Coverage Pointers - Volume XXII, No. 17

Volume XXII, No. 17 (No. 582)
Friday, February 5, 2021
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.


Coverage Pointers Subscribers:

Do you have a situation?  We love situations. 

For our several new subscribers, here’s what you will find.  We call this our “cover note” and it contains the thoughts, dreams, aspirations, highlights and ramblings of our editorial staff, interspersed with historical tidbits from 100 years ago today.  At the end of the cover letter, you will find the headlines for the cases reviewed in the attached issue of Coverage Pointers.  And yes, there is an attached issue where we have summaries of every insurance opinion from every New York appellate court, decided in the two weeks previous to the issue, topically arranged.  We also cover Connecticut decisions, federal decisions from New York courts and from selected courts around the country, and a variety of other insurance-related topics.  But don’t miss the attached issue of CP.  Past issues of our newsletter are available on our firm’s website and there is a fairly decent search engine that should help you find older cases.

Happy February – one day closer to spring here.  We felt badly for all those downstate who suffered from the snow event this week.  Buffalo was spared from the Nor’easter although our Long Island office was not.  All is ok.

Need to root against Brady.  That simple. Bills fans do that.

We are always delighted to hear from you.  Pick up the phone if you want to discuss coverage, litigation, strategy, whatever,  We really do love situations and if it is out of my wheelhouse, we have all kinds of wheels in the office who can help.

You’ll find an interesting decision in C.J. Englert’s column from the Southern District of New York on the courts look at proof when trying to recreate lost policies. This is becoming more and more important in Child Victims cases.


New Training Opportunity: 

Summing Up the Sum and Substance of SUM Coverage

This week we presented on  New York Supplementary Uninsured/Underinsured Motorists Coverage, [SUM Coverage] for a good client:  Here’s what we discussed  If you’re interested is scheduling a program, reach out to me at [email protected]:



Presidential Biography List – 2021 Version

Presidents’ Day is coming up.

Those who know me best (or those who are regular readers of CP) know that my secret passion is U.S. Presidential history.  Some years ago, I decided to read presidential biographies in order and tried to find the best of the best read.  I published that list after my reading was complete.

Each year, in the issue just before Presidents’ Day, I publish an update on my related reading and do so below.  The underscored titles below are books I’ve read since Presidents’ Day, 2020. Since I joined a book club, I’ve read a number of other genres as well.  Currently, I’m reading the recent Telex from Cuba, by Rachael Kushner, about Cuba in the 1950’s. Some of this year’s reads related to the presidency at the time, rather than strictly biographies of the president   Numbers represent the Presidents, of course.

P.S. Some of the books (e.g. The Quartet, War of the Roosevelts, Impeachment) focus on more than one president but are only listed once.

  1. His Excellency, George Washington (Ellis); First Entrepreneur, How George Washington Built His and the Nation’s Prosperity (Lengel), The First Conspiracy – The Secret Plan to Kill George Washington (Meltzer); Franklin & Washington (Larson)

  2. John Adams (McCullough); John Adams Under Fire (Abrams)

  3. Thomas Jefferson, the Art of Power (Meachem); Thomas Jefferson and the Tripoli Pirates: The Forgotten War That Changed American History (Kilmead); America’s Jefferson (Fenster), Thomas Jefferson’s Education, (Taylor)

  4. James Madison: A Biography (Ketcham); The Quartet (Ellis), The Price of Greatness – Alexander Hamilton, James Madison and the Creation of American Oligarchy, (Cost)

  5. The Last Founding Father: James Monroe and a Nation's Call to Greatness (Unger)

  6. John Quincy Adams (Unger)

  7. Andrew Jackson-- American Lion (Meacham); Andrew Jackson – Miracle of New Orleans, (Kilmead), Avenging the People, Andrew Jackson, The Rule of Law and the American Nation (Opal);

  8. Martin Van Buren (Widmer)

  9. William Henry Harrison (Collins)

  10. John Tyler (May), The Accidental Presidents (Cohen)

  11. A Country of Vast Designs – James Polk (Merry)

  12. Zachary Taylor (John S.D. Eisenhower)

  13. Millard Fillmore (Finkelman)

  14. The Expatriation of Franklin Pierce (Boulard)

  15. James Buchanan (Baker); Worst. President. Ever (Strauss)

  16. Team of Rivals (Goodwin); The Impeachment of Abraham Lincoln (Carter);  Killing Lincoln (O'Reilly), Lincoln and the Abolitionists (Kaplan), Six Encounters with Lincoln (Pryor), Becoming Abraham Lincoln – The Coming of Age of Our Greatest President (Kigel), Lincoln’s Last Trial – the Murder Case that Propelled Him to the Presidency (Abrams)

  17. History of the Impeachment of Andrew Johnson (Ross); The Impeachers (Wineapple), Impeachment, (Meachem, et al)

  18. Ulysses S. Grant in War and Peace (Brands); American Ulysses (White), The Presidency of Ulysses S. Grant,  (Kahan)

  19. Fraud of the Century: Rutherford B. Hayes, Samuel Tilden, and the Stolen Election of 1876 (Morris), Grant (Chernow)

  20. Destiny of the Republic: A Tale of Madness, Medicine and the Murder of a President -- Garfield (Millard)

  21. Chester Alan Arthur (Karabell), The Unexpected President – The Life and Times of Chester A. Arthur (Greenberger)

  22. Grover Cleveland (Graff)

  23. A Compilation of Messages and Papers of the President - Benjamin Harrison

  24. Grover Cleveland (Graff)

  25. The President and the Assassin: McKinley, Terror, and Empire at the Dawn of the American Century (Miller); President McKinley, Architect of the American Century (Merry)

  26. Theodore Rex (Morris), Theodore Roosevelt (Autobiography), The Bully Pulpit (Goodwin), Bully Pulpit (Goodwin), The River of Doubt: Theodore Roosevelt's Darkest Journey (Millard), Forging a President – How the Wild West Created Teddy Roosevelt (Hazelgrove), The War of the Roosevelts (Mann), Theodore Roosevelt for the Defense (Abrams)

  27. The Tea Party President by William Howard Taft; Charles Stanfield Davis

  28. Woodrow Wilson (Brands), The Moralist – Woodrow Wilson and the World He Made, (O’Toole); Mr. President, How Long Must We Wait – Woodrow Wilson and the Fight for the Right to Vote (Cassidy)

  29. Warren Harding (Dean); The President’s Daughter (Britton)

  30. Calvin Coolidge, Man from Vermont (Fuess)

  31. Herbert Hoover (Leuchtenburg); Herbert Hoover in the White House (Rappleyea)

  32. Traitor to His Class -- FDR (Brands); War of the Roosevelts (Mann); His Final Battle (Lelyveld); Commander in Chief (Hamilton); The Last 100 Days – FDR at War and Peace (Woolner), No Ordinary Time (Goodwin); The Washington War (Lacey)

  33. Citizen Soldier -- Harry Truman (Donald); The General and the President (Brands)

  34. Eisenhower: Soldier and President (Ambrose); Eisenhower, In War and Peace (Smith), Ike and McCarthy (Nichols); The Age of Eisenhower, America and the World in the 1950s (Hitchcock); Ike’Bluff – President Eisenhower’s Secret Plan to Save the World (Thomas)

  35. Kennedy (Sorensen)

  36. The Conviction of Richard Nixon (Reston), Nixon, the Triumph of a Politician (Ambrose) Nixon, the Education of a Politician (Ambrose);
  37. Write It When I'm Gone -- Ford  (DeFrank)

  38. Jimmy Carter (Zelizer), President Carter – the White House Years (Eizenstat)

  39. Dutch - Reagan (Morris; Ronald Reagan (Sutherland); Reagan, An American Journey (Spitz)

  40. George Herbert Walker Bush (Wicker); Destiny and Power (Meachem);

  41. First in His Class (Bill Clinton); My Life (Autobiography)

  42. Decision Points -- George W. Bush (Autobiography)

  43. The Bridge – Barack Obama (Remnick)

  44. Understanding Trump (Gengrich), Fire and Fury – Inside the Trump White House (Wolff), Everything Trump Touches, Dies (Wilson)


  45. Presidents’ Club  (Gibbs and Duffy)

  46. Benjamin FranklinAn American Life, (Isaacson)

  47. Rebel Yell, The Violence, Passion and Redemption of Stonewall Jackson, 

  48. Dead Presidents: An American Adventure into the Strange Deaths and Surprising Afterlives of Our Nation's Leaders (Carlson)

  49. The American Sprit (McCullough)

  50. Unusual for their Times – On the Road with America’s First Ladies (Och)

  51. Impeachment – An American History (Meacham, Baker, Naftali, Engel)

  52. John McCain, The Restless Wave (McCain and Salter),

  53. Leadership in Turbulent Times (Goodwin)

  54. The Tragedy of Benedict Arnold – An American Life (Malcolm)

  55. Without Precedent – Chief Justice John Marshall (Paul)

  56. A Higher Loyalty – Truth, Lies and Leadership (Comey)

  57. The Soul of America (Meacham)

  58. Demagogue – the Life and Long Shadow of Senator Joe McCarthy (Tye)

  59. The Man Who Ran Washington – The Life and Times of James A. Baker, III (Baker)

If you are looking for recommendations, just ask.


Risk Transfer Training:

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

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


New York Coverage Protocol Training:

Another very popular program is one designed to remind, refresh or instruct claims professionals who handle New York insureds, claims and policies, on the special nuances (and traps) that are part of the New York coverage experience.  Does your staff need it? Here’s the way to find out.  Ask your staff these questions:

  • Are you sending out reservation of rights letter in NY claims? 
  • Do you know the “30-day” rule?
  • Are you certain you know who gets copies of coverage position letters in New York?
  • If the insured fails to respond to 10 letters seeking cooperation, can you successfully deny coverage for lack of cooperation?
  • If the insured gives you notice of an accident, five years after it occurred, in violation of notice obligations in the policy, is that enough to sustain a late notice disclaimer?

If the answer to question “1” was “yes” or the answer to any of the remaining questions were “no”, sign up for NY Protocol training.



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.  Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Chris Potenza at [email protected]  to subscribe.



We hope you are celebrating Black History Month.

Mirna M. Santiago

[email protected]


The House that Ruth Built – to be Built:

The Evening World
New York, New York
05 Feb 1921



Col Ruppert Announces Purchase Of Site from the Astor Estate

STADIUM TO COST $2,000,000

Will Be a Complete Bowl With Seating Capacity of 75,000

            The New York American League Baseball Club has purchased a site for their new home grounds at 161st Street, near the north bank of the Harlem River for $500,000, it was announced to-day.

            Col. Ruppert, President of the Yankees, closed the deal to-day with the Astor estate for the site.

            Work will be started on the new stadium at an early date, and it is estimated it will cost $2,000,000.

            It will be a complete bowl, but will probably not be ready until the opening of the 1923 season, although an effort will be made to get the materials to finish it a year from now.  There are to be seats for 75,000.

            The consent of the city to close 158th Street and Cromwell Avenue must be obtained to make the site available. 


Peiper on Property and Potpourri:

The beginning of February brings with it a few interesting decisions for your perusal. The column this week touches on attorney/client privilege issues, the Relation Back Doctrine, Reformation and the definition of “residence premises” as used in a homeowner’s policy.  Good stuff to be sure, but we must take issue with the Third Department’s decision in Place v. Preferred.

Let us explain. The court was confronted with an unusual situation where the plaintiff’s former residence was damaged by a plumbing leak caused by frozen pipes.  Although plaintiff still owned the premises, she admittedly had not lived there for months and had no intention of returning to live there.  Preferred understandably denied the claim on the basis that it was not a “residence premises” and thus not covered under Section A – Dwelling.

In addition, Preferred noted that the premises was also vacant/unoccupied and that plaintiff did not take reasonable steps to ensure heat was maintained. 

Here’s where the problem started.  The Court reasoned that because there was an exclusion for vacant/unoccupied premises, it followed the policy had to contemplate coverage for something more than simply the residence premise.  The court, it appears, reasoned that a residence premise could not be “unoccupied,” and as such, Coverage A could not be construed to be limited to only “residences premises.”   We respectfully submit that the Court may have been mistaken. 

A party may have two residences for purposes of insurance.  That is well established.  Is it not possible for a party to reside in Florida and New York, and split time in between?  When the New York premises is left unoccupied for months at a time, does it cease to become a residence.  We think not.  The policy does not require exclusive residency, just that it is a place where the insured resides. 

Further, of course, even if it is not a residence premises, the policy still contemplates, at a minimum, coverage for some portion of personal property (usually 10%).  Thus, there is coverage under the policy for those insured properties which do not qualify as “residence premises.” 

Further still, we are troubled that the Court effectively created coverage under Coverage A - Dwelling for non-residence premises by construing an exclusion.  Exclusions, quite simply, should not be read to create coverage.  They are to be read ad seriatim.  Thus, if there is no coverage, you don’t continue on to the next exclusion.  Here, of course, the coverage grant is not triggered, so the Court should have never even looked at the exclusion to begin with.

We trust this will be one of those anomaly cases which will be a thorn in everyone’s side until it is eventually forgotten. We all know those cases.  Indeed, I’ve been involved in some of those cases.  As with the others, we’re sorry to see this one today but don’t anticipate it being a problem in the future.  

That’s enough complaining for this week. On a lighter note, I’ll address the other pressing issue:  Bucs or Chiefs.  It is a particularly complex question for Buffalonians. On one hand, no one has tortured the City of Buffalo more than Mr. Brady.  On the other hand, the Chiefs crushed the Bills just 10 days ago. 

I, for one, am Team Brady this week, but not because I have any issue with the Chiefs.  Nope.  I dislike the Patriots and Patriot Way thing far more than anything else in sports.  Brady (and, I suppose his team) winning further demonstrates that the Patriots 20-year run of success was more about his mastery than anything else.  In year one after Brady, the Patriots had a losing record and missed the playoffs.

It is not a coincidence, or at least I hope not.  A Buccaneers win further supports my ongoing, yet still fragile, recovery from the last 20 years. 

Steven E. Peiper

[email protected]


TAE Turns 74:

Times Union
Brooklyn, New York
05 Feb 1921


            Orange, N. J., Feb. 5.—Plans are under way here for a celebration in honor of the seventh-fourth birthday of Thomas A. Edison  that will overshadow all former occasions of its kind.

            On February 11 Mr. Edison will be the guest of the “Edison Pioneers” men who have been associated with him during the years 1870-1885, and of the junior members of the order who were his co-workers form 1886 to 1900.

            At “Glenmont,” the home of Mr. Edison, in Llewellyn Park, West Orange, the Edison employees and their families will be entertained. 


Wilewicz’ Wide-World of Coverage:

There is poetry for every month of the year, it seems. March comes in light a lion and leaves like a lamb. April showers bring May flowers. But what does February do? Perhaps something about the cold and rollercoaster weather? I tried to search online for something, but came up short. There were a couple, but they were morbid. It is interesting that the briefest month also has a dearth of poetry written about it. Maybe there’s just not enough time.

In any event, this week in the Wide World of Coverage, we are finally able to bring you something from our very own Second Circuit. In fact, the old 2d Cir. touched upon two coverage-ish matters in the past two weeks. Below and attached you’ll find Diane’s write-up of a matter involving a reinsurance company but actually analyzing issues relative to the Securities Exchange Act. For my column, we have a case involving premium payment issues and lapsed coverage. Full summary and link to the matter can be found in the annexed edition this week.

Until next time!

Agnes A. Wilewicz

[email protected]


Taking One’s Husband’s Name:

Daily News
New York, New York
05 Feb 1921


            We hesitate to disagree with a daughter of a President about anything whatever. Yet with all due respect we venture the opinion that considerable havoc will be wrought in this land of the free if many women follow the advice of Miss Margaret Wilson and retain their maiden names after their marriage.

            The married name is the family name.  It does not matter so much whether it is the name of the groom or of the bride. But inasmuch as custom has made it the name of the groom, it is wiser to leave it that way.

            We fail to see how a woman, no matter how great her gifts or how vivid her personality, submerges her identity when she takes the name of the man she weds.

            Mrs. Harriet Beecher Stowe, Mrs. Julia Ward Howe, Mrs. Harriott Stanton Blatch, Mrs. Humphrey Ward, Madame Curie, Mrs. Elizabeth Barrett Browning and Mrs. Mary Roberts Rhinehart have all adopted the names of their husbands, and none of them became nonentities thereby.

            It would take many pages to enumerate the roses which have lost none of their fragrance by changing their names when they were led to the altar.

            Moreover, our ideas of the marriage state being what they are, we fear that it would often embarrass the wife of Mr. Smith to give her name to the census enumerator as Miss Jones, and announce herself as the mother of four or five little Smith children.

            It would confuse the postman too, and bother the income tax collector, and annoy the grocer, who wouldn't understand why he had to send a bill to Mr. Smith for the bacon and eggs that Miss Jones had ordered on the telephone.

            We have enough things to confuse us just now without adding hyphenated families. We know of no woman of genius who has had to blush unseen merely because the name she is known by isn't the name she is born with.

            The case of actresses cannot be cited in favor of the proposed innovation, for there are very few actresses whose stage names have the least resemblance to the names they bore when they were in short skirts and pigtails.

            It is right and proper of course for women to preserve their identity. But they can do that without sticking to the old family name, as witness Mrs. Pankhurst and the late Carrie Nation, whose personalities could never have been lost if they had changed their names a dozen times.

            We do not believe that marriage can blight budding genius, or interfere with any career that a woman cares to make for herself.

            Certainly helping to establish a family by sharing the family name will not hide the upstruggling of aspiration.

            Then too there is the law, which insists upon regarding Mrs. Blodgett as Mrs. Blodgett in all legal transactions, and not as Marie Gladys Blenkinsop.

            There are of course young women who still insist on being known by their maiden names, although happily married. But the fact that the name of not a single one of them occurs to us just now seems to be a fairly good proof of our contention that Miss Wilson's advice is not good.


Barnas on Bad Faith:

Hello again:

Football season has, unfortunately, come to an end around here.  It was a great season, and I had a great time in Kansas City, until about the second quarter that is.  Still, it was nice to see that so many Bills fans made the trip, and the BBQ certainly lived up to the hype.  I did not even know burnt ends were a thing until a couple weeks ago, and now it is all I can think about as far as BBQ is concerned. 

Anyone who has read this publication with any degree of regularity over the years has seen frequent references to the Bi-Economy decision.  In that case, the Court of Appeals decided that consequential damages are recoverable based on an insurer’s breach of the implied covenant of good faith and faith and fair dealing in a first-party insurance case.  Notably, the Court of Appeals took great pains to label these damages as “consequential” and “contractual” rather than what they really are which is extra-contractual and punitive.

In my column you will see that the Florida Supreme Court recently adopted a different approach.  The Florida Supreme Court was asked to answer whether Florida law allows an insured to recover extracontractual damages in a first-party breach of insurance contract action brought by an insurer, not involving suit under Florida’s bad faith statute.  The court ruled that such damages are not recoverable and reversed the decision of the appellate court.  It held that “extra-contractual, consequential damages are not available in a first-party breach of insurance contract action because the contractual amount due to the insured is the amount owed pursuant to the express terms and conditions of the policy.  Extra-contractual damages are available only in a bad faith action.

This strikes me as a far more sensible approach than the one laid out by the Court of Appeals in Bi-Economy.  Contract damages in a breach of insurance contract case should be limited to the coverage available to the insured under the contract.  Damages above and beyond the insurance contract for bad faith should not be considered “contractual” in nature, as they were not part of the contract in the first place.  If you have any thoughts about whether the Florida or New York approach is preferable, please do not hesitate to reach out to discuss.

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

Brian D. Barnas

[email protected]


A Woman to be (and do) Justice:

The Muscatine Journal
Muscatine, Iowa
05 Feb 1921


            Cleveland, O., Feb. 5.—The unusual action of a woman judge presiding at the trial of a man judge, may arise in criminal court Monday, indications to-day being that Commons Pleas Judge Florence Allen probably will preside when Judge William H. McGannon goes on trial a second time charged with second-degree murder in the slaying of Harold C. Kagy last May.

            When told today that there was a likelihood of her getting the McGannon case, Judge Allen said:

            “I will try any case that is sent to me.”


Off the Mark:

Dear Readers,

I hope everyone has been staying warm.  The NYC Metro area got hit with a substantial snowstorm at the start of the week, with most areas getting between one and two feet of snow.  While this may seem normal to many of our readers (and certainly my colleagues in Buffalo), it has been years since we have had this much snow from a single storm.  My back is not used to this kind of shoveling.  The kids loved it until one of them lost a boot in the snow.

Although the office was physically closed, it was no big deal as we are all very familiar with working remotely at this point.  Speaking of the office and snow, as I was writing this column, the awning above the entrance to the office collapsed due to the weight of the snow on top of it (as I said, we got a lot of snow).  While thankfully no one was hurt, the collapsed awning and the pile of snow that had, moments before, been on top of the awning blocked the door, trapping us in the office.  Luckily, I was able to resume writing once the police and fire department freed us.

This edition of “Off the Mark” brings you a recent construction defect decision from the United States District Court for the Middle District of Pennsylvania.  In Berkley Specialty Ins. Co. v. Masterforce Constr. Corp., the U.S. District Court examined a carrier’s coverage obligations to its insured for damages due to faulty workmanship and found that such damages were not covered under the CGL policy, including damage to third-party property which was determined to be entirely foreseeable.   

Until next time …

Brian F. Mark

[email protected]


Chaos in the Courtroom – a Century Ago:

The Los Angeles Times
Los Angeles, California
05 Feb 1921


Sheriff Forced to Disarm Kentucky Talesmen

Deliberations Wind Up on Free-for-All Squabble

Final Verdict is Eleven to One For Acquittal


Harlan (Ky.) Feb. 4.—Jurymen trying Dr. H. C. Winnes for murder of Laura Parsons, Pine Mountain school-teacher, fought in the jury room shortly before noon today, where they have been deliberating the case since Monday night, and three of them were brandishing knives when a deputy sheriff burst into the room and disarmed them.

The court had just finished cautioning them against allowing personal feelings to enter into their deliberations.

More than eighty-nine hours after they began to deliberate, the jury was dismissed at 2 o’clock this afternoon by Circuit Judge Davis.  Unable to agree on a verdict, the jury stood eleven for acquittal to one against. 


Boron’s Benchmarks:

Is it the game itself?  The TV commercials?  The halftime show?  The four-to-six hour “hall pass” to snack away to your heart’s content?  Which of these things do you most look forward to as Super Bowl Sunday approaches?  For me, it is most definitely the commercials.  Especially since the Bills will not be playing in the Super Bowl this year. 

And here, let us pause, for a moment of silence.

Thank you.

I’ve seen a preview of a General Motors electric vehicle Super Bowl commercial featuring Will Farrell that got me smiling.  I can’t wait to see the rest of the commercials.  Given what we’ve all been enduring with this pandemic for the past 11 months, God knows we could all use a night of smiling.

