Back to Top

Coverage Pointers - Volume XXII, No. 14

Volume XXII, No. 14 (No. 579)
Friday, December 25, 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 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.

Congrats to our two most recent hires, Nick Heintzman and Daniel Mattle, both of whom passed the New York State Bar Examination.  We’re proud of you.

Merry Christmas and Happy New Year to all our subscribers and friends (you’re all the same).  This is our final issue of the year, and we’re getting it out early so you can share it with Santa on Christmas Eve.

First, a word about an upcoming CLE/CL program that may be of interest to you.

 

State Bar Association Webinar on New York Coverage Basics:

We had such a huge turnout for our most recent program in November, we’re doing it again.

I was asked by the New York State Bar Association to present a primer on New York coverage basics.  Co-sponsored by our good friends at NYSBA’s TICL Section (that’s Torts, Insurance and Compensation Law) Section, I am pleased to present a webinar on the subject on Tuesday, January 12, 2021, at noon, EST. 

Registration:  https://nysba.org/events/basics-of-insurance-liability-in-new-york/.

Image result for Count Sesame Street Muppets

It’s count time – and each year, we provide you with two sets of statistics, in order of importance.  First, another end-of-the-year bad faith milestone.

See the source image

It has been 22 years, six months and 14 days or 9,233 days since the last time any New York appellate court has affirmed a finding of bad faith against any carrier, under any policy, for any reason. The last appellate decision upholding a bad faith verdict from a New York state appellate court was Smith v. General Accident Insurance Company, decided on June 11, 1998.

On that day, Bill Clinton was president, number “1” on the American Library Association “most requested book” list was Trump – the Art of the DeaI, the Dow Jones Industrial Average closed at 8811.77, George Pataki was Governor of the State of New York, “Windows 98” was released by Microsoft, and the New York Daily News carried ads offering a SONY Walkman for $59 and an RCA 25” TV for $248.97.

Secondly, we report to you that over the past 12 months, eighteen authors have published columns in Coverage Pointers reviewing 549 judicial or regulatory pronouncements.  Even with the court closes, that count exceed the 531 decisions reported during the 2019 calendar year.  Here the report count, in order of numerosity:

 

Kohane

Coverage Corner

87

Maxwell

Capital Roundup

77

Peiper

On Property and Potpourri

48

Barci

Basics on No Fault

37

Cox and Sanderson

Canadian and Cross Border Connections

35

Ewell

Jersey Journal

34

Dischley

Dishing Out Serious Injury

33

Barnas

Barnas on Bad Faith

27

Englert

CVA and USDC (NY)

27

Ehman

Jen’s Gems

25

Boron

Benchmarks

26

Siegel

Connecticut Chronicles

25

Bucci

Bucci on “B”

27

Mark

Off the Mark

15

Wilewicz

Wide World of Coverage

14

Cantwell

Earl’s Pearls

9

Rauh

Ramblings

2

 
 

See the source image

Merry Christmas --  in celebration of the 10th Anniversary of our classic poem (which we haven’t published in a few years) and with our salute to the insurance industry, we offer you:

Christmas Coverage
or
A Policy for Saint Nicholas


Dan D. Kohane

With apologies to Clement Moore (or less)

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

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

Most company's adjusters had left for the day.
And most coverage lawyers had little to say.

It was surely the moment to turn out the light,
Shut down the computer, put work out of sight.

Then the phone started chirping, it startled my poise,
Not the typical ring-tone, but an odd sounding noise.

It jingled like sleigh bells, instead of a "ding,"
I knew I must answer, despite everything.

A Christmas Eve caller?  What could be the need?
But the sound of the music, would just not recede.

I was really not looking for Christmas Eve banter,
Imagine my shock when the caller was Santa!

"I need some advice, sir" said a somber Saint Nick,
"My Christmas Eve Policy is three inches thick."

I don't mean to bother, but I'm wrought with confusion
"I don't understand this new 'Gifting Exclusion.'"

"It carves out the nasties, the mean and the haughty.
It favors the good ones and leaves out the naughty. 

My coverage appears to have holes like Swiss Cheese,
I'm afraid if I'm sued, I will twist in the breeze."

"A products exclusion? A chimney one too?
Elf employment exception, I'm screwed through and through.

Just what is still covered? I sure am confounded,
With all of these issues, I'm fear that I'm grounded."

"With a sleigh full of sacks and reindeer at the ready,
I'm starting to feel just a tad too unsteady.

My belly has acid, my knees are a 'quiver
With millions and millions of toys to deliver."

"I want you to help me, I fear a disclaimer.
This policy's scary; I need you to tame her.

We must surely save Christmas, for good girls and boys,
And Amazon won't refund "squat" on the toys.

The holiday challenged; I sure knew my mission
We needed to craft a new ISO edition.

Santa needed an ally, a comrade, a fighter,
On the opposite side was a Grinch Underwriter.

I am sure you'd imagine how hard it would be
To secure for Saint Nick a late-night policy.

Without coverage gaps, so that Santa could fly,
To save Christmas Day, we were destined to try.

The person in charge of the coverage for Nick,
Had left the shop early, was feeling quite sick.

Perhaps it was sadness, or guilt or just gumption,
He thought he'd killed Christmas, a well-placed assumption.

In order to soften his hardening heart,
We had to play coy, we had to be smart.

We needed to dazzle that Grinch with our guile,
To show him the risk was sure worth his while.

Worse yet, betwixt and between stood a broker,
A bloodsucker culled from the mind of Bram Stoker.

Through him we must go, around or about,
He'd bring pressure to bear, he's really got clout.

"It's Santa," we'd say, "who'd sue him for cash?" 
"Another broker can get us a better deal in a flash.

We'll go to the market if a deal can't be made;"
The Grinch saw his bonus beginning to fade.                   

From the cream of the crop, a new team we'd assemble,
To get Santa protection, to weaken his tremble.

We'd send out the e-mail, we'd tweet, and we'd twitter
We needed to find the best of the litter.

The other apt choice, as the time slipped on by,
Was to use those fine people, to make him comply.

By plane and by car, by boat and by train.
We beckoned this family to join in refrain.

And gather they did, first a few then a score,
Lawyers and brokers, claims folks and more.
Much more than a choir, it was surely a throng,

Together they gave voice to a beautiful song.

And they reached that man's spirit, his heart and his soul,
And in no time at all, they'd accomplished their goal.

"Give me my pen", the Grinch yelled to his clerk.
I knew then and there that our ploy it had worked.

"Exclusions begone!  Limitations not there!
We'll provide him his coverage, no need to beware."

And so, it was written, and Santa could jet,
And Christmas was saved, the best Yuletide yet.

On cold winter night, when you're hearing his jingle,
When the children are sleeping and in comes Kris Kringle,

Remember that coverage protected his flight,
Happy Christmas to all, and to all a good night.

 

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:

Last week, we concluded with a warning about waiting too long to start holiday shopping.  To be clear, unlike most years, I started before December 15th.  Indeed, most of my work was done and bookmarked before December 1st.  Yet, despite my better efforts, here I sit wondering when/where my packages will arrive.

***Spoiler Alert – They are not likely to be here for X-mas Eve***

           Me, and 25,000,000 others, will be still giving gifts in late January this year.  Given the past 9 months, though, 2021 gifts seem more than appropriate.

           Turning to this week’s column, we reviewed a very interesting decision from the First Department addressing the sufficiency of proof submitted in support of a motion for summary judgment.  As readers of this space will recall, Appellate Courts have been cracking down with increasing regularity on improperly authenticated documentation.

The term “with personal knowledge”, if not part of your motion preparation already, should become a central focus in your future applications.  Summary judgment motions usually write themselves in the initial coverage opinion.  Knowing what you want to do is one thing, knowing how to get it before the Court can be more challenging and as we’re seeing, requires a bit more thought. 

           That same decision, Underwriters, also involved a subsequent challenge to an appraisal award.  The award effectively distinguished between losses which were allocated as “building” and “machinery.”  Despite the ongoing arguments to the contrary, New York law does not permit an appraisal proceeding to answer any questions related to policy interpretation.  The exception to that rule is if the appraisal agreement specifically includes the dispute as part of the scope of the process.  Here, there was such an exception in play, and overturning an appraisal proceeding is not an easy task.

           That’s it for now.  Happy Holidays and may you all have the happiest and safest New Year.

Steve
Steven E. Peiper

[email protected]

 

A Little Insurance History:

News-Journal
Mansfield, Ohio

25 Dec 1920

FIRST IN 1901.

In 1901 England wrote for the first time the modern fire, theft and public liability insurance on commercial vehicles.

 

Wilewicz’ Wide-World of Coverage:

Dear Readers,

Happy Holidays! Whichever holidays you celebrate, we know that this year will be unusual. Hopefully we can all make the best of it and stay healthy and safe. For my part, I am rather sad that we won’t be seeing my parents for Christmas (for the first time in my entire life, mind you), but we are trying to make up for it with lots of Zoom dinners and opening presents “together”. Last weekend, we all very-socially-distantly built gingerbread houses, and that worked out alright. We are planning to Zoom-cook Christmas Eve (Wigilia) dinner together, and I suppose the silver lining is that with two kitchens it will solve the usual “too many cooks” problem.

Now, in the Wide World of Coverage, the Second Circuit finally issued a coverage decision of interest. In County of Niagara v. Netherlands Insurance, at issue was whether a disclaimer sufficiently notified an additional insured of the grounds for denial, when it was only sent to their attorney and admittedly did not include the full text of some of the policy provisions. The Court cited some basic precepts of insurance coverage analysis in holding that the disclaimer was sufficient where it was copied to the AI’s counsel, cited enough policy language to put the insured on notice, and provided the factual basis for the applicability of that language. Given that it was sent timely, was unambiguous, and detailed, it was enough to stand up to scrutiny. That said, we should always err on the side of more specificity and policy language, than not. Had the letter here been sent by an extra copy to the additional insured and included all potentially applicable policy language, this case never would have made it up to the Second Circuit Court of Appeals.

