Coverage Pointers - Volume XXII, No. 11

Volume XXII, No. 11 (No. 576)
Friday, November 13, 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. 

Happy Friday the 13^th.  Avoiding ladders, black cats, and broken mirrors, and instead looking forward to a nice weekend.  Hope you are all well. 

 

New York Coverage Protocol Training:

Last week we offered New York Coverage training on October 16 by Zoom and the 50 spots that were opened were quickly filled.  If others are interested in attending in the future, let me know.

 

Risk Transfer Training:

So much of my casualty coverage work, these days, focuses on risk transfer – additional insured questions, contractual hold-harmless agreements and how the interrelationship between them impacts on the ultimate resolution of complex cases.  We are conducting, via Microsoft Teams, a regional training program on risk transfer next week for a good client.  If your shop can benefit from that training, let me know and we can arrange a date and time to help train your staff.

We have now scheduled or are in the process of finalizing the scheduling of five private sessions of this program, each one specially modified and crafted to meet the particular needs of the companies who have asked for the training.  If interested, let me know.

 

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.

   

​Peiper on Property and Potpourri:

On the run but tune back in next time for the latest in property coverage. A quick Second Department case about landlord/tenant negligence and General Obligations Law (courtesy of Dan) is in the annexed edition.

Steve
Steven E. Peiper
[email protected]

 

Back in the Day, a 16-Year-Old Could be Convicted of Murder and Sentenced to Life.  In this Case,  the Murderer was Released in 13 Years and Lived to  become a Centurion:

The Baltimore Sun
Baltimore, Maryland
13 Nov 1920

 

MARYLAND BOY FOUND  GUILTY OF MURDER

Young Perrygo Convicted of  Killing Aged Woman Who Befriended Him.

CARRIES THE DEATH PENALTY

Wanted Money to Marry—16-Year-Old  Sweetheart Stands By Him—Crime Committed In  District of Columbia.

[From The Sun Bureau.]

            Washington, Nov. 12.—Edward Randolph Perrygo, son of an Oxon Hill, Md., truck farmer, and one of the youngest defendants ever to face a murder charge in the courts of the District of  Columbia, was convicted of first degree murder in the District Supreme Court here this afternoon. The conviction carries the death penalty.

            Perrygo, who is only 18 years old, was charged with killing an aged woman, Mrs. Emily Faithful, in order that he might rob her and obtain money with which to get married to a young girl of his neighborhood.  This girl, Mable Hill, stuck to Perrygo throughout the trial and professed still to love him.

Victim Had Befriended Boy.

            The crime was committed within the District of Columbia, though the Perrygo family lived just over the Maryland line.  It was testified that Mrs. Faithful had befriended the boy from time to time and that shortly before he struck her with an iron bar on the day of the murder, young Perrygo and his 16-year-old sweetheart had washed and dried the dishes for the elderly woman.

            The police produced a confession of the crime, which was repudiated by the defendant at the trial and a plead of insanity substituted.  More than four score witnesses, including alienists, were heard.  A sum of money alleged to have been taken from the woman was later found in the home of Perrygo’s sweetheart, but it was testified she knew nothing of the crim until the boy’s arrest.  Originally Perrygo was said to have confessed that he wanted money so that he could leave the country, get married to Miss Hill and come to the city to live.

            Mr. and Mrs. Elmer Perrygo, parents of Edward Randolph and seven other children attended the trial and testified in behalf of the boy.

 

Born Within Asylum Grounds

            An unusual phase of the insanity defense was the argument that Edward Perrygo had been born within the grounds of the Government Hospital for the Insane, near Anacostia.  At the time his father was an employee of the institution and had a truck farm within the hospital grounds.  Later he moved to Oxon Hill.  Whether birth near an insane asylum and the spending of the first 10 years of his life within its ground had affected the boy’s mind was one of the questions before the jury.  However, the jury brushed aside the insanity plea and also the suggestion of second-degree murder and convicted for first degree after short deliberation. 

EDITOR’S NOTE:  After four years of appeals, the sentence was reduced to 20 years.  He began serving his sentence in 1925 and was released, on good behavior, in 1938.  He died in May 2002, just two months short of his 100^th birthday.

 

Wilewicz’ Wide-World of Coverage:

So, Halloween came and went, and just like that my daughter started decorating for Christmas. She’s not a fan of Thanksgiving, though we usually do wait until at least the day after to start putting up lights and a tree. This year, however, we are all in need of some festive spirit(s) and I did not object when she decked out her homeschool “office” with little baubles and lights. Indeed, this upcoming holiday season is likely to be a somber one, but we should all try to find joy here and there if we can.

This week in the Wide World of Coverage, the Courts again have been quiet. Not much of interest to write about lately, I suppose. Litigation and coverage actions in particular do not seem to have slowed, but the decisions are coming down in fits and starts. When something new and of import does come in, you’ll be sure to see it here.

Until then,

Agnes
Agnes A. Wilewicz
[email protected]

 

What Really Bothered Me About the Story, Besides the Suicide, was the Use of the Term Aged, for a 64-year Old:

Times Union
Brooklyn, New York
13 Nov 1920

Aged Man Is Found Dead With Gas Tube in Mouth

            Cord Meyer, 64, of 194 Forbell Avenue, was found last night with a gas tube in his mouth and the jet turned on, in a pool room at 1164 Liberty avenue by Joseph Schanzer, owner of the place.  The police of the Liberty Avenue station say Meyer committed suicide because of ill health. 

 

Barnas on Bad Faith:

Hello again:

It’s the middle of November and the Masters is this weekend?  Only in 2020.  The Masters is one of my favorite sporting events of the year, and I can’t wait to see what Augusta National is going to look like in the fall.  A Phil Mickelson win is probably too much to ask for at this point, but stranger things have happened!

The final round of the Masters on Sunday is going to lead directly into the Bills-Cardinals game on CBS.  The Bills sit at 7-2 for the first time since 1993 and appear to be cruising towards the playoffs for the third time in four years.  After the Bills win on Sunday over the NFC leading Seahawks, we learned that quarterback Josh Allen’s grandmother had passed away the day before the game.  In honor of Josh’s grandmother, Bills fans have been making donations to John R. Oishei Children’s Hospital in Buffalo, mostly in 17 dollar increments based on Allen’s number.  As of the time of this note, 16,498 donations have been made and $319,438.00 has been donated.  Bills fans are the best.

In my column this week I have a case from Colorado discussing when an insurer’s duty to negotiate, settle, or pay may be suspended.  There, the duty was suspended by the initiation of litigation by the insured where there was a genuine disagreement as to the amount of the claim.

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

Brian
Brian D. Barnas
[email protected]

 

A Blind Date to Marry?”

The Morning Post
Camden, New Jersey
13 Nov 1920

WIDOWER has a fine home, no family.  Object, matrimony.  Between 35 or 40 years.  Must be neat and tidy.  Take car at Front and Chestnut, No. 13.  Call 1929 S. Sixty-fifth St., W. Philadelphia.  Call after 5 p.m.  No mail will be answered.

 

Off the Mark:

Dear Readers,

Halloween wasn’t as much of a dud as I had anticipated.  We were able to convince the kids to go out trick-or-treating.  While they only went out for an hour or so (with their masks on), they did have a good time.  With Thanksgiving right around the corner and the pandemic numbers going up, we have had to change our usual routine of traveling to New Jersey.  Although we will not be traveling this year, cooking for ourselves should leave plenty of leftovers.  A lack of leftovers for late night snacks has been the one downside of visiting family over the holidays. 

This edition of “Off the Mark” brings you a recent construction defect decision from the United States District Court for the District of Hawaii.  In Nautilus Ins. Co. v. RMB Enters., the U.S. District Court examined a carrier’s duty to defend and indemnify its insured in an underlying action alleging property damage resulting from the construction of a ranch, which included residential structures integrated with a pond.  There, the Court determined that there was no “occurrence” and thus, the carrier had no duty to defend or indemnify its insured.

Stay safe everyone …

Brian
Brian F. Mark
[email protected]

 

Charlie Chaplin’s Divorce, 100 Years Ago:

New York Herald
New York, New York
13 Nov 1920

Chaplins Divorced;  Wife Gets $200,000 And Drops Name

Mrs. Mildred Harris Chaplin Agrees Not to Use Husband’s Name Professionally.

            Los Angeles, Cal., Nov. 12.—Mrs. Mildred Harris Chaplin was granted a divorce from Charley Chaplin in the Superior Court here late to-day.

            Mr. Chaplin, whom Mrs. Chaplin charged with cruelty, was not in court but was represented by attorneys.

            It was stated that a property settlement involving about $200,000 had been made out of court and an agreement reached by which Mrs. Chaplin would not use the name of Chaplin professionally. Thus ends the romance of the most famous comedian of the pictures and his pretty wife, who also is a well-known screen actress.

 

Boron’s Benchmarks:

As self-appointed Vice President of the Knucklehead Section of the Who Really Cares Department, I did a spot of online research today as to when sports fans began doing the “wave”. Turns out, it is not entirely clear when a sports fan assemblage first “waved”. There is some evidence it was started by a so-called professional cheerleader, “Krazy” George Henderson, during a televised Oakland Athletics baseball playoff game on October 15, 1981.  If any reader was there and can confirm the account, please email me.     

All of this silliness is my segue to an important legal issue (waiver) ruled upon by the Supreme Court of Mississippi in Travelers Property Casualty Company of America v 100 Renaissance, LLC, the case I have selected for this edition of Boron’s Benchmarks, the Coverage Pointers beat monitoring and reporting on insurance coverage decisions of the high courts of the 49 states not named New York. 

Until next time, be well.

Eric
Eric T. Boron
[email protected]

 

Now it’s Prescription Pot; During Prohibition, it was Prescription Whiskey:

New York Herald
New York, New York
13 Nov 1920

LIQUOR ONLY IN BAD CASES.

Prescriptions by Doctors Here Limited to 100 in Three Months

            New York physicians must continue to limit their liquor prescriptions to the most serious cases.  Chicago has lifted the ban and physicians there may write prescriptions without limit.

            Some time ago, Charles R. O’Connor, State Prohibition Director, limited the number of prescriptions which New York physicians might give out to 100 in a period of three months. This order still stands, it was said yesterday. 

 

Barci’s Basics (On No Fault):

Hello Subscribers!

I hope you are all still staying healthy and safe! I also hope you all had an enjoyable Halloween and transition into November. Although we did not get any trick-or-treaters so I did not get to test out the candy chute we made, we did watch many Disney Halloween movie classics and ate the candy the kids didn’t come for, so it was a good day. Lots of things have happened since then – we’ve had snow, we’ve had hot summer weather, the election has come and gone, and I officiated my first wedding! It was a really cool experience to marry long-time friends of mine, and although there was some turbulence before the wedding day, it was a beautiful day overall. Which brings me to the questions I posed last issue: “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?” Since I knew the couple really well, I was able to tell some personal stories about their relationship and it caused a lot of smiles and laughs during the ceremony, which was very heartwarming. Their sincere thanks after the ceremony caused a long-lasting smile on my face, and I am grateful they trusted me enough to handle their special day!

With the holiday season approaching, for next time consider: Do you have holiday traditions? If so, what are they? Are they traditions you created or have they been passed down for generations?

On the no-fault front, I’ve got two cases for you out of the First Department, which seems to be the only court determining no-fault cases these days. First is a case discussing EUO requirements under a policy, and the second discusses IME requirements under a policy, both common issues often seen with no-fault claims.  So a reminder of how to properly utilize them is nice. Enjoy!

That’s all folks,

Marina
Marina A. Barci
[email protected]

 

Trying to Clean Up Baseball after the Black Sox Scandal:

New-York Tribune
New York, New York
13 Nov 1920

 

Landis Heads Baseball After Peace is Made

 

Federal Jurist Accepts Chairmanship At Salary of $42,500 a Year for Term of Seven Years

Will Remain on Bench

To Be Court of Final Appeal; Warring Clubs Compromise on New Plan

Special Dispatch to The Tribune

            CHICAGO, Nov. 12.—Peace was restored in organized baseball to-day when Judge Kenesaw Mountain Landis accepted the offer extended unanimously by the sixteen American and National league clubs to become the head of the board controlling the game.

            Judge Landis’s acceptance was with the understanding that he was to keep his place on the bench, where his salary is $7,500, and that he should have “one-man control” of baseball, having no other persons on the board of control with him.  His salary as supreme arbiter in all baseball disputes will be $42,500, with an allowance of $10,000 a year for expenses.  He agreed to serve for a term of seven years.

            The offer to Judge Landis came after representatives of all the clubs, in two conferences to-day, had thrashed out their differences which threatened  to start another baseball war.  Ban Johnson and the other four American League club owners, who had held out against the civilian plan of control proposed by A. D. Lasker, of Chicago, compromised when the other eleven owners, abandoning their proposed twelve-club league, agreed to certain concessions in the manner of voting on questions of inter-league interest.  The result was complete agreement on all the points at issue.

           

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

There is something to that autumn air. My wife and I spent some time recently preparing the yard for winter and the air just hits different in these later months. Breathe deep.

Our Regulatory Wrap-Up has a pair of write-ups this issue. The first involves open nominations for DFS’ State Insurance Advisory Board. The second includes a permanent change to the continuing education and pre-licensing course exam procedure for insurance practitioners.

Until next time,

Ryan
Ryan P. Maxwell
[email protected]

 

Buffalo Mayor Returns After Eight Months of Illness:

The Buffalo Enquirer
Buffalo, New York
13 Nov 1920

DEMONSTRATIVE WELCOME FOR MAYOR MONDAY

Will be Greeted on Return to Office By Many Civic, Professional and Business Delegations – Former Councilman

Bagley in Charge of Programme

            Mayor Buck’s return to office next Monday following eight months of illness, will be marked by an unusual welcome for a city executive.  The council will meet to congratulate him on his recovery from a very serious operation and his restoration to health.  The civil service employees association will be represented by a large committee to extend congratulations.  And spokesmen for some fifty organizations of businessmen, clubs and other civil associations will assemble at the council chamber to give him greeting and their wishes for a successful continuation of city administration.

            It was made known today that the mayor plans to be at his office at 10 o’clock and that former Councilman Frederick G. Bagley was in charge of a welcoming programme.  After meeting his associates in the council the mayor will with them go to the representatives of civic organizations.

            Mr. Bagley will act as chief spokesman for the latter, of which many will have presidents or other officials at the welcoming gathering. 

 

CJ on CVA and USDC(NY):

Hello all,

On October 20 my wife and I were thrilled to welcome our son, Charlie, to the world! After a 2:00 AM wake-up call from my wife saying her doctor wanted to see her in the hospital “just to check on things,” we were both pleasantly surprised when Charlie arrived a mere five hours later. We are slowly but surely getting used to all the challenges that parenting has been presenting and, more importantly, enjoying every second of it.

The District Courts are once again light on coverage cases. While they have issued orders related to removal and jurisdiction in a few insurance cases, there have not been any proceedings that have addressed questions of coverage directly. This week I chose to discuss a decision from Washington County Supreme Court related to a CVA plaintiff’s request to proceed anonymously. As we have come to learn, anonymous proceedings have presented significant challenges in assessing coverage for these claims, and it seems (at least to this court watcher) that plaintiff’s attorneys are expecting the court to allow anonymous proceedings almost as a matter of course. Let us hope that Justice Muller’s decision making becomes more then norm than the exception in future cases. 

Happy Reading!

CJ
Charles J. Englert, III
[email protected]       

 

Accident Insurance for Sale:

The Buffalo Times
Buffalo, New York
13 Nov 1920

NOW IS TIME TO TAKE OUT ACCIDENT INSURANCE

            With weeks of slippery and icy streets and sidewalks soon to come and with automobiles skidding around every corner and in the street car tracks, Harry P. Brainard, general insurance agent, with offices in the Ellicott Square, in an interview with THE TIMES reporter, said this is the right time to take out personal accident insurance.  If a man falls and suffers a broken leg and is without insurance there is an unending line of expense. 

            If he is the owner of a policy covering any form of accident and an accident overtakes him he can rest assured that he will receive full and just compensation covering the expenses following the injury.  With more autos on the city streets than ever before this accident hazard has been on a rapid increase, figures showing an astoundingly large number of small and large accidents.

            On the other hand, the autoist who strikes and injures a person while driving his car should be thoroughly protected against liability.  Many disastrous lawsuits have followed accidents where the autoist did not carry any insurance, leaving him on the edge of bankruptcy.  Liability insurance for autoists is a complete protection to the car owner and signing a policy should not be put by lightly with the thought that he will not have an accident.  Under this policy the driver does not even have to appear in court, but merely has to sign an affidavit concerning the facts surrounding the accident. 

 

Dishing Out Serious Injury Threshold:

Dear Readers,

Thanksgiving is almost upon us but by looking at storefronts and commercials you would think the holidays are already here. Hope everyone is staying safe and making preparations for Thanksgiving and trying to enjoy some family time before the real holiday season is upon us.

In the Serious Injury Threshold world, we have a case from the Second Department showing how effective deposition testimony and expert opinions can prohibit plaintiff from being successful on a serious injury threshold matter.

Stay safe,

Michael
Michael J. Dischley
[email protected]  

 

Horrors!  Lawyer’s Car Stolen while He was in Court:

The Standard Union
Brooklyn, New York
13 Nov 1920

WHILE LAWYER IS IN COURT THIEF STEALS HIS AUTO

            While Elias Beutschman, a lawyer, with offices at 44 Court Street, was defending a client in Bridge Plaza court to-day before Magistrate Short, his automobile, a Hudson Supersix, was stolen from in front of the court house, where he had left it.  Detectives and policemen who were standing near the machine said they had seen a young man get into the car and drive off with it, but they had no reason to doubt the man was the owner.  Detectives of the Sixteenth Bureau are working on the case. 

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

It’s been quite the ride here in Connecticut these last two weeks. Howling winds, bone chilling cold, followed by bright sunshiny days with temperatures in the high 70s reminiscent of the last days of summer. We took full advantage with some tennis, hiking, taking the laptop outside to the deck, and firing up the barbeque. In a sign of Connecticut’s mixed COVID-19 messaging, I was summoned for jury duty – in person! But at the same time, the state announced new mask regulations, requiring wearing masks full time during indoor activities (even while appropriately distanced at the gym). I’ve seen counsel refuse to appear for in-person noticed depositions, while others are insisting on in-person appearances. The courts and counsel are lagging as the newest COVID-19 wave seems to be spreading across the region.  Inconsistency and confusion reign.

Here’s hoping for clarification and that we all remain smart and safe as we move closer to the holiday season.

Lee
Lee S. Siegel
[email protected]

 

Since it’s Friday the 13^th, We Needed a Superstition Article:       

Lincoln Journal Star
Lincoln, Nebraska
13 Nov 1920

DOG’S HOWL A DEATH OMEN.

            CHICAGO, Nov. 13.—When a dog howls to the moon in the dead of night someone has died.

            So runs the ancient superstition, just how ancient none know.

            Recently a stray hound slipped into the yard of the home of Mrs. R. Peavey.  Out of the shadows of the fence he made his way beneath a window—and howled.  Inside the house Mrs. E. J. Bulgin, of Portland, Ore., heard the howl and recounted to her sister the superstition of the howling canine and death.

            The following morning Mrs. Bulgin received from her husband, the Rev. E. J. Bulgin, a telegram stating that their son, Arthur, twenty-three formerly a member of the Metropolitan Opera Company, had been killed on a hunting trip.

 

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

Dear Subscribers,

Well, I’ve recently learned it takes about three people to move a 300-pound tub from room to room. Most of the wallpaper has been steamed, ripped, or scoured off. And what’s more motivating is seeing all the wood paneling off the walls! At this point, the house looks more like the set of a horror movie (underneath all the wallpaper and paneling are walls that need some serious TLC). Friends are still willing to work for pizza and beer, so we continue and look forward to more progress. 

On a different note, more friends are moving back to the East Coast from the West Coast because of the California fires or the coronavirus, or both. So, when I saw an article in the Los Angeles Times about California’s one-year moratorium prohibiting carriers from cancelling or non-renewing homeowners’ policies, I wanted to find a fire-related Canadian case to discuss. I believe the case discussed in this week’s column fits well within the context of the coronavirus and the physical damage or loss arguments which are being litigated across the country. Please enjoy and I hope everyone is taking advantage of this warm fall!

Cara A. Cox
[email protected]

 

Heather Sanderson
Sanderson Law (Alberta, Canada)
[email protected]

 

Headlines from this week’s issue, attached:

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

• Issues of Fact Exist as to whether there was Contract that Required Additional Insured Coverage

• Coverage is Provided to Landlord on Tenant’s Policy, for Accident on Sidewalk in Front of Bank Building

• While It was Determined in the Underlying Action that the Acts or Omissions of the Named Insured Did Not Cause, in Whole or In Part, the Liability of the Additional Insured, the Allegations in the Complaint were Broad Enough to Require a Defense

 

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

• Landlords Can, in Certain Cases, Pass their Negligence onto Tenants

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley
[email protected]

• Plaintiff’s Expert Set Forth Conclusory Opinions That Were Insufficient to Rebut Defendants’ Prima Facie Showing

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz
[email protected]

• All quiet on the District Court front.

 

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

• Plaintiff’s Statutory Bad Faith Claim was Dismissed on the Pleadings because Travelers’ Duty to Settle, Negotiate or Pay was Suspended

 

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

• Dishonest Purpose Alleged, Bad Faith Count Survives Dismissal

 

OFF THE MARK
Brian F. Mark
[email protected]

• U.S. District Court Finds No “Occurrence” Resulting from Faulty Construction of a Residential Compound as the Insured Performed Work for the Entire Property

 

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

• Auto Insurance – Uninsured Motorist Coverage – Waiver of Attorney-Client Privilege Re Correspondence Between Claim Rep and In-House Counsel

 

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

• Insurer’s Attempt to Dismiss Claims for No-Fault Benefits Before EUO Took Place was Premature

• Insured’s Failure to Attend a Duly Scheduled IME is a Breach of a Policy Condition, Effectively Cancelling Coverage

 

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

Regulatory Wrap-Up

• Department of Financial Services Requests Nominations For State Insurance Advisory Board Members By November 30, 2020

• Latest Supplement to DFS’ Relaxed Insurance Producer Licensing Requirements During the Pandemic Makes Permanent Changes to Exam Procedure

 

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

• Even in CVA Claims a Plaintiff Must Present the Merits of Their Claim and Their Specific Reasons for Seeking Anonymity

 

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

 

Heather Sanderson
Sanderson Law (Alberta, Canada)
[email protected]

• Where’s There’s Smoke, There’s (Not Always) Fire (Damage)

 

Stay healthy, be happy.

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]

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

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

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Diane L. Bucci

Brian D. Barnas

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
Dan D. Kohane
[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

Barnas on Bad Faith

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]

11/10/20       Continental Insurance Co. v. Greenwich Insurance Company Defendant-Appellant, Liberty Contracting Corp., Defendant.
Issues of Fact Exist as to whether there was Contract that Required Additional Insured Coverage

The insured has the burden of showing that the insurance contract covers the loss it claims. It is well-established that an additional insured enjoys "the same protection as the named insured".

According to the additional insured endorsements of the policy, to add an additional insured, Liberty and Americon had to enter into a contract or an agreement. One of the additional insured endorsements required that the agreement be in writing, while the other two endorsements did not have that requirement.

Greenwich asserts that, following discovery, there was no agreement on the date of the accident between Liberty and Americon. The witnesses did not specifically testify as to whether there was an oral agreement pre-accident and, in the notice to admit, Continental denied "having personal knowledge or information sufficient" to admit or deny that the terms and conditions in the written contract (post-accident) were orally agreed to by Americon and Liberty before the accident. However, considering the totality of the circumstances, including the testimony provided by Liberty's principal and Americon's principal, there are still issues of fact as to the existence of an agreement to procure additional insured coverage for Americon

 

11/10/20       Wesco Insurance Company v. Travelers Property Casualty Co.
Appellate Division, First Department
Coverage is Provided to Landlord on Tenant’s Policy, for Accident on Sidewalk in Front of Bank Building

The plaintiff in the underlying action alleged that he slipped and fell on ice on the sidewalk abutting the front of Capital One's bank branch building in a shopping center after exiting the building. Capital One leased the building from Waldman, the owner of the shopping center, and, in accordance with its lease, named Waldman as an additional insured in a commercial general liability policy issued to it by Travelers. The policy covered Waldman "only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to [Capital One] and shown in the Schedule." The lease defined the leased premises to include the building and "all appurtenances."

Waldman is covered as an additional insured by the Travelers policy in connection with the underlying action because the action arose from the "use" of the leased premises, i.e., plaintiff's use of the sidewalk as a means of egress from the bank branch building.  Coverage is determined by the terms of the policy, and is not affected by the finding in the underlying action that Waldman may have failed to satisfy any legal obligations to maintain the sidewalk

Wesco, which issued a commercial general liability policy to Waldman, is entitled to a declaration that it owes no obligation to defend or indemnify Capital One, which is not a named or an additional insured under the policy (see Moleon v Kreisler Borg Florman Gen. Constr. Co., 304 AD2d 337, 339 [1st Dept 2003]). It is true that the policy provided that in the event Wesco defended Waldman in an action to which an indemnitee of Waldman was also a party, it would defend that indemnitee "if all of the [listed] conditions [were] met." However, even if Capital One were Waldman's indemnitee, it would not be entitled to coverage, because the condition that there be no conflict between Waldman's and its indemnitee's interests in the underlying action was not met.

Wesco is also entitled to a declaration that Travelers may not seek indemnification from Waldman on behalf of Capital One in the underlying action. The anti-subrogation rule would bar an attempt to obtain payment from Waldman, an additional insured under the Travelers policy, to cover the same risk for which it is covered under the policy.

 

11/05/20       Live Nation Marketing, Inc. v. Greenwich Ins. Co.
Appellate Division, First Department
While It was Determined in the Underlying Action that the Acts or Omissions of the Named Insured Did Not Cause, in Whole or In Part, the Liability of the Additional Insured, the Allegations in the Complaint were Broad Enough to Require a Defense

Live Nation contends that it is entitled to a defense and indemnification by XL in connection with the underlying personal injury action as an additional insured under the policies issued by XL to nonparty Best Buy Co., Inc., the underlying plaintiff's employer. The policies, by amending "Designated Person or Organization" endorsement, included as additional insureds persons or organizations that Best Buy had agreed by written contact so to designate, but only with respect to liability for bodily injury caused, in whole or in part, by acts or omissions of Best Buy or those acting on Best Buy's behalf.

It was determined in the underlying action that neither Best Buy nor those acting on its behalf had caused, in whole or in part, the plaintiff's bodily injury. Thus, Live Nation was not entitled to indemnification

Nevertheless, Live Nation was entitled to a defense, because the allegations of the underlying complaint and the third-party complaint suggested a reasonable possibility of coverage under XL's broad duty to defend, i.e., a reasonable possibility that the underlying injury was caused, in whole or in part, by Best Buy's acts or omissions.

Editor’s Note:  A duty to defend is based on the allegations; the duty to indemnify is based on the ultimate facts.

 

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

Potpourri

11/12/20       Spence v. Merrick Central, LLC
Appellate Division, Second Department
Landlords Can, in Certain Cases, Pass their Negligence onto Tenants

The Difference between General Obligations Law Sections 5-322.1 and 5-321

In the construction milieu, a contractor may not pass its negligence on to another by virtue of an indemnity agreement. That is because General Obligations Law Section 5-322.1 prohibits it.

For landlord and tenants, there’s a slightly different set of rules, that are often confused.

Section 5-321 of the General Obligations Law prohibits a property owner from exonerating itself from liability to a plaintiff for premises defects.  However, it does allow a landlord to pass its liability – even its negligence – onto a tenant, if there is an arms-length transaction supported by insurance. 

That’s what this case was about.

The plaintiff allegedly tripped and fell on the sidewalk abutting the front of commercial property. The premises were owned by the defendant Merrick Central, LLC, and leased to Hair Definition). Thereafter, the plaintiff commenced the instant action to recover damages for personal injuries against Merrick Central, LLC. Following discovery, the Merrick defendants moved, for summary judgment on their cross claim against Hair Definition for contractual indemnity

The appellate court agreed that plaintiff's accident fell within the scope of the indemnification provision in the lease and that the indemnification provision is not unenforceable pursuant to General Obligations Law § 5-321.

Where, as here, the liability is to a third party, General Obligations when coupled with an insurance procurement requirement allocating the risk of liability between themselves.

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley
[email protected]

11/10/20       Joana Gjoleka v. Alexis Caban
Appellate Division, First Department
Plaintiff’s Expert Set Forth Conclusory Opinions That Were Insufficient to Rebut Defendants’ Prima Facie Showing

This appeal was based on an Order from Supreme Court, Bronx County (Shawndya L. Simpson, J.), entered on or about June 13, 2019, which denied defendants' motion for summary judgment dismissing the complaint of plaintiffs Inxhi Gjoleka and Halim Gjoleka for lack of a serious injury within the meaning of Insurance Law § 5102(d).

On appeal, defendants established prima facie that plaintiffs suffered neither a permanent consequential limitation of use nor a significant limitation of use of their cervical and lumbar spines through the affirmed report of their expert orthopedic surgeon, who documented full range of motion in plaintiffs' neck and back and no objective symptoms to support their claims of injury. Defendants also established prima facie a lack of causation through their expert radiologist's affirmed reports finding, based on her review of the MRIs of plaintiffs' neck and back, that the claimed injuries are chronic and degenerative in nature and not causally related to the accident.

In opposition, the appellate division found that plaintiffs failed to raise an issue of fact as to causation. Because the MRI reports of Inxhi's cervical spine and Halim's cervical and lumbar spine noted degenerative conditions, such as bony foraminal changes, disc desiccation and dehydration, and spurring, plaintiffs' treating neurologist was required to address the issue. Since he did not do so, his opinion that those injuries were causally related to the accident was conclusory and insufficient to rebut defendants' prima facie showing. While Inxhi's lumbar spine MRI did not reveal any degenerative conditions, her treating neurologist nevertheless failed to provide any reason for his conclusions either that those bulges and herniations were causally related to the accident or disagreeing with defendants' expert radiologist's opinion that those conditions, too, were degenerative in origin. Accordingly, the treating neurologist's conclusory opinion that Inxhi's cervical spine injuries were causally related to the accident also failed to raise an issue of fact.

Further, the Appellate Division found that plaintiffs' permanent loss of use and 90/180-day claims are dismissed as abandoned, since they did not oppose so much of defendants' motion as sought dismissal of those claims, and they do not defend them on appeal. In any event, since plaintiffs' evidence acknowledges that they have some, albeit limited, range of motion in their neck and back, they have not suffered a total loss of use of those body part. The 90/180-day claims also should have been dismissed, since plaintiffs testified that they each were out of work for no more than roughly one month after the accident.

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz
[email protected]

All quiet on the District Court front.

 

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

11/02/20       Pace v. Travelers Home and Marine Insurance Company
United States District Court, District of Colorado
Plaintiff’s Statutory Bad Faith Claim was Dismissed on the Pleadings because Travelers’ Duty to Settle, Negotiate or Pay was Suspended

On or about January 29, 2014, Mr. Pace was involved in an automobile accident caused by a non-party tortfeasor who collided with stopped traffic in or around Littleton, Colorado.  Mr. Pace claimed he suffered damages and personal injuries because of the accident.

At the time of the accident, Mr. Pace was insured under a Travelers’ insurance policy that provided uninsured/underinsured motorist (“UIM”) coverage. On or about April 10, 2018, Mr. Pace received $99,000 to settle his bodily injury claim against the non-party tortfeasor.  On March 16, 2020, Mr. Pace initiated this action asserting a breach of contract claim against Travelers for UIM benefits under the Policy.

Thereafter, on or about March 30, 2020, Plaintiff sent Travelers his incident related medical records and billing.  Travelers contacted the attorneys for the non-party tortfeasor's insurance provider, who informed Travelers that they believed Plaintiff was fully compensated by the $99,000 bodily injury settlement.  Then, on or about May 15, 2020, Mr. Pace filed an Amended Complaint to assert an additional claim for statutory bad faith given Travelers' alleged unreasonable delay and/or denial of Mr. Pace's UIM claim.  Travelers moved for judgment on the pleadings dismissing the statutory bad faith claim.

Travelers made two arguments in support of its motion for judgment on the pleadings.  First, it argued that Plaintiff’s statutory bad faith claim related solely to conduct after Plaintiff filed suit, which suspended its duty to settle, negotiate or pay.  Travelers also argued that its conduct was reasonable even if its duty to settle, negotiate, or pay was not suspended.

The court agreed with Travelers’ first argument.  While under Colorado law the insurer's duty of good faith and fair dealing continues unabated through the duration of the insurer-insured relationship, including litigation, the initiation of an adversarial proceeding combined with a genuine disagreement as to the amount of a claim may suspend an insurer's duty to negotiate, settle, or pay.  However, the court concluded that Travelers's duty to negotiate, settle, or pay was suspended for purposes of Mr. Pace's statutory bad faith claim. 

Mr. Pace initiated this civil action on March 16, 2020, nearly two weeks before sending Travelers his relevant medical bills and records, and nearly two months before amending his complaint to add a statutory bad faith claim.  There also was a genuine dispute as to the amount of Mr. Pace's UIM claim.  Even if Travelers was required to negotiate after it received notice of Mr. Pace's breach of contract claim, only nine days elapsed between when Plaintiff served Travelers with the original Complaint and it was amended as a matter of right on May 15, 2020.

The court also concluded that this was not a case in which Mr. Pace's statutory bad faith claim concerns an entire course of conduct by Travelers, including its pre-litigation conduct, such that Mr. Pace may be able to proceed with a statutory bad faith claim despite the suspension of Travelers's duty of negotiate, settle, or pay.  Indeed, the timeline of events belies any such claim, because Mr. Pace submitted his medical records after he initiated this civil action, at which point Travelers allegedly denied Mr. Pace's UIM claim.

 

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

10/17/20       Jordan v. CSA Fire & Cas. Ins. Co.
Superior Court, Hartford
Dishonest Purpose Alleged, Bad Faith Count Survives Dismissal

Where an insured alleges that a carrier denied coverage with a dishonest purpose, her bad faith claim will survive a motion to strike. The plaintiff's complaint arises from the CSA’s alleged failure to pay for water damage under the terms of her homeowners policy. Jordan claims that, following an October 2018 water leak, CSA failed to pay for all covered loss. She sued for breach of contract, negligence, common law bad faith and statutory bad faith. CSA moved to strike (dismiss) all but the breach of contract counts.

In Connecticut, a claim of bad faith means more than mere negligence; it involves a dishonest purpose. As the court noted, “Bad faith has been defined in our jurisprudence in various ways. Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive.” Here, in addition to allegations sounding in a mere disagreement over the interpretation of coverage, Jordan also alleged that the carrier falsely denied coverage, changing its reasons, in order to mislead and deceive her and that CSA intended to evade the spirit of coverage. The court summarized her allegations as “a dishonest shell game of coverage denial.” In whole, the allegations, the court concluded, were sufficient to survive the CSA’s motion to strike.

Jordan’s statutory bad faith allegations were also sufficiently plead to avoid dismissal. As we have discussed in this space, a violation of CUIPA can serve as the basis to make an actionable CUTPA claim. CUIPA defines unfair insurance claim settlement practices and further provides that the enumerated acts must be committed or performed with such frequency as to indicate a general business practice. Here, in addition to Jordan’s allegations that CSA committed multiple acts of misconduct to her, she also alleged other substantially similar claims against CSA as reported on a better business website.  The court found that, when taken together, Jordan sufficiently plead a general business practice. The court indicated that it will “permit further discovery of the specific nature and number of these other, substantially similar claims and to then test this evidence against the legal requirements of CUIPA.”

CSA did not go home empty handed, persuading the court to strike the negligence count. An alleged breach of duty arising under an insurance contract and not a distinguishable duty imposed by law, is insufficient to state a cause of action. To be actionable, tortious conduct alleged must arise from a breach of a duty, other than one arising from a contractual duty alone. Accordingly, the court dismissed the negligence count.

 

OFF THE MARK
Brian F. Mark
[email protected]

10/28/20       Nautilus Ins. Co. v. RMB Enters.
United States District Court, District of Hawaii
U.S. District Court Finds No “Occurrence” Resulting from Faulty Construction of a Residential Compound as the Insured Performed Work for the Entire Property

This declaratory-judgment action arises out of an underlying construction defect action related to the development and construction of a ranch, which included residential structures and a pond.  The ownership entities entered into a contract with RMB Enterprises, Inc. (“RMB”) for the development and construction of the property.  The pond walls enclose residential spaces and "are steel-reinforced, cast-in-place (C.I.P) concrete walls that also serve as structural foundations for walls enclosing the Main Foyer, Foyer Stairway, Kitchen, Dining Room, Living Room, Theatre, Master Bedroom Foyer, Master Bedroom Closet, and Bedroom 4.  RMB built the subject property from 2011 to 2013.

In February 2017, the pond leaked into its pump room and RMB performed remedial work by injecting epoxy into cracks.  On June 3, 2017, water from the pond leaked into the interior of the residence near a staircase.  Water also leaked into the master bedroom area causing musty odor, mold growth, and increased humidity.  Additional leaks appeared in December 2017 in the pump room and at the base of an exterior wall between the main residence and the pump room.  The ownership entities incurred substantial expenses investigating the sources of the leaks and discovered water proofing issues and the use of untreated lumber in violation of the building code.

The ownership entities filed an underlying action alleging breach of contract, breach of warranty, misrepresentation, and negligence claims.  The plaintiff Nautilus Insurance Company ("Nautilus"), issued consecutive CGL policies to RMB, effective from March 25, 2010 to March 25, 2018.  Following the commencement of the underlying action, Nautilus issued a reservation of rights letter to RMB, reserving the right to disclaim coverage and to file a declaratory action regarding its rights and obligations.  Thereafter, Nautilus defended RMB in the underlying action pursuant to its reservation of rights.

Nautilus commenced this declaratory-judgment action seeking a determination that it had no duty to defend or indemnify RMB in the underlying action.  Following a default judgment against RMB, the underlying ownership entities intervened (“Intervenors”). 

Relevant here, the Nautilus policies include a Revised Occurrence Definition – Hawaii stating the following: "Occurrence" means an accident, including continuous or repeated exposure to the same general harmful conditions.  Faulty workmanship does not constitute an "occurrence".  But when faulty workmanship performed by you or on your behalf causes "bodily injury" or causes "property damage" to property other than "your work", then such "bodily injury" or "property damage" will be considered caused by an "occurrence".

Plaintiff argued that the claims in the underlying action are not covered by the Nautilus policies and the Intervenors countered that genuine issues of material fact existed regarding RMB's contractual scope of work.

Nautilus argued that the policies only cover damages for an insured's liability for "bodily injury" or "property damage" that took place during the policy period and caused by an "occurrence."  Nautilus asserted that there was no occurrence entitling RMB to coverage because there was no accident or property damage to property other than RMB's work.

The Court noted well established law in Hawaii that contract and contract-based tort claims are not occurrences in the context of CGL policies.  The Hawaii Supreme Court explained that in the context of a CGL, the following constitutes an "accident": "[I]f the insured did something or . . . failed to do something, and the insured's expected result of the act of omission was the injury, then the injury was not caused by an accident and therefore not . . . within the coverage of the policy[.]"  In other words, "for the insurer to owe a duty to defend or indemnify, the injury cannot be the expected or reasonably foreseeable result of the insured's own intentional acts or omissions."  Lastly, the Court noted that the Hawaii Intermediate Court of Appeals held that because "construction defect claims do not constitute an 'occurrence' under a CGL policy . . . breach of contract claims based on allegations of shoddy performance are not covered under CGL policies [and] tort-based claims, derivative of these breach of contract claims, are also not covered under CGL policies."

In the present case, Intervenors asserted breach of contract, breach of warranty,  misrepresentation, and negligence claims in the underlying action.  Based on the governing law, Intervenors' breach of contract and breach of warranty claims are not covered under the policies.  The same is true of their misrepresentation and negligence claims.  To ascertain whether these claims were covered, the Court looked at whether they were premised on a contractual relationship or an independent tort claim under Hawaii law.

The Court examined the underlying claims of misrepresentation and negligence, finding such claims to be clearly predicated on the contractual relationship between the Intervenors and RMB, not “accidents” and thus, not covered under the Nautilus policies.  Under the Policies, faulty workmanship does not constitute an "occurrence."  However, as set forth above, there is an exception – “when faulty workmanship performed by you or on your behalf . . . causes 'property damage' to property other than 'your work', then such . . . 'property damage' will be considered caused by an 'occurrence'."  "Your work" is defined as "(1) Work or operations performed by you or on your behalf; and (2) Materials, parts or equipment furnished in connection with such work or operations,"

and includes "(1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of 'your work', and (2) The providing of or failure to provide warnings or instructions."

After examining the evidence before it, the Court determined that it was undisputed that the damages at issue in the underlying action were limited to the pond and residential structures and that RMB performed the work for the entire property, and furnished materials, parts, or equipment in connection with such work.  Intervenors unconvincingly suggested that damage to the residence is an "occurrence," as it was property other than the pond.  The Court found this effort to manufacture a distinction between the pond and residence unavailing and misrepresenting the nature of the property, a residential compound integrating and connected to the pond.  Even if the pond and residence were independent of one another, the dispositive inquiry is whether the defendant caused property damage to property other than its work.  Per the allegations in the underlying action, RMB caused property damage to its own work.  Thus, the assertion of faulty workmanship is not an "occurrence" within the meaning of the policies.  As a result, RMB was not entitled to coverage under the policies and Nautilus had no duty to indemnify or defend RMB.

Accordingly, the Court granted Nautilus’ motion for summary judgment.  Because the Court determined that RMB was not entitled to coverage, it did not address the applicability of the exclusions.

 

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

10/29/20       Travelers Prop. Cas. Co. of America vs. 100 Renaissance, LLC
Supreme Court of Mississippi
Auto Insurance – Uninsured Motorist Coverage – Waiver of Attorney-Client Privilege Re Correspondence Between Claim Rep and In-House Counsel

The background facts and procedural history are as follows.  The insured LLC brought a bad-faith, failure-to-pay action against its insurer Travelers, alleging: an unidentified driver struck a flagpole owned by the insured causing $2,134 in damage; that the insured LLC then filed a claim with Travelers under its automobile liability-insurance policy which included uninsured-motorist (UM) coverage and that Travelers denied the claim based upon Travelers’ determination there was no coverage under the UM policy because the flagpole was not a covered "auto."  The LLC took the claim handler's deposition, as signer of the disclaimer, and asked her to explain the reasons Travelers denied the LLC’s claim. Unfortunately, she couldn’t. The LLC moved to compel production by Travelers of e-mails between Travelers' claims handler and Travelers’ in-house counsel, as well as the in-house counsel's deposition. After conducting in camera review of the emails between the claim handler and in-house counsel, the trial court granted the LLC’s motion, finding that “Travelers ha[d] waived the attorney-client privilege as it relates to attorney Jim Harris”, who was the in-house counsel for Travelers. Travelers then petitioned for interlocutory appeal, which was granted.

The Mississippi Supreme Court’s opinion issued October 29, 2020 holds Travelers impliedly waived its attorney-client privilege with its in-house counsel, and thus was required to produce communications between counsel and claims handler and produce counsel for deposition.  If you click on the link to the case we have provided, you will see the Mississippi Supreme Court’s recap in its opinion of a portion of the deposition testimony given by the Travelers claims handler about the wording of the denial letter and subsequent correspondence responding to the LLC’s contentions that the claim should have been covered.  The claim handler’s testimony indisputably evidences she did not have knowledge of state statutes or other legal issues cited in the disclaimer or in subsequent correspondence to the LLC attempting to justify the disclaimer.

Supreme Court’s opinion states that Mississippi law requires that insurers have an arguable or legitimate basis to deny an insurance claim. Here, through discovery, the LLC sought to understand Travelers’ reasons, or arguable or legitimate basis, to deny the claim.  The LLC successfully argued that the claim handler’s deposition testimony shows that Travelers’ in-house counsel Jim Harris made the decision to deny the claim and, as a result, that he must testify.

The waive.  Of attorney-client privilege.  “Krazy” stuff, right? 

 

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

10/29/20       Kemper Independence Ins. Co. v. AB Med. Supply, Inc.
Appellate Division, First Department
Insurer’s Attempt to Dismiss Claims for No-Fault Benefits Before EUO Took Place was Premature

Kemper brought a summary judgment motion on the basis that it was not obligated to reimburse the defendant medical provider for no-fault benefits. The Court determined that Kemper failed to provide the assignees with the “specific objective justification” for its request that the assignor submit to an EUO to establish proof of claim and since the criteria by which Kemper determined that the EUO was required constituted facts unavailable for the medical providers to use in opposition to the motion, the motion was premature. Further, Kemper moved before any testimony had been taken, so the motion was dismissed.

 

11/05/20       PV Holding Corp. v. Hank Ross Med., P.C.
Appellate Division, First Department
Insured’s Failure to Attend a Duly Scheduled IME is a Breach of a Policy Condition, Effectively Cancelling Coverage

The insurer scheduled an IME of the claimant within 15 business days of receiving a claim verification form from an assigned medical provider. The claimant failed to appear for the initial IME, so the carrier rescheduled and the claimant again failed to appear. Failure to attend an IME is a violation of a condition precedent to coverage, which violates the policy. Repeated non-appearance at a duly scheduled IME effectively cancels the insurance contract as if there was no coverage in the first instance, which permits an insurer not to deny all claims retroactively to the date of loss and outside the 30-day deadline in which a denial must be issued, but all future claims as well. Thus, because the insured-assignor failed to appear for his IME, the insurer has no obligation to reimburse the assigned medical providers no-fault benefits. 

 

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

Regulatory Wrap-Up

11/02/20       State Insurance Advisory Board Nominations Are Open
Department of Financial Services
Department of Financial Services Requests Nominations for State Insurance Advisory Board Members by November 30, 2020

DFS is currently seeking nominations of candidates from across the insurance industry to serve a three-year term on the New York State Insurance Advisory Board (Advisory Board) starting in 2021.

Under New York Insurance Law §201, the Advisory Board assists the Superintendent further DFS’s mission as it relates to the insurance industry and consumer protection. The Advisory Board consists of ten members appointed by the Superintendent, and must include seven representatives of domestic insurance companies, one insurance producer, and two consumer representatives.  Each member serves a term of three years or until a successor is appointed. In addition, members of the Board may be renewed at the Superintendent’s discretion. 

Currently, the Superintendent seeks nominees from both domestic insurers and insurance producers for the Advisory Board. DFS provides a list of required information for nominees, including:

• for a representative of a domestic insurer, an overview of the insurer’s primary insurance products sold or offered in the state;  

• for a representative of an insurance producer, the kinds of insurance the nominee and/or insurance producer are licensed to sell in the state; 

• the number of insureds served within the state; 

• the geographic area served in the state, by county; 

• the amount of premium generated within the state in the last 12 months; 

• a statement as to how the person being nominated is qualified to contribute to the statutory mandate of the Advisory Board as set forth in Insurance Law Section 201(a)(1)-(6); 

• a curriculum vitae of the nominee; and 

• any other relevant information as to the nominee’s ability to serve as a member of the Advisory Board.

In addition, the Superintendent is accepting submissions for nominees interested in serving as consumer representatives. Such submissions must include:

• a curriculum vitae of the nominee; 

• a statement of how the nominee is qualified to contribute to the statutory mandate of the Advisory Board as set forth in Insurance Law Section 201(a)(1)-(6); and 

• any other relevant information as to the nominee’s ability to serve as a member of the Advisory Board. 

 

11/09/20       Monitor Requirement for CE or Prelicensing Exams Eliminated
Department of Financial Services
Latest Supplement to DFS’ Relaxed Insurance Producer Licensing Requirements During the Pandemic Makes Permanent Changes to Exam Procedure

As we have written about in the past, Insurance Circular Letter No. 9 (2020) suspended license expirations for producers from March 25, 2020 through May 24, 2020, waived any late fees, and suspended the exam monitor requirement for continuing education and prelicensing course exams online during that period.  Supplement No. 1 to Insurance Circular Letter No. 9 (2020) extended that relief through July 8, 2020.  Supplement No. 2 to Insurance Circular Letter No. 9 (2020) extended that relief through August 7, 2020.  And Supplement No. 3 extended the suspension of the expiration of individual producer licenses through September 6, 2020, and extended the suspension of the monitor requirement through November 5, 2020.

This latest Supplement No. 4 to Insurance Circular No. 9 (2020) eliminated the requirement that a monitor be present when an insurance producer takes any exam entirely.

Maxwell’s Minute: To be sure, however, DFS provides one point of clarification: “This change does not modify the requirement to take an exam at the conclusion of a self-study continuing education course or online prelicensing course . . . .” You’re not getting off that easily.

 

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

 

10/26/20       A.S. v. Adirondack Camp 
Supreme Court of the State of New York, Washington County
Even in CVA Claims a Plaintiff Must Present the Merits of Their Claim and Their Specific Reasons for Seeking Anonymity

Plaintiff commenced this action by way of the CVA seeking recovery for alleged sexual abuse by a camp counselor. Filed along with plaintiff’s complaint is an order to show cause (“OSC”) for leave to file and prosecute the complaint using only Plaintiff’s initials. In support of this OSC plaintiff included only an affirmation from his/her attorney which states that plaintiff “fears further psychological injury” should plaintiff’s identity be made known.

The court however categorizes this submission as “threadbare” and “derisive of the basic due process rights of notice and an opportunity to be heard.” The court, relying on a multitude of Supreme Court decisions, concludes that “to be granted anonymity, a plaintiff must present the merits of their claim and their specific reasons for seeking anonymity. This requires more than a bare-bones affidavit with little or no detail regarding plaintiff's contacts with the county of venue or the immediate vicinity, and the other specified factors.” The court goes on to discuss that an applicant for anonymity need not give “horrendous details” of abuse, but the applicant needs to establish some legitimate reason that proceeding anonymously be allowed. One such reason referenced by the court is the possibility that an applicant’s child or grandchild may attend the school or parish in which the abuse occurred.

Predictably the court in this application, ruled against the plaintiff’s request to proceed anonymously.

Author’s Note:  This is a welcome decision from the court, as the anonymity of many claimants has not only been an impediment to making timely decisions on coverage but presented many challenges to attorneys charged with defending these claims. Hopefully we will see more judges take a similar approach when forced to determine whether or not a plaintiff can proceed anonymously.

 

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

Heather Sanderson
Sanderson Law (Alberta, Canada)
[email protected]

08/07/20       Sidhu (c.o.b. Prosperity Electric) v. Aviva Ins. Co. of Canada
Supreme Court of British Columbia
Where’s There’s Smoke, There’s (Not Always) Fire (Damage)

The insured, Harmeet Sidhu (“Mr. Sidhu”), owned a business selling electrical equipment under the name Prosperity Electric (“Prosperity”) and rented a two-story commercial space (“the Premises”). The first floor of the Premises consisted of a showroom and office space (“showroom”) and the second floor was a storage room (“storage room”), which housed lighting and electrical fixtures (“stock”) packed in separate boxes and then packed in larger sealed boxes. Aviva Insurance Company of Canada (“Aviva”) insured Mr. Sidhu under a commercial policy and provided coverage for Mr. Sidhu’s business for, amongst other things, “direct physical loss of or damage” to Mr. Sidhu’s property. The Premises included the storage room.

In November 2018, there was a fire adjacent to the Premises. However, the fire did not spread to the Premises but there were smoke deposits from the fire throughout the Premises, including the storage room. After the fire, a remediation company was hired to clean the Premises. Thereafter, Mr. Sidhu made a claim for reimbursement for damage to the Premises, damage to the showroom stock, and damage to all of the storage room stock.

Aviva investigated the claim and retained an expert, an electrical engineer, to assess the damage to the storage room stock. The expert selected and tested a large sealed box, which was intact, from the storage room. Then, the expert opened the large box and started opening each individually wrapped boxes and products (think nesting dolls). The large box contained layers of boxed fixtures, which were all individually packaged in the smaller boxes; the individually packaged smaller boxes contained more packaging that wrapped a fixture and a junction box. The expert examined the large box, smaller boxes, packaging, and products and there was no visually identifiable fire by-products damage to the exterior. The expert also swab tested all the aforementioned boxes and products. The expert’s swab testing of these items did reveal small amounts of fire by-products, such as chloride, but the amount was so small that the expert concluded the probability of failure to the fixtures was zero^[1]. Specifically, the expert concluded that “… the fixtures are very likely fully functional and free of hazardous levels of contamination and can be used.”

Accordingly, Aviva denied the claim because there was no coverage where Mr. Sidhu’s property had not sustained “direct physical loss or damage”. Thereafter, Mr. Sidhu retained an attorney in response to the denial, but Aviva reiterated its decision. Aviva then brought a summary trial application seeking a declaration it was not required to indemnify Mr. Sidhu. Although Aviva paid Mr. Sidhu the full value of the stock located in the showroom, the parties disagreed over whether there was coverage for the storage room stock. Mr. Sidhu alleged the storage room stock could not be “sold, displayed or otherwise disposed of by Prosperity…” The issue was whether the presence of chloride contamination on some of the stock from the storage room resulted in “physical loss of or damage” to all of the storage room stock. However, the Supreme Court of British Columbia referred to another case, Acciona Infrastructure Canada Inc. v. Allianz Global Risks US Ins. Co., 2014 BCSC 1568, to provide meaning to “physical loss” and “damage” as “…denot[ing] an alteration in appearance, shape, colour or other material dimension of the property insured.”

One of the expert’s reports did note the Premises were exposed to smoke, such as soot, as a result of the fire. However, despite the trace amounts of chloride found, the expert’s reports confirmed there was no visually identifiable fire by-products, such as soot, to the storage room or the boxes, packaging, or products within the storage room. Mr. Sidhu argued the presence of fire by-products at the Premises confirmed the storage room was exposed to smoke and soot and therefore, suffered “chloride contamination” and thus, the products in the storage room had been altered in a “material dimension”. Alternatively, Mr. Sidhu argued the storage room stock was exposed to smoke and soot, and thus, suffered “physical loss of or damage” because the stock had been impaired such that it was “useless for its purpose”. Despite Mr. Sidhu’s argument, he failed to provide any evidence to dispute Aviva’s expert’s conclusion that (1) the storage room stock was only contaminated with trace amounts of chloride and (2) there were no visually identifiable fire by-products, such as soot, on the storage room stock.

Mr. Sidhu’s alternative argument asserted that the storage room stock was no longer “certified”. Mr. Sidhu referred to MDS Inc. v. Factory Mutual Insurance Company, 2020 ONSC 1924 to support his argument that a broad definition of resulting “physical damage” should be applied and included “impairment of function or use of tangible property”. (We discussed MDS Inc. v. Factorial Mutual Ins. Co. and the American case, Lantheus Medical Imaging, Inc. v. Zurich American Ins. Co., in the June 12, 2020 issue of Coverage Pointers). Specifically, the Safety Standards Act (“the Act”) governs the regulation of the sale of electrical equipment in B.C. The Act outlines adopted standards, the effect of certification markers, and regulated product approval. Under the Act, the Electrical Safety Regulation (the “Regulation”) prohibits the use, offer for sale, sell, display or otherwise disposal of electrical equipment in B.C. unless the equipment displays a certification label or mark from a certified provincial safety manager. Technical Safety BC is responsible for administrating and enforcing the Act and the Regulation in B.C. and identified Intertek Testing Services (“Intertek”) as an independent “certification agency” capable of providing the necessary “certification marks”. Mr. Sidhu had reached out to Intertek for certification services, but Intertek quoted Mr. Sidhu almost $98,000 for their services. Notably, although the quote was close to Mr. Sidhu’s $100,000 policy limits, Mr. Sidhu’s policy did provide supplemental coverage for reasonable fees to such persons as engineers and other consultants to produce details of loss under the Policy. All Mr. Sidhu was able to offer regarding the certification of the storage room stock was an e-mail from an Intertek representative that discussed whether the stock could be sold as new under the existing certifications. Nevertheless, the Court found MDS was not applicable to the subject case and held the e-mail was not admissible evidence. Importantly, the Court held the Acciona test for “physical loss or damage”, which was binding on the Court and more restrictive than MDS, does not include loss of function of marketability in its current state. Thus, even if Mr. Sidhu was able to provide any evidence to support his assertion there had been a loss of certification as a result of chloride levels found on certain items tested by Aviva’s expert (i.e. suffered impairment in its function and value, rending it wholly useless for its intended purpose), his policy did not provide coverage for such a loss.

Lastly, Aviva argued that even if the storage room stock was damaged, the policy’s Contamination Exclusion applied. Conversely, Mr. Sidhu argued the exclusion did not apply because the policy provided an exception to loss or damage caused directly by “named perils”. The “named perils” included “fire or lightning” and “smoke due to a sudden, unusual and faulty operation of any stationary furnace.” There was no allegation the underlying fire was caused by a furnace, so Mr. Sidhu bore the burden of establishing the exception applied because the alleged contamination was caused directly by the fire. Mr. Sidhu was unable to meet his burden because both parties agreed “that any chloride contamination was not the immediate consequence of the fire. Rather the fire caused smoke and soot which migrated to the Premises and in particular, the Storage Room where the [storage room s]tock was located… [the Court] agree[d] therefore with Aviva that, while the fire started the chain of events that indirectly caused the alleged damage, Mr. Sidhu has not proven that the fire directly caused the alleged contamination.” Therefore, even if there was coverage and if the exclusion applied, the exception to the exclusion would not save Mr. Sidhu’s claim because the contamination was not caused directly by the fire. Accordingly, the Court dismissed Mr. Sidhu’s claim against Aviva.