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 January 27, 2021, by the Supreme Court of New Jersey in New Jersey Transit Corporation vs. Certain Underwriters at Lloyd’s London.  2012’s Superstorm Sandy spawned - metaphorically (or is it meteorologically?) speaking - a veritable storm surge (yes, another pun intended) of storm-related insurance claims.  Now, more than eight years later, some of those claims are still in the process of being resolved through litigation.  This is one of them, concerning water damage caused by Superstorm Sandy to properties owned by the New Jersey Transit Corporation, which had in place as the storm struck a multi-layered property insurance policy program through eleven insurers.  No less than three hundred million dollars of insurance coverage were in the balance in this litigation. 

Have a healthy and happy next two weeks. And may your cheeks be sore next Monday from a well-deserved Sunday night of non-stop smiling!

Eric T. Boron

[email protected]


Some Things Never Change – Immigration an Issue – 100 Years Ago:

The Kinston Free Press
Kinston, North Carolina
05 Feb 1921


New York, Feb. 3.—A resolution of protest against proposed restrictive immigration laws, designed to prohibit practically all immigration for one year, was passed at a recent meeting of the Federation of Italian Societies of Philadelphia.  While realizing the urge of the present economic crisis, the federation believes that the situation will soon correct itself without further restrictive legislation than now in force. 


Barci’s Basics (On No Fault):

Hello Subscribers!

I hope you are all still staying healthy and safe! I asked last time what TV show you loved but wouldn’t watch again. This was a real stumper when I was thinking about it. Apparently, it is very common to re-watch shows rather than start new ones in these pandemic days especially since people prefer to know what’s going to happen next and don’t want to process new information. There have been a number of articles written about this phenomenon recently. For me, I think a show I would refrain from re-watching even though I loved it at the time is Bunheads. It was the Amy-Sherman Palladino show that she left Gilmore Girls to do (I think, don’t quote me on that). It was cancelled after only one season, I believe unexpectedly, so there was no wrap up for any of the stories. Although I thoroughly enjoyed watching the show the first time around, knowing that there is no resolution is a turn off. But if you haven’t seen it and want a light-hearted, funny show that centers around dance, I would recommend it!

For next time consider: What was your favorite Halloween costume as a child?

On the no-fault front, I have one case from the EDNY that stems from a motion to reconsider that ultimately grants default judgment to the carrier. Let me know if you’d like a copy of the decision.

That’s all folks,

Marina A. Barci

[email protected]


Public Familiarity – He’s Guilty, She’s Not:

Buffalo Morning Express and Illustrated Buffalo Express
Buffalo, New York
05 Feb 1921


Complaint of the police vice squad against her behavior squashed.



Court again warns guardians of morals they must not provoke vice.

Indiscreet but not a violation of the law was the view that Judge Maul took of the actions of Antoinette E. Lukaszewska, 34 years old, of No. 23 C Street, arraigned before him in city court yester accused of allowing Joseph Zintl of No. 19 Louisen Street improper familiarity in a public place.  Zintl pleaded guilty and was fined $10.

Two of the police vice squad, Thierfeldt and Carberry, testified they went into the rear room of a saloon at Chippewa and Ellicott streets, where several couples were seated, and found Mrs. Lukaszewska and Zintl at one of the tables.  The pair say they watched Zintl fondle the lady and ordered the pair out of the place.  Zintl was willing, but the woman would not heed the order, claiming she had a date with a private detective who was going with her to try to get evidence against her husband.

Mrs. Lukaszewska was graduated from the Buffalo law school, but failed to pass her state bar examination.  She was convicted of practicing without a permit and fined $100 and sentenced to the workhouse for three months on a larceny charge for her dealings in Liberty bonds with several clients.  She has now taken up millinery for a livelihood.          


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

Okay, mistakes were made. And all of Buffalo has been put between a rock and a hard place. Do I (A) root for Tom Brady—the very embodiment of a two-decade-old nightmare for Western New Yorkers—in a final realization that he is, in fact, the GOAT; or (B) root for Patrick Mahomes (secured with a pick traded by Buffalo) and the Kansas City Chiefs, who embarrassed the Bills in their first Conference Championship appearance since 1994 and appear, at the moment, to be the next coming of a New England Patriot dynasty that haunted our region for what feels like my entire existence on this earth? There is always (C) the Puppy Bowl, because there are no losers there…

This edition of Ryan’s Capital Roundup takes a trip down memory lane. First, we discuss a new Washington State Senate Bill that picks up where business interruption legislation largely left off last summer. Caution—the bill is much broader in scope and would have prospective impact on the property insurance market in Washington. Second, we look back to a previous edition—exactly one edition prior—to a new law that has passed in New York attempting to clarify premium reductions available for commercial risk insurance covering for-hire vehicles.

Until next time,

Ryan P. Maxwell

[email protected]


A Man’s Sized Job for a Man’s Sized Paycheck:

Buffalo Courier
Buffalo, New York
05 Feb 1921


by well rated and old established concern for permanent connection.  This is a man’s size job with man’s size pay.  Should know Buffalo and vicinity.  References required.  See


1424 Marine Trust Bldg.


CJ on CVA and USDC(NY):

Hello Readers,

This is certainly my favorite time of the year, the snow is flying, the temps are cold, and the ski slopes are pristine. While some hunker down by a fire or in a warm cabin during the winter, I prefer to get out and enjoy the quiet cold that is a Western New York winter. I hope that you all have found some activity to keep you busy this winter, be it something outdoors or reading a good book by the fire. Even though the groundhog said we should be expecting six more weeks, I’m betting on an early spring.

This week I bring you a case from the Southern District that blends both the District Court coverage and has some CVA implications. Cosmopolitan Shipping Co. v. Continental Insurance Co. discusses the burden an insured must meet while requesting coverage under a lost or missing insurance policy. Here, Cosmopolitan had found three endorsements which proved that there was a policy issued by Continental, but Cosmopolitan could not prove the material terms of the policy sufficient to prove that coverage was owed. While this case does not help answer the question of whether the material terms must be proven by a preponderance of the evidence or beyond a reasonable doubt, this case is still instructive on how an insurer can challenge a demand for coverage under a lost or missing policy. 

See you in two weeks,

Charles J. Englert, III

[email protected]


Hiccough Epidemic?:

Dayton Daily News
Dayton, Ohio
05 Feb 1921


SIDNEY, Feb. 5.—County Health Commissioner Arlington Ailes has reported the out-break of a possible epidemic of hiccoughs, with the affliction of Alva C. Jackson of Sidney, who is the first victim of the disease in this part of the country.  Jackson has been suffering from almost continuous paroxysms of hiccoughing for a week and medical science does not seem to give relief.  It is feared by the county commission that an epidemic similar to that affecting various parts of New York and New England may be a result here. 


Dishing Out Serious Injury Threshold:

Dear Readers,

We received almost two feet of snow out here on Long Island this week.  After spending a couple days shoveling, I am now looking forward to a weekend on the mountain enjoying the fresh snow in upstate New York. We will see which one leaves me hurting more.

In the Serious Injury Threshold world, we have one case to discuss in this issue. This case deals with plaintiff’s inability to submit admissible medical evidence of significant or permanent limitations of his lumbar spine. In pertinent part, plaintiff only submitted records from a month after the accident showing some limited range of motion but failed to provide any other evidence of limitation or permanency.

Be well,

Michael J. Dischley

[email protected]  


That’s My Story and I’m Sticking to It:

Knoxville Sentinel
Knoxville, Tennessee
05 Feb 1921


SACRAMENTO, Feb. 5.—John Peter Hundrup, of San Francisco, says he forgot that he had been married for twenty-two years, when he came here recently and married Mrs. Amy Ethel Burgess.  The next night he apparently forgot his second marriage, for he returned to his first home.  He now faces two divorce suits.


Bucci on “B”: 

Hello all,

It is a nice, sunny day today.  Maybe the block of ice that is commonly referred to as my driveway will thaw!  Hope springs eternal. 

This week, I brought you something a bit out of the Coverage Team’s wheelhouse.  The case involves a reinsurer but the focus is primarily on when a foreign transaction is domestic enough to fall within the scope of §10(b) of the Security Exchange Act.  There is an interesting discussion about how to make the distinction between foreign and domestic transactions in this “boarder-less” economy because, according to the court, every transaction will have at least some contact with the United States.  The plaintiffs set forth a number of factors similar to a choice of law analysis to establish that the transaction occurred in New York.  But the court held that the focus is not whether the plaintiff can establish that the contract at issue was entered into in the United States but rather whether it involved the sale and purchase of securities in the United States. 

Mirna Santiago of our team has presented us with the opportunity to take the New York State Bar Association's 28-Day Racial Equity Challenge, and we are right behind her.  I like a challenge.  I might even win.  I am sure I know a bit about the whitewashing of history and have learned a tremendous amount of black history in the United States.  I thought I knew…but I did not.    Here is the link.  Good luck!

Diane L. Bucci

[email protected]


Jury Wishes it Were There:

The Standard Union
Brooklyn, New York
05 Feb 1921

Jury Regret What It Missed

Jake Jackson, a native of Georgia, was summoned to court on an assault charge.

The State brought into court the weapons used—a huge pole, a dagger, a pair of shears, a saw and a gun.  Jackson’s counsel produced as the complainant’s weapons an ax, a shovel, a scythe, a hoe and a pair of tongs.

The jury was out only a short while and returned with this verdict:  “Resolved, That we, the jury, would have given $5 to see the fight.”—Rehoboth Sunday Herald. 


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

The Connecticut courts, it seems, are hibernating from the immense cold spell we’ve been having these last several weeks—with all due apologies to our Minnesota friends who scoff at what us Southern New Englanders call winter. Although it’s all relative, as I shake my head in disbelief as my Jacksonville, Florida, family kvetches about temperatures dropping into the 40s. The cold has really put a damper on any form of social life – oh, we so fondly recall the days of summer dinning on city streets turned into piazzas. West Hartford Center was our little slice of the Champs-Elysees.

Nutmeggers, as a group, have taken the pandemic seriously, with indoor activities almost at nil. There is a real clamoring for the vaccine here, but the rollout is maddeningly slow. “We are working to administer the vaccine to as many people as possible, but the greatest barrier continues to be our supply as we are only scheduled to receive about 45,000 doses of the vaccine per week, while 1.4 million people are eligible under phase 1b,” Governor Lamont said in a recent press release. Connecticut courts remain closed to in-person appearances (with exceptions that do not apply to our ilk), there are no jury trials taking place, and the courts are struggling to satisfy citizens’ first amendment rights to open courts. Maybe once we have the vaccine in arms, the courts, like the rest of society, will be on track to reopen—that, or we have trials in the town square once the weather warms up.

Continue to stay safe and be vigilant.

Lee S. Siegel

[email protected]       


Hate When That Happens – Woman has 11 Imaginary Children:

New-York Tribune
New York, New York
05 Feb 1921


Wife Fools Husband 11 Times By Producing Borrowed Babies

Special Dispatch to The Tribune

ATLANTA, Ga., Feb. 4.—Mrs. F. E. A. South, fifty-two years old, whose husband is a grocery clerk, confessed to-day that the “triplets” supposedly “born” to her on New Year’s Eve were not her own, and that she had mothered eight other waif children believed, even by her husband, to be their own.

All of the children came from a maternity home.  When her own three children grew up, years ago, Mrs. South said, her yearning for babies to care for and raise was so great that she decided to get them from the maternity home and pretend they were her own.  For ten years she succeeded, and her story came out to-day only because the city Health Commissioner had no record of the births and made an investigation which developed the facts. 

The triplets “born” on New Year’s Eve in reality were taken from Mrs. M. R. Mitchell’s maternity hospital at 23 Windsor street.  Women in charge of the “cradle roll” at St. Paul’s Methodist Church had agreed to educate as missionaries the first triplets born to a church member.  Mrs. South holds membership in this congregation. 

More than ten years ago Mrs. South said she hit upon the scheme of deceiving her husband with a “fake birth.”  She said the plan worked so well that at annual intervals she adopted three more infants.  These four babies, said Mrs. South, she got from institutions, the name of which she would not give.  They now range in age from five to thirteen and live in complete ignorance of their true origin.

Four years ago, said Mrs. South, she decided to have twins.  She got them from the maternity home, she said.  They were boys, but both died.  So two years ago Mrs. South declares she got two girls, which she declared were twins, and has reared them.

Mrs. Mitchell confirmed Mrs. South’s assertions regarding these “triplets” and “twins.”  The “triplets,” said Mrs. Mitchell were children of three different mothers.

Mrs. South’s husband laughed when he was informed of his wife’s confession, and then became indignant, declared it was an “infernal lie.”  He added:

“They are all my children.”


Rauh’s Ramblings:

Hi all,

Well unfortunately, the Bills did not bring home the AFC championship win, but as us Bills fans always say….next year is our year!!  The past week has been pretty snowy here in Buffalo. Although I am not a huge fan of winter, my almost three-year-old son has loved playing in the snow and having “snow fall bites”, even though we spend more time getting him dressed to go outside than he actually spends playing outside.  It sounds like the snow may continue through the weekend, so I think we will find somewhere to take him sledding.

This week, I have another life insurance case from the First Department that reiterates an insured’s duty to actually read the insurance policy and correct any inaccuracies on the insurance application.  Despite the plaintiffs’ contention, it is not the duty of an insurance broker to make sure an insured’s insurance application is complete and contains accurate information.

Until next time,

Patricia A. Rauh

[email protected]       


Take Two Sips and Call Me in the Morning:

Buffalo Courier
Buffalo, New York
05 Feb 1921



Washington, Feb. 4.—The amount of hard liquor a sick man may acquire legally is definitely fixed by statute, but the only limit to the amount of wine he may obtain is the “sound and honest” judgment of his physician and perhaps the depth of his purse.

Prohibition Commissioner Kramer, in a formal announcement today, says there seemed to be some confusion as to the quantity of wine that a physician may prescribe.  To clear up all doubts he lays down this rule:

“Until further orders physicians may prescribe in their practice such quantities of wine as they, in the exercise of their sound and honest judgment deem necessary in the particular case, if they in good faith believe that the use of wine as a medicine by the person for whom it is prescribed is necessary and will afford relief to him from some known ailment.”


Storm’s SIU Examen:

Super Bowl Sunday!  I know, who cares this year, right?  Being a Bills fan I can’t root for KC and I won’t root for Tom Brady (sorry Brady fans).  Here’s to hoping for really creative commercials at 5.6 million dollars per 30 seconds of air-time.

I am almost settled-in, transitioning to my new firm home.  It has been a lot of work, but I am very excited and happy to be here and looking forward to the new challenges and opportunities ahead.  “Thank you!” to all my clients who have transitioned with me, continuing to have me represent them here at Hurwitz & Fine, P.C.  I appreciate your confidence in me and our continuing friendships.

In “Storm’s SIU Examen” I will be seeking to provide you with insight into decisional and statutory law, as well as new developments in the special investigation of claims and the war against insurance fraud, both in New York, Pennsylvania (the other state I am admitted in) and elsewhere throughout the country.

This week I want to share with you a very important practice pointer.  Most policies provide language requiring that examinations under oath are to be conducted separately, while not in the presence of any other insured.  But what about when claims are litigated that were denied based on fraud related defenses, are the plaintiffs sequestered from one another during depositions?  This is a good question.

Depositions are regulated by the rules of court, not the insurance contract.  The common practice in most types of cases is that parties are permitted to attend the depositions of other parties and nonparties.  I suspect most attorneys are following this practice with respect to litigated claims which had been denied based on fraud. 

However, when I was a younger version of me, I challenged this commonly accepted practice making some very favorable case law for insurers in Hanna v. Graphic Arts Mut. Ins. Co., 824 N.Y.S.2d 754 (Oneida Co. S. Ct. 2006).  In that case one of the affirmative defenses was material misrepresentation in the presentment of the claim, that the plaintiffs had conspired to falsely inflate their damages.

I argued that the plaintiffs’ depositions (husband and wife) were to be conducted separately, not in the presence of the other, and that they should be prevented from communicating until both had testified. The plaintiffs countered that due process and the rules of discovery permit a party to be present at all phases of a legal proceeding – this is the way it has always been done.

The court noted that the plaintiffs are uniquely possessed with the underlying facts and their depositions are of supreme importance to the insurer’s defense to their claim. Granting my motion, the court said that the “Defendant is entitled to some leeway, and the relief it requests is reasonably related to a fair defense of the case. It is difficult to see how the Plaintiffs would suffer any real prejudice from the relief requested”.

The Court was guided by another decision, Matter of Estate of Czachor 137 A.D.2d 915 (3rd Dept. 1988) (a claim for personal services against an estate in a probate proceeding), which held that under appropriate circumstances, a court may exclude a party from a pretrial deposition.  As the plaintiff’s interests were recognized to be virtually identical and each was represented by the same attorney, with these circumstances said to be prevailing, it was said that to allow each plaintiff to testify in the presence of the other would clearly work an unfair advantage in their favor. The Czachor court held that, “While trial courts are vested with broad discretion in supervising disclosure, in the interest of preserving respondent's right to the spontaneous, uncolored testimony of each petitioner, we find that separate depositions are in order”. 

Accordingly, the Plaintiffs in Hanna were deposed separately, and their attorney was directed to not report the substance of the testimony of the first witness to the second to be deposed. 

As such, if coverage for a claim is denied based on fraud related defenses and is subsequently litigated, be certain to direct your legal counsel that the plaintiffs are to be deposed separately, while not in the presence of any other plaintiff.  It is an important opportunity to, among other things, test the consistency of their respective testimony. 

If you would like a copy of either of these cases please email me at [email protected] and I will forward them to you.  Otherwise, I look forward to reporting to you again in two weeks.  Need assistance with an issue?  Call me (Scott Storm) on my cell (716) 220-1478. 

Final thought – “Make your life a masterpiece; imagine no limitations on what you can be, have or do”.  ~ Brian Tracy.

Scott D. Storm

[email protected]


Headlines from this week’s issue, attached:

Dan D. Kohane
[email protected]

  • A Carrier Can Cut Off Post-Judgment Interest With an Unequivocal Offer of Policy Limits, but Not In This Case


Steven E. Peiper

[email protected]

  • Exclusion for Vacant or Unoccupied Premises Creates Ambiguity in Definition of “Residence Premises”

  • Relation Back Doctrine Saves Reformation Claim

  • Subpoena to Compel Discovery of Plaintiff’s File Regarding Settlement Discussions Appropriately Quashed Where Counsel’s Discussions Were Irrelevant to the Remaining Controversies at Issue


Michael J. Dischley
[email protected]

  • Plaintiff Was Able Unable to Establish Significant or Permanent Limitations of his Lumbar Spine


Agnes A. Wilewicz

[email protected]

  • Second Circuit Court of Appeals Holds No Breach of Contract Against Carrier in Premium Mix-Up Case, but Finds Negligence Cause of Action Viable


Brian D. Barnas

[email protected]

  • Emotional Distress Damages Not Recoverable for an Alleged Breach of the Duty of Good Faith and Fair Dealing but Punitive Damages May Be

  • Extra-Contractual Consequential Damages are Not Recoverable in a Breach of Contract Action Under Florida Law


Lee S. Siegel

[email protected]

  • The courts were busy with non-insurance work this Fortnight. We’ll keep a watchful eye and hopefully have something to report in our next edition.


Diane L. Bucci
[email protected]

  • Employment Related Practices Exclusion Defeats Coverage for Wrongful Employment Related Practices.  Who Knew?

  • (Not Coverage B but) Is Fraud Domestic Enough to Fall Within the Securities Exchange Act?


Brian F. Mark
[email protected]

  • U.S. District Court Finds No Duty to Defend or Indemnify for Damages Caused by Faulty Workmanship, including Damages to Third-Party Property where such Damage was Foreseeable


Eric T. Boron

[email protected]

  • Commercial Property Insurance – Court Upholds Grant of Summary Judgment to the Insured – NJ Transit Entitled to Full $400 Million of Named Windstorm Coverage for Superstorm Sandy Water Damage Rather Than Just $100 Flood Sublimit


Marina A. Barci

[email protected]

  • Carrier Obtains Default Judgment on Motion for Reconsideration 


Ryan P. Maxwell

[email protected]

Legislative List

  • Proposed WA Senate Bill No. 5351 Would Require Both Retroactive and Prospective Coverage For Loss of Use of and Deprivation of Property

  • New Law Clarifies That A Premium Reduction For-Hire Vehicles Does Not Impact Other Personal Auto Rate Reductions


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

[email protected]

  • Coverage Under a Missing or Lost Insurance Policy will not be Afforded Unless the Material Terms of the Policy can be Proven


Patricia A. Rauh

[email protected]

  • An Insured Has the Duty to Read the Insurance Policy, as Well as the Duty to Correct Any Inaccuracies on the Insurance Application.  It is Not the Duty of an Insurance Broker to Make Sure the Insurance Application is Complete and Accurate


Mirna. M. Santiago

[email protected]

  • Nothing this week.


Scott D. Storm

[email protected]

  • See my cover note, above.


All the best. Stay healthy!




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.

Dan D. Kohane

[email protected]

Agnes A. Wilewicz

[email protected]

Patricia A. Rauh

[email protected]

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

Scott D. Storm

Brian D. Barnas

Eric T. Boron

Marina A. Barci

Ryan P. Maxwell

Charles J. Englert

Patricia A. Rauh

Diane F. Bosse

Joel R. Appelbaum

Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley

Scott D. Storm

Eric T. Boron

Brian D. Barnas

Dan D. Kohane
[email protected]

Marina A. Barci

Jody E. Briandi, Team Leader
[email protected]

Mirna Martinez Santiago

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)

Rauh’s Ramblings



Dan D. Kohane
[email protected]

01/26/21       Scottsdale Insurance Company v. RLI Insurance Co.
Appellate Division, First Department
A Carrier Can Cut Off Post-Judgment Interest With an Unequivocal Offer of Policy Limits, but Not In This Case

Given the absence of admissible evidence to support RLI's claim that it made an unconditional offer to pay the policy limit so as to terminate its obligation to pay post-judgment interest under the terms of the policy, denial of the summary judgment motion was proper.


Steven E. Peiper

[email protected]

01/28/21       Place v. Preferred Mut. Ins. Co.
Appellate Division, Third Department
Exclusion for Vacant or Unoccupied Premises Creates Ambiguity in Definition of “Residence Premises”

This case arises from a water damage claim at plaintiff’s residence in Essex County.  Plaintiff insured the property through a policy issued by Preferred.  While plaintiff apparently lived at the premises from 2010 through 2016, at some point during 2016 she purchased another home and effectively moved out of the premises at issue in this case.  Six months later plaintiff discovered that a toilet had frozen and cracked due to a broken upstairs window.  Preferred denied the claim on the basis that the insured location was not a residence premises at the time of the loss, and that the exclusion for water loss caused by frozen plumbing in vacant structures applied. 

Plaintiff appears to have conceded the home was vacant, but noted that the exception for frozen plumbing applied where she maintained efforts to ensure heat in the home.  Plaintiff averred that she continuously visited the premises, as did her mother.  At each of their visits, the premises appeared warm and secure. 

With regard to the issue of residence premises, the plaintiff argued that the exclusion applied when a home was vacant or unoccupied.  Thus, the policy contemplated coverage for premises which were not “residence” premises.  At the very least, the policy was ambiguous about whether coverage for the dwelling required that the policy be a “residence premises.” 

The Court agreed with the plaintiff’s argument on “residence premises” noting “interpreting the policy to cover only the place where the insured was residing would render meaningless the exclusion concerning water damage to ‘vacant’ or unoccupied’ premises, and the coverage amounts for dwelling repair of vacant dwellings.” 

Switching back to the frozen plumbing exclusion, the Court noted that the home was, in fact, vacant at the time of the of the loss.  As such, Preferred met its burden of establishing the exclusion. The burden then shifted to plaintiff to demonstrate reasonable efforts to ensure that heat was maintained in the premises.  Plaintiff’s testimony that she, and her mother, frequently inspected the premises and always found it to appear warm, was persuasive to the Court. 

In addition, there was no indication that the heat, itself, ever failed.  Rather, it was the broken window which allowed cold air into the premises which overwhelmed the heat and caused the frozen toilet.  Preferred noted that the electricity bills did appear to establish that the electricity bills were higher in the weeks leading up to the loss, and argued that the plaintiff’s lack of diligence was manifest in the fact that she did not realize that heat was escaping at least from part of the home due to the broken window.  On balance, the Court found that a question of fact existed as to plaintiff’s diligence and thus denied both plaintiff’s and Preferred ’s motions for summary judgment.

The Court also denied plaintiff’s claims against her agent.  Where, as here, there remained a question of whether the Preferred policy would apply, plaintiff could not prevail on a claim against the agent.  If the policy does apply, it would follow that no cause of action could be maintained against the agent. 

Finally, plaintiff’s motion to amend her Complaint was denied by the trial court.  In affirming the trial court, the Appellate Division noted that plaintiff offered no explanation for a two-year delay in amending.  On that basis, and the fact that due discretion is to be afforded to the trial court on issues of amendments to pleadings, the Court elected to forego disturbing the earlier ruling.


01/28/21       34-06 73, LLC v. Seneca Ins. Co.
Appellate Division, First Department
Relation Back Doctrine Saves Reformation Claim

The procedural vehicle of this appeal is a motion to set aside a jury verdict which exceeded $4.5 million dollars.  The substantive legal issue, however, is the far more interesting aspect of this case.  Plaintiff submitted a claim which was denied by application of a Protective Safeguards Endorsement (“PSE”) which required an active sprinkler system.  Plaintiff challenged the application of the PSE on the basis that Seneca was aware that the premises did not have a sprinkler system, but nevertheless elected not to cancel the policy.  Plaintiff argued that their acts of continuing coverage, even after discovering the non-compliance, amounted to waiver.

At trial, it was further established that Seneca likely added the PSE by mistake.  As such, at the conclusion of proof, plaintiff requested that the policy be reformed so that the PSE was deleted, entirely, from the policy. Seneca opposed the motion as barred by the applicable statute of limitations. 

It appears that all sides agree that the reformation, standing alone, was untimely as a matter of law.  The question then became whether it could relate back to the filing of the original Complaint.  In this case, because the claim for reformation arose from the same transaction, the relation back doctrine saved plaintiff’s claim.  The Court noted that the applicability of the PSE was at issue throughout the litigation, as were the issues of waiver and estoppel.  Reformation, or in the alternative deletion, are fundamentally the same issue. 

The Court further noted the fact that Seneca apparently had information in its underwriting file which demonstrated the endorsement was mistakenly appended to policy.  Having had exculpatory evidence, yet failing to produce it for nearly four years after the commencement of litigation, pushed the Court to reject any claim of prejudice by the late reformation claims. 


01/27/21       Prime Alliance Group, Ltd. v. Affiliated FM Ins. Co.
Appellate Division, Second Department
Subpoena to Compel Discovery of Plaintiff’s File Regarding Settlement Discussions Appropriately Quashed Where Counsel’s Discussions Were Irrelevant to the Remaining Controversies at Issue

This claim involves a property loss at a plaintiff’s building in Manhattan.  Affiliated denied the claim, and plaintiff commenced the instant action against Affiliated and its retail broker, Praxis, as well as the wholesale broker, HUB.  The matter with Affiliated was settled, and Praxis moved to dismiss the claims of broker negligence accordingly.  In a previous decision, the Second Department ruled that the settlement of the insurance dispute between plaintiff and Affiliated did not resolve the question of whether the policy actually applied. As such, the broker negligence case could continue.

In response, Praxis then served subpoenas for the files of plaintiff’s attorney who had negotiated the Affiliated settlement.  Plaintiff, not surprisingly, moved to quash the subpoena on the basis of the attorney-client privilege.  In opposition, Praxis argued that counsel waived the privilege, as well as the work product privilege, when their beliefs as to the settlement were “at issue” in the instant litigation. 

The trial court granted the motion to quash, and the Appellate Division affirmed.  In so holding, the Court noted “[counsel’s] beliefs concerning the settlement…are utterly irrelevant to the issues in this action.” 


Michael J. Dischley

[email protected]

01/28/21       Saiful Nadim v. Gadi Inc. et al.
Appellate Division, First Department
Plaintiff Was Able Unable to Establish Significant or Permanent Limitations of his Lumbar Spine

In an action to recover damages for personal injuries, the plaintiff appeals from an Order of the Supreme Court, Bronx County (Mary Ann Brigantti, J.), entered September 5, 2019, which, to the extent appealed from as limited by the briefs, granted defendants' motion for summary judgment dismissing the complaint based on plaintiff Saiful Nadim's inability to satisfy the serious injury threshold under Insurance Law § 5102(d),

The Appellate Division found that defendants met their prima facie burden and established that plaintiff did not sustain a serious injury to his lumbar spine allegedly resulting from an accident that occurred in May 2014. The Court found this by plaintiff's own medical records and deposition testimony concerning his activities after the accident and the affirmed reports of a neurologist, orthopedist, and radiologist. Defendants' orthopedist noted normal range of motion and negative results on various tests and concluded that plaintiff's lumbar spine injury had resolved. Defendants' radiologist concluded that the positive findings in plaintiff's lumbar spine MRI were degenerative in origin, and not causally related to the accident. Although the neurologist noted limited range of motion in plaintiff's lumbar spine on examination, she concluded that these findings were based on subjective complaints and not supported by any objective findings, noting that plaintiff demonstrated normal range of motion during spontaneous activities.

The Appellate Division then found that, assuming that plaintiff adequately addressed the issue of causation, his medical records show at most a minor or insignificant injury that does not constitute a serious injury resulting in significant or permanent limitation in use of his lumbar spine. Plaintiff submitted medical records reflecting that he had some limited range of motion in the month after the accident but failed to submit any other admissible medical evidence of significant or permanent limitations in his lumbar spine. Plaintiff submitted the affirmed report of his physician who examined him more than four years later, but that physician's recitation of the range of motion findings was of another orthopedist and therefore constitutes hearsay. Furthermore, the lack of evidence of continuing limitations after June 2014, and cessation of treatment after November 2014 at the latest, precludes plaintiff's claim that his lumbar spine injury is permanent.

As such, the Appellate Court unanimously affirmed the Supreme Court decision, without costs.


Agnes A. Wilewicz

[email protected]

01/26/21       Robert Toussie v. Allstate Insurance Company
United States Court of Appeals, Second Circuit
Second Circuit Court of Appeals Holds No Breach of Contract Against Carrier in Premium Mix-Up Case, but Finds Negligence Cause of Action Viable

Robert Toussie and his wife owned two properties in Brooklyn: their primary residence at 290 Exeter Street ("290 Exeter") and an investment property at 285 3 Coleridge Street ("285 Coleridge"). Beginning in 2003, 290 Exeter was insured against flooding under a policy, in the form of a Standard Flood Insurance Policy ("SFIP"), issued by Allstate pursuant to the National Flood Insurance Program ("NFIP"). 285 Coleridge, which apparently was held in the name of an entity owned by Toussie's wife, was also covered for flooding by an SFIP policy issued by Allstate. The policy on 290 Exeter was renewed each year without incident until late 2009-early 2010. The 2008-2009 policy was in effect from December 19, 2008 through December 29, 2009.

On November 4 and December 18, 2009, respectively, Allstate sent a renewal notice and then a final notice to Toussie requesting payment of the premium to continue the coverage on 290 Exeter. When Toussie did not pay the premium, the insurance agency that held the policy, Alan Rodriguez Insurance Agency, Inc. ("Rodriguez"), sent Toussie a fax on January 14, 2010 reminding him that he had to pay the premium of $388 by January 17, 2010 to avoid a lapse in the policy. Rodriguez received the check from Toussie on January 19, 2010 and deposited the check on January 20, 2010. Although the check was apparently late (the actual deadline was January 18), under the terms of the SFIP, Toussie only lost coverage for thirty days as the payment triggered reinstatement after a thirty-day waiting period.

The check, which included the policy number, clearly indicated it was for 290 Exeter. Yet, Rodriguez applied the payment to the policy on 285 Coleridge, for 4 which a payment was also due, using the centralized Allstate computer system, and the funds were deposited into an account shared by Rodriguez and Allstate. Because of the error, Allstate considered the policy on 290 Exeter lapsed, and it did not send Toussie renewal notices for 290 Exeter for the 2010-2011 or 2011- 2012 policy periods. Instead, Allstate sent Toussie renewal notices for 285 Coleridge for both periods and Toussie paid the premiums for 285 Coleridge for both periods. He did not make any additional premium payments for 290 Exeter. In October 2012, Hurricane Sandy hit, damaging both properties. Allstate paid Toussie $185,000 for damage to 285 Coleridge, but denied coverage for 290 Exeter on the basis the policy on that property had lapsed. Litigation ensued.

Toussie asserted two causes of action against Allstate, which went all the way up to the Second Circuit on appeal. First, his breach of contract action was predicated on his argument that he had paid the premium on the policy for 290 Exeter in January 2010 and that Rodriguez had accepted that payment. Thus, he argued, Allstate was contractually obligated to send him a notice of cancelation, renewal notice, and final notice pursuant to applicable regulations. Failing to do so, he asserted, was a breach of contract. However, this argument failed, the Second Circuit wrote. The policy had a provision dealing with just these circumstances:

3. If we find, however, that we did not place your renewal notice into the U.S. Postal Service, or if we did mail it, we made a mistake, e.g., we used an incorrect, incomplete, or illegible address, which delayed its delivery to you before the due date for the renewal premium, then we will follow these procedures:

a. If you or your agent notified us, not later than one year after the date on which the payment of the renewal premium was due, of non-receipt of a renewal notice before the due date for the renewal premium, and we determine that the circumstances in the preceding paragraph apply, we will mail a second bill providing a revised due date, which will be 30 days after the date on which the bill is mailed.

Toussie received renewal notices in November and December 2009 for the 2009-2010 policy period, but he did not receive notices in November or December 2010 for the 2010-2011 policy period or in November or December 2011 for the 2011-2012 policy period. He did not, however, notify Allstate of non-receipt of a renewal notice. Hence, by the plain terms of the SFIP, Allstate was not obliged to send a second bill with a revised due date. As such, there was no breach of contract.

With regard to Toussie’s negligence claim, there was a wrinkle. Toussie argued that Rodriguez was Allstate’s agent, thus making Allstate vicariously liable for his failure to use reasonable care with the check, which was marked for the 290 Exeter policy, to the premium for the 285 Coleridge policy. The underlying district court was “persuaded that Rodriguez was in fact Allstate's agent for these purposes, but nonetheless granted summary judgment for Allstate on the theory that the misapplication of Toussie's premium payment "actually benefitted him." The district court concluded that the payment was used to renew the policy on 285 Coleridge, and that Allstate paid the "policy limits" on that policy to Toussie for the damage sustained at 285 Coleridge because of the hurricane. This was error. First, as Allstate concedes, it did not pay the policy limit for 285 Coleridge. Rather, the policy limit was $350,000 and Allstate paid only $185,177.87. Second, the coverage on the two properties was not interchangeable, as Toussie alleged that substantially greater damage was sustained at 290 Exeter (his primary residence) than at 285 Coleridge. Hence, even considering the $50,000 payment from [the broker’s insurance agency], Toussie still had a claim for damages beyond what he received from Allstate. Third, while Allstate might very well have a claim against Toussie for the monies paid on account of 285 Coleridge (if, for example, the payment was a windfall because Toussie was not the owner of 285 Coleridge, as he alleges, or if only one policy 8 was in effect), the proper mechanism for determining any such adjustment would have been a counterclaim (for example, a set-off) or an affirmative defense (for example, for payment). While the district court was right to be concerned about allowing an insured who "paid the premium for one policy to recover the limits of two policies," the district court could not conclude, as a matter of law on this record, that "[t]he adverse and beneficial effects cancel each other out."” As such, the summary judgment dismissing the negligence claim was vacated.


Brian D. Barnas
[email protected]

01/27/21       Perlbinder v. Vigilant Ins. Co.
Appellate Division Second Department
Emotional Distress Damages Not Recoverable for an Alleged Breach of the Duty of Good Faith and Fair Dealing but Punitive Damages May Be

In October 2012, the plaintiff's house was damaged by Hurricane Sandy.  Plaintiff had a homeowners insurance policy with Chubb and filed a claim.  In 2014, at the plaintiff's request, the parties participated in a mediation program established by the New York State Department of Financial Services.  On October 24, 2014, the parties signed a written settlement agreement requiring Chubb to pay the plaintiff $1.6 million within 21 days as a "final payment" to settle all of his claims that were brought to mediation.  Chubb tendered the sum of $410,195.51 to the plaintiff, asserting that the $1.6 million settlement amount set forth in the settlement agreement was inclusive of $1,189,804.49 in total payments they had previously. The plaintiff rejected the payment.

The plaintiff then commenced the instant action seeking to recover damages for breach of the settlement agreement. He also asserted causes of action alleging deceptive conduct in violation of General Business Law § 349 and bad faith. The plaintiff sought to recover punitive damages and damages for emotional distress in addition to compensatory damages.  Motion practice followed.

Plaintiff's motion for summary judgment on the cause of action alleging breach of the settlement agreement was granted.  The plaintiff demonstrated the agreement unambiguously obligated the Chubb to pay the plaintiff $1.6 million within 21 days as a "final payment" in settlement of the claims he brought to mediation and made no mention of deducting any prior payments.  In opposition, Chubb failed to raise an issue of fact whether the settlement agreement was subject to rescission on the ground of mutual mistake or unilateral mistake.

The court also denied Chubb’s motion to dismiss the cause of action alleging violation of General Business Law § 349 and the plaintiff's demand for punitive damages. An alleged breach of the implied covenant of good faith and fair dealing may support an award of punitive damages.  Likewise, a claim for punitive damages may be asserted in the context of a cause of action predicated upon an alleged violation of General Business Law § 349.  Since Plaintiff stated a claim for violation of § 349 and the implied covenant of good faith and fair dealing, the punitive damages claim was allowed to stand.

However, Chubb’s motion to dismiss the plaintiff's demand for damages for emotional distress was granted. A breach of a contractual duty does not create a right of recovery for damages for emotional distress, nor does an alleged breach of the implied covenant of good faith and fair dealing does not support an award of damages for emotional distress.


01/21/21       Citizens Property Insurance Corporation v. Manor House, LLC
Supreme Court of Florida
Extra-Contractual Consequential Damages are Not Recoverable in a Breach of Contract Action Under Florida Law

The case arose out of a claim made by the owner of nine apartment buildings for damages caused by Hurricane Frances in 2004.  The Florida Supreme Court was asked to answer whether Florida law allows an insured to recover extra-contractual damages in a first-party breach of insurance contract action brought by an insurer, not involving suit under Florida’s bad faith statute.  The court ruled that such damages are not recoverable and reversed the decision of the appellate court.  It held that “extra-contractual, consequential damages are not available in a first-party breach of insurance contract action because the contractual amount due to the insured is the amount owed pursuant to the express terms and conditions of the policy.”

The court noted that extra-contractual damages are available to insureds in a separate bad faith action pursuant to Florida statute.  However, in this case, the defendant Citizens is statutorily immune from first party bad faith claims as a government entity.  Accordingly, the insured sought extra-contractual damages as part of its breach of contract claim.

The insured sought extra-contractual, consequential damages based on Citizens’ alleged failure to timely adjust the loss, wrongful denial of the claim, and delay and failure to timely pay the claim.  Specifically, it sought lost rental income as consequential damages, which was not included in the coverage provided by the policy.  The court held that the express terms of the insurance policy controlled.  The allegations made by the insured fell under the established statutory framework for bad faith and extra-contractual claims.  Such damages were not available to the insured as part of a breach of contract claim.

Accordingly, the court concluded that extra-contractual damages were not recoverable in the breach of contract action against Citizens.


Lee S. Siegel
[email protected]

The courts were busy with non-insurance work this Fortnight. We’ll keep a watchful eye and hopefully have something to report in our next edition.


BUCCI on “B”
Diane L. Bucci

[email protected]

01/26/21       Guillon v. AMCO Ins. Co.
United States District Court, Northern District of California 
Employment Related Practices Exclusion Defeats Coverage for Wrongful Employment Related Practices.  Who Knew?

Three former Crush Steakhouse-Ukiah, Inc. (“Crush”) employees brought suit against Crush, its Chief Executive Officer and Director, Douglas Joseph Guillon (“Guillon”), and Nicholas Karavas, apparently a supervisor.  The former employees alleged various federal and state employment law causes of action, alleging sexual harassment, retaliation, and wrongful termination.  They also alleged battery. 

AMCO Insurance Company, Inc. (“AMCO”) insured Crush/Guillon.  AMCO denied coverage because the claims did not allege bodily injury, property damage, or personal or advertising injury.  AMCO also relied on the policy’s Employment Related Practice Exclusion, which defeated coverage for:

(a) Refusal to employ that person; (b) Termination of that person's employment; or (c) Employment-related practices, policies, acts, or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination, or malicious prosecution directed at that person.

The Employment Related Practices exclusion applied to both Coverage A and Coverage B.

Among other things, the court addressed the following specific events:

Underlying Plaintiff Lacey Berry alleged that Underlying Defendant Nicholas Karavas “insisted on [Berry] attending non-work related social events” with him. Underlying Action, Attach. A at 8. On one occasion, Berry alleged that Karavas “demanded” that Berry “dress up” and accompany him to a “winemakers dinner” at Crush when she was not scheduled to work. Id. She was not paid to accompany him as an employee. Id. Additionally, Berry alleged that Karavas “showed up” at her hotel outside of work hours and without her consent.

Under Coverage B, the policy provided coverage for personal and advertising injury arising out of any of seven enumerated offenses which included, “false arrest, detention or imprisonment” and “oral or written publication, in any manner, of material that violates a person's right to privacy.” 

Crush argued that the exclusion did not defeat the duty to defend because many of the incidents allegedly took place outside the workplace.  The court employed the two-factor test enunciated by the court in Low v. Golden Eagle Ins. Co., 104 Cal. App. 4th 306, 128 Cal. Rptr. 2d 423 (2002), to examine whether the conduct outside the workplace was employment related such that the Employment Related Practices Exclusion would apply.  The two factors are: “(1) the nexus between the allegedly defamatory statement (or other tort) at issue and the third-party plaintiff's employment by the insured, and (2) the existence (or nonexistence) of a relationship between the employer and the third-party plaintiff outside the employment relationship.” Id. at 428-29.

Here, according to the court, the nexus was clear.  The employees alleged that supervisors used their positions to engage in “inappropriate and non-consensual physical contact” inside and outside the workplace, and that instances outside the workplace were part of a “series of continuing and related” employment law violations, and they would suffer retaliation no matter whether they were inside or out. 

The court also held that the second factor was satisfied because there weren’t any non-employment relationships between these parties.  There were no relationships outside of the employment context.  Consequently, the court held that all coverage was barred by the exclusion. 

The court noted that even if the exclusion did not apply, there was no coverage under “personal or advertising injury” coverage because Crush did not state with particularity how any of the alleged injuries complained of could constitute personal and advertising injury.  The court also noted that Crush alleged that Coverage B applied in its opposition, but never explained why, and never attempted to define any of the alleged injuries as personal or advertising injuries.

Under Coverage A, the court held that even if the Employment Related Practices exclusion did not apply, the underlying complaint did not allege the existence of an occurrence causing bodily injury or property damage. 


01/25/21       Cavello Bay Reinsurance Ltd. v. Shubin Stein
United States Court of Appeals, Second Circuit (New York)
(Not Coverage B but) Is Fraud Domestic Enough to Fall Within The Securities Exchange Act?

Plaintiff Cavello Bay Reinsurance Ltd (“Cavello”) was a Bermuda corporation with its principal place of business in Bermuda.  Spencer Capital Ltd, owned by Kenneth Shubin Stein (“Spencer Capital”), is a Bermuda corporation with its principal place of business in New York.  Spencer Capital’s investment portfolio consisted of investments in U.S. insurance services.  Spencer Capital's shares did not trade on a domestic or foreign exchange. The parties’ subscription agreement--which was governed by New York law, required the shares to be issued in accordance with the Securities Act of 1933 (“SEC”) before they could be resold.

In a private offering, Cavello invested $5 million in Spencer Capital’s plan to raise $75,000,000 by selling A preferred shares. In a lawsuit that followed, Cavello alleged that Spencer Capital misrepresented that a management fee to Spencer Management, also owned by Shubin Stein, was tied to Spencer Capital's profits when in fact, the agreement stated that the fees were calculated as 25% of the increase in Spencer Capital's book value.  While Spencer Capital was operating at a loss, 25% ($4.4 million) of the funds received through the offering were paid to Spencer Management.

Cavello brought suit against Spencer under §10(b) of the SEC to recover its investment.  Section 10(b) provides a remedy for “manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.” 15 U.S.C. § 78j(b). 

Section 10(b) does not apply beyond U.S. boarders, but because the economy is mostly border-less, “it is a rare case of prohibited extraterritorial application that lacks all contact with the territory of the United States.” Cavello, at *4-*5 (citing Morrison v. Nat'l Australia Bank Ltd., 561 U.S. 247, 260, 130 S. Ct. 2869, 2880, 177 L. Ed. 2d 535 (2010).

The district court dismissed Cavello’s claims for two reasons: (1) the parties’ transaction was not “domestic” under Absolute Activist Value Master Fund Ltd. v. Ficeto, 677 F.3d 60 (2d Cir. 2012), and (2) even if the transaction was domestic, §10(b) wouldn’t apply because Cavello’s claims were predominantly foreign.  Parkcentral Global HUB Ltd. v. Porsche Automobile Holdings SE, 763 F.3d 198 (2d Cir. 2014).

On appeal, the Second Circuit assumed arguendo that the transactions were domestic, because it was unable to decide the place of the transaction without making state law.  Instead, the court upheld the district court’s ruling that in order to invoke §10(b), the claims must not be “so predominantly foreign as to be impermissibly extraterritorial” as they were here. Parkcentral, 763 F.3d at 216. 

According to the court, unless a company is listed on a domestic stock exchange, a bright-line rule limits § 10(b)’s reach to “transactions in securities listed on domestic exchanges, and domestic transactions in other securities.” (Morrison, 561 U.S. at 247). In Parkcentral, the court held that the Morrison analysis places the focus “upon purchases and sales of securities in the United States,” not “upon the place where the deception originated.”

With respect to the transaction impacting the United States and its citizens, Cavello argued that Spencer Capital made the misrepresentation in New York (vis-à-vis Shubin Stein); planned to use the funds to invest in U.S. insurance services; had its principal place of business and CEO and directors in New York; and was managed by a U.S. company. 

The court held that where the contract originated or was entered into was not relevant to the analysis.  Instead, the focus was whether the transaction related to the purchase and sale of securities.  Here, according to the court, while Cavello’s examples could have supported a contract formation argument, they did not establish that these transactions involved the purchase and sale of securities in the United States. 

Cavello argued that the agreement was domestic because Cavello could not resell the shares unless they were registered with the SEC (or met an exemption).  According to the court, that requirement only constituted a contractual impediment for resale.  In fact, held the court, the transaction was structured to avoid the bother and expense (and taxation) of U.S. law, stating, if “these sophisticated institutional investors” wanted the regulatory hand of the United States, they could have bargained for it and structured a U.S. transaction.” 

The court held that Cavello’s showing was not enough to render the transaction domestic, noting that instead, the transaction here implicated only the interests of two foreign corporations and Bermuda. 


Brian F. Mark
[email protected]

01/26/21       Berkley Specialty Ins. Co. v. Masterforce Constr. Corp.
United States District Court, Middle District of Pennsylvania
U.S. District Court Finds No Duty to Defend or Indemnify for Damages Caused by Faulty Workmanship, including Damages to Third-Party Property where such Damage was Foreseeable

This declaratory-judgment action arises out of an underlying construction defect action related to a failed roof installation.  In 2012, John P. Brandt and Karen Brandt (“the Brandts”) contracted with Masterforce Construction Corp. (“Masterforce”) to install a new metal roof on the Brandts’ home.  Masterforce, never intending to install the roof itself, hired Keith Wilton, a subcontractor to install the roof.  Of note, Wilton was instructed to conceal his identity as a subcontractor and hold himself out as an employee of Masterforce.

During construction, Wilton failed to cover the roof, resulting in a substantial leak due to rain.  The Brandts paid $481 to repair damage resulting from that leak.  After the roof was completed, a leak occurred on January 11, 2013; although Masterforce was contractually obligated to repair the roof, it informed the Brandts that they needed instead to contact Wilton.  Wilton applied caulk to the roof, which he asserted would fix the leak.  Additional leaks occurred on January 29, 2013 and January 30, 2014.  In April 2014, the Brandts paid Marcon Roofing $2,782 to inspect the roof and replace the ridge vent, which had not been properly installed and which contributed to the leaks.

The Brandts then filed suit in state court and while that suit was pending, the roof again leaked in January 2018.  The Brandts ultimately needed to replace the entire roof at a cost of $67,020, plus an additional $5,000 to design the new roof.  These costs were necessary because it was determined that the roof that Masterforce installed should never have been installed on the Brandts' home due to the slope of the home.

Berkley Specialty Insurance Company (“Berkley”) agreed to defend its insured, Masterforce, under a reservation of rights pursuant to two CGL policies, in effect in 2012 and 2013.

The policies state that Berkley would cover "those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage'" that is "caused by an 'occurrence.'"  The policies define an "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions" and define "property damage" as "[p]hysical injury to tangible property, including all resulting loss of use of that property" or the "[l]oss of use of tangible property that is not physically injured."

In finding for the Brandts, the trial court determined that the roof was improperly installed and never should have been installed on the Brandts' home due to the slope of the roof, which violated zoning regulations and manufacturer recommendations.  The court also concluded that Masterforce, Wilton, and others "acted in concert and conspired to deceive and defraud the plaintiffs by intentional actions and inactions which included the purposeful manipulation of the many defendants to obscure who was the actual party to the contract, the actual party doing the work and the actual party responsible for the warranty."  The court found the Brandts total damages to be $74,216.05, but awarded treble damages and attorneys’ fees for a grand total of $492,023.40.

Both Berkley and Masterforce filed motions for summary judgment in the declaratory-judgment action.  Berkley claimed entitlement to judgment in its favor on five grounds.  First, Berkley argued that Masterforce's conduct does not qualify as an accident sufficient to trigger coverage, as the damage to the Brandts' roof was caused by defective construction.  Second, Berkley argued that there is no coverage for Masterforce's intentional conduct, and all treble damages arose from Masterforce's intentional deception of the Brandts.  Third, Berkley asserted that there wass no coverage for a breach of contract or warranty.  Fourth, Berkley argued that attorneys' fees are not covered by the policies.  Lastly, Berkley asserted that treble damages are not covered for the further reason that treble damages are akin to punitive damages, which are excluded from coverage both by the terms of the policies, and as a matter of public policy.

Defendants argued that they were entitled to an order directing that Berkley indemnify Masterforce for the state court judgment.  Defendants first argued that Berkley should be estopped from disclaiming coverage under the 2013 policy because, in its reservation of rights letter, Berkley only referenced the 2012 Policy and, thus, failed to reserve its rights under the 2013 policy.  Second, the defendants asserted that Berkley's arguments against indemnification are incorrect, and the damages in the underlying state case arose from property damage caused by an occurrence, meaning that those damages are covered by the insurance policies.


Although Berkley only reserved its rights under the 2012 policy, the Court determined that estoppel did not apply.  First, the Court found that the 2013 policy was not implicated and that the 2012 policy was dispositive.  Both policies provide that they cover only damage that "occurs during the policy period."  The Court looked to Pennsylvania case law to determine which event triggers coverage under a policy of third party liability insurance. 

The Court examined a number of triggering theories and concluded that under any theory, the triggering event occurred during the existence of the 2012 policy.  The Court noted that the first leak occurred in 2012, due to Wilton’s failure to cover it.  Although the second and third leaks occurred in 2013, such leaks occurred after the roof was fully constructed and were undoubtedly the result of defective construction.  The first leaks of the improperly-constructed roof occurred in 2013 and property damage became reasonably apparent at that time, while the 2012 policy was still in effect.  The Brandts suffered injury in fact in 2012 when the defective roof was installed. 

As such, under any triggering theory, coverage was triggered during the 2012 policy.  Thus, Berkley was only required to reserve its rights under the 2012 policy.  The Court also noted that the defendants fatally failed to raise estoppel as an affirmative defense and that estoppel cannot be used to expand coverage where none existed in the first place.


Defendants first argued that the damages resulted from an occurrence, as the faulty workmanship damaged third-party property.  Defendants further argued that they did not intend any property damage, attorneys' fees are covered under the policies, and treble damages are not excluded under the policies.

In determining whether there was an “occurrence”, the Court examined cases interpreting the term “accident” and ultimately determined that damage to third-party property caused by faulty workmanship does not qualify as an accident sufficient to trigger insurance coverage.  The key term in the ordinary definition of 'accident' is 'unexpected.'  This implies a degree of fortuity that is not present in a claim for faulty workmanship."

In holding that the damages in this matter were not covered under the Berkley policy, the Court found that every cost, except for two, were damage to the product itself, which undoubtedly excluded them from coverage.  The Court found that the other two costs, damage from rain due to the uncovered roof and damage to the wood beneath the roof due to the improper roof installation, were entirely foreseeable results of failing to properly cover or install the roof, and thus, not covered.

Because treble damages were awarded as a result of Masterforce's intentional conduct, the Court determined that those damages could not be considered an "occurrence" under the 2012 policy.  As such, Berkley had no duty to indemnify Masterforce for those damages.  As none of the damages resulting from the underlying action constituted an occurrence that Berkley was legally obligated to pay, attorneys' fees arising from the underlying action did not arise as a result of "property damage" that was covered by the 2012 policy.  Accordingly, Berkley was not required to indemnify Masterforce for attorneys' fees.

As Berkley had no duty to indemnify Masterforce for the damages awarded in the underlying action, The Court dismissed Masterforce’s claim of bad faith.

In light of the above, the Court granted Berkley summary judgment, finding that Berkley had no duty to defend or indemnify Masterforce.


Eric T. Boron
[email protected]

01/27/21       New Jersey Transit Corp v. Certain Underwriters at Lloyd's
Supreme Court of New Jersey
Commercial Property Insurance – Court Upholds Grant of Summary Judgment to the Insured – NJ Transit Entitled to Full $400 Million of Named Windstorm Coverage for Superstorm Sandy Water Damage Rather Than Just $100 Flood Sublimit

In a succinct Per Curiam Opinion, the New Jersey Supreme Court affirmed last week the 2019 judgment of the Appellate Division which had upheld the trial court’s grant of summary judgment to the insured New Jersey Transit Corporation and denied the insurers’ motions for summary judgment.  The Supreme Court of New Jersey found no reversible error in the Appellate Division’s judgment, upholding it “substantially for the reasons expressed in Judge Yanotti's thoughtful opinion. See N.J. Transit Corp. v. Certain Underwriters at Lloyd's London, 461 N.J. Super. 440, 221 A.3d 1180 (App. Div. 2019).”  Supreme Court’s Opinion stated the Court relied “principally on the court's analysis of the plain language of the relevant insurance policies” and did not rely upon the discussion of Appleman's Rule or the doctrine of contra proferentem.  Supreme Court’s affirmance means New Jersey Transit is entitled to its full $400 million of insurance coverage in connection with Superstorm Sandy damage rather than the $100 million sublimit the insurers contended applied.

For those of you coverage nerds wanting a deeper dive, here is further background, review and analysis of certain issues considered and addressed by Appellate Division Judge Yanotti’s opinion essentially adopted by the New Jersey Supreme Court.  Much of this material comes from the “Syllabus” provided on the Supreme Court’s website.

NJ Transit carried a $400 million multi-layered property insurance policy program through eleven insurers when Superstorm Sandy struck. NJ Transit sought coverage for the water damage to its properties brought about by the storm.  Certain of its insurers invoked the $100 million flood sublimit in NJ Transit’s policies and declined to provide coverage up to the policy limit. NJ Transit filed an action seeking a declaratory judgment against those insurers.

The trial court found the $100 million flood sublimit did not apply to NJ Transit’s claims.  It further held the insurers had not submitted sufficient evidence to support their claims for reformation of the policies. The trial court granted summary judgment to NJ Transit and denied the insurers’ summary judgment motions.

The Appellate Division affirmed. The appellate court first considered the insurers’ argument that the Sandy-related damage to NJ Transit’s properties was subject to the flood sublimit because that damage met either of two separate definitions of “flood” in the policies: either “[t]he overflow, release, rising, back-up, runoff or surge of surface water;” or “[t]he unusual or rapid accumulation or runoff of surface water from any source.”  The court noted that the policies at issue also contained separate definitions for a “named windstorm.”  (“Named” by the National Weather Service or any other recognized meteorological authority.)

Specifically, the policies of most of the defendant insurers separately define “named windstorm” to include “wind driven water, storm surge and flood associated with, or which occurs in conjunction” with a “named windstorm.”  It was “storm surge” from Superstorm Sandy that damaged various New Jersey Transit sites.  One of the policies even defined “named windstorm” as the “direct action of wind including storm surge when such wind/storm surge is associated with or occurs in conjunction with” a named windstorm. 

The Appellate Division found the policies do not define “flood” to include “storm surge” and “wind driven water” associated with such a “named windstorm.” Although the definition of “flood” includes “surge,” the definition of “named windstorm” more specifically encompasses the wind driven water or storm surge associated with a “named windstorm.”

Where, as here, two provisions of an insurance policy address the same subject, the more specific provision controls over the more general.  If the parties had intended that damage from a “storm surge” would be subject to the flood sublimit, the policies would have stated so in plain language, found the court.   Moreover, if the term “flood” already included damage from a “storm surge” associated with a “named windstorm,” there would have been no need for the parties to include the “named windstorm” provision in the policies.

The court determined “that the relevant provisions of the policies are sufficiently clear and establish that water damage associated with a ‘named windstorm’ does not come within the definition of ‘flood’ and is not subject to the flood sublimit.” The insurers’ argument that the parties never intended that the “named windstorm” provision would remove water damage associated with a “named windstorm” from the flood sublimit was rejected by the court.  It was instead found that “[t]he plain language of the policies indicates that the purpose of the ‘named windstorm’ definition was to differentiate between the inundation caused by a ‘surge’ of water, which may have no relationship to a storm, and the inundation resulting from a ‘storm surge,’ which the policies define as wind driven water associated with a ‘named windstorm.’”


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

01/21/21       American Transit Insurance Company v. Bilyk et. al
United States District Court, E.D.N.Y.
Carrier Obtains Default Judgment on Motion for Reconsideration  

If you’ll recall, back in our last issue of 2020, I reported this RICO case by American Transit Insurance Company (“AITC”) against a multitude of defendants for engaging in a pattern of submitting fraudulent claims under NY’s no-fault insurance scheme. The Court originally dismissed the case, but denied default judgment because the Judge concluded that AITC did not establish the defendant’s liability. AITC moved for reconsideration, in which the Court found for the first time drew the proper connections between the broadly pleaded allegations in the complaint and the detailed supporting exhibits. The Judge, in chastising AITC, said “the present motion does the work that should have been done in the complaint, or, at the very least, in the default judgment motion.” However, upon the new showing, the Court concluded that there was adequate proof to establish the defendants’ liability on AITC’s RICO and fraud claims and granted the default judgment.


Ryan P. Maxwell
[email protected]

Legislative List

1/26/21         Washington State Proposes New Business Interruption Bill
Washington State Senate
Proposed WA Senate Bill No. 5351 Would Require Both Retroactive and Prospective Coverage For Loss of Use of and Deprivation of Property

I am old enough to remember the flood of proposed legislation this past summer that would have retroactively amended the language of property policies, requiring them to provide business interruption coverage for COVID-19 as a “covered peril” (we discussed those bills in a previous installment of Ryan’s Capital Roundup here, and have helpful summaries of each that can be found here). You may recall that those bills took off about as well as lead balloons. Fast forwarding to today, the Washington State Senate has introduced a new bill that takes after these original bills, with a few exceptions. Washington Senate Bill No. 5351 is new, but I believe it will not fare any better than those bills that came before.

Despite what I believe, the bill goes as far to include within Section 1 an indication that

“The legislature notes that Washington state and federal courts that recently examined this issue have ruled clearly and unambiguously that the words ‘loss’ and ‘damage’ hold distinct meanings under Washington law in the context of business interruption insurance policies and should not be interpreted to render one word or the other superfluous. The legislature intends to codify this interpretation to provide greater clarity.”

There have been two COVID-19 business interruption decisions on motions in Washington State that I am aware of, both of which run in direct contravention to the national trends favoring carriers when insureds arguing “loss of use” on account of governmental orders, without the actual presence of the virus on their property. Both decisions rely solely on the idea that “loss” and “damage” cannot and should not be interpreted to mean the same thing, resulting in ambiguity:

  • Perry Street Brewing Company LLC v. Mutual of Enumclaw Insurance (granting partial MSJ to policyholder)

  • Hill and Stout PLLC v. Mutual of Enumclaw Insurance Co. (denying carrier’s MTD).

According to the Senate Bill Report,

“A ‘direct physical loss’ and ‘damage to’ are often undefined terms in an insurance contract.  A recent Spokane County Superior Court decision, Perry Street Brewing Co., LLC v. Mut. of Enumclaw Ins. Co., and a recent King County Superior Court decision, Hill and Stout PLLC v. Mut. Of Enumclaw Ins. Co., both determined that ‘loss of’ and ‘damage to’ have distinct meanings from each other.  The courts established that the insureds' lack of access to their property was a loss because the plain meaning of the word meant to deprive.  In both instances, the insureds lost the ability to use their property for its intended purpose because its use was prohibited by gubernatorial proclamation due to the COVID-19 outbreak.  The insureds, in both cases, were seeking coverage on their business interruption insurance policies.”

Recall that those bills proposed this past summer by various states died in their respective legislative committees—where the WA bill currently resides. However, there are important differences in the language of WA Senate Bill No. 5351 that should be parsed carefully. The operative language for Bill No. 5351 is in Section 3, where it provides:

“Every property insurance policy containing a grant of coverage for direct physical loss of or damage to property shall be construed to include the deprivation of such property and the loss of the ability to use such property.”

This language in Section 3 is fairly the same as those bills that came before, except it appears to modify “loss of or damage” to encompass coverage for loss of use, rather than simply add a covered peril for COVID-19 (see column D in our summary document here). Therefore, the application of Bill No. 5351 may be broader than the original bills. For example, the operative language from the New Jersey bill is below:

"[E]very policy of insurance insuring against loss or damage to property, which includes the loss of use and occupancy and business interruption in force in this State on the effective date of this act, shall be construed to include among the covered perils under that policy, coverage for business interruption due to global virus transmission or pandemic, as provided in the Public Health Emergency and State of Emergency declared by the Governor in Executive Order 103 of 2020 concerning the coronavirus disease 2019 pandemic."

Another interesting caveat between Bill No. 5351 and those previous bills is that because the proposed retroactive change in language is not tied to COVID-19, Section 4 of the WA bill contemplates mandatory “loss of use” coverage prospectively, in addition to retroactive “loss of use” coverage for COVID-19:

“NEW SECTION.  Sec. 4. This act applies to all causes of action commenced on or after the effective date of this section, regardless of when the cause of action arose. To this extent, this act applies retroactively to February 29, 2020, when Governor Jay Inslee issued Proclamation 20-05, proclaiming a state of emergency for all counties throughout the state of Washington as a result of the COVID-19 outbreak in the United States. In all other respects this act applies prospectively.”

A public hearing on Bill No. 5351 was scheduled for February 2 and an archived link is available here. It remains to be seen whether this bill will suffer the same fate as the others.

1/28/21         Clarification to Premium Reductions for Commercial Risk Insurance Covering For-Hire Vehicles
NY Governor’s Office
New Law Clarifies That A Premium Reduction For-Hire Vehicles Does Not Impact Other Personal Auto Rate Reductions

In the last edition of Ryan’s Capital Roundup, here, we wrote about a bill that had just passed the Assembly and proposed to make clarifying changes to Chapter 347 of the Laws of 2020, which authorized associations representing for-hire vehicles with a capacity of eight or more persons to create safety programs and required insurers to provide appropriate premium reductions to insureds upon successful completion of such programs.

Well, it passed and is Chapter 4 of the Laws of 2021. So there’s that.


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

01/22/21       Cosmopolitan Shipping Co. Inc. v. Continental Ins. Co.
United States District Court, Southern District of New York
Coverage Under a Missing or Lost Insurance Policy will not be Afforded Unless the Material Terms of the Policy can be Proven

Plaintiff is a shipping company and claims that it is insured under a policy of Protection & Indemnity Insurance (the P&I Policy) issued to the United Nations Relief and Rehabilitation Administration (“UNRRA”) from defendant. Beginning in the 1980s, seamen who sailed on ships owned by plaintiff in the 1940s are bringing claims related to asbestos related injuries. Plaintiff seeks coverage for settlements related to these under the P&I Policy, but apart from three endorsements, the P&I Policy cannot be found. Defendant asserted that it is not liable to plaintiff because plaintiff has not sustained its burden of proving the existence and terms of any policy issued by defendant that would provide plaintiff coverage for the asbestos claims.

The court then held an evidentiary hearing to determine whether or not plaintiff has met their burden to prove the material terms of the “lost” P&I Policy issued by defendant. Plaintiff proffered three expert witnesses at the evidentiary hearing: one to establish that the terms and conditions contained in other P&I policies issued by defendant could eb used to establish coverage under the policy in question, one witness to lay the foundation between the underlying claimants and the ships allegedly covered by the P&I Policy, and one who testified that plaintiff was not insured by one of the other insurance companies permitted by the U.S. Maritime Commission to issue policies to US government chartered vessels during the relevant time period. Defendant called only one witness who opined that there was no evidence defendant provided P&I insurance to plaintiff during the relevant time period and filed three affidavits to establish that it made a diligent albeit unsuccessful search for the policy in question.

The court then addressed whether a diligent search for the policy had been conducted by the insured, and therefore whether or not secondary evidence could be used to establish coverage. The court found that plaintiff did establish that they made a diligent search for the policy. Plaintiff established that in 1995 it commenced an investigation by asking its insurance broker to search for policies from the relevant time period, a decade later (as the asbestos claims continued to progress) plaintiff searched its own internal records for policies issued to either it or the UNRRA, and lastly plaintiff issued subpoenas to the four insurance companies authorized to issue policies to shipping outfits operating US government charters. The search turned up three endorsements for the P&I Policy, found in the United Nations Archives, plaintiff then searched the Columbia Rare Book Archive and Manuscript Library and the National Archives, to no avail. The court held that plaintiff did conduct a diligent search by looking for the policy in the places it would most likely be found.

The court stated that, in New York, the burden of proof in proving the terms and conditions of a lost policy are unclear, some cases have held that the terms must be proven by a preponderance of the evidence and others argue the evidence must meet the clear and convincing standard. The argument is moot in this case, as the court held plaintiff’s evidence of coverage failed to meet either standard in proving that defendant owes plaintiff coverage under the P&I Policy.

While the court agreed with plaintiff’s contention that defendant issued the P&I Policy to the UNRRA, and that plaintiff’s ships were chartered and sailed in service of the UNRRA, the court did not find sufficient evidence to prove plaintiff’s ships were covered by the P&I Policy. The court agreed that plaintiff had sufficiently proved some of its ships would have been covered by the P&I Policy, and that at least four of the underlying asbestos claimants sailed on covered ships, however plaintiff filed to show, even by a preponderance of the evidence, the material terms of the P&I Policy. The court explained that in order to prove the material terms of a lost or missing policy an insured can use a “typical” policy (e.g. a policy based on standard ISO forms) so long as a witness with knowledge agrees that the insurer used such a policy for the time period in question, the insured can prove that a renewal policy would have substantially the same terms as a policy it is replacing, or the insured can provide a witness, who was familiar with the terms of the lost policy, testified that another policy, in evidence, had the same terms and conditions as the lost policy. In the instant case, plaintiff provided two different policies as examples of maritime insurance policies, one issued by defendant to a different commercial shipping entity and one issued by a consortium of insurers to the United States War Shipping Administration. The court found that neither exemplar policy provided a direct connection to the P&I Policy in question, and therefore they were insufficient to prove the material terms and establish coverage under the missing P&I Policy.


Patricia A. Rauh

[email protected]

01/28/21       Chai-Chen v. Metropolitan Life Ins. Co.
Appellate Division, First Department
An Insured Has the Duty to Read the Insurance Policy, as Well as the Duty to Correct Any Inaccuracies on the Insurance Application.  It is Not the Duty of an Insurance Broker to Make Sure the Insurance Application is Complete and Accurate

The lower court properly dismissed the action against Cui Li, the defendant insurer’s former insurance broker.  The court held that an “insured has the duty to read the insurance policy or have it read to him or her, as well as the duty to correct any inaccuracies present on the insurance application.”  The plaintiffs argued that they were not responsible for any misrepresentations in the insurance application because they did not understand English.  The court rejected this claim and concluded that there was evidence that the plaintiffs were proficient in English.

Plaintiffs also claimed that they had a confidential, special or fiduciary relationship with the broker.  The court also rejected this argument and stated that generally, there is not a type of special relationship between an insurance agent and an insured except in exceptional and particularized situations, none of which exist here.

Finally, the plaintiffs’ negligence claim against the broker was also properly dismissed because the broker met her common-law duty to obtain coverage for her client, despite the fact it was later disclaimed,  It was not the broker’s responsibility to make sure the information on the application was complete and accurate, despite any alleged language barriers.


Mirna M. Santiago

[email protected]

Nothing this week.

Scott D. Storm

[email protected]

Please see my cover note.

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