Until next time, stay safe, and happy holidays!

Agnes
Agnes A. Wilewicz

[email protected]

 

History Repeats Itself :  President-Elect Accused of Insurance Fraud – Claim Went Nowhere:

The Ogden Standard-Examiner
Ogden, Utah

25 Dec 1920

PANAMA PRESIDENT-ELECT ACCUSED OF VOTE FRAUD

           PANAMA, Dec. 24—The Nicaraguan legation at Panama today gave out a message from the Managua, foreign office stating that the national congress has declared Diego Manuel Chamorro and Bartolo Martinez, constitutionally elected president and vice president, respectively, of Nicaragua.  The new executives are to take office January 1.

           Announcement was made in Managua recently that supports of Jose Andres Urtecha, former minister of foreign relations, who was defeated in the presidential election by General Chamorro, had appealed to the state department in Washington to take some action regarding the election, asserting that flagrant frauds were committed.  They were said to be supported by many influential members of the Conservative party.

 

Barnas on Bad Faith:

Hello again:

Merry Christmas and Happy New Year.  I hope everyone is enjoying a happy and healthy holiday season.  This year we received an early Christmas present from the Buffalo Bills when they clinched their first AFC East title in 25 years with a 48-19 thrashing of the Broncos on national television.  The national sports media is talking about the Bills as Super Bowl contenders, and there will be at least one home playoff game in Orchard Park in January.  While most of 2020 has felt like a nightmare, I have to pinch myself once in a while to remember that the Bills’ success is not a dream.

The case I have this week from the Missouri Court of Appeals is a bit different than what I normally feature.  The determinative issue on the bad faith case against the insurer was whether Kansas or Missouri law applied to the claim.  The policy’s choice of law provision provided that if a covered loss to the auto, a covered auto accident, or any other occurrence for which coverage applies happens outside Kansas, claims or disputes regarding that loss are governed by the laws of the jurisdiction where the loss happened.  Allstate argued that the bad faith claim was not a loss involving the auto or an occurrence, and thus the provision did not apply.  The court disagreed, concluding that the bad faith cause of action was a claim or occurrence within the meaning of the language of the policy.

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

Brian
Brian D. Barnas

[email protected]

 

How Kind of the Waco Government, 100 Years Ago:

The Dallas Express
Dallas, Texas

25 Dec 1920

MAYOR OF WACO DEDICATES A PLAY GROUND FOR NEGROES.

           Waco, Texas, Dec. 23—The South Waco Colored Public School of which R. E. Bevis is principal, had every reason to be proud of the splendid play-ground equipment that has recently been installed.  This school, though one of the youngest in the city, had grown by leaps and bounds so to speak.  Having been equipped through the efforts of the principal, teachers, pupils and Mothers Club, with almost all of the accessories of a very modern school ion the inside; attention was turned last fall to  the campus, which by the way is said to be one of the most beautiful among all of the city schools of Waco.  Feeling that Negro children need every opportunity to develop physically, as well as mentally, a drive was launched to secure for the campus a few pieces of steel play-ground equipment.  It seemed like a big undertaking for this small school; they were determined.  A series of room rallies were held which in three months time netted $112.  Then a city-wide campaign was launched by the principal and as a result at its close early in March a little less than $600 had been raised. 

 

Off the Mark:

Dear Readers,

Happy Holidays and Happy New Year!  No doubt about it, 2020 has been a trying year.  Here’s to hoping life returns to normal, or at least as close as possible, in 2021.

The courts’ usual holiday shutdown has arrived.  As such, there were no newsworthy construction defect decisions to be found.

Stay safe everyone and enjoy the holidays…

Brian
Brian F. Mark

[email protected]

 

Black Eyes Instead of Jail Time:

The Salina Daily Union
Salina, Kansas

25 Dec 1920

Gang of Rowdies Get Unusual Christmas Gift

           A gang of Rowdies attempted to run “Harry’s Coffee House” on North Santa Fe last night.  The gang received several Christmas presents in the way of black eyes and teethless mouths, that they will carry for several days.  The police responded to the call, and the men taken to the police station.  They were so badly beaten up, that the chief concluded that their punishment was sufficient, so they were not held.  The gang did considerable damage in the coffee house. 

 

Boron’s Benchmarks:

I’m writing this on December 22, and so far, no visible sign of a White Christmas at my house.  My lawn is actually still green.  But…drum roll, please… the weather forecast for Christmas Day and the day after is predicting heavy lake effect snow for Western New York.  We will be at the mercy of the wind direction on the 25th and 26th.  If the wind blows from the southwest up the entire fetch of Lake Erie for a prolonged period of time, we could have not just a White Christmas, but a White-Out Christmas as well.  Hey, I’m going nowhere during the holidays due to COVID-19, so this might just be the perfect year to kick back and appreciate anew what Western New York is well known for, Lake Effect Snow.  

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, I’ve selected for your consideration an Opinion issued on December 15, 2020, by the Supreme Court of Oklahoma in Johnson vs. CSAA General Ins. Co.  The Court analyzed and considered the post-loss assignment by the insured of her property loss claim and determined, as a majority of courts considering the same issue have, that what the insured assigned was a “chose in action” (the right to recover money or other personal property by judicial proceedings), and not an assignment of the insured’s policy or policy rights.  The majority rule in the United States is that a provision that prohibits the assignment of an insurance policy, or that requires the insurer's consent to such an assignment, is void as applied to an assignment of a claim made after a loss covered by the policy has occurred.

The legal reasoning behind the majority rule has been summarized by courts as follows.  Once the loss has triggered the liability provisions of the insurance policy, an assignment is no longer regarded as a transfer of the actual policy or rights under the policy. Instead, it is a transfer of a chose in action under the policy. At this point, the insurer-insured relationship is more analogous to that of a debtor and creditor, with the policy serving as evidence of the amount of debt owed. Applying such analysis, the Oklahoma Supreme Court held the policy provision requiring consent from the insurer prior to the insured’s assignment of her policy did not prohibit the insured’s post-loss assignment of her property loss claim.

Have a wonderful holiday folks!

Eric
Eric T. Boron

[email protected]

 

Give Your Wife Appliances for Christmas, and She’ll be Happy – a Century Ago:

Record-Journal
Meriden, Connecticut

25 Dec 1920

An Electrical Christmas

Make her Christmas a happy one by reducing her work to the minimum.  Make her a contended woman by eliminating the drudgery of the home.  It’s quite simple if you pay a visit here.

Here you’ll find electric irons, toasters, vacuum cleaners, washing machines, percolators, grills, etc.—all so beautifully and practically made.  Give her electrical things for Christmas.

L W. Reynolds

17 North Main Street

 

Barci’s Basics (On No Fault):

Hello Subscribers!

I hope you are all still staying healthy and safe! My Christmas cookie baking extravaganza, and subsequent cookie devouring festivities, went off without a hitch. It took me 3 days total to make my three cookie staples, including a rather elaborate Italian rainbow cookie ice cream cake that was a gift (and a big hit!). My roommate on the other hand made 8 varieties of sweets, including an eggnog cookie and a fruitcake cookie that were very interesting. Not to my taste, but if you like those flavors, I am sure you would enjoy the cookies!

Last time I asked what the best or most memorable gift you’ve either given or received was. I think the best gift I ever gave was to my two best friends in high school junior year. I got them each different concert tickets, which they were so excited about, and then when the summer rolled around, we all got to go to the concerts together and have a good time! COVID aside, I highly recommend giving experiences if you can!

Moving away from the holiday, for next time consider: What is the worst job you’ve ever had?

On the no-fault front, I’ve got one case from the EDNY that I would call no-fault adjacent. It is a RICO action brought by American Transit Insurance Company that attempts to allege a grand scheme of no-fault fraud against many unknown players. The court, in a rather scathing decision, found the allegations to be baseless and even went so far as to say, “when a complaint is 186 pages long, plus more than 300 pages of annexed exhibits, and contains 58 claims for relief, that is a red flag that something may be wrong with it.” If you would like a copy of the decision please let me know.

That’s all folks,

Marina
Marina A. Barci

[email protected]

 

Who is Santa?

The News and Observer
Raleigh, North Carolina

25 Dec 1920

SANTA CLAUS

           Old Santa Claus, shortened down from Saint Nicholas, or maybe better known in the Teutonic language through which the traditions of Kris Kingle has passed, is a personage of many sides and traits of character.  As the Kris Kingle or probably Christ Kindschen, Santa Claus betrays his origin as the saint of the children, and there is the beginning of this foremost figure of ancient and modern child life.  Around Santa Claus is always association of the kindschen, the childhood of the race, the kindliness and thoughtfulness that the children kindle.

But as Santa Claus has grown to be a reasonably old chap he had made many acquaintances among the older folks, and the child qualities that have given sanctity to the name have extended to older and older heads until today to Santa Claus the world is peopled with children of all ages who are, when he comes, actuated by peace and good will and thought for each other, and so Santa Claus rules all of civilization wherever the influences of Christianity extend, and much of the world that is still beyond the border, for the Santa Claus sentiment has been infectious and made its way into all corners and among all people more or less.

Santa Claus is the exemplar we can all cultivate, even though we can go no further with him than one day in the year, for even one day of innocent and earnest merriment, and help in extending that merry cheer that it may be broad enough to cover all who are about us is a stimulus that runs through a part of the year, and sometimes all of it.

This old winter saint is not always a plump chap in big whiskers and a jowl like Robin Hood's jolly Friar.  You have seen a little, shy old woman give a neighbor a Christmas greeting that made her the queen of all the Claus family.  And that is the strong power in the whole matter. It is not where the cheer comes from, nor the volume of it, nor anything else at all than just its human note of friendliness that comprises Santa Claus.

We can all be one of the Claus family, even if say a hopeful word to ourselves, for you can be a missionary to yourself as well as to anybody else and may be to as good advantage.

 It would not hurt much to be Santa Claus all the time, every day in the year, but as we can't do that the next thing is to be as cordial and cheery and full of good will on today as we know how.  Santa Claus comes mighty near being a state of mind and it is a wonderfully good state. 

          

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

Happy Holidays and hold on to your hats! This sleighride through the moguls that were 2020 cannot slide on into 2021 soon enough. The Maxwells are ready for Santa Claus, with our oldest reminding us every time the doorbell rings. “No, son. Santa uses the chimney and won’t be here until Thursday night.” That is, unless the North Pole caught on to the convenience of two-day shipping and started dropping off packages early. Might free up our night before Christmas…

This week we have two new laws that have been signed by the Governor that incentivize the completion of safety courses for boaters and certain for-hire motor carriers with actuarially appropriate premium rate reductions, and a bill recently delivered to the Governor that levels the playing field for P&C assessment corporations that wish to offer umbrella policies and stand-alone liability coverages.

Until next time,

Ryan
Ryan P. Maxwell

[email protected]

 

Anti-Semitism Alive and Well, a Century Ago:

The New York Times
New York, New York

25 Dec 1920

 

ROSALSKY WOULD PROSECUTE FORD

Judge Preparing Bill to Punish Those Who Libel Jews and Other Denominations.

TALKS ON ANTI-SEMITISM

Contrasts Treatment of Jews in America With that of “Benighted”  European Countries.

           Judge Otto A. Rosalsky told a delegation of the Daughters of Jacob, who presented him yesterday with a judicial robe, that he was preparing a bill to bring to court those “who persist in libeling not only Jews but every other denomination.”  Judge Rosalsky assailed Henry Ford for his alleged anti-Semitic utterances, characterizing him as “the greatest menace to American institutions.”

           “The anti-Semitism which now  pervades throughout the world is an attack by the unthinking,” said Judge Rosalsky, “but America has been awakened to its duty, and the great men of his country now realize that it is their duty to stem the tide.  A man like Ford is the greatest menace to American institutions; first, because he is an ignorant man; secondly, because he uses his wealth improperly, and, third, he is not inspired with the teachings and lessons of Americanism.  During the war his son escaped from performing his duty toward our country, whereas the records show that the Jews have contributed more than their allotment.

           “The history of the Jew throughout the world is that when you give him an opportunity to dwell in freedom he is not a destroyer.  He is a builder, and the records of our institutions demonstrate that whenever the Jew had been given his freedom and enjoyed justice and opportunity, he has been responsible for making substantial contributions to our civilization.  In my years I have never differentiated between the Jew and Gentile.  They are all alike.  

 

CJ on CVA and USDC(NY):

Hello all,

Hopefully, this note finds you all well and savoring the last days of 2020. It has been a very challenging year, but one that has certainly allowed for a great deal of growth and change. From finding new ways to connect with family and friends to taking depositions and handling motion arguments by video conference, the world has certainly changed, in many ways for the better. I wish you all the best and hope the new year treats you very well.

In this week’s column I discuss a COVID-related Business Interruption case in the Southern District. The big takeaway in this matter is, without physical loss coverage will not apply.

Happy Reading and Happy New Year!

CJ
Charles J. Englert, III

[email protected]
        

 

First All-Woman Jury in Bergen County Renders Verdict in Five Minutes:

The New York Times
New York, New York

25 Dec 1920

 

WOMEN FIND QUICK VERDICT

Hackensack Jury Out Only Five Minutes in Damage Case

           HACKENSACK, N.J., Dec. 24.—The first jury in Bergen County, composed entirely of women heard today the damage suit of Gerald Galloway against Thomas v. McIntegart for damages to his automobile.  All of the women are attached to the County Clerk’s office and compose what is called a “struck” jury, having been hastily summoned when no venire had been drawn.  The jurors are the Misses Lillian Prelle, foreman; Florence A. Christle, Lillian Galbraith, Mabel Weickert, Ruth Williams, Catherine Heath, Irene Tully, Marie Klaus, Elsie Van Diemen, Marian Demarest, Laurette Keen and Lila Stephens.

           After being out for five minutes the jury returned a verdict in favor of Galloway for $89.50, the amount of damage specifically claimed.

 

Dishing Out Serious Injury Threshold:

Dear Readers,

I hope everyone is celebrating the holidays and is able to ring in the New Year in a safe manner. It has been a trying year on everyone and hopefully next year will bring about a return to being able to freely interact and enjoy everything life has to offer without fear of this virus.

In the Serious Injury Threshold world, we only have one case this issue as the Courts have slowed down for the holidays. This First Department case deals with plaintiff’s expert failing to address or contradict defendant radiologist’s findings that plaintiff’s spinal injuries were degenerative in nature. Plaintiff’s failure to do so was fatal to plaintiff’s claim.

Stay safe,

Michael
Michael J. Dischley

[email protected]
  

 

Not a Good Bargain:

Buffalo Morning Express and Illustrated Buffalo Express
25 Dec 2020

BOUGHT 22 WOMEN OFF FOR $100,000 TO GET HUSBAND

Baroness, heir to $25,000,000 Estate, would like to be rid of him now.

TOO MANY SWEETHEARS

Baron asks custody of child, saying mother is not fit person to care of him.

Special to the Buffalo Express

           Chicago, Dec. 24.—Baroness Cecile Young Heyworth de Korwin, heiress to the $$25,000,000 estate of the late Otto Young, pioneer State street merchant, paid $100,000 to buy off 22 women before she could legally claim Baron Joseph de Korwin as her husband, but she will gladly give him away or pay anyone to take him sway and throw him in the garbage can.

           The spectacular married life of the American girl and her foreign husband was partially gone into before Judge McKinley in the superior court today.  Marrying into the nobility came high and the American bride speedily discovered that codes and ethics in the old world did not coincide with her ideas.  She found that her husband-elect had nine mistresses, four morganatic wives, two common law wives and various Cyprians who had claims against him.  The baron had made love to each of them and each one thought she had a right to marry him.  In order to be rid of them, the American heiress bought them off at a job lot sale.  One of his former wives held him up on the day of the wedding and Mrs. Di Korwin had to buy her off for several thousand dollars before the honeymoon could proceed.      

 

Bucci on “B”: 

Hello subscribers,

How are you all faring in this post-election and hopefully soon to be post-COVID-19 world?  How are your holidays shaping up?  I am definitely doing things differently this year…having a very small gathering for Christmas.  Which, by the way, I am getting catered ?as I hate to cook.  I burn everything.  Before I was a lawyer, I was a pretty good cook but once I started working, I could never focus on what I was cooking.  I always feel like I had to accomplish other things while I cooked, which explains the burning.  I have to practice staying in the moment if I want to improve my cooking.  Other than that, though, I am perfect!

This concludes my first year at Hurwitz & Fine, and despite 2020’s challenges, I have discovered that this is a great place to be.  H&F has very smart, experienced lawyers, coverage and otherwise, who have been so helpful to me over this year.  That said, I can’t wait for this year to end.  Next year is going to be great!

I brought you some Coverage B cases this week, mostly from trial courts, which all seem to have been reasonably decided.  Not always the case but see for yourself…

Diane
Diane L. Bucci

[email protected]

 

Limb Transplants, a Century Ago:

The New York Times
New York, New York

25 Dec 1920

GIVE ARMS TO CHICAGO BOY.

Doctors Develop stumps and Fix on Artificial Limbs

Special to The New York Times.

CHICAGO, Dec. 24.—A remarkable and successful feat of surgery has just been performed at St. Luke’s Hospital in this city upon Henry Weigmann, 12 years of age, who was born without arms, without even the stumps of arms.  His shoulders, until recently, have been smooth as if this little body had never been intended to have arms.  But at the Spaulding School Henry learned to draw by holding his pencil between his chin and his shoulder.  He wanted to become an artist.

People interested themselves in the boy, and last may took him to St. Luke’s Hospital.  There was an operation, and from  beneath Henry’s smooth little shoulders the beginnings of two arm bones were extracted.  Muscles were taken from his chest and affixed to the bones.  In six weeks Henry was able to move his new arm stumps.

Henry’s teachers, the doctors and the Service League for the Handicapped contributed $475 and bought two specially constructed artificial arms, and a woman from South Dakota has sent Henry his first shirt with long sleeves and his first coat with long sleeves.  Today the arms were fitted to the new stumps and Henry mastered two of the three essential movements. 

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Well, there was a time that I didn’t think we’d get here, but we did. Somehow, we’ve managed to survive 2020 and all it brought to bear. We adapted, we persevered, and we overcame. 2021 is just around the corner. I wonder how much COVID-19 will impact our work and daily lives well into the future? I’m just a simple country coverage lawyer, so I’ll leave the predicting to the social scientists and columnists. But I can predict this: if you read the attached case discussions, you will find out how a Connecticut federal court ruled in the state’s first COVID-19 business income coverage case.

Have a happy, healthy, and safe New Year.

Lee
Lee S. Siegel

[email protected]
         

 

Where is Les Nessman When We Need Him?

The New York Times
New York, New York

25 Dec 1920

Santa Claus Drops Toys From Airplane

           RIDGEWOOD, N. J., Dec. 24—Santa Claus came out of the clouds, not bounding over the hilltops, to Ridgewood today.  He circled so low before the assembled hundreds of dancing children that they could see the pink of his cheeks and the whirl of his whiskers as his airplane cut didoes in the air and then to cap the climax the old boy dropped dolls and toys that floated down in miniature parachutes to the eager throng below.

           Santa’s trip was arranged by the Christmas Tree Association of Ridgewood.  Lieutenant Fred Nixon of Paterson, aviation pilot, brought the holiday saint here.  Harry Rouclere, proprietor of the Rouclere Hotel of Ridgewood, rode in the plane and impersonated Santa Claus.  When Santa descended a troop of children escorted him to Wilsey Hall, where presents were distributed and exercises held.

 

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

Dear Subscribers,

With the craziness of packing and house renovations, I’ve had little time to decorate for the holidays, but the one thing I have made time for is baking cookies. Everyone has their favorite holiday dessert and mine are butter cookies with buttercream frosting. It’s my grandmother’s recipe and requires multiple sticks of buttery goodness. The only other time I attempted making these cookies was a couple years ago but ended up running out of butter for the frosting, so I ate them sans frosting, and they were still pretty good. However, I made it a point this year to make them because, like many of us, I am celebrating the holidays afar from my family and this makes me feel more connected to my family by continuing our family (food) traditions. So, if you’re feeling homesick because you can’t be with family this holiday season, ask for that recipe that elicits fond holiday memories. Until next time, eat all the feel good food and have a Happy New Year!

Cara
Cara A. Cox

[email protected]

 

Heather
Heather Sanderson

Sanderson Law (Alberta, Canada)
[email protected]

 

Dead Men Need Not Apply:

The Topeka Daily Capital
Topeka, Kansas
25 Dec 1920

Wanted -- Six Salesmen

To travel with manager.  Extraordinary opportunities for live men.  Call

C.E. FERRIER

Room 610, National Hotel.

 

Rauh’s Ramblings

Dear Subscribers:

I cannot believe Christmas is upon us already!  Despite COVID-19 and the fact that our Christmas will be pretty lowkey this year, I have really been looking forward to it because my two-year-old son is finally old enough to talk about Santa and he is getting so excited – he asks me every day if he is still on the “good list” and whether Santa will still be bringing presents! I remember Christmas being so magical for me as a child, so I am so excited to make new Christmas memories with my son.

Today I bring you a case from New York’s First Department in which the court held that life insurers have a duty to escheat unclaimed life insurance proceeds to the state even in the absence of notice and/or proof of death of the policyholder.

I wish all of you a very Happy Holiday and a safe and healthy New Year!  I hope 2021 will be much better than 2020!  Until next year…

Patty
Patricia A. Rauh

[email protected]
        

 

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane

[email protected]

  • Since Trade Contract Did Not Require Additional Insured Coverage be Provided, Additional Insured Coverage was Not Provided Under Policy

  • Prior Determination in Uninsured Motorist Proceeding Finding Car Involved Did Not Resolve Question as to Who Was Driving the Car

  • UM Carrier Established that it Suffered Prejudice as a Result of Late Notice of an Uninsured Motorists Claim – Even Though It Received Timely Notice of a Property Damage Claim

  • Late Notice of Disclaimer in Underinsured Motorist Claim Leads to Insurer Losing Right to Contest Coverage

  • Accepting Premiums After Learning of Grounds for Rescission, Waives Right to Rescind

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

Property

  • Appraisal Award Deciding Value and Classification of Damages Stands;

  • Carrier’s Rescission Argument Fails for Evidentiary and Substantive

  • Deficiencies

 

Potpourri

  • Common Law Indemnity Claims Unencumbered by General Obligations Law § 15-108

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley

[email protected]

  • Plaintiff’s Expert’s Failure to Address the Findings of Defendant Radiologist Degenerative Nature of Spinal Injuries Fatal to Plaintiff’s Claim

 

WILEWICZ’S WIDE WORLD of COVERAGE
Agnes A. Wilewicz

[email protected]

  • Second Circuit Holds that Disclaimer Sufficiently Notified Additional Insured of Grounds for Disclaimer, where it Cited Policy Language, the Factual Basis for the Denial, and Was Sent to AI’s Attorney

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

  • Bad Faith Claim was an Occurrence within the Meaning of Auto Policy’s Choice of Law Section

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • Virus Exclusion Precludes COVID-19 Business Income Claim

 

BUCCI on “B”
Diane L. Bucci

[email protected]

  • Declaratory Judgment Action Does Not Seek Damages for Personal or Advertising Injury

  • Insurer is Not Obligated to Defend its Insured for Trademark Infringement Which Falls Within the Intellectual Property Exclusion

  • Facilitating Copyright Infringement Does Not Qualify as Copyright in YourAdvertisement

  • Duty to Defend Was Triggered Where Complaint “Sketched Out” a Potentially Covered Claim

 

OFF the MARK
Brian F. Mark
[email protected]

  • No newsworthy decisions to report on as the holiday shutdown has arrived.

 

BORON’S BENCHMARKS
Eric T. Boron

[email protected]

  • Property Insurance – Reversal of District Court – Post-Loss Assignment of Property Insurance Claim Without Insurer Consent Was Not Prohibited

 

BARCI’S BASICS (on No Fault)
Marina A. Barci
[email protected]

  • Carrier Fails to State Claim Indicative of No-Fault Fraud Under RICO

 

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell

[email protected]

Legislative List

  • Bill Delivered to the Governor Would Clarify that P&C Assessment Corporations are Authorized to Write Umbrella and Liability Policies

  • Governor Signs Law Permitting Associations Representing For-Hire Motor Vehicles to Establish and Implement Educational Safety Programs and Corresponding Premium Reductions

  • Governor Signs Law Permitting Insurance Rate Reductions Upon Completion of Designated Boating Safety Courses

 

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

[email protected]

  • Without Physical Loss, Business Interruption Claims are Denied

 

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

[email protected]

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]

  • All quiet in the Great White North.

 

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

  • Defendants Had a Duty to Escheat Life Insurance Proceeds to the State Even in the Absence of Notice and Proof of Death of Policyholder

 

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 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
Patricia A. Rauh

[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

Mirna Martinez Santiago

Brian D. Barnas

Eric T. Boron

Marina A. Barci

Ryan P. Maxwell

Charles J. Englert

Cara A. Cox

Patricia A. Rauh

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

Bucci on “B”

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)

Rauh’s Ramblings

 

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

12/16/20       Assevero v. Hamilton & Church Properties, LLC
Appellate Division, Second Department
Since Trade Contract Did Not Require Additional Insured Coverage be Provided, Additional Insured Coverage was Not Provided Under Policy

The plaintiff allegedly was injured while working at premises owned by the Hamilton & Church Properties. Castle Construction Group (“Castle”), was a subcontractor on the job site, insured by Scottsdale Insurance Company (“Scottsdale”). Contractual trade contract indemnity was sought by Hamilton against Castle as was insurance coverage.

Scottsdale moved for summary judgment declaring that Hamilton & Church is not an additional insured under the policy that Scottsdale issued to Castle, and that Scottsdale had no duty to defend or indemnify Hamilton & Church in the action to recover damages for personal injuries because the underlying contract did not call for additional insurance coverage.

Since there is no provision in the subcontract expressly and specifically requiring Castle to procure additional insurance coverage for Hamilton & Church and since there was no written agreement in which Castle agreed to name Hamilton & Church as an additional insured on the Scottsdale policy, Hamilton & Church was not an additional insured under that policy.

 

12/16/20       Ali-Choudhury v. Vartia
Appellate Division, Second Department
Prior Determination in Uninsured Motorist Proceeding Finding Car Involved Did Not Resolve Question as to Who Was Driving the Car

Allstate commenced a proceeding pursuant to CPLR Article 75 to permanently stay arbitration of a claim for uninsured motorist benefits arising from a motor vehicle accident that occurred on May 29, 2015. A framed-issue hearing was held to determine whether a vehicle owned by Vartia and insured by GEICO was the offending vehicle in the hit-and-run accident. Vartia failed to appear at the hearing. In an order dated November 22, 2016, the Supreme Court granted Allstate's petition to permanently stay arbitration upon finding that the vehicle owned by the Vartia and insured by GEICO was involved in the accident.

The plaintiffs commenced the instant action to recover damages for personal injuries they each allegedly sustained in the same accident. The plaintiff Ali-Choudhury moved to preclude Vartia from testifying at deposition and trial that he, personally, and his vehicle were not involved in the accident, and the other plaintiffs joined in the motion.

The Second Department found the other court proceeding did not resolve the issue of who was driving the car. The doctrine of res judicata operates to preclude the reconsideration of claims actually litigated and resolved in a prior proceeding, as well as claims for different relief against the same party which arise out of the same factual grouping or transaction, and which should have or could have been resolved in the prior proceeding.

In the earlier Article 75 proceeding, the court did not find that the defendant was driving his vehicle at the time of the accident. It only found that that the vehicle was involved in the accident.

 

12/16/20       Allstate Insurance Company v. Kim
Appellate Division, Second Department
UM Carrier Established that it Suffered Prejudice as a Result of Late Notice of an Uninsured Motorists Claim – Even Though It Received Timely Notice of a Property Damage Claim

On March 26, 2018,  Kim served a demand to arbitrate an uninsured motorist claim on his insurance company, Allstate, based on a hit-and-run accident he was involved in on April 6, 2017. In a letter dated April 9, 2018, Allstate notified the insured that it would not honor the claim because "[t]he first notice we received in regards to injury on this case was 11.5 months after [the date of loss]. There was also no police report filed in this case."

Thereafter, Allstate commenced this proceeding to permanently stay arbitration, based on the insured's failure to provide notice of the uninsured motorist claim as soon as practicable. In opposition to the petition, Kim established that he gave Allstate notice of the accident on the same day that it occurred, in connection with his claim for property damages.

The insured failed to give Allstate timely notice of his claim for uninsured motorist benefits. However, since the insured gave Allstate timely notice of the accident, Allstate was required to establish that it was prejudiced by the late notice in order to be entitled to disclaim coverage. Allstate established that it was prejudiced since, although the insured promptly notified it of the occurrence of the accident and his claim for property damage, it had no notice of, or opportunity to investigate, his claim that he was injured in the accident, until almost one year after the accident.

 

12/16/20       Liberty Mutual Insurance Company v. Rhone
Appellate Division, Second Department
Late Notice of Disclaimer in Underinsured Motorist Claim Leads to Insurer Losing Right to Contest Coverage

Rhone alleges that she was injured in an automobile accident in July 2017. Thereafter, Rhone filed a Request for New York Supplementary Uninsured/Underinsured Motorists (hereinafter SUM) Arbitration seeking coverage under the SUM endorsement of an insurance policy issued by Liberty Mutual. Liberty Mutual commenced this proceeding to permanently stay arbitration.

The court found that Insurance Law § 3420(d)(2) requires an insurer to provide its insured and any other claimant with written notice of its disclaimer or denial of coverage "as soon as is reasonably possible". The timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage.

While the issue of whether a disclaimer was unreasonably delayed is generally a question of fact, requiring an assessment of all relevant circumstances, ‘“an insurer's explanation [for the delay in disclaiming coverage] is insufficient as a matter of law where the basis for denying coverage was or should have been readily apparent before the onset of delay”'.  Similarly, even where the basis is not apparent, an explanation will be inadequate as a matter of law 'unless the delay is excused by the insurer's showing that its delay was reasonably related to its completion of a thorough and diligent investigation into issues affecting its decision whether to disclaim coverage'.

Here. the facts supporting the disclaimer were either apparent from the claim documents that were submitted by Rhone or were readily ascertainable upon the performance of a cursory investigation. Therefore, even if some investigation was warranted in this matter, Liberty Mutual failed to demonstrate that the more than four-month delay in disclaiming was reasonably related to its performance of a prompt, diligent, thorough, and necessary investigation.

 

12/16/20       5512 OEAAJB Corp. v. Hamilton Insurance Company
Appellate Division, Second Department
Accepting Premiums After Learning of Grounds for Rescission, Waives Right to Rescind

In September 2016, the 5512, through its insurance broker, Inter Insurance Agency (“Agency”) , secured a policy of business owners insurance from Hamilton Insurance Company (“Hamilton”), through Hamilton's general agent, Dovetail. The insurance application represented, incorrectly, that the building had a sprinkler system.

In January 2017, the insured premises was damaged as a result of a fire and the plaintiff submitted a claim to Hamilton. While Hamilton continued to collect premium payments, it requested proof of loss and confirmation that the building contained an automatic sprinkler system. Upon learning that the insured premises did not have such a system, Hamilton disclaimed coverage on the basis of a material misrepresentation during the application process, and reserved its right to cancel the policy.

Nevertheless, in September 2017, Hamilton, through Dovetail, renewed the plaintiff's insurance policy. Subsequently, claiming that it had first learned about the renewal after an audit of Dovetail, Hamilton directed Dovetail to issue a notice of cancellation of the renewed policy.

Hamilton waived its right to assert the plaintiff's misrepresentation as a basis for rescinding the policy and disclaiming coverage by renewing the policy and accepting further premiums after it discovered the misrepresentation.

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

12/17/20       Underwriters v. Bioenergy Development Group, LLC
Appellate Division, First Department

Appraisal Award Deciding Value and Classification of Damages Stands; Carrier’s Rescission Argument Fails for Evidentiary and Substantive Deficiencies

This decision involved two different motions.  The first issue involved the defined scope of an appraisal decision, and the second motion involved plaintiff’s application to rescind the policy based upon purported material misrepresentations.  There are few appraisal decisions in New York, so we address that issue first.

Apparently, the parties reached an impasse on the value of the alleged losses which included both damage to the insured “Buildings” and “Machinery and Contents.” The Appellate Division noted, however, that the appraisal agreement explicitly provided that the panel could determine into which category the individual damaged items fell.  Where the issue was explicitly part of the appraisal agreement, the decision of the panel must be preserved absent fraud, bias or bad faith.  No such issues were present here, and Underwriters’ attempts to undue the decision of the appraisal panel was summarily dismissed.

With regard to the later issue, material misrepresentation, Underwriters attempted to rescind the policy on the basis that the defendant undervalued the insured property.  In support of its motion, Underwriters offered the affidavit of an individual who purported to have personal and direct knowledge of the underwriting guidelines governing the issuance of this policy.

Plaintiffs moved to preclude this affidavit, and the trial court appears to have granted it based upon the proffered witness’ unfamiliarity with this underwritten policy. In reversing the trial court, the Appellate Division noted that the affidavit was permissible due to his personal and firsthand knowledge of the underwriting principles in play.  The fact that he was not personally involved in the issuance of the policy did not preclude his ability to submit evidence for the court’s consideration.

On the contrary, however, some of the exhibits attached to the affidavit were not submitted in acceptable evidentiary form. This included the proposed witness’ inability to authenticate certain underwriting guidelines and emails allegedly authored by the insurance broker.

In addition, the Appellate Division affirmed the trial court’s refusal to accept supplemental affidavits submitted by Underwriters which were offered to cure the basic evidentiary deficiencies.

Putting aside the issues related to the proffered affidavit, the Court also concluded that the movant nevertheless failed to meet its burden.  The material misrepresentation claimed by Underwriters suggested that they would not have written the subject policy with the same terms and conditions had an accurate value of the property been relayed.  The Appellate Division found these statements to be conclusory, and, as such, insufficient to support Underwriters’ attempted rescission. 

 

Potpourri

12/15/20       Lexington Ins. Co a/s/o Wyckoff Heights Med. Ctr. v. Pub. Admin. of New York County
Appellate Division, First Department
Common Law Indemnity Claims Unencumbered by General Obligations Law § 15-108

Lexington appears to have paid loss on behalf of their insured, Wyckoff, even though the damage was allegedly caused by the negligence of a third-party.  After paying the loss, Lexington then asserted Wyckoff’s indemnity rights against the purported tortfeasor. 

In response, the since deceased tortfeasor’s estate moved to dismiss the action by invoking the protections afforded under CPLR § 15-108.  Here, however, where it was established that Wyckoff’s liability was strictly vicarious, its claim was purely for common law indemnification.  Section 15-108 only applies to claims of contribution which, necessarily, presupposes some allocation of negligence to Wyckoff.

 

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

12/16/20       Devito v. Anatra
Appellate Division, Second Department
Plaintiff’s Expert’s Failure to Address the Findings of Defendant Radiologist Degenerative Nature of Spinal Injuries Fatal to Plaintiff’s Claim

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (Robert A. Bruno, J.), dated December 6, 2018. The order granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

Initially, the plaintiff commenced this action to recover damages for personal injuries that she allegedly sustained in a motor vehicle accident that occurred on August 29, 2016. Thereafter, the defendant moved for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

On appeal, the Appellate Court found that the defendant met her prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. The defendant submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine were degenerative in nature and not caused by the accident.

In opposition, the Appellate Court found that the plaintiff failed to raise a triable issue of fact. The plaintiff's expert failed to address the findings of the defendant's radiologist that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine were degenerative in nature.

Accordingly, the Appellate Court agreed with the Supreme Court's determination granting the defendant's motion for summary judgment and dismissing the complaint.

 

WILEWICZ’S WIDE WORLD of COVERAGE
Agnes A. Wilewicz

[email protected]

12/08/20       County of Niagara v. Netherlands Insurance Company, et al.
United States Court of Appeals, Second Circuit
Second Circuit Holds that Disclaimer Sufficiently Notified Additional Insured of Grounds for Disclaimer, Where it Cited Policy Language, the Factual Basis for the Denial, and Was Sent to AI’s Attorney

In November 2007, the County of Niagara contracted with T.G.R. Enterprises, Inc. (“TGR”) for a construction project at Niagara County Community College. As per that agreement, TGR procured insurance through Excelsior, including umbrella excess liability coverage, and named the County as an additional insured. That umbrella policy included a Designated Automobile Liability Exclusion (the “auto exclusion”) which excluded from coverage any injury or damage arising out of “owned autos”. Those were defined as “autos you own and any trailer you do not own while attached to power units you own”. The policy further specified that “you” and “your” referred to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under the policy.

In May 2008, Michael Lombardo, an employee of TGR, was injured while riding in the bed of a truck owned by TGR. In July, he served a Notice of Claim on the County, and then sued the matter in November 2008. In the meantime, in August, the County sent a letter to TGR’s insurance broker, tendering the claims alleged in the Notice of Claim. Peerless Insurance Company, the owner of Netherlands and Excelsior, disclaimed coverage within days, with a copy to the County. “The Disclaimer Letter contained the subject line: "Notice of Claim -- Michael Lombardo v. County of Niagara, et al." and stated that coverage was being denied for the "above captioned matter." The Disclaimer Letter quoted key portions of the Auto Exclusion provision and cited relevant facts regarding the circumstances of Lombardo's injury.”

The County then filed a declaratory judgment action seeking a declaration that one or more of the insurance companies was obligated to defend and indemnify them with respect to the Lombardo claims. The County argued that the disclaimer letter was not sufficient in that it was not addressed to the County, did not explicitly reference the County’s tender letter, did not provide a full copy of the auto exclusion, and failed to include quotations of pertinent definitions. The Second Circuit, however, was unpersuaded. A disclaimer letter must be written notice, given as soon as reasonably possible, to the insured and any other claimant. It must apprise the claimant with a high degree of specificity of the grounds for disclaimer, and include applicable policy provisions.

In this case, the letter was sufficient on its face. While not addressed to the County specifically, it was copied to their attorney, thus unambiguously notifying the County for the reason for denying coverage, and it included specific, pertinent portions of the auto exclusion, along with the factual basis for its applicability. As such, it effectively disclaimed coverage. While the County also took issue with the terms “you” and “your”, as above, in this case they were expressly defined in the policy. They unambiguously referred to TGR and excluded coverage for injuries arising from autos they owned. Accordingly, the court found that the umbrella policy did not apply.

 

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

12/08/20       Allstate Fire and Casualty Insurance Company v. Stratman
Missouri Court of Appeals, Western District
Bad Faith Claim was an Occurrence within the Meaning of Auto Policy’s Choice of Law Section

On February 13, 2014, Philip Stratman was involved in a car accident in Jackson County, Missouri that resulted in paralysis to Steven Holdeman. At the time of the accident, Stratman was insured by a policy issued by Allstate with coverage limits of $100,000 for each person and $300,000 for each occurrence. Stratman alleges that Holdeman offered to settle for the applicable coverage limits of his Allstate policy, but Allstate rejected the offer.  Allstate admits that Holdeman offered to settle the claims within the amount of Stratman's insurance coverage, but it denies that it rejected that offer.

On October 21, 2014, the Holdeman’s filed a lawsuit against Stratman in the Jackson County Circuit Court.  On December 13, 2016, a judgment was entered against Stratman in the amount of $34,311,833.22, plus post-judgment interest. The Holdeman’s sought to collect the proceeds of Stratman's Allstate policy by filing an action pursuant to Missouri's equitable garnishment naming both Stratman and Allstate as defendants.

Stratman filed a cross claim against Allstate alleging that it committed the tort of bad faith refusal to settle and breached numerous fiduciary duties it owed him in its response to the Holdeman’s insurance claim and lawsuit against him. Stratman alleges that Allstate caused him to suffer a judgment far in excess of his insurance coverage.

During the course of the litigation, Allstate settled with the Holdeman’s and satisfied the tort judgment against Stratman. The Holdeman’s dismissed all their claims with prejudice and discharged the judgment, which left Stratman’s cross claim as the only remaining cause of action.

The dispositive issue in Stratman’s remaining claim against Allstate was whether Kansas or Missouri law applied.  If Kansas law applied, the claim would be dismissed because Kansas does not recognize tortious causes of action for insurance claims.  However, the claim could proceed if Missouri law applied.

The policy’s choice of law provision provided that if a covered loss to the auto, a covered auto accident, or any other occurrence for which coverage applies happens outside Kansas, claims or disputes regarding that loss are governed by the laws of the jurisdiction where the loss happened.  Allstate argues that this provision did not apply because the bad faith cause of action was not a covered loss to the auto, covered auto accident, or other occurrence for which coverage applies.

The court disagreed.  It reasoned that a bad faith claim, by its very nature, regards a covered loss or occurrence.  The  bad faith cause of action presupposes a claim against the policy that should have been settled and could have been settled but for the alleged bad faith of the insurance carrier. The court went on to state that to read the second paragraph of the policy's choice of law provision to exclude bad faith refusal to settle because such claims are not themselves a covered loss or occurrence would be to disregard the plain language of the policy and an insured's reasonable expectation.

However, the court concluded that there was an issue of fact as to what state’s law applied under Missouri choice of law analysis.  The case was sent back to the trial court for further proceedings to determine whether Missouri or Kansas law applied.

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

12/21/20       LJ New Haven LLC d/b/a Lenny & Joe’s Fish Tale v. Amguard
United States District Court, District of Connecticut
Virus Exclusion Precludes COVID-19 Business Income Claim

A Connecticut federal court determined that the Virus Exclusion eliminates coverage for COVID-19 business income claims. In a case of first impression, Judge Michael Shea lent his voice to the growing chorus of cases finding that COVID-19 business interruption claims are not covered under standard term commercial property policies.

Founded as a clam stand in 1979, Lenny’s & Joe’s Fish Tale, grew to become three seafood restaurants along the Connecticut Shoreline, in New Haven, Madison and Westbrook. But, like so many hospitality businesses, Lenny’s was severely impacted by COVID-19-inspired stay-at home orders. In March 2020, Connecticut Governor Ned Lamont issued executive orders suspending indoor-dining and bar operations to slow the transmission of the virus. The order noted that the risk of exposure “is particularly acute in places the public gathers typically to socialize, eat, drink, shop, be entertained, and go for recreation.” As a result, Lenny’s suffered significant loss of income and even had to shut down its New Haven location.

Lenny’s sought business income coverage from its carrier, Amguard. Lenny’s claimed that the stay-at home orders prevented it from using its properties for its intended purpose. Lenny’s was careful to avoid any allegation that the restaurants suffered from actual contamination or infestation by the virus. Amguard issued standard ISO commercial property coverage, including loss of business income sustained “due to the necessary suspension of your operations during the period of restoration. The suspension must be caused by direct physical loss of or damage to property….” The policy also included Civil Authority and Extra Expense coverage.

In addition, Amguard included the standard ISO virus exclusion, that includes anti-concurrent causation language. “We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area….j.(1) Any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.”

Amguard moved to dismiss, arguing that the virus exclusion bars coverage for COVID-19 related loss. The court agreed and, therefore, did not consider whether Lenny’s claims even triggered coverage in the first place. The court found that the exclusion precluded coverage for loss caused “directly or indirectly” by a virus; and, that the anti-concurrent causation language means that a virus only must “act as a link somewhere in the causal chain producing the loss or damage at issue.” The court found that Amguard easily met its burden. As the court wrote, “it cannot seriously be disputed….that the virus is at least a “but for” cause of [Lenny’s] loss…” The causal link between the virus and the executive order, the court found was intertwined and inseparable. Because Connecticut courts have accepted and applied anti-concurrent causation language, there was no need to determine whether the virus was the efficient proximate cause of the loss. It suffices that the virus is a significant or substantial cause of the loss.

The court rejected Lenny’s other arguments as to why the virus exclusion was inapplicable. The court found that the plain language of the exclusion does not require that the virus enter and contaminate the insured premises. “There is no mention of contamination or any other restriction based on the virus’s location.” (citing N&S Restaurant LLC v. Cumberland Mut. Fire Ins. Co., 20-CV-05289, 2020 WL 6501755 (D.N.J. Nov. 5, 2020)).

The court also rejected Lenny’s argument that, within the context of the policy as a whole, the virus exclusion is only applicable to onsite contamination. Lenny’s claimed that the exception within the exclusion restoring coverage for loss resulting from fungi, rot, and pollution indicates that the exclusion only applies in instances of contamination. The court held that there is nothing intrinsically “onsite” about these causes of loss, noting that such conditions in an adjacent property could cause loss. And, the noscitur a socii canon of construction did not mean that the word virus must be accorded the same meaning as the elements within the exception to the exclusion. “The policy clearly distinguished between fungi and viruses, and I decline to import into the virus exclusion an “onsite” or “contamination” restriction that appears nowhere in the terms of the policy,” the court concluded.

The court also rejected Lenny’s assertion that a loss caused by a precautionary measure to avoid a peril cannot be caused by that peril. As Lenny put it, the virus could not cause the loss because the Order was issued to prevent the virus from causing loss. The court declined to follow Lenny’s suggestion that the Order was issued as a result of fear of the virus and not because of the virus. The court, rejecting Lenny’s cases. noted that as of the date of decision there were 35 decisions addressing the virus exclusion in the COVID-19 context and that 32 found the exclusion applicable. Of the three contrary outcomes, the court wrote that, “I do not find these cases persuasive in light of the weight of authority favoring application of the virus exclusion when courts were presented with similar policy language and analyzed the issue.”

This decision, as the court pointed out, follows the great weight of authority finding that business income claims arising from COVID-19 stay-at home orders are not covered by standard commercial property insurance policies. Each day there are more such decisions issued, as some 1,500 BI lawsuits work their way through the trial courts.  While there are some outlier decisions (mostly emanating from the state courts), they are just that, outliers; generally, thinly reasoned or addressing unique state law or policy language.

 

BUCCI on “B”
Diane L. Bucci

[email protected]

12/16/20       Prince George Par. of Prince George Winyah v. GuideOne Mut.
United States Court of Appeals, Fourth Circuit (South Carolina)
Declaratory Judgment Action Does Not Seek Damages for Personal or Advertising Injury

Protestant Episcopal Church and The Episcopal Church (“TEC”) both brought suit against the Parish for trademark infringement.  GuideOne denied coverage.

GuideOne agreed to defend any suit seeking tort damages arising out of personal and advertising injury.  However, the plaintiffs in the underlying action did not specifically request damages; rather, they sought declaratory relief, injunctive relief, cancellation of trademark registrations, attorney’s fees and costs.  The Parish argued that GuideOne had a duty to defend because the court could have awarded tort damages even though they were not sought.  The court held that such an award was far too remote to constitute a reasonable possibility of coverage and was insufficient to trigger GuideOne’s duty to defend.

 

12/15/20       James River Insurance Company v. Rosemoor Suites, L.L.C.
Appellate Court of Illinois, First District, Second Division
Insurer is Not Obligated to Defend its Insured for Trademark Infringement Which Falls Within the Intellectual Property Exclusion

LHO brought suit against Rosemoor Suites for trademark infringement after Rosemoor opened a hotel which it called Hotel Chicago, a few miles away from LHO’s hotel, which was also called Hotel Chicago. Despite a cease and desist letter, Rosemoor continued to use the name and sought to trademark it even though LHO had been using the name for at least two years before Rosemoor.

James River denied coverage to Rosemoor in the underlying suit because LHO’s trademark infringement claims occurred after the policy period and were barred by the policy’s intellectual property exclusion.  This court agreed that Rosemoor’s alleged infringement was not alleged to occur until after the policy expired. While the court recognized that Rosemoor filed for a trademark during the policy period, this was unknown to LHO until after the policy period, so claims of infringement could not have occurred until after the policy period.  The court also held that even if the infringement had occurred during the policy period, James River had no duty to defend because the policy excluded coverage for personal and advertising injuries “arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights.”  Moreover, held the court, based on the cease and desist letter,  Rosemoor at the very least knowingly infringed LHO’s declared trademark rights, which triggered the knowledge exclusion.

 

11/17/20       Hurricane Elec., LLC v. Nat'l Fire Ins. Co. of Hartford
United States District Court, Northern District of California
Facilitating Copyright Infringement Does Not Qualify as Copyright in Your  Advertisement

Internet service providers used Hurricane Electric’s business to business internet-related services to provide internet access to individual customers.  On March 19, 2020, Hurricane received a cease and desist letter asking that it terminate subscribers that repeatedly infringed upon copyrighted motion pictures.  It was alleged that Hurricane induced the infringement with promotional language on its webpage. The cease and desist letter alleged that Hurricane was “liable” for copyright infringement because it had “not terminated” these accounts. The alleged copyright infringement happened between February 2018 and March 2020.

It was also alleged that Hurricane itself had infringed by “rout[ing] the data packets of the infringing material from its account holders to destinations” and “encourages or materially contributes to the account holders’ direct infringements by providing the facilities and means for the account holders to continue their infringements.”

The National Fire policy defined “personal and advertising injury” as “[i]nfringing upon another’s copyright, trade dress or slogan in your ‘advertisement.” National Fire denied coverage for the claims asserted on the grounds that the proceedings between Hurricane and the claimants did not constitute a suit within the meaning of the Policy.

Hurricane then brought actions for declaratory relief against the claimants seeking to establish that that it did not infringe copyrighted materials, or in the alternative, that it was shielded from liability.  It then sought reimbursement from National Fire for the sums expended in the declaratory judgment action.

The court granted judgment on the pleadings for National Fire because: (1) there was no suit within the meaning of the policy; and (2) the related declaratory judgment actions do not involve alleged copyright infringement in Hurricane’s advertisements.

Hurricane argued that under the definition of suit, a mediation between Hurricane and the claimants following the cease and desist letter constituted a suit defined as “any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent.”  The court easily dispensed with this argument because National Fire did not consent to the mediation.

Also, the Policy excluded from coverage “‘personal and advertising injury’ arising out of the infringement of copyright ... rights.” The exclusion had an exception for “infringement, in your ‘advertisement,’ of copyright....”

The court held that the exception did not apply because encouraging and providing the facilities and means for infringement does not constitute advertising.  The court noted that even if certain advertisements might have led customers to services that enabled infringement, there were no allegations of infringement in the advertisements themselves.  

 

11/19/20       Indian Harbor Ins. Co. v. SharkNinja Operating LLC
Delaware Supreme Court
Duty to Defend Was Triggered Where Complaint “Sketched Out” a Potentially Covered Claim

iRobot brought an advertising injury lawsuit against competing vacuum manufacturer “Shark Ninja.” iRobot accused SharkNinja of infringing several iRobot patents and advertising falsely about the capabilities of its “Shark IQ” vacuum cleaner to the detriment of iRobot’s products and goodwill, including a smear campaign around iRobot’s pricing in comparison to its own.

Indian Harbor denied coverage on the grounds that the false advertising claim did not meet the definition of “personal and advertising injury” because it did not allege a “disparagement” of iRobot’s products.  Indian Harbor argued even if the claim was initially covered, the Failure to Conform and IP Infringement Exclusions applied.

The court, applying Massachusetts law, held that the duty to defend was triggered if a covered claim could be “roughly sketched out” and iRobot’s claims roughly sketched out a disparagement claim.  For the sake of completeness, the court also held that coverage attached under the “use of another’s advertising idea” injury.  In fact, according to the court, iRobot provided a line-item chart detailing the ways in which SharkNinja “mimic[ked]” iRobot’s marketing claims about the Roomba’s “selected cleaning” and “recharge/resume” features to influence purchasing decisions.  According to the court, this was not a “rough sketch” of the use of another’s advertising idea, it was a well-drawn illustration.

Indian Harbor attempted to rely on the Conformance Exclusion which precludes coverage for damages that arise out of the failure of goods, products or services to conform with any statement of quality or performance made in [SharkNinja’s] ‘advertisement.’ This, according to Indian Harbor, defeated coverage for false advertising claims about the insured’s product because the advertising extolled the SharkNinja product instead of iRobot’s.  According to the court, Indian Harbor did not carry its burden with respect to this exclusion because the advertising both disparaged iRobot’s product and extolled SharkNinja’s competing product.

Indian Harbor then attempted to rely on the IP Infringement Exclusion. It argued that the Exclusion plainly excluded the patent infringement claims alleged by iRobot.  The court held that while that may be the case, the fact that some claims were potentially covered, all claims had to be defended. 

 

OFF the MARK
Brian F. Mark
[email protected]

No newsworthy decisions to report on as the holiday shutdown has arrived.

 

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

12/15/20       Johnson v. CSAA General Insurance Co.
Supreme Court of Oklahoma
Property Insurance – Reversal of District Court – Post-Loss Assignment of Property Insurance Claim Without Insurer Consent Was Not Prohibited

The issue before the Supreme Court of Oklahoma concerned the insured Ms. Johnson’s assignment of her post-loss property insurance claim to the construction company she had engaged to repair her storm-damage real property.  The insurer argued its insured, Ms. Johnson, was required under her policy with the insurer to obtain written consent from the insurer prior to making the assignment, and because Ms. Johnson had failed to do so, the assignment was null and void.  In ruling on this issue, the Oklahoma Supreme Court agreed with a majority of courts in determining an insured's post-loss assignment of a property insurance claim is an assignment of a “chose in action”, and not an assignment of the insured's policy.  As such, the Supreme Court held Ms. Johnson’s assignment of her property insurance claim was not prohibited by either the insurance policy or Oklahoma statutory law.  The opinion concluded the District Court's judgment had been erroneous when it dismissed the construction company as a party based on its finding that written consent for the assignment was not provided by the insurer to the insured. The Oklahoma Supreme Court reversed the judgment of the District Court and remanded the case back for further proceedings.

Many property insurance policies have a provision stating something along these lines: no assignment of benefits or other transfer of rights is binding upon us unless approved by us.  Notwithstanding this, the majority rule in the United States is that a policy provision prohibiting assignment of an insurance policy or rights under it unless the insurer's prior consent is obtained does not nullify an assignment or transfer of rights by an insured of its claim rights after a loss covered by the policy has occurred.

The legal reasoning behind the majority rule has been generally summarized by courts as follows.  Once a loss has triggered the liability provisions of the insurance policy, an assignment of the claim is no longer regarded as a transfer of the actual policy or rights to coverage of the claim.  Instead, it is a transfer of a chose in action under the policy. Post-loss, the insurer-insured relationship is more analogous to that of a debtor and creditor, with the policy serving as evidence of the amount of debt owed.

I know many of our readers handle property loss claims in New York.  New York also follows the majority rule on this assignment of claim issue.  See M.V.B. Collision Inc. v State Farm, 59 Misc.3d 406, 409-413 (NY Dist. Ct. 2018).    

 

BARCI’S BASICS (on No Fault)
Marina A. Barci
[email protected]

12/14/20       American Transit Insurance Company v. Yulia Bilyk, et al.
United States District Court, Eastern District of New York
Carrier Fails to State Claim Indicative of No-Fault Fraud Under RICO

American Transit Insurance Company (“ATIC”) filed a RICO action against 29 named individuals and companies and another 40 unknown individuals and a company alleging that they constitute an “enterprise” that has engaged in a pattern of racketeering activity by making fraudulent or exaggerated policy claims under NY’s no-fault insurance scheme. The complaint identifies three categories of defendants – retail, wholesale, and “no-fault clinics” and attempts to explain how these categories interacted to submit fraudulent claims at ATIC’s expense. The “no-fault clinics” are purported to have provided generic, fraudulent prescriptions for commonly needed medical devices used by car accident victims to unknown accident patients who assigned their no-fault benefits to the clinic. The clinic then referred the patients to the retail and wholesale defendants to fill their prescription and received a kickback after the retailer/wholesaler made an insurance claim. This was one, among many other claims made, that ATIC claimed constituted fraud. The court dismissed the case entirely for failure to state a claim upon which relief can be granted as the allegations were broad, speculative, and contained only conclusory allegations.

 

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

Legislative List
12/11/20       Potential Law Permits Assessment Corporations To Write Umbrella and Stand-Alone Liability Policies
New York State Legislature
Bill Delivered to the Governor Would Clarify that P&C Assessment Corporations are Authorized to Write Umbrella and Liability Policies

A bill that passed both houses of the Legislature in July (Bill No. A07110) has been delivered to the Governor that would level the playing field for assessment cooperatives in the property and casualty insurance market.

These companies cover thousands of homeowners, renters, small businesses and farms in Upstate New York and have been writing liability policies for over 50 years. However, current law restricts these companies from writing umbrella insurance policies for their policyholders. The discrepancy has left assessment cooperatives at an unfair disadvantage in the rural and underserved areas of the Upstate New York markets they primarily serve, and potentially results in price increases for policyholders due to shrinking options.

The bill, if signed into law, would eliminate language in Insurance Law § 6605 expressly limiting the offerings of these assessment cooperatives to coverage extended “solely in conjunction with fire insurance written under the same policy and covering the same premises . . . .” Additionally, the bill would add a new § 6605(d) expressly permitting these entities “to write personal or commercial umbrella liability insurance or any other type of standalone liability insurance, excluding automobile insurance.”

 

12/15/20       New Law Establishes For-Hire Motor Vehicle Safety Program
New York State Legislature
Governor Signs Law Permitting Associations Representing For-Hire Motor Vehicles to Establish and Implement Educational Safety Programs and Corresponding Premium Reductions

Last week, Governor Cuomo signed into law Chapter 347 of the Laws of 2020 incentivizing educational safety programs for for-hire motor vehicles with reduced premium benefits.

Vehicle and Traffic Law § 370 requires certain minimum limits of insurance to be carried by for-hire motor vehicles, which, in 2019, increased to $1.5M for those vehicles with a carrying capacity of eight or more persons. This increase saw a corresponding increase in premiums that the legislature has sought to address. This law would permit premium reductions for those insureds that successfully complete a comprehensive vehicle safety program.

Aside from authorizing the creation of these education programs, the new Insurance Law §2353 outlines the subject areas to be covered, including:

  1. the concept of collision prevention, including a discussion of the factors involved in traffic situations;

  2. alcohol and drug use as a contributing factor in motor vehicle collisions;

  3. accident prevention techniques;

  4. the use of occupant restraints;

  5. the risk factors involved in driver attitude and behavior such as speeding, reckless and aggressive driving, and improper lane use;

  6. traffic laws in New York state;

  7. physical and mental condition of drivers;

  8. conditions and strategies of driving;

  9. safe driving techniques in hazardous weather conditions including rain, wind, snow, ice, sleet and fog;

  10. equipment that can enhance the safe operation of vehicles; and

  11. passenger safety including but not limited to recommending the use of seat belts to passengers, warning passengers to exercise care when boarding and exiting a vehicle and notifying passengers of emergency exits, if applicable.
     

After successful completion, the superintendent is permitted to provide an appropriate three-year reduction in premium rates for commercial risk insurance applicable to for-hire motor vehicles with capacity to carry eight or more passengers.

In Governor Cuomo’s Approval Memorandum No. 51, he advised that his office

“secured an agreement with the  Legislature to make certain technical changes to allow the Department of Motor Vehicles to evaluate and approve the safety course, and to ensure that taking multiple safety courses does not result in additional premium rate reductions.”

 

12/15/20       New Law Grants Rate Reductions For Boating Safety Courses
New York State Legislature
Governor Signs Law Permitting Insurance Rate Reductions Upon Completion of Designated Boating Safety Courses

Last week, Governor Cuomo signed into law Chapter 335 of the Laws of 2020 that provides for boating liability insurance reductions for those who take boater safety courses. The bill, which passed both houses in July, recognized that although owning and operating a boat provides enjoyment for a large portion of the populace, many perils and responsibilities arise once a boat leaves the dock and provides incentives for those who opt to learn and follow boating safety rules through basic or advanced boating safety courses.

Pursuant to a new Insurance Law § 2336-b, boating liability insurance rates and premiums may be reduced where an insured “has successfully completed a  boating safety course or an advanced boating safety course which meets the requirements of part five of article four of the navigation law and has been approved by the commissioner of parks, recreation and  historic  preservation.” There is an express carve-out from such reductions for those who attend such a course following any boating infraction pursuant to Navigation Law §§ 45, 49.

In his Approval Memorandum No. 41, Governor Cuomo noted that he had signed Brianna’s Law into effect last year, which phases in

“requirements that all operators of motorized watercraft must complete a state-approved boating safety course. While this bill requires all insurers provide a discount for completing a soon to be mandatory boating course, I have secured an agreement with the Legislature to allow insurers to independently evaluate risk to determine if a discount is warranted.”

 

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

12/15/20       10012 Holdings, Inc. v. Sentinel Insurance Company, LTD,
United States District Court, Southern District of New York
Without Physical Loss, Business Interruption Claims are Denied

Plaintiff (owner of an art gallery and dealership) initiated this action seeking coverage for business losses allegedly resulting from government restrictions on non-essential businesses during the COVID-19 pandemic. Plaintiff obtained a business property insurance policy (the “Policy”) from defendant. The Policy provides “Business Interruption” coverage as follows:

We will pay for the actual loss of Business Income you sustain due to the necessary suspension of your “operations” during the “period of restoration”. The suspension must be caused by direct physical loss of or physical damage to property at the “scheduled premises”, including personal property in the open (or in a vehicle) within 1,000 feet of the “scheduled premises”, caused by or resulting from a Covered Cause of Loss.

The Policy defines “suspension” as “[t]he partial slowdown or complete cessation of your business activities” if “part or all of the ‘scheduled premises’ is rendered untenantable as a result of a Covered Cause of Loss if coverage for Business Income applies to the policy.” “Covered Causes of Loss” is defined by the Policy as “risks of direct physical loss.” Plaintiff’s policy also provided “Civil Authority” coverage: “This insurance is extended to apply to the actual loss of Business Income you sustain when access to your ‘scheduled premises’ is specifically prohibited by order of a civil authority as the direct result of a Covered Cause of Loss to property in the immediate area of your ‘scheduled premises.’” The Policy also provides “Extra Expense” coverage. Those provisions cover “reasonable and necessary Extra Expense[s] you incur during the ‘period of restoration’ that you would not have incurred if there had been no direct physical loss or physical damage to property at the ‘scheduled premises.’” Like many other non-essential businesses, plaintiff suspended operations based on orders issued by the Governor of New York and the Mayor of New York City. Plaintiff then requested that defendant reimburse it under the Policy’s “Business Interruption,” “Civil Authority,” and “Extra Expense” provisions. Defendants then made a motion to dismiss the action on the pleadings pursuant to Federal Rule of Civil Procedure 12(b)(6), forcing plaintiff to provide the grounds upon which his claim rests through factual allegations sufficient ‘to raise a right to relief above the speculative level.’” ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007).

Tackling the question of whether or not Business Interruption coverage should be afforded the court looked to various New York cases interpreting language similar to that in the Policy at issue here. Plaintiff claimed the Policy was ambiguous because it covers both “loss of” and “damage to” Covered Property. Plaintiff argued that “loss” and “damage” cannot mean the same thing, as New York law requires contracts to be interpreted to give each term effect. The court reasoned that the term “loss” is unambiguous in this case in light of New York law which interprets such language as not including the “loss of use” alleged by the complaint. Plaintiff then argues that because the Policy’s definition of “Covered Cause of Loss” includes the “risk of direct physical loss”, defendant agreed to cover business loss due to the risk of COVID-19 on the insured premises. The court again noted that the requirement of the Policy is “direct physical loss” with an emphasis on the physical aspect of the loss. Here, there was no physical loss alleged in the complaint, thus the Business Interruption coverage was not implicated. Using the same reasoning, i.e. a need for a direct physical loss to trigger coverage, the court ruled that the Policy’s Extra Expense coverage was not triggered.

Moving onto the Civil Authority provision of the Policy, the court once again ruled that the complaint did not allege facts which could trigger coverage. In short, the court reasoned that the Civil Authority provision is triggered if and only if access to the insured premises is prevented by a civil authority as a result of direct physical loss to properties in the immediate area of the insured premises. Here, the court stated that plaintiff’s premises was closed for the same reason that all of the neighboring buildings were closed. The complaint did not plausibly allege that the potential presence of COVID-19 in neighboring properties directly resulted in the closure of plaintiff’s properties; rather, it alleged that closure was the direct result of the risk of COVID-19 at plaintiff’s property. Accordingly, the court granted defendants motion to dismiss, as there was no plausible way that plaintiff could argue coverage under the Civil Authority provision of the Policy was owed.

 

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

 

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]

All quiet in the Great White North.

 

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

12/12/20       Total Asset Recovery Servs LLC v. Metlife, Inc.
Appellate Division, First Department

Defendants Had a Duty to Escheat Life Insurance Proceeds to the State Even in the Absence of Notice and Proof of Death of Policyholder

In the early 2010’s, New York State (the “State”) investigated the manner in which life insurers tracked policyholders and found that life insurers were not adequately verifying whether their policyholders had died in the absence of a claim from a beneficiary.  This investigation resulted in the payment by life insurers of over $250 million, as well as the formation of regulations requiring life insurers to take certain measures to identify deceased policyholders.

Plaintiff commenced this action in 2010 alleging that defendants (Metlife and other insurance companies) failed to escheat to the State unclaimed life insurance proceeds.  Plaintiff brought this claim under the New York False Claims Act (“NYFCA”) alleging that from 1986 through 2017, defendants knowingly made, used, or caused to be made or used a false record or statement to avoid complying with their escheatment obligations under the Abandoned Property Law.  The plaintiff further alleged that the defendants had actual knowledge of certain policyholders’ deaths, as evidenced by returned mail, customer call service logs, or demutualization payments separately escheated to the State, yet defendants failed to disclose policyholder’s life insurance proceeds to the State.

Defendants moved to dismiss this lawsuit arguing, among other things, that they had no duty to escheat unclaimed life insurance proceeds in the absence of notice and proof of death.  The Supreme Court granted defendants’ motion to dismiss. 

The Appellate Division found that the Abandoned Property Law does require insurers to escheat unclaimed life insurance proceeds to the State, even in the absence of notice and proof of death of the policyholder.  Insurers are obligated to compare their information against the Social Security Administration’s Master Death File.  Thus, if a life insurer files a false report with the State certifying that it has no abandoned property, within the meaning of the Abandoned Property Law § 700, to escheat in a given year, and has the requisite level knowledge, within the meaning of State Finance Law § 188(3)(a), as to the falsity of that report, then the filing of that false report may serve as a basis for the NYFCA claim, even if the life insurer has not been presented with notice and proof of the policyholder’s death.
 

www.hurwitzfine.com

© Hurwitz & Fine, P. C. 2020
All rights reserved

Newsletter Sign-up

Fill in the form to register to receive any of our free electronic newsletters: