Coverage Pointers - Volume XXII, No. 18

Volume XXII, No. 18 (No. 583)
Friday, February 19, 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.


Dear Coverage Pointers Subscribers:

Do you have a situation?  We love situations. 

Our firm is proud to recognize and celebrate:


Lots of material in our cover note today as well as in the issue attached. 

A special thanks to Attorney Howard Kronberg for a guest summary in this week’s issue on a fine decision involving agents and brokers liability.  It’s in my column, the Trimasa case.

My wife, Chris, and I are fortunate to have received our second Moderna vaccine last week.  It’s one of the few advantages of being aging, even if the aging is not graceful!  The side effects were quite minimal and lasted less than a day.  Chris had some flu-like symptoms and she claims that I became “cranky”.  For the record, I am never cranky. 

We hope that your families remain healthy and that you have had success in seeking and scheduling your shots in the arm.  To us, it is clearly the right thing to do; obviously, every person will make her or his own decision.

You’ll find the usual array of interesting cases in this week’s issue, attached.  The headlines for the reported cases are, as usual, at the bottom of this cover note.


Flash news – ZONE of DANGER expanded to Grandparents:  New York State Court of Appeals just expanded the right of grandparents to bring “zone of danger” claims.  It expanded the understanding of “immediate  family” to allow grandparents to bring a claim when “one who is . . . threatened with bodily harm in consequence of the defendant’s negligence to recover for emotional distress” flowing only from the “viewing [of] the death or serious physical injury of a member of his or her immediate family”  under Bovsun (61 NY2d 219).  Click to read the decision in Greene v Esplanade Venture Partnership


Additional Insured Coverage – Revisiting Indian Harbor:

I have a thing for the Indian Harbor decision. Don’t know it, read on …

Additional insurance coverage is a topic we all love and ponder.  How do we tell whether a party is entitled to AI coverage under a CGL policy?

Let’s take the classic Labor Law case.  Humpty Dumpty is an employee of Sally  Subcontractor, LLC (“Sally”).  One fine day, he falls from a wall and breaks his crown.  He brings an action, under Section 240(1) of the New York State Labor Law against General Contractor, Inc. (“General”), the general contractor on the job.  General is insured with Red Umbrella Insurance Company (“Red Umbrella”).

Sally is insured with All the Kings Horses Insurance Company (“Kings”), and Kings has a CGL policy that includes an additional insured endorsement that provides additional insured (“AI”) coverage to anyone required to be listed as an AI under a contract or agreement, but only if the accident and injuries were caused, in whole or in part, by the acts or omissions of the named insured, Sally.  Assume the trade contract between General and Sally required AI coverage.

The complaint filed by Dumpty does not allege any conduct on the part of Sally, because Sally is the employer and is not being sued by Dumpty. 

The following often occurs:

  1. General’s CGL carrier, Red Umbrella, on behalf of itself and General, tenders the defense of the lawsuit to Kings, alleging that General is an AI (and/or contractual indemnitee);

  2. Kings denies the AI tender because the complaint does not allege that its insured, Sally, caused the accident, in whole or in part;

  3. General then commences a third-party action against Sally, alleging negligence on Sally’s part and seeking contractual indemnity and alleging that Sally failed to secure promised AI coverage;

  4. General then retenders its defense to Kings and Kings, once again, denies the tender, claiming that General cannot allege negligence against Sally, just to trigger coverage;

  5. General and Red Umbrella bring a declaratory judgment action against Kings, seeking AI coverage.

Sound familiar?  The question is:  who is right?  Can General, in its third-party action, include allegations designed to trigger its right to AI coverage from the subcontractor’s carrier?  If so, wouldn’t every general contractor (or owner) do that every single time, even if there are no allegations in the main complaint of subcontractor causation?

Along comes Indian Harbor Insurance Company v. Alma Tower, LLC,165 AD 3d 349 (1st Dept. 2018), the case EVERYONE talks about on this issue.  Let’s review that decision.  It’s relatively brief:

Alma Tower (the owner) and Vordonia (the GC) were sued  in a Labor Law claim.  Shortly after the underlying action was commenced, asserting claims of common-law negligence and Labor Law violations against Alma Tower and Vordonia in connection with injuries sustained by the injured party while he was working on the property for subcontractor S&S HVAC Corp. (“S&S”), both defendants commenced third-party actions against S&S “alleging negligence and seeking indemnification and contribution. Alma Tower and Vordonia also wrote to plaintiff seeking coverage pursuant to the insurer's duty to defend.”

The court concluded that defendants, Alma Tower and Vordonia, demonstrated that plaintiff had actual knowledge of facts establishing a reasonable possibility of coverage and is therefore obligated to defend them in the underlying personal injury action (see Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 67 [1991]).  The Court held:

Because there is a reasonable possibility that S&S proximately caused the injury, neither Burlington Ins. Co. v NYC Tr. Auth. (29 NY3d 313 [2017]) nor Hanover Ins. Co. v Philadelphia Indem. Ins. Co. (159 AD3d 587 [1st Dept 2018]) is applicable here.

As the underlying personal injury action was filed when the insurance policy was in effect, and plaintiff has a duty to defend, plaintiff is legally obligated at this time to pay Alma Tower and Vordonia's defense costs in the underlying action.

So, what was the court saying?  Was it saying that just because there were allegations in the third-party complaint of negligence on the part of the subcontractor (Sally, in our example), that alone gives rise to a duty to defend?  We suggest not, although others may disagree, the court found, as a matter of fact, that there was a reasonable possibility that the subcontractor’s conduct caused the injury.  The Fitzpatrick case, cited by the court, tells an insurer that the allegations in the complaint may not be the only guide for determining the duty to defend:

These factors militate in favor of a rule requiring the insurer to provide a defense where, notwithstanding the complaint allegations, underlying facts made known to the insurer create a “reasonable possibility that the insured may be held liable for some act or omission covered by the policy”.

Fitzpatrick v Am. Honda Motor Co., Inc., 78 NY2d 61, 70 [1991]

What are “underlying facts” as compared to “allegations”?  That is a question not yet answered by the courts, but we contend that Indian Harbor does not stand for the proposition that a defense is owed, simply because of allegations of negligence are contained in the third-party action.  The insurer, Kings, in our case, needs to be aware of “actual facts” that justify a finding of a defense obligation.

On February 8, 2021, a lower court decision was handed down in a case called Noble Constr. Group, LLC v. Farm Family Insurance Company, linked here.  In that case, Country Wide, insured by Farm Family Insurance Company, was the subcontractor, and Noble was the GC.  An employee of the subcontractor, Allacio sued Noble after a gravitational related fall.  Noble asked Farm Family, the sub’s insurer, to pick up its defense as an AI.  Farm Family denied coverage and Noble sued.

Noble moved to compel discovery, apparently to demonstrate Country Wide’s negligence and responsibility for the accident.  Farm Family opposed the motion, arguing that discovery was unnecessary and unwarranted because AI coverage should be determined by the complaint and the complaint did not allege that its named insured, County Wide, was negligent.  The court considered the motion.  First, the court weighed in on the burden of proof, holding that Farm Family, had to disprove that its insured’s negligence caused the accident.

As an additional insured the plaintiff must demonstrate that Allacio’s injuries were caused by acts or omissions of Country Wide the insured party of Farm Family. Thus, to succeed upon a motion to dismiss the defendant must conclusively establish that there are no such acts or omissions committed by Country Wide.

Odd, indeed.

Then, the court noted:

The complaint in the Allacia action does not allege any acts or omissions committed by Country Wide at all. The plaintiff argues that in any event Farm Family must provide coverage because there are extrinsic facts which demonstrate a possibility that coverage is applicable.

The court then looked outside of New York for guidance on the subject, leading to this analysis:

Thus, while there might be a conflict among various courts as to the level of wrongdoing necessary for an additional insured seeking such coverage, namely whether a showing of negligence is required, all courts agree the additional insured should be entitled to present whatever such evidence is necessary. Therefore, in The Charter Oak Fire Insurance Company v. Zurich American Insurance Company, 462 F.Supp3d 317 [S.D.N.Y. 2020] the court held that even though the underlying complaint did not even mention the insured, a company called Slade, the insurer was required “‘to provide a defense when it has actual knowledge of facts establishing a reasonable possibility of coverage’”…

The duty to defend the additional insured is only based upon whether the insured committed acts or omissions that could give rise to liability….[A] declaration that an insurer is without obligation to defend a pending action could be made ‘only if it could be concluded as a matter of law that there is no possible factual or legal basis on which [the insurer] might eventually be held to be obligated to indemnify [the insured] under any provision of the insurance policy.

The court then allowed discovery:

Consequently, there must be some evidence presented, and further evidence may be explored to determine whether Country Wide committed any acts or omissions that would trigger the additional insured coverage. 

It then looked to the plaintiff’s complaint which alleged that “Mr. Allacio was working under the direction and control of his supervisor, another County-Wide Masonry employee, when he was allegedly struck by an unsecured falling object” and concluded:

Thus, this complaint may serve as potential evidence and notice that Country Wide was negligent. In Indian Harbor Insurance Company v. Alma Tower LLC, 165 Ad3d 549, 87 NYS3d 9 [1st Dept., 2018] the court noted that third party and other complaints may serve as knowledge of acts or omissions giving rise to coverage.

So, where does that take us?  Allegations in the third-party complaint and other complaints may serve as potential evidence and notice that the subcontractor was negligent (or caused the accident).

Are allegations enough?  Here, the court did not so find, but allowed discovery to go forward to establish proof.

The last chapter has not been written.


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:

  1. Are you sending out reservation of rights letter in NY claims? 
  2. Do you know the “30-day” rule?
  3. Are you certain you know who gets copies of coverage position letters in New York?
  4. If the insured fails to respond to 10 letters seeking cooperation, can you successfully deny coverage for lack of cooperation?
  5. 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 client and subscribers with timely information and practical, business-oriented solutions to the latest employment and general business law developments.  Contact Joseph S. Brown at [email protected] to subscribe.

  • Premises Pointers:  This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!).  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.



Are insurance companies’ “approved panel lists” a hotbed for racial inequity?

Insurance companies compile and maintain a select list of “approved panel” firms for a myriad of reasons, the main ones of which are efficiency and cost-effectiveness. These pre-approved panel lists allow claims professionals to have a vetted list of counsel on hand for defense and coverage matters. Because they count on volume from the carrier, the attorneys are willing to provide services for lower rates or flat fees. For attorneys on the list, there is predictability in the work and a steady income flow. So, it’s a win/win proposition, right? Maybe for the parties involved, but perhaps not for racial equity.

In 2016, the American Bar Association passed Resolution 113. It urged legal service providers to expand their network of attorneys and provide/create opportunities for diverse attorneys by allocating a greater percentage of their legal spend to providers who are diverse and/or employ diverse attorneys. The stated goals of the Resolution were to: (1) increase diversity at all levels within the legal profession, which will make the legal field a more appealing profession for diverse individuals; (2) increase the number of diverse attorneys and remediate the issues of implicit bias in the legal profession; and (3) encourage corporate clients to use a Model Diversity Survey in procuring and evaluating legal service providers.

As of June 2020, 114 companies had endorsed the ABA’s Resolution 113, but only 6 of those were insurance companies. In a business where more than 90% of all equity partners at law firms are white and only 57 of the general counsels of the nation’s 500 largest companies are BIPoC, there is the fear that a mirrortocracy is in play and that minority counsel may never get the opportunity to ascend to those vaunted preferred or approved panel lists.

Studies show over and over that: diverse teams create higher profits for their companies; diverse management boosts revenue by 19%; and companies with highly gender-diverse executive teams perform better than gender homogenous teams.

The hope is that insurance companies and their leadership will come to realize all the benefits that diversity brings and create programs that will bring BIPoC-led firms into the fold of their approved panel lists.

Mirna M. Santiago

[email protected]


Old-Style Punishment in Fort Erie, Ontario:

The Buffalo Times
Buffalo, New York
19 Feb 1921

20 Lashes for Wife-beater

BRIDGEBURG, Ont., Feb. 19.—A severe punishment was meted out to John Toloski, of Crowland Township, yesterday, who several days ago, kicked his wife in the knee, beat her up on the face and hit her with an alarm clock.

Magistrate Goodwin sentenced Toloski to thirty days in jail.  Previous to the commencement of his sentence he is to receive ten lashes.  Ten days from the day of his release he is to receive ten more lashes.  In addition, he was given a lecture on the difference in treatment of women in Canada and Russia.  Toloski claimed that he believed in the Russian way, he being a Russian.

This is the first time that lashes have been administered in some years.

Editor’s Note:  Bridgeburg, Ontario, is now known as Fort Erie. It is the town immediately across the Peace Bridge from Buffalo, within which my summer home is located, on the shore of Lake Erie (a home I didn’t visit this summer).  I don’t think lashes are still the call of the day, but I’ll be extra careful this summer, if I can cross the border.


Peiper on Property and Potpourri:

Happy late Valentine’s Day. I am now comfortably into my second decade of reporting every two weeks, and you may recall that I have provided a glimmer of hope in this particular issue almost every year since I started the route.  That’s right, earlier this week (2/17) pitchers and catchers reported for Spring Training.  The first games start on the last day of February.  It is a rite of Spring, and some indicator of warm weather (and, perhaps, normalcy) to come.  Who can’t get behind that, even if you don’t give a hoot about baseball?

We also take a moment to highlight the Valbuena decision reviewed in this week’s column.  The First Department in that decision extended an indemnity clause to provide protection even where the party from whom indemnity was sought apparently had nothing to do with the accident.  The clause only required that the subcontractor have tools in the area, or be working in the area.  Or so, it seems, that’s how the First Department read the contract.

We, respectfully, would dissent from the decision, but there is a bigger issue in play.  Not all indemnity clauses are created equally.  Some are broad, some are restrictive.  That said, ALL will be read according to the exact terms used.  So, if you are a contractor and you want a negligence trigger, you better say so in the contract.  If you are an owner, and you want the broadest protection possible, make sure the term “negligence” is nowhere found in the agreement.  The reality is that the Court will apply the language as written, and if broad enough, loose enough, it can be applied, as here, where the indemnitor is not providing protection for losses it causes but rather is acting as a surety for the entire jobsite (including those areas beyond its control). 

Steven E. Peiper

[email protected]


False Arrest Leads to Pittance:

The Castle Herald
New Castle, Pennsylvania
19 Feb 1921


In the case of w. J. Griffiths versus Robert Withers, the jury returned a verdict of $350.  Griffiths who is an aged druggist in the city, had brough suit for $20,000 damages through alleged false arrest.

Griffith’s case was handled by Atty. Charles Mehard and Atty. S. L. McCracken.  Atty. Clyde Gilfillan defended Withers.


Wilewicz’ Wide-World of Coverage:

Happy Presidents’ Day-Week! There is no remote school this week, so we are trying our hand at a stay-cation for once. It’s not working very well thus far, as the work just keeps coming in (always a good thing; not complaining!), yet between the snow and the Covid restrictions, there really isn’t much left to do at the house. We have already cleaned and reorganized, cooked and baked every day, and did all of our puzzles and paint-by-numbers. My daughter has already complained a few times that she wished that her teachers had assigned homework or projects over the break. Maybe she can let them know and have them start prepping some assignments for over the summer.

See y’all in two weeks.

Agnes A. Wilewicz

[email protected]


In 2021 Dollars, about $36,500 for Wrongful Death of a Boy:

Buffalo Courier
Buffalo, New York
19 Feb 1921


Timothy Manley as administrator of the estate of his son, Theodore Manley, was awarded a verdict of $2,500 against William G. Perry by a jury in Part V of Supreme Court yesterday.  Testimony produced by William J. Flynn, counsel for the plaintiff, showed that young Manley was riding on the running board of an automobile driven by George Bodkin when an automobile truck driven by William G. Perry collided with it near Woodlawn Beach on July 11 last.  Manley was thrown, receiving injuries which caused his death. 


Barnas on Bad Faith:

Hello again:

Last week in my cover note I advocated for the approach to extracontractual damages in first party bad faith cases that the Florida Supreme Court recently articulated.  In so doing, I said that the Florida approach struck me as far more sensible than the approach that New York follows with respect to “consequential damages.”

The R&R Third Properties case in my column this week is a perfect example of what is wrong with New York case law in this area.  Plaintiffs submitted a claim to Federal for first party coverage for damages to a scanner used in their medical practice.  They also claimed that they were entitled to consequential damages.  The First Department concluded that Plaintiffs stated a claim for consequential damages in the resulting lawsuit.  The court noted that the record was replete with issues of fact that called Federal’s good faith in investigating the insurance claim into question.  The court went on to say that even if Federal did not act in bad faith, it would not be entitled to summary judgment dismissing the consequential damages claim because it failed to show that such damages were not within the contemplation of the parties at the time of or prior to contracting.

So, what is the standard the court is applying in this case?  Are Plaintiffs entitled to consequential damages solely by establishing that Federal breached the contract and that the damages claimed were within the contemplation of the parties?  Do Plaintiffs have to show that Federal acted in bad faith to recover consequential damages not covered by the policy?  Is it something in between?  There remains a lack of clarity regarding what standard New York courts are applying in these first party insurance consequential damages cases, and this further case illustrates that.

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

Brian D. Barnas

[email protected]


On the Other Hand, this Verdict Equates to about $200,000 today:

The Chat
Brooklyn, New York
19 Feb. 1921


A verdict of $13,500 was given Mrs. Emily E. Brill, 246 Jamaica avenue, in the Supreme Court, Wednesday.  She suffered internal injuries in a train accident at the Canal street station a year ago. 


Off the Mark:

Despite an exhaustive search, I did not find any recent construction defect decisions to report on.

Until next time …

Brian F. Mark

[email protected]

Not So Smart:

Buffalo Evening News
Buffalo, New York
21 Feb 1921


CLEVELAND, Feb. 21.—Seventy percent. of the adults of the United States have not the intelligence of the average 10-year-old student, and a change in its school system is necessary to meet this condition, Dr. P. H. Goddard, Ohio State university, told the National Council of State Normal School Presidents and Principals in convention here today.

Statistics gathered by the draft boards, he said, showed that 70 percent. left school before the eighth grade was reached.

Goddard held that manual training was therefore necessary to equip this number of places in skilled industry.  He proposed manual training almost exclusively up to the fifth grade.  Childish dislike for schooling was given as the reason for the early exodus from the schools.  Other educators at this meeting, held in advance  of the National Education association convention here next week, urged remedial legislation to prevent the demoralization of the teaching forces of the United States.

Lack of compensation is driving teachers into affiliation with labor organizations, and the result is having its effect on the pupils and the home, it was stated. 


Boron’s Benchmarks:

Perhaps you feel differently, but from this writer’s viewpoint, Super Bowl Sunday had very little that was “super” to it.  Given that each and every Sunday of the year already has its own “super” vibe to it, this past Super Bowl Sunday provided little, in my opinion, to qualify it for the celebrated title “Super” with a capital “S”.  As a viewer who is not a Tampa Bay Bucs fan, I found the game itself to be “super” disappointing.  It is not particularly engaging to watch a four-hour athletic contest where one team plays to its full or close to its full potential, while the other team plays nowhere near its full potential.  Some of the TV commercials were OK, but I’d rate them as only slightly above “blah”. What I saw of the halftime show was not memorable.  And, I ate too many snacks during the game and regretted it afterward. Other than that, I have no complaints. 

But on a brighter note, 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 February 5, 2021, by the Supreme Court of Alabama in Allstate Ins. Co. vs Ogletree, where the jury’s verdict for the insured Ms. Ogletree resolving an extent of damages dispute was reversed by the Alabama Supreme Court and remanded for a new trial on the basis of inaccurate statements made during closing arguments by the insured’s attorney unsupported by the evidence at trial.   

Have a healthy and happy next two weeks, folks.

Eric T. Boron

[email protected]


Daily News Quiz – Answers Below:

Daily News
New York, New York
19 Feb 1921


Can You Answer Them?


            1.         How should “affect” be used?  With what is it sometimes confused?

            2.         What is the significance of “allude”?

            3.         What is the singular of “animalcula”?

            4.         What is the possessive to “anybody else”?

            5.         Is this correct: “Many guests assisted at the ceremony”?

            6.         What is the difference between “avocation” and “vocation”?

            7.         When only should “both” be used?

            8.         What is a synonym for “commence”?

            9.         What is “corporal” sometimes confused with?

            10.       How might “editorial” be defined?

(Answers on following page.)


Barci’s Basics (On No Fault):

Hello Subscribers!

I hope you are all still staying healthy and safe! Last time, I asked what your favorite Halloween costume was as a child, assuming you celebrated Halloween. Mine was a traveling businesswoman. I think I was around 10 and I wore black pants and a jacket and wheeled around a suitcase. It was ingenious, since it was super simple, I didn’t have to carry a bag for candy, and I had a much larger area to fill with candy in the suitcase! I think I recycled this costume the next year too.

For next time consider: What is the worst advice you’ve been given?

On the no-fault front, I have two cases from the Second Department Appellate Term, one that discusses collateral estoppel and the other about the attorney-witness rule as it relates to EUOs.

That’s all folks,

Marina A. Barci

[email protected]

Daily News Quiz – Questions Above:

Daily News
New York, New York
19 Feb 1921


Here Are the Answers to the Questions on Preceding Page


            1.         Affect is sometimes confused with effect.  Pain “affects” us unpleasantly.  We “effect” a result.

            2.         Allude does not mean “to mention” but “to touch on in passing.”

            3.         “Animalcule” or “animalculum.”

            4.         Either anybody’s else’s or anybody’s else.  The former has been much objected to by some critics, but is perfectly correct.

            5.         It is incorrect.  One should say:  “Many guests were present at the ceremony.”

            6.         Vocation means a man’s calling or profession; avocation is what he takes up as an amusement or side issue. 

            7.         “Both” should be used only with reference to two persons or objects.

            8.         Begin.

            9.         Corporeal.

            10.       As the American equivalent of the British “leader.”


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

My birthday was this week and a lot happened that day.

  • For starters, I gained a year… or rather lost one.

  • I worked all day—but my wife took the day off to watch the kids. All said and done, it was my most productive work-Tuesday in a long time.

  • Additionally, my dog returned from the vet with his surgically repaired knee. No, not the left one. He had that one repaired last time, which leads me to my next point…

  • I *shoveled the backyard* so that my dog didn’t have to fight through a literal foot of snow to go about his business.

  • When asked “what should we have for dinner,” I responded with the logical choice. Pizza. Great choice.

  • I enjoyed a Peanut Porter or three from Flying Bison, on tap at the Maxwell House circa Super Bowl weekend, and a home-made cake that was simply divine; and finally

  • I assembled our new projector with oversized screen. When I say my living, room is a movie theatre right now, I’m not lying. The 120-inch screen—that will most certainly be used exclusively outside once we take it down—is currently touching the ceiling, while the projector is precariously resting upon the back of the couch against the wall. Captain America hits different in your home theatre.


I’m not a birthday guy, normally, but it was quite a special day. Thanks for all the well wishes and a special thanks to my family for making going that extra mile.

This week, Ryan’s Capital Roundup will feature the new Cyber Security Framework rolled out by DFS for authorized carriers offering cyber insurance products, as well as those insuring “silent” cyber risks.

Until next time,

Ryan P. Maxwell

[email protected]


Dealing with an Epidemic, 100 Years Ago:

Daily News
New York, New York
19 Feb 1921


Three Cases Upstate; City and Federal Officials Clash

New York health officials were notified late yesterday afternoon that the United States senate had passed an appropriation of $200,000 for the Public Health Service for increasing the facilities of the quarantine station at New York.  The action was taken upon the urgent representation of Senator William M. Calder.

The Senator said that the Public Health Service had requested the appropriation because of the danger of a typhus epidemic resulting from the flood of immigration now under way.



Three cases of typhus, in a family named Partigioni, arriving from Naples through New York city January 5, were discovered by the State Board of Health in the city of Cortland, and Dr. Herman S. Biggs, State Health Commissioner, telegraphed the fact to dr. L. E. Cofer, health officer of the Port of New York, and to the Surgeon General at Washington. 


CJ on CVA and USDC(NY):

Hello Readers,

I’m writing today’s cover note on Ash Wednesday. A significant day to many Catholics, but in Buffalo it also marks the start of fish fry season. Over the next seven weeks, parish halls, hole-in-the-wall bars, and even some of the more haute cuisine establishments in the area will be serving up the Lenten favorite of a beer-battered haddock fish fry with a side of coleslaw and fries. As many may know, us Western New Yorkers are very opinionated when it comes to our favorite eats.  Almost everyone I know has very strong held opinions on who has the best pizza, wings, and beef on weck.  I’m making it my goal this year to try a new fish fry every week. Whether it be from a local church or a bar, I am going to sample (at least seven) of the area’s best offerings and report back with my findings. Currently my favorite comes from a pizzeria in Cheektowaga (Gandy’s, for those locals wondering) but, I have heard that the pizza hasn’t been the best as of late, and one can only hope that does not translate to the fish!

Insurance cases were few and far between in the District Courts these past two weeks; therefore, I bring a discussion of an order from the Supreme Court of Albany County discussing a discovery dispute in a CVA case. While not a coverage decision, I believe the discussion of what a court finds “material and necessary” (the magic words in New York pretrial discovery) could help frame what an insurer should ask for from an insured when presented with a CVA claim. The short answer is to ask for everything, the long answer is in this week’s issue. 

See you in two weeks,

Charles J. Englert, III

[email protected]       


Prohibition Squealers to be Compensated:

The Post-Star
Glens Falls, New York
19 Feb 1921


WASHINGTON, Feb. 18.—Liquor “tattle tales” and “squealers” may be rewarded by the government.  Attorney General Palmer has issued a ruling in an opinion submitted to Secretary Houston that anyone furnishing information leading to the capture of liquor smugglers may be paid rewards up to $5,000 from the sale of the intoxicants seized.

The rewards under the attorney general’s ruling, however, may only be paid where information is furnished of “a fraud upon the customs service, and are not available to those who carry tales to government agents about bootleggers and other domestic violators. 


Dishing Out Serious Injury Threshold:

Dear Readers,

The result is that spending two days on the mountain is way more of a workout than shoveling a couple feet of snow. Vermont was beautiful, even if we had to be a little cautious on the ride there and back at times. Unfortunately, the lodge wasn’t open due to restrictions, but my trusty flask helped keep me warm.

In the Serious Injury Threshold world, we have one case from the Fourth Department. This case deals with plaintiff’s own medical record submissions raising a triable issue of fact with respect to the significant limitation of use and permanent consequential limitation of use categories of serious injury.

Be well,

Michael J. Dischley

[email protected]  


Incoming President Thanks Outgoing President – The Bygone Days:

The New York Times
New York, New York
19 Feb 1921


Asks That White House Luncheon Be Prepared as President Offered

WASHINGTON, Feb. 18.—President-elect Harding, in a letter received today by President Wilson, requests that a luncheon be prepared at the White House on March 4 for him and his immediate family.  The President and Mrs. Wilson will not be present, as Mr. Wilson plans to go direct from the Capitol after the inauguration to his new home on S. Street.

Mr. Hardin’s letter was in reply to one from the President asking if he desired a luncheon prepared.  White House officers described the letter as “very nice and generous.”  They said that the President-elect expressed gratification at Mr. Wilson’s offer to have the luncheon prepared and also stated that he was pleased to learn that Mrs. Wilson’s health had so improved that he was able to attend the theatre. 


Bucci on “B”: 

Hello all,

No Coverage B cases in this installment.  I searched far and wide to no avail.  Should I be happy or sad about that?  On the one hand, I can use the time, on the other, I hate being left out!

At least in the Coverage B arena, there have not been many cases these days.  I always feel lucky to find one.  Keeps the mind sharp.  

On another note, I bought Barrack Obama’s book thinking it would be a distraction from the real world, which is none too pretty these days.  I do not know how people do it with work and families and all.  I would need a year to read it, turning one page a night before I go to sleep.  Thanks to one of our trusty assistants, yay Alex, I am switching to what I hope will be some mind-numbing offerings.  I am starting with the Undoing on HBO.  Here is her list in case you are looking for a good show:

  • Undoing (HBO)

  • True Detective Season 1 (HBO)

  • Handmaids Tale (Hulu)

  • Little Fires Everywhere (Hulu)

  • Sons of Anarchy (Hulu)

  • Dead to Me ( Netflix)

  • Virgin River (Netflix)

  • Mind Hunter (Netflix)


Any feedback welcome!  I hope you all stay safe and warm until we thaw out in the spring.

Diane L. Bucci

[email protected]



Daily News
New York, New York
19 Feb 1921



Denver, Colo., Feb. 18.—A strange twist of the “eternal triangle” was revealed here today when the sixteen-year-old bride of Lawrence Kelley, alleged forger, told officials she was not the girl whom Kelley thought he was marrying.

She married Kelley three days ago under the name of “Mildred Gardner.”  Later she said her name was Dolly Green, a former New York chorus girl.

The real Mildred Gardner, according to the girl, is in San Francisco working for a magazine.  She calls herself Dolly Green, Mrs. Kelley said. 


Lee’s Connecticut Chronicles:

Snow. Cold. More snow. Ice. Even colder. No, I’m not talking about the current conditions in Texas. This has been our Connecticut winter. As I write this edition’s column, our forecast is calling for a 24-hour snow event with a light dusting of about 7 more inches of snow. Whoever coined our part of the world as “southern New England” had a cruel sense of humor. There’s been nothing southern about it. The wheels of justice apparently remain frozen as, once again, we have no insurance coverage decisions. Here’s to warmer days ahead.

Lee S. Siegel

[email protected]       


Some Things Never Change -- Impeachment was Difficult 100 Years Ago:

The Knoxville Journal and Tribune
Knoxville, Tennessee
February 19, 1921



Easy to Bring Charges; Hard To Expel

Moves in Judge Landis Case to Be Slow

History of Some Famous  Impeachment Trials in  U.S. Congress

Special to The Journal and Tribune

Washington, D. C., Feb. 18.  While it required little effort on the part of Representative Welty, of Ohio, to rise in his seat in the house and impeach Federal Judge Kenesaw Mountain Landis, of Chicago on the charge of “high crimes and misdemeanors,” in connection with his acceptance of the position of supreme arbiter of baseball at a salary of $42,500 per annum, the buckeye statesman, as well as Senator Dial of South Carolina who has expressed sympathy with the movement will find that the senate will deliberate a long time before convicting the jurist.

The records of the senate show that body has proceeded with great caution in carrying out that provision of the Constitution embodied in Section 4, of Article II, vesting the authority in impeachment trial.

In spite of the several impeachment cased that have suggested, the records show that in reality only nine cases have even been before the United States Senate after charges had been made in the house, and in all of these, convictions were only had in three.  These impeachment trials were against one president, one cabinet member, one senator, and six judges of the Federal bench.

Of these cases, Tennessee furnished three, being those against President Andrew Johnson in re-construction days when he came within one vote of conviction; United States Senator William Blount in 1798, who was expelled; and Federal Judge West Humphries of Tennessee in 1862, who was found guilty by a unanimous vote of the senate in that he committed “high crimes and misdemeanors,” by upholding the right of secession and the principles of the confederate cause in a speech at Nashville.

Editor’s Note:  Judge Landis resigned from the bench before being impeached.


Rauh’s Ramblings:

Dear Readers,

It is mid-February and I am officially over the winter.  I always enjoy the first few snowfalls of the year, but as soon as I am the one who has to go outside and shovel, I am ready for spring!  Since it has been so cold, I have been staying inside and watching Netflix more than usual.  I am almost done with Firefly Lane, which has been good, but I am always hesitant to get too invested in a series with only one season because they always end up getting canceled! 

This week’s case is from the First Department and involves a Plaintiff medical provider trying to recover the difference between the payment amount it received from Medicaid and the amount that the Defendant insurer was contractually obligated to pay.

Until next time!

Patricia A. Rauh

[email protected]       


Immigrants Under Attack for Disease:

The New York Times
New York, New York
19 Feb 1921


A Score Are Found to Have Picked Up Vermin in Passing Through Station.


Three Typhus Victims, Recently From Italy, Are Reported in Cortland, N.Y.

The discovery of three cases of typhus in Cortland, N.Y., and the finding of vermin on immigrants who had received a clean bill of health before they left the steamship Adriatic to go to Ellis Island stirred Dr. Royal S. Copeland, Commissioner of Health, yesterday to remark that he was more afraid of Ellis Island then of any ship that might come into port.

“Finding lice on these immigrants whom we had previously examined and found clean on the steamer shows what the conditions are on the island,” he said.  “I have long been of the opinion that it should be declared an infected port and an embargo place on it. 

“it is not the fault of Commissioner Wallis.  He is doing the best he can with his limited facilities.  It is the fault of the Congress, which has failed to appropriate sufficient money to enable the island to be cleaned up.  It is the fault of the system of health inspection.  They don’t examine immigrants over there.  They don’t even strip them.  They look at their eyes, their head and their skin, and let them in.  There is no attempt to learn their real physical condition.

“I notice that Chairman Johnson of the Immigration Committee of the House says that I show a disposition to “pass the buck” to the Federal authorities.  I am not ruing to avoid responsibility.  I assume responsibility for this city, but I repeat again that the quarantine of the United States is disgracefully insufficient due the failure of Congress to provide facilities to clean up.”


Storm’s SIU Examen:

Hi everyone:

This week in the Examen I have reviewed two New York PIP cases involving coverage defenses based upon injured persons failing to attend examinations under oath.  These decisions provide a good refresher of some of the stringent requirements mandated by Regulation 68, as enforced by arbitrators and courts, with respect to EUOs. 

We will also consider two Pennsylvania cases.  The first pertains to a fire insurer’s motion to quash or, in the alternative, for a protective order to limit an insured-plaintiff’s subpoena to depose a municipal fire investigator.  The second involves an insurer’s duty to defend or indemnify an insured with respect to a willful assault, including considerations of intoxication and whether this may negate intent. 

Since the last edition of Coverage Pointers I attended a virtual monthly meeting of the Pennsylvania Auto Crime Investigator’s Association (PACIA).  This is an excellent organization which I want to give a “shout out” to.  The meetings are always very informative and practical in the fight against insurance fraud.  Please visit them at

Please also take a look at my article, “Sequestering Plaintiff’s During Depositions in Fraud Cases”, posted on our firm’s blog, as well as on LinkedIn.  Most policies require that EUOs are to be conducted separately, while not in the presence of any other insured.  However, the policy does not control depositions once fraud claims are litigated.  I suspect most attorneys allow insured-plaintiffs to attend one another’s depositions.  However, case law exists supporting the insured-plaintiffs in such cases also being sequestered during their EBTs.  It is an important practice pointer to keep in mind and to make sure your legal counsel is following. 

If you and I are not yet connected on LinkedIn, please send me a connection request. 

This edition’s encouraging word:  “Humble means recognizing that we are not on earth to see how important we can become, but to see how much difference we can make in the lives of others”.  ~ Gordon Hinckley

I look forward to speaking with you regarding any challenging coverage issues you are evaluating.  Call me anytime at (716) 220-1478.  Talk to you soon!


Scott D. Storm

[email protected]


Headlines from this week’s issue, attached:

Dan D. Kohane

[email protected]

  • Even though Court Determined no Duty to Indemnity Assault Determination, Allegations were Still Broad Enough to Compel a Duty to Defend
  • The “Special Relationship” for an Insurance Agent E&O Claim Revisited
  • Residency Issue Kills Coverage
  • Excusable Delay for Failing to Notify MVAIC

Steven E. Peiper

[email protected]

  • Possibility, if not Likelihood, of Prejudice to Insurance Broker Results in Denial of Request for Joint Trial
  • Broad Indemnity Agreement Leads to Unanticipated Exposure


Michael J. Dischley

[email protected]

  • Plaintiff’s Own Medical Evidence Raised Triable Issues of Fact with Respect to Serious Injury Threshold


Agnes A. Wilewicz

[email protected]

  • On stay-cation this week.


Brian D. Barnas

[email protected]

  • Insured Breached its Insurance Policy with State Farm by Stipulating to Judgment and Assigning his Rights to Underlying Plaintiff Where State Farm Had Not Appeared to Act Unreasonably by Refusing Offer to Settle Within Policy Limits
  • Insured Stated Claim for Consequential Damages


Lee S. Siegel

[email protected]

  • Check back next edition for the latest from Connecticut.

Diane L. Bucci
[email protected]

  • No Coverage B cases this installment.


Brian F. Mark
[email protected]

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


Eric T. Boron

[email protected]

  • Underinsured Motorist Insurance – Court Reverses and Remands Case Appealed by Allstate After Jury Verdict for Insured – Substantial Prejudice Resulted to Allstate From Improper Closing Argument Statements Made By Insured’s Attorney


Marina A. Barci

[email protected]

  • Collateral Estoppel Not Applicable to Civil Court Action Commenced Before Declaratory Judgment Action
  • Failure to Appear at EUOs Gets Case Dismissed


Ryan P. Maxwell

[email protected]

  • DFS Creates Cyber Insurance Risk Framework Outlining Best Practices for Managing Cyber Insurance Risk


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

[email protected]

  • Discovery in CVA Matters May Extend into Personnel Files, Psychiatry Records, and Mediation Program Files


Patricia A. Rauh

[email protected]

  • Medicaid Regulations Cited by Defendant Have No Bearing on the Contractual Relationship Between a Commercial Insurance Company That is the Primary Payor and the Medical Provider


Mirna. M. Santiago

[email protected]

  • Are insurance companies’ “approved panel lists” a hotbed for racial inequity?


Scott D. Storm

[email protected]

  • PIP EUOs – an Arbitration Affidavit Submitted in Support of a Coverage Denial Based on the Failure to Attend an EUO must be Based Upon Actual Knowledge of the Affiant and not Merely a Review of the File; and Referenced Exhibits must be Attached
  • PIP EUOs – Insurer’s Motion for Summary Judgment was Premature Because it had not yet Disclosed to Defendant Providers in Discovery the Justification for its EUO Request.  Neither the Insured nor the Providers Waived their Challenge to the Justification for the EUO Request by not Questioning the Need for the EUO when it was First Requested (No Basis to Impose What Would in Effect be an Exhaustion Requirement on Challenges to the Basis for an Insurer's EUO Request)
  • Fire Insurer’s Motion to Quash or, in the Alternative, for a Protective Order to Limit the Plaintiff’s Subpoena to Depose the Municipal Fire Investigator
  • No Duty on Insurer to Defend or Indemnify for Willful Assault and the Insured’s Alleged Intoxication was not Sufficient in this Case to Negate Intent


Keep those cards and letters coming in.


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]


02/18/01       Margulies v. USAA Casualty Insurance Co.
Appellate Division, First Department
Even though Court Determined no Duty to Indemnity Assault Determination, Allegations were Still Broad Enough to Compel a Duty to Defend

This action stems from an incident in which Margulies intentionally struck nonparty Dennis Hough with his vehicle. Hough sued Margulies. Neither Margulies nor USAA defended against the action, and a default judgment was entered against Margulies.

Margulies then brought an action to compel USAA to pay the judgment. That application was denied by the First Department. The Second Circuit had determined that "because Margulies acted intentionally, the incident is not an occurrence within the meaning of the USAA policies, and no coverage is available".  That serves as collateral estoppel to relitigating the matter.

However, USAA is also collaterally estopped from arguing that Supreme Court should have dismissed the claim for costs and fees incurred by Margulies in defending against the underlying action. In an earlier action to recover on the judgment brought by Hough against USAA, Supreme Court held that the claims of negligence and criminal negligence in the underlying complaint "establish[ed] as a matter of law that [USAA] had a duty to defend Margulies despite the evidence that Margulies intentionally struck [Hough] with his motor vehicle"

The duty to defend, having arisen out of the allegations of the complaint, "remains even though facts outside the four corners of [the] pleadings indicate that the claim may be meritless or not covered"


02/09/21       Trimasa Rest. Partners, LLC v Global Coverage, Inc.
Appellate Division, First Department
The “Special Relationship” for an Insurance Agent E&O Claim Revisited

On February 9, 2021 the First Department affirmed the dismissal of a “Failure to Procure” action against insurance broker Global Coverage, Inc. and producer Myles Share, (“Global”), brought by Insured-Appellant, Trimasa Restaurant Partners LLC, (“Trimasa”).

Trimasa was created to operate a Japanese restaurant at a leased location in Tribeca, New York City. It sought the services of Global to assist in procuring insurance coverage for the build-out of the space. During construction, Trimasa’s contractor found lead paint on columns in the space. It tried to remove it by sanding off the lead paint. The lead dust went airborne winding up in the apartments of the adjacent high-rise buildings. Suffices to say that many claims were made against Trimasa for the cleanup costs. The stopped work, during the cleanup, and remediation was also claimed to result in lost income and other damage claims.

The insurer denied all the claims based on the Lead Paint exclusion in the policy. Trimasa then sued Global. Since Trimasa never specifically requested Lead Paint Liability coverage, it argued a “Special Relationship”; a duty to affirmatively suggest the coverage.

On a Pre-Answer Motion to Dismiss, the Supreme Court dismissed the case stating that there was no Special Relationship. The First Department affirmed.

What makes this decision so important is the clarification of the narrowness and limitation of the “Special Relationship” doctrine which many get wrong. This decision followed Voss v. Netherlands Ins. Co., 22 N.Y.3d 728 (2014), Spinnato v. Unity of Omaha Life Ins. Co., 322 F.Supp.3d 377 (E.D.N.Y. 2018), Holborn Corporation v. Sawgrass Mutual Insurance Company, 304 F.Supp.3d 392 (S.D.N.Y 2018) and Tracey Road Equipment, Inc. v. Ally Financial, Inc., 2018 WL 1578160 (N.D.N.Y. 2018) in holding that where an Insured argues for a “Special Relationship” based on a course of dealing, that court of dealing must be about the exact coverage at issue. For example, a “Special Relationship” about forwarding notices of claims to a carrier cannot be used to support a “Special Relationship” for failing to procure Asbestos Liability coverage.

Here, Trimasa did not allege a “Special Relationship” based on a course of dealing about Lead Paint liability coverage and thus the court dismissed that claim altogether.

A last interesting note. Given that the subject of the suit was Lead Paint Liability coverage and given that Trimasa was arguing a “Special Relationship”, (since it never specifically discussed or asked for Lead Paint Liability coverage), the First Department searched the Record and dismissed the Breach of Contract claim based on a lack of contract formation; no meeting-of-the-minds as to Lead Paint Liability coverage.

Editor’s Note: We thank Howard Kronberg for his column and congratulate him on his win at the First Department.  For more information about this case, reach out to Howard at:


By: ______                                           Howard S. Kronberg, Esq.
925 Westchester Avenue, Suite 400                                                        
White Plains, NY  10604
Howard Kronberg [email protected] 


02/09/21       MIC General Insurance Corporation v. Okapa
Appellate Division, First Department
Residency Issue Kills Coverage

MIC made a prima facie showing that it was entitled to summary judgment declaring that there is no coverage under the homeowners liability policy issued to the Okapa defendants based on the affidavit of an investigator stating that defendant Agnieszka Okapa admitted that she and her husband no longer resided at the insured property on the date of the accident, as required by the policy, since they previously moved out. Defendants also showed that the premises were identified as a single family dwelling and were leased to an unrelated family on the operative date.

In opposition, defendants submitted an affidavit of Mariusz Okapa, in which he stated that he moved back into the insured property for a period of time that included the date of the accident, due to marital difficulties, which was sufficient to raise a triable issue of fact as to whether he resided there at the time of the accident. The affidavit presents issues of fact and credibility that are not ordinarily determined on a motion for summary judgment, and the facts stated in Mariusz Okapa's affidavit are not clearly contradicted by his previous deposition testimony (see Katz v 260 Park Ave. S. Condominium Assoc., 168 AD3d 615, 616 [1st Dept 2019]; compare Fernandez v VLA Realty, LLC, 45 AD3d 391, 391 [1st Dept 2007]). Furthermore, contrary to plaintiff's contention, the record developed on this motion does not establish that defendant Mariusz Okapa only intended to stay at the property temporarily when he moved back in (compare New York Cent. Mut. Fire Ins. Co. v Kowalski, 222 AD2d 859, 860-861 [3d Dept 1995]).


02/09/21       Aquero v. Nelson and  MVAIC
Appellate Division, First Department
Excusable Delay for Failing to Notify MVAIC

Failed to show that plaintiff was not a "qualified person" under Insurance Law § 5202(b). Plaintiff, then 10 years old, was the victim of a hit-and-run incident in which he was injured while playing outside his home in New York County with his brother.

The applicable three-year statute of litigations for a personal injury action was tolled until January 7, 2016, when plaintiff turned 18, and expired three years later on that date.  Plaintiff made an excusable error concerning the identity of the owner and operator of the vehicle that struck him.  The record shows that the police accident report had incorrectly identified the owner of the offending vehicle. In addition, because there was a criminal action against the owner of the vehicle, plaintiff believed that the identity of the operator was known. However, the criminal charges were dismissed, and the identity of the hit-and-run driver is unknown.


Steven E. Peiper

[email protected]

02/16/21       Kukielka v. Santana
Appellate Division, First Department
Possibility, if not Likelihood, of Prejudice to Insurance Broker Results in Denial of Request for Joint Trial

This case involves two different lawsuits which were consolidated for purposes of trial pursuant to CPLR 602.  The first lawsuit, as captioned above, involved a negligence claim against defendants Santana and Liefer.  It would appear that at least one of the defendants, in turn, commenced a professional malpractice claim against his/her/their broker, Fairmont. 

In reversing the trial court, the Appellate Division noted that consolidated trials are appropriate when there are common issues of law and fact and no party will sustain demonstrable prejudice. Here, however, the negligence claim and the malpractice claims do not share common issues of law, and the Court further noted that the jury could “be more disposed to resolve the question of procuring adequate insurance coverage against Fairmont, the insurance broker, especially if it sought to render a verdict in favor of the plaintiffs.”  As a result, the Appellate Division reversed the trial court, and held that the two matters could not be resolved by a single trial.


02/09/21       Valbuena v 650 Madison Avenue Owner, LLC
Appellate Division, First Department
Broad Indemnity Agreement Leads to Unanticipated Exposure

Plaintiff was hired by defendant/owner to strip paint chips from a window.  To access the top of the window, plaintiff stood on a radiator. As he attempted to climb down, he tripped on duct tape and fell to the floor allegedly sustaining injuries. 

The owner commenced a third-party action against Americon on the basis of a contract between the two parties wherein Americon was performing work at the premises.  Americon’s work, however, was distinct from the work of the plaintiff, and, indeed, was explicitly excluded from Americon’s scope of responsibilities.  Nevertheless, it was unconverted that Americon was working in the same area of the premises and its tools were still present at the location. 

The indemnity clause at issue extended to “personal injuries ‘which arise out of or are connected with, or are claimed to arise out of or be connected with…[a]ny accident or occurrence which happens, or is alleged to have happened, in or about the place where such Work is being performed or in the vicinity thereof…while any of [Americon’s] or subcontractors (of any tier) property [or] equipment …are in or about such place or the vicinity thereof, provided the foregoing arise or result from the performance of the work’.”

The Appellate Division ruled that materials belonging to Americon were “at least allegedly present in the area where plaintiff fell.”  Moreover, Americon was still working at the jobsite on the date of the accident.  In so holding, the Court rejected the argument that the clause required Americon to have been negligent (it doesn’t), the indemnity claim is barred because plaintiff or his employer were negligent (it doesn’t) or that the anti-subrogation rule applied (apparently not true as well). 

Peiper’s Point – How about the argument that there doesn’t appear to be proof that the loss “arose or resulted from the performance of the work?”  Bad contract = Bad Results. While surely “arose from” is a minimal standard to hit, but it requires more than simply being on the jobsite, or having tools there.  The Court of Appeals tells us “arising out of” requires some causal relationship between the injury and the risk.  In other words, arising out of is “ordinarily understood to mean originating from, incident to, or having connection with.”     


Michael J. Dischley
[email protected]

02/05/21       Kim Lagattuta-Spataro v. Cora A. Sciarrino, et. al.
Appellate Division, Fourth Department
Plaintiff’s Own Medical Evidence Raised Triable Issues of Fact with Respect to Serious Injury Threshold

In an action to recover damages for personal injuries, the defendant appeals from an Order of the Supreme Court, Erie County (Joseph R. Glownia, J.), entered November 13, 2019, which, granted plaintiffs’ motion for summary judgment.

Plaintiff commenced this action to recover damages for serious injuries allegedly sustained by Kim Lagattuta-Spataro (plaintiff) when a vehicle that she was operating was rear-ended at a red light by a vehicle operated by defendant Cora A. Sciarrino and owned by defendant Kenneth J. Sciarrino. The Supreme Court granted plaintiffs’ motion for summary judgment on, inter alia, the issue of serious injury with respect to the significant limitation of use, permanent consequential limitation of use, and 90/180—day categories of serious injury.

Upon review of the papers, the Appellate Court agreed with the defendants, insomuch as plaintiffs failed to meet their initial burden of establishing that plaintiff sustained a serious injury under the significant limitation of use and permanent consequential limitation of use categories. “Whether a limitation of use or function is 'significant' or 'consequential' (i.e., important . . .) relates to medical significance and involves a comparative determination of the degree or qualitative nature of an injury based on the normal function, purpose and use of the body part".

Here, the Appellate Court found that although plaintiffs’ submissions included objective evidence of serious injury in the form of medical records quantifying limited range of motion in plaintiff's spine and reporting the detection of muscle spasms, those submissions also included medical records containing contrary findings. Thus, the Court found that, plaintiffs’ own submissions raised triable issues of fact with respect to the significant limitation of use and permanent consequential limitation of use categories of serious injury.

In addition, the Appellate Court agreed with defendants that plaintiffs failed to meet their initial burden with respect to the 90/180—day category of serious injury. Plaintiff failed to submit any evidence that plaintiff was prevented “from performing substantially all of the material acts which constitute [her] usual and customary daily activities” within the statutory period.

Inasmuch as plaintiffs failed to meet their initial burden with respect to the three threshold categories at issue, the Appellate Court found that the Supreme Court erred in granting that part of the motion on the issue of serious injury, regardless of the sufficiency of defendants' opposition papers.

Agnes A. Wilewicz

[email protected]

On stay-cation this week.


Brian D. Barnas
[email protected]

02/11/21       State Farm Mutual Auto Ins. Co. v. Goddard
Colorado Court of Appeals, Division VI
Insured Breached its Insurance Policy with State Farm by Stipulating to Judgment and Assigning his Rights to Underlying Plaintiff Where State Farm Had Not Appeared to Act Unreasonably by Refusing Offer to Settle Within Policy Limits

Griggs was insured under an auto policy with State Farm with limits of $25,000 per person and $50,000 per accident.  Griggs injured Goddard and two others in a four-vehicle accident on November 30, 2013.  Goddard and the two other injured persons made claims under the policy.  Goddard made a $25,000 policy limit demand on March 5, 2014, which State Farm responded to with an initial offer of $5,000 based on the information provided to date.  No response to that offer was received.

By February 2015, State Farm offered the remaining $18,500 under the policy after the settlements with the two other injured persons.  Goddard never responded.  Goddard sued Griggs.  In June 2015, Goddard informed Griggs that she would not accept a policy limits offer.  She asked him to assign any potential bad faith claims against State Farm in exchange for Goddard not seeking to enforce a judgment against Griggs’ personal assets.  Griggs agreed to the assignment after a punitive damages claim was added against him because he ran a red light while under the influence of alcohol, which caused the accident.

In the assignment, Griggs admitted liability and agreed to have damages determined through a binding, non-appealable arbitration.  He also assigned any claims against State Farm to Goddard and agreed to cooperate with Goddard in prosecuting any claims against State Farm.  State Farm defended Griggs at the arbitration.  The arbitrator awarded $837,193.36.

After the arbitration, State Farm commenced a declaratory judgment action against Griggs seeking a determination that he breached the insurance policy by entering the assignment agreement.  Goddard counterclaimed that State Farm acted in bad faith by failing to settle Goddard’s claim within the policy limits.  The case went to trial and the jury found that State Farm proved its breach of contract case against Griggs.  It also found that Goddard had not proved her counterclaim for bad faith.

The appellate court affirmed the jury’s verdict.  It concluded that the trial court properly let a jury decide whether Griggs had breached the insurance contract.  While Colorado permits an insured to stipulate to a judgment and assign its claims against its insurer to a third-party claimant, it must first appear that the insurer has unreasonably refused to defend its insured or settle a claim within policy limits.  The court noted that it was disputed whether State Farm appeared to have acted unreasonably in denying Goddard’s policy limits demand, and there was enough evidence for the jury to find, as it did, that State Farm acted reasonably in declining the offer.

The court also found that the jury did not err in concluding that Griggs breached the insurance policy.  State Farm presented evidence that, by agreeing to submit Goddard's damages to binding, non-appealable arbitration, Griggs deprived State Farm of its rights to settle and control the defense of Goddard's claim, try the case to a jury, and appeal any adverse judgment.  Griggs also assumed an obligation to help Goddard sue State Farm, which he did without State Farm's consent. State Farm offered evidence that it made specific requests of Griggs with which he did not comply, including requests to Griggs's personal attorneys. Further, State Farm warned Griggs not to enter into the assignment agreement, but he did so anyways.


02/04/21       R&R Third Properties, LLC v. Federal Insurance Company
Appellate Division, First Department
Insured Stated Claim for Consequential Damages

The court upheld denial of Federal’s motion for summary judgment seeking dismissal of Plaintiffs’ consequential damages claim arising out of an insurance claim related to a medical scanner.  Plaintiffs sufficiently stated a claim for consequential damages, which was made in their interrogatory responses.

Federal failed to establish that plaintiffs were not entitled to consequential damages.  The court noted that the record was replete with issues of fact as to whether plaintiffs' scanner could be repaired, obviating the need for replacement, which calls into question Federal's good faith in investigating their insurance claim.

Even if Federal did not act in bad faith, it would not be entitled to summary dismissal of the claim for consequential damages, because it failed to establish that such damages were not within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting. It was undisputed that the scanner was the focal point of plaintiffs' practice diagnosing and treating patients and that the loss of the scanner caused extensive harm to plaintiffs. Thus, Federal would have been on notice that plaintiffs would suffer business interruption losses if the scanner was not repaired or replaced.

The court also declined to dismiss the remainder of the complaint against Federal. While Philips certified in October 2011 that the scanner had been repaired, issues of fact remained as to whether that representation was accurate.  It was unclear from the record whether the scanner was fully operational at that time, given that the technician only took phantom CT images in 2011 and the scanner was not used on a patient. Moreover, the scanner did not work in the follow-up inspections. Plaintiffs' pre-litigation consultant concluded that the scanner could not have been ready for patient use in October 2011, and plaintiffs claimed that they had been unable to use the scanner since April 2011.


Lee S. Siegel
[email protected]

Once again, the Connecticut courts have let us down with no new insurance-related decisions for us to digest, dissect, and discuss.  Check back next edition. If there are no new rulings, we’ll go back in the archive and find something fun to kick around.


BUCCI on “B”
Diane L. Bucci

[email protected]

No Coverage B cases this installment.


Brian F. Mark
[email protected]

No noteworthy construction defect cases to report on this edition.


Eric T. Boron
[email protected]


02/05/21       Allstate Insurance Co. vs. Ogletree
Supreme Court of Alabama
Underinsured Motorist Insurance –  Court Reverses and Remands Case Appealed by Allstate After Jury Verdict for Insured – Substantial Prejudice Resulted to Allstate From Improper Closing Argument Statements Made By Insured’s Attorney

In a Per Curiam Opinion issued February 5, 2021, the Alabama Supreme Court reversed the trial court’s post-jury verdict judgment and remanded this case for a new trial.  This case arises from a dispute between Allstate Insurance Company (“Allstate”) and its insured, Kaitlin N. Ogletree (“Ms. Ogletree”), over the extent of damages incurred in an automobile accident that Ms. Ogletree had with an underinsured motorist. During closing arguments, Ms. Ogletree's counsel made inaccurate statements unsupported by the evidence presented at trial. The jury returned a verdict for Ms. Ogletree, and Allstate appealed on account of the allegedly improper closing argument.  The Alabama Supreme Court determined that incorrect statements made by Ogletree's counsel in closing argument asserting that Allstate could recover the amount of any punitive-damages award from Bice's estate were prejudicial, and adequate grounds for a new trial. Allstate's objection to the argument was properly preserved, and those statements were not provoked by an improper statement from Allstate's counsel.

Based on what Ms. Ogletree's counsel argued to the jury, Allstate would be able to recover any punitive-damages award against it from another entity: the Estate of Justin Bice, the intoxicated and since deceased driver who rear-ended the Ogletree vehicle on an interstate. But that is exactly the type of “no-harm/no-foul” argument Alabama courts have held to be unduly prejudicial to defendants -- particularly when the availability of recovery was, in fact, nonexistent. And while Alabama appellate courts (as do appellate courts all over the country) ordinarily defer to a trial court's rulings on what is allowed in closing arguments, it is clear that substantial prejudice resulted from the erroneous statements of Ogletree's counsel. The jury awarded Ogletree $60,000 in punitive damages after hearing the misleading proposition that Allstate could recover from the estate of the actual wrongdoer, Bice. Moreover, the “fact” of recovery from Bice's estate was not in evidence. In fact, the first time the jury heard that Allstate could recover from Bice's estate was during Ogletree's closing argument -- which is not evidence.  The prejudicial effects of the incorrect statements were exacerbated by the fact that they occurred during Ogletree's rebuttal closing argument, denying Allstate the opportunity to correct them.


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

02/05/21       Triborough Psychiatric v. State Farm Mut. Ins. Co.
Appellate Term, Second Department
Collateral Estoppel Not Applicable to Civil Court Action Commenced Before Declaratory Judgment Action

Plaintiff commenced this action in Civil Court in 2003 to recover no-fault benefits as assignee to the allegedly injured party in a motor vehicle accident on August 26, 2002. Thereafter, State Farm commenced a declaratory judgment action in Supreme Court, Nassau County, against the assignor and a number of other individuals. Upon the default of the assignor, among others, in submitting opposition to State Farm's motion for declaratory relief, the Supreme Court, in a judgment entered on November 22, 2006, declared that the August 26, 2002 collision had been a staged accident; that the insurance policy at issue is null and void with regard to any claim arising out of that collision; and that State Farm has no duty to provide no-fault benefits to the assignor herein and the other individual defendants.

State Farm then moved in the Civil Court for an order dismissing the complaint on several grounds, including a lack of coverage due to a staged accident, as previously determined by the Supreme Court. In opposition, Plaintiff argued that it did not have a "full and fair" opportunity to litigate the declaratory judgment action. By order entered February 20, 2019, the Civil Court granted State Farm’s motion, finding the Plaintiff's claim is barred under the doctrine of collateral estoppel. Collateral estoppel precludes a party from relitigating an issue where "the issue in the second action is identical to an issue which was raised, necessarily decided and material in the first action, and the plaintiff had a full and fair opportunity to litigate the issue in the earlier action."

As the declaratory judgment was obtained on default and not actually litigated on the merits in the Supreme Court, there is no identity of issues between the present action and the prior determination in the declaratory judgment action. Moreover, as Plaintiff commenced this action in 2003 as assignee, Plaintiff and its assignor were not in privity when the declaratory judgment action was commenced in 2005. Consequently, contrary to the determination of the Civil Court, the Appellate Term found that the Plaintiff's action is not barred under the doctrine of collateral estoppel.


02/05/21       BNE Clinton Med., P.C. v. State Farm Mut. Auto Ins. Co.
Appellate Term, Second Department
Failure to Appear at EUOs Gets Case Dismissed

In this action brought by a provider to recover assigned no-fault benefits, the carrier moved for summary judgment dismissing the complaint on the ground that the assignor had failed to appear for duly scheduled examinations under oath (EUOs). The motion was supported by, among other things, an affirmation from a partner in the law firm representing the carrier, attesting to the assignor’s failure to appear. The provider opposed the motion contending that the carrier failed to show it had timely mailed “prescribed forms” upon learning of the accident and cross-moved to disqualify the law firm representing the carrier on the ground that a member of the firm was a necessary witness in the case. The Court granted the carrier’s motion since showing that timely mailing is not part of the carrier’s burden when seeking summary judgment on the ground that a provider or the provider’s assignor failed to appear for duly scheduled EUOs. The Court denied the provider’s cross-motion since a contention that a carrier’s law firm should be disqualified based on the attorney-witness rule lacks merit.


Ryan P. Maxwell
[email protected]

02/04/21       Cyber Insurance Risk Framework
Department of Financial Services
DFS Creates Cyber Insurance Risk Framework Outlining Best Practices For Managing Cyber Insurance Risk

For those of you asleep at the wheel a couple weeks ago round this time like I was, today’s write-up may not come as a surprise. After consultation with industry, cybersecurity experts, and other stakeholders, the Department of Financial Services has created a Cyber Insurance Risk Framework that outlines best practices for the management of cyber insurance risk by all authorized property/casualty insurers that write cyber insurance. Beyond that, DFS issued guidelines for other property/casualty insurers that do not write cyber insurance to evaluate their exposure to “silent risk” and take appropriate steps to reduce that exposure.

DFS indicates that a 2020 survey it conducted revealed that between 2018 and 2019, “the number of insurance claims arising from ransomware increased by 180%, and the average cost of a ransomware claim rose by 150%,” and further that ransomware attacks reported to DFS almost doubled from 2019 to 2020. The landscape faced by insurers in the cyber arena resulting in escalating costs has created pressure to increase rates and tighten underwriting standards for cyber insurance.

The challenges posed to insurers include the lack of any developed rigorous and data driven approach to cyber risk, which are yet able to accurately measure cyber risk. The offer of cyber coverage and the price charged for same should be based upon a careful assessment of the individual entity’s risk, with special attention paid to the caliber of an organization’s cybersecurity program. Without vigorous assessment on the front end, cyber insurers risk incentivizing organizations to prioritize improving cyber security—needlessly passing costs of cyber incidents to the insurer.

Further insurers also face losses from cyber incidents on policies without express grants of cyber coverage—known as “silent” risk. All carriers should therefore “measure and manage silent risk in their non-cyber insurance policies.”

Explaining the origins of the proposed framework, DFS indicates that:

“The Framework is a result of our ongoing dialogue with the insurance industry and experts on cyber insurance.  Over the past year, we have had dozens of meetings with insurers, insurance producers, cyber experts, and insurance regulators across the U.S. and Europe.  In July 2020, we hosted a cyber insurance roundtable with representatives from five global insurance groups.  Also in 2020, we collected survey data from 49 insurers on cyber insurance and ransomware.  We continue to welcome input from industry and other interested parties on challenges facing the cyber insurance market.”

The Framework provides as follows:

All authorized property/casualty insurers that write cyber insurance should employ the practices identified below to sustainably and effectively manage their cyber insurance risk. Based on our engagement with industry and experts, certain best practices have emerged.

Each insurer’s cyber insurance risk will vary based many factors, including the insurer’s size, resources, geographic distribution, market share, and industries insured.  Each insurer should take an approach that is proportionate to its risk. 

  1. Establish a Formal Cyber Insurance Risk Strategy

Insurers that offer cyber insurance should have a formal strategy for measuring cyber insurance risk that is directed and approved by senior management and the board of directors, or the governing body if there is no board. The strategy should include clear qualitative and quantitative goals for risk, and progress against those goals should be reported to senior management and the board, or the governing body if there is no board, on a regular basis.  The strategy should incorporate the six key practices identified below.

  1. Manage and Eliminate Exposure to Silent Cyber Insurance Risk

    Insurers that offer cyber insurance should determine whether they are exposed to silent or non-affirmative cyber insurance risk, which is risk that an insurer must cover loss from a cyber incident under a policy that does not explicitly mention cyber.  Even property/casualty insurers that do not explicitly offer cyber insurance should evaluate their exposure to silent risk and take appropriate steps to reduce their exposure.  Silent risk can be found in a variety of combined coverage policies and stand-alone non-cyber policies, including errors and omissions, burglary and theft, general liability and product liability insurance. Cyber risk likely has not been quantified or priced into these policies, which exposes insurers to unexpected losses.

    Ultimately, insurers should eliminate silent risk by making clear in any policy that could be subject to a cyber claim whether that policy provides or excludes coverage for cyber-related losses. Elimination of this risk will take some time, given the many existing policies that can contain silent cyber risk.  Insurers should therefore also take steps to mitigate existing silent risk, such as by purchasing reinsurance.

  2. Evaluate Systemic Risk

    As part of their cyber insurance risk strategy, insurers that offer cyber insurance should regularly evaluate systemic risk and plan for potential losses. Systemic risk has grown in part because institutions increasingly rely on third party vendors and those vendors are highly concentrated in key areas like cloud services and managed services providers.  Insurers should understand the critical third parties used by their insureds and model the effect of a catastrophic cyber event on such critical third parties that may cause simultaneous losses to many of their insureds.  Examples of such events could include a self-propagating malware, such as NotPetya, or a supply chain attack, such as the SolarWinds trojan, that infects many institutions at the same time, or a cyber event that disables a major cloud services provider.  A catastrophic cyber event could inflict tremendous losses on insurers that may jeopardize their financial solvency.

    Insurers also should conduct internal cybersecurity stress tests based on unlikely but realistic catastrophic cyber events.  Accurate stress testing requires accounting for both silent and affirmative risk.  Moreover, because exposure to catastrophic cyber events varies across business industries and by type and size of the insured, insurers should track the impact of stress test scenarios across the different kinds of insurance policies they offer as well as across the different industries of their insureds.  The cyber insurance risk strategy should account for possible losses identified in stress tests.

  3. Rigorously Measure Insured Risk

    Insurers that offer cyber insurance should have a data-driven, comprehensive plan for assessing the cyber risk of each insured and potential insured.  This commonly starts with gathering information regarding the institution’s cybersecurity program through surveys and interviews on topics including corporate governance and controls, vulnerability management, access controls, encryption, endpoint monitoring, boundary defenses, incident response planning and third-party security policies.  The information should be detailed enough for the insurer to make a rigorous assessment of potential gaps and vulnerabilities in the insured’s cybersecurity.  Third-party sources, such as external cyber risk evaluations, are also a valuable source of information.  This information should be compared with analysis of past claims data to identify the risk associated with specific gaps in cybersecurity controls.

  4. Educate Insureds and Insurance Producers

    Insurers that offer cyber insurance have an important role to play in educating their insureds about cybersecurity and reducing the risk of cyber incidents.  Insurers should strive to offer more comprehensive information about the value of cybersecurity measures and facilitate the adoption of those measures.  Insurers should also incentivize the adoption of better cybersecurity measures by pricing policies based on the effectiveness of each insured’s cybersecurity program.

    Several leading insurers already offer their insureds guidance, discounted access to cybersecurity services, and even cybersecurity assessments and recommendations for improvement.  We commend these initiatives, and insurers should continue to expand the type, scope and reach of such offerings.

    Insurers should also encourage and assist with the education of insurance producers who should have a better understanding of potential cyber exposures, types and scope of cyber coverage offered, and monetary limits in cyber insurance policies. Ensuring that the need for, benefits of, and limitations to cyber insurance are well understood and conveyed to insureds and potential insureds will facilitate the growth of a robust cyber insurance market.


  5. Obtain Cybersecurity Expertise

    Insurers that offer cyber insurance need appropriate expertise to properly understand and evaluate cyber risk.  Insurers should recruit employees with cybersecurity experience and skills and commit to their training and development, supplemented as necessary with consultants or vendors.

  6. Require Notice to Law Enforcement

    Cyber insurance policies should include a requirement that victims notify law enforcement.  Some insurers that offer cyber insurance already engage in this best practice.[23]  Notice to law enforcement may be beneficial both to the victim-insured and the public.[24]  Law enforcement often has valuable information that may not be available to private sources and can help victims of a cyber incident.  Law enforcement can help recover data and funds that were lost.  For instance, when funds are stolen through a business email compromise, law enforcement can sometimes block or reverse wire transfers if alerted of the incident promptly.  Notice to law enforcement also can enhance a victim’s reputation when its response to a cyber incident is evaluated by its shareholders, regulators, and the public.  Finally, information received by law enforcement can be used to prosecute the attackers, warn others of existing cybersecurity threats, and deter future cybercrime.

In addition to this Framework, DFS-regulated insurers also must address their own cybersecurity and comply with the cybersecurity regulations set forth in 23 NYCRR 500 et seq.

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

01/06/21       Harmon v. Diocese of Albany
New York State Supreme Court, Albany County
Discovery in CVA Matters May Extend Into Personnel Files, Psychiatry Records, and Mediation Program Files

Plaintiff brought this action pursuant to the Child Victims Act (CVA) alleging that he was abused over a period of years at the St. Catherine’s Center, a children’s group home owned and operated by the Diocese of Albany. Plaintiff asserts that in his time as a resident of the St. Catherine’s Center he was sexually abused by Diocese priest Fr. Edward Pratt. Plaintiff brought a motion to compel the Diocese to produce various records which Plaintiff contended were improperly withheld during discovery.

The court explained the long-standing position that New York Courts have favored open and far-reaching pretrial discovery and that while trial courts have a broad discretion to limit discovery, the terms “material and necessary” in CPLR 3101 are to be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial [I]f there is any possibility that the information is sought in good faith for possible use as evidence-in-chief or in rebuttal or for cross-examination, it should be considered evidence material in the prosecution or defense.

Plaintiff took issue with the Diocese’s failure to disclose certain records of Fr. Pratt’s personnel file and files of other priests who have been credibly accused of child sexual abuse. First, discussing the personnel file, the court concluded that the Diocese’s failure to produce a memo and report of a private investigator’s interview with Fr. Pratt. The court reviewed the withheld documents in camera and concluded that the Diocese’s assertion of attorney client privilege was invalid. The report and memo were prepared by a private investigator, not an attorney. Therefore, neither the attorney client privilege nor immunity under the attorney work product doctrine apply. The court went on to discuss that parts of the memo (namely a list of others who made allegations against Fr. Pratt) did constitute material prepared in anticipation of litigation, and thus was conditionally immune. However, as the Plaintiff proved he could not duplicate this information without experiencing undue hardship, the court held that the list must be produced.

The Diocese also sought to withhold certain documents, consisting largely of correspondence between the Bishop and a psychiatrist at the Southdown Institute concerning Fr. Pratt’s sexual acting out. The court explained that these correspondences contained no clinical documents. Further, Fr. Pratt was examined at the Southdown Institute as required by the Diocese. The court looked to caselaw from across the country and concluded that an employee who submits to a medical or psychological exam by request or demand of his/her employer, that employee consents to the disclosure of any records of that exam to the employer which are not generated in the confidence that those records will not be disclosed. As the records were not created in confidence, the Diocese did not meet its burden to prove that the physician-patient privilege should apply. 

The Diocese also withheld the personnel files of other priests who were credibly accused. The Diocese argued that these files were not materially related to the case, and that producing them would be unduly burdensome. The court disagreed. The Diocese asserts, as an affirmative defense, that it followed the appropriate practice and procedure in handling sexual abuse allegations made against priests. The court determined that Plaintiff should be entitled to the documents related to how the Diocese addressed other allegations of abuse in order to properly cross-examine the Diocese’s expert witnesses who will be proffered to bolster this defense. 

Lastly the Plaintiff seeks production of records from the Diocese’s Independent Mediation Assistance Program (IMAP), which was implemented by the Diocese in 2004 to allow victims of time-barred claims to file complaints, have them investigated, and where warranted, mediated. Plaintiff asserted that he is entitled to all IMAP records concerning Fr. Pratt, arguing that the Diocese’s blanket denial of his abuse allegations rendered those records discoverable. As a central issue in this case is whether Fr. Pratt molested Plaintiff, any evidence probative of that fact is discoverable. Thus, the court held that the IMAP records are discoverable.


Patricia A. Rauh

[email protected]

02/04/21       Montefiore Med. Ctr. v. Empire Healthchoice HMO, Inc.
Appellate Division, First Department
Medicaid Regulations Cited by Defendant Have No Bearing on the Contractual Relationship Between a Commercial Insurance Company That is the Primary Payor and the Medical Provider

Plaintiff brought an action seeking to recover the difference between the payment amount it received from Medicaid Managed Care Organizations (MCO’s) that were billed in error, and the amount that Defendant was contractually obligated to pay the Plaintiff for medical assistance provided to Defendant’s insureds.  Defendant filed a motion to dismiss, which was denied in Bronx County Supreme Court and this decision was then appealed to the First Department.

Defendant claims that the plain language of the Medicaid statute and regulations compel a different result from that reached by the Supreme Court