was still an officer of CCSI.  The jury unanimously found that Riconda was not an insured under the policy, and that Liberty breached the covenant of good faith and fair dealing.  It awarded $2,282,000 in damages.

During argument on the motion for a directed verdict, Plaintiff’s counsel conceded that the exclusion applied if the deal closed. The court granted the motion to set aside the verdict based on judicial estoppel, as Plaintiff had previously taken the position that the deal was completed and changed strategy to argue the opposite during trial.  The decision to set aside the verdict was affirmed on appeal.

 

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

10/20/20       Singh v. Penn National Ins. Co.
New Jersey Superior Court, Appellate Division
Gas Station Attendant, Injured when Driver Drove Away with Nozzle Still Attached, Did Not Qualify for SUM Benefits under Driver’s Policy

Chestnut was getting gas for his car at a gas station in Bordentown, New Jersey. At the time, Singh was working as an attendant at the gas station. Chestnut drove away from the gas pump while the nozzle and hose were still attached to his vehicle. The nozzle struck Singh causing him to sustain injury.

Singh sued Chestnut and his insurer, NJM, who provided workers compensation coverage to his employer, APCO Petroleum.  Chestnut's vehicle was insured under a policy issued by GEICO, which had bodily injury liability limits of $15,000 per person and $30,000 per occurrence. To resolve the claims against Chestnut, GEICO tendered the $15,000 per person coverage provided under its policy to plaintiffs.

Believing Singh's damages exceeded $15,000, Singh filed an amended complaint asserting claims for underinsured motorist (UIM) coverage against AAA Insurance (AAA) and Penn. Singh did not own an automobile, and the AAA policy insured a vehicle owned by his son with whom he was residing. Because the AAA policy had limits equal to those under Chestnut's GEICO policy, Singh agreed to dismiss his claims against AAA.

The Penn policy was a commercial automobile insurance policy issued to APCO. It provided $1,000,000 in UIM coverage. Penn denied Singh's request for UIM coverage because he was not a named insured under the policy and, at the time of the accident, he was not occupying a vehicle covered under the policy.

Penn filed a motion for summary judgment and argued Singh was not entitled to UIM coverage under its policy. Plaintiffs opposed the motion and filed a cross-motion for summary judgment. The judge determined the Penn policy did not provide Singh with UIM coverage because he did not meet the requirements for such coverage under the policy.

On appeal, Singh argued that the trial court's orders must be reversed. He contended the trial court's decision is contrary to N.J.S.A. 17:28-1.1(f), which elevates Singh to the status of "named insured" under the Penn policy.

The declarations page of Penn’s policy identifies APCO and Atlantic Management Company (AMC) as the named insureds. The policy includes an endorsement for uninsured motorist (UM) and UIM coverage, which states in relevant part:

A. Coverage

1. We will pay all sums the "insured" is legally entitled to recover as compensatory damages from the owner or driver of an "uninsured motor vehicle" or "underinsured motor vehicle." The damages must result from "bodily injury" sustained by the "insured", or "property damage" caused by an "accident". The owner's or driver's liability for these damages must result from the ownership, maintenance or use of an "uninsured motor vehicle" or an "underinsured motor vehicle".

B. Who Is An Insured

If the Named Insured is designated in the Schedule or Declarations as:

1. An individual, then the following are "insureds":

a. The Named Insured and any "family members".

b. Anyone else "occupying" a covered "auto" or a temporary substitute for a covered "auto".

c. Anyone for damages he or she is entitled to recover

because of "bodily injury" sustained by another "insured".

2. A partnership, limited liability company, corporation

or any other form of organization, then the following

are "insureds":

a. Anyone "occupying" a covered "auto" or a temporary substitute for a covered "auto".

***

The policy defines "occupying" as "in, upon, getting in, on, out or off." For UIM coverage, "autos" are those "you own that because of the law in the state where they are licensed or principally garaged are required to have and cannot reject [UM] Coverage." The term "you" refers to the "named insured" listed in the declarations page.

The Appellate Division ruled that the motion judge correctly found that Singh was not an "insured" under the Penn policy. He is not identified on the declarations page as a "named insured." Moreover, at the time of the accident, Singh was working as a gas station attendant as APCO's employee. It is undisputed that Singh was not "occupying" an automobile covered under the policy at the time he was injured.

The Appellate Division further ruled that ruled that N.J.S.A. 17:28-1.1(f)  did not make Singh an insured, stating:

We are convinced that N.J.S.A. 17:28-1.1(f) was intended to address the amount of UM or UIM coverage available to a business entity's employees who are entitled to coverage under the entity's commercial liability policy. The statute does not apply where, as in this case, the employee was not entitled to such coverage under the policy.

Singh was not identified as a named insured under the policy. Therefore, he would be entitled to UM or UIM coverage only if he was injured while occupying an auto covered under the policy, or a temporary substitute for a covered vehicle. As stated above, it is undisputed that Singh was not occupying a covered auto when he was injured. Thus, Singh was not entitled to UM or UIM coverage under the Penn policy and N.J.S.A. 17:29-1(f) does not confer insured status upon him.

Accordingly, the Appellate Division affirmed the grant of summary judgment to the insurer.

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

No insurance coverage or interesting Connecticut cases to report on this edition. Check back next time!

 

OFF THE MARK
Brian F. Mark
[email protected]

No noteworthy construction defect decisions to report on this edition.

 

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


10/23/20  Kaiser vs. Allstate Indemnity Co.
Supreme Court of Nebraska
Rental Property Insurance – Summary Judgment for Insurer Affirmed

Jeremy Kaiser sued his rental property insurer Allstate Indemnity Company (Allstate) after denial of his property damage claim, whereby he asserted his tenants damaged his rental house by producing and/or using methamphetamine in the house.  The District Court granted summary judgment for Allstate, holding the loss was excluded from coverage under Allstate's insurance policy with Kaiser. Kaiser appealed to the Nebraska Supreme Court which concluded at the end of last week, after a de novo review of the evidence, that the loss was excluded from coverage and therefore not a covered peril, affirming the decision of the District Court.

After the tenants who had produced and/or used the methamphetamine vacated the premises, Kaiser discovered methamphetamine vapor and residue throughout the house.  It was recommended to Kaiser by an expert he hired that the house be decontaminated before it could be safely rented to new tenants. Kaiser submitted a claim to Allstate for the cleanup costs.  Allstate denied the cleanup costs claim within a day of its submission.

Kaiser’s Allstate policy excluded from coverage, as pertinent herein, any property loss “consisting of or caused by” the following perils: “[A]ny type of vapors, fumes, acids, toxic chemicals, toxic gasses, toxic liquids, toxic solids, waste materials, [i]rritants, contaminants, or pollutants…”, and “[C]ontamination, including, but not limited to, the presence of toxic, noxious, or hazardous gasses, chemicals, liquids, solids or other substances at the residence premises or in the air, land or water serving the residence premises…”  The Allstate Policy also provided that when property loss resulted from multiple causes, the loss was wholly excluded from coverage if “the predominant cause(s) of loss is (are) excluded.”

Kaiser’s suit against Allstate after the denial of the cleanup costs claim, which costs amounted to $38,361.80, asserted breach of contract and insurer bad faith.  Kaiser argued the cleanup costs claim should have been covered as “vandalism and malicious mischief”, but was wrongfully denied by Allstate, in bad faith.  The District Court agreed with Allstate that Kaiser’s cleanup costs claim was excluded from coverage because methamphetamine had damaged Kaiser’s property in two ways, by its vapor, which is a toxic chemical, and by its residue, which is a contaminant and pollutant.

Kaiser argued to the Nebraska Supreme Court that the policy provisions at issue were ambiguous.  Supreme Court disagreed, noting that while many of the terms used in the policy were undefined terms, “the relevant terms [such as ‘contamination’, for example] are contained in standard dictionaries”.  The Supreme Court also noted Kaiser’s own appellate brief had used the terms contamination and decontamination in briefing the Court as to the facts of this matter.

Kaiser also argued that exceptions to policy exclusions for “sudden and accidental direct physical loss” either caused by fire resulting from vandalism or by smoke should afford him coverage for the methamphetamine cleanup costs, notwithstanding the policy exclusions.  Supreme Court ruled Kaiser failed to meet his burden of proving facts showing either exception to the policy exclusions applied.  The Court noted that the evidence that Kaiser offered indicated the loss actually occurred as the result of his tenants’ smoking or producing methamphetamine in the house on an ongoing basis over a significant period of time, perhaps up to a year, and, “an event occurring over a period of time is not sudden.”

The Nebraska Supreme Court also ruled that the issue of whether the tenants had damaged the house by producing methamphetamine or by using it in the house was irrelevant to the analysis of the application of the policy exclusions. The dispositive fact in Supreme Court’s view was that methamphetamine vapor and methamphetamine residue are excluded causes of loss under the Allstate policy.  Thus, whether the methamphetamine vapor and methamphetamine residue were released inside the house through production or use was immaterial to Supreme Court’s ultimate conclusions of law.

 

10/27/20       Wright's Case
Supreme Judicial Court of Massachusetts
Workers’ Compensation Insurance – Health Insurance – Reviewing Board Denial Upheld - Medical Marijuana – Federal Preemption of State Law

The Massachusetts Supreme Judicial Court was asked to determine whether an insurance company may be ordered to reimburse an employee for medical marijuana expenses pursuant to a general provision of the Massachusetts workers' compensation scheme that requires reimbursement of necessary and reasonable medical expenses.

The claimant, Daniel Wright, sought compensation for $24,267.86 of medical marijuana expenses to treat chronic pain stemming from two work-related injuries he sustained in 2010 and 2012. His claim was denied by an administrative judge, and the denial was affirmed on appeal by the reviewing board of the Department of Industrial Accidents (department). The reviewing board concluded that marijuana's status as a federally illicit substance preempted any State level authority to order a workers' compensation insurer to pay for Wright's medical marijuana expenses.

Prefacing its ruling by noting that “the current legal landscape of medical marijuana law may, at best, be described as a hazy thicket”, Massachusetts’ highest court affirmed the denial of the claim, by issuing its slip opinion this week ruling that the workers' compensation insurer cannot be required to pay for medical marijuana expenses.  While on the one hand acknowledging that Massachusetts and a majority of states have now legalized medical marijuana and created regulatory schemes for its administration and usage, the Supreme Judicial Court of Massachusetts nonetheless determined that application of the State’s own medical marijuana act barred the claim.  The Supreme Court of Massachusetts wrote, concerning the application of the Commonwealth’s medical marijuana act: “insurers are not required to reimburse medical marijuana expenses for a substance that remains illegal under Federal law. We conclude that [the Act’s] specific language, and the Federal concerns it seeks to address and avoid, is controlling and not overridden by the general language in the workers' compensation laws requiring workers' compensation insurers to reimburse for reasonable medical expenses. A contrary reading of this specific language, which states that health insurers and government agencies and authorities are not required to reimburse medical marijuana expenses, would have been completely misleading to those who voted on it. It is one thing for a State statute to authorize those who want to use medical marijuana, or provide a patient with a written certification for medical marijuana, to do so and assume the potential risk of Federal prosecution; it is quite another for it to require unwilling third parties to pay for such use and risk such prosecution. The drafters of the [state] medical marijuana law recognized and respected this distinction.” 

 

BARCI’S BASICS (ON NO FAULT)
Marina A. Barci
[email protected]

10/20/20       Global Liberty Ins. Co. v Laurenceau
Appellate Division, First Department
Videotaped Confession of Limo Passenger Proves Accident Was Staged, Meaning No No-Fault Benefits Were Owed

Global provided an insurance policy, including a no-fault endorsement, to VIP Limousine & Tuxedo, Inc. In April 2014, one of VIP’s limousines was rear-ended. The driver and passengers of the limousine filed claims for no-fault benefits, and assigned their rights to various medical providers, under the policy issued by Global. Global moved for summary judgment, asserting that the accident was staged, and therefore none of the individuals or their medica providers were entitled to benefits under the policy. The Court initially denied the motion, finding that Global failed to show that the accident was fraudulently or intentionally procured. Global moved to renew the motion, submitting additional evidence that the accident was staged with a videotaped confession of one of the passengers. The Court then denied renewal of the motion on the basis that Global failed to offer any reasonable explanation as to why the videotape could not have been produced with the original motion and that it was not properly authenticated. The Appellate Division reversed, finding that the renewal should have been granted in the interests of justice and substantive fairness, particularly given that Global was unaware of the nature and material kept by outside agencies that proved the accident was staged. Other than arguing that the videotape was inadmissible, which was dismissed because it was a confession by one of the parties, the defendants did not submit any evidence controverting Global’s proof that the accident was staged.

 

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

Legislative List

11/09/20       Final Adoption of Audited Financial Statements Regulations
Department of Financial Services
New Rule Making Requires Insurers Meeting a Certain Premium Threshold to Establish and Maintain an Internal Audit Function

In February, we wrote about a proposed amendment to 11 NYCRR Part 89 (Insurance Regulation No. 118) that is scheduled for final adoption on November 9, 2020.

By way of background (and for my own personal amusement, since this bill was first proposed way back when), I glanced at the National Association of Insurance Commissioners (“NAIC”) White Paper that served as the predicate for NAIC’s 2014 amendments to Model Audit Rule 205, which has been implemented here, in large part.

In 2008, the NAIC began pursuing a critical self-evaluation of insurance solvency regulation in the United States. Coined the Solvency Modernization Initiative (“SMI”), state insurance regulators sought to review various integral regulatory components including capital requirements, governance and risk management, group supervision, statutory accounting and financial reporting, and reinsurance.  In conducting this self-evaluation, U.S. regulators found that combining both financial and market regulation was the best means of achieving NAIC’s regulatory mission to “[p]rotect the interests of the policyholder and those who rely on the insurance coverage provided to the policyholder first and foremost, while also facilitating the financial stability and reliability of insurance institutions for an effective and efficient marketplace for insurance products.”

In 2010, NAIC unveiled the results of its SMI exploration into the existing U.S. financial regulatory framework of insurance in a document titled “The United States Insurance Financial Solvency Framework”.  Those results indicated that the existing financial regulatory process consisted of three-stages.  The first seeks to mitigate or eliminate insurance business risks by restricting insurer activities, such as the implementation of licensing procedures, or the prior approval of extraordinary dividend payments, “change of control, transactions with affiliates, investments, and some reinsurance transactions.”  The second, and most abundant financial regulatory stage involves financial oversight and includes consistent and appropriate reporting including audits, compliance, and actuarial opinions, among others.  The final stage of the framework, the most difficult and certainly one sought to be avoided by the others, is triggered once an insurer becomes insolvent or financially impaired either by falling below the required regulatory capital level (“RBC”) or some other significant financial indicator.

The SMI identified concerns regarding the corporate governance and risk management component of the insurance regulatory framework—which focuses on structures, policies and processes through which an insurer is managed and controlled.  These concerns included issues with board oversight, succession planning, lack of formal risk management, and the lack of independent internal audit functions. 

Those regulations modelled after NAIC Model Rule 205, Insurance Regulation No. 118, serve 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.

Moving forward, the text of 11 NYCRR 89.1(c) and (t) has been modified, and a new subdivision (x) has been added.

11 NYCRR 89.1(c) defines “Audit committee” to include 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 following this amendment replaces the use of “a company” with “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, the new 11 NYCRR 89.1(x) adds a newly defined term, “internal audit function”, providing 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.”

Additional amendments to 11 NYCRR Part 89 will 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 was 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 new internal audit function is codified under 11 NYCRR 89.16, and includes:

“(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 new internal audit function 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.

 

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

Out on paternity leave.

 

CARA’S CANADIAN AND CROSS-BORDER CONNECTIONS (WITH HEATHER SANDERSON)
Cara A. Cox
[email protected]

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]

10/14/20       Carter Adams v. Arch Ins. Canada Ltd.
Ontario, Superior Court of Justice
2020 Spring Break at Home: School Trip Refunds

As a senior in high school, many of my friends were excited about their spring break trips with their respective language classes: students taking Latin went to Italy and the students taking French or German went on a shared trip to France and Germany. However, there had not been a trip for the students taking Spanish in many years. I thought this was unfair. So, a friend and I convinced our Spanish teacher to organize and trek two dozen students through Costa Rica for spring break. Although my parents were very supportive and assisted with a lot of the cost of the trip, they asked that I help with some of the cost because they were going to send both my brother and I on said trip.

Accordingly, whenever I was not studying for school or going to crew practice, I was working as an assistant for a physical therapy office or at a pizzeria. By the time trip came around, I had enough saved for my share of the trip and enough spending money for gifts for my family. This high school Spanish class trip sparked my desire to continue travelling to new places through college and law school, and (hopefully) will continue in the future.

Sadly, many students will not be able to have the same experience. School trips from March 2020 and onward have been cancelled due to the coronavirus. However, like most 2020 cancellations, it has not been that simple. Many Canadian students and families who have had their trips cancelled have yet to see any or a full refund despite buying trip cancellation insurance for trips booked through Explorica Canada Inc. Per their website, Explorica touts “authentic immersion learning” through more than 200 educational tours from Alaska to the South Pacific.

Despite the expansive information of available tours, Explorica has yet to respond to many Canadian families’ inquiries for refunds for trips that were cancelled as early as March 2020.  Understandably, parents and students who put anywhere from a couple to several thousand dollars towards a trip have become frustrated after being placed in the middle between the trip cancellation carriers, Old Republic Insurance Company of Canada or Arch Insurance, and Explorica. Specifically, Explorica asserts that they have sent all the necessary claim information to the carriers while the carriers insist they have yet to receive the necessary information from Explorica to process a claim. Many students and families joined a Facebook group in an attempt to obtain refunds.

Eventually, like business interruption claims, trip cancellation claims have turned litigious. However, the Facebook group has splintered into multiple national class actions against the trip cancellation. Before litigation can proceed, a judge will need to decide which class action should be certified. Additionally, the class actions not only seek refunds, but also seeking punitive damages. One action is seeking $5 million in “aggravated punitive damages” from the carriers . Such damages are barred in New York State. At this time, the carriers have not publicly argued that coverage is an issue so hopefully there will be a quick resolution for the all involved.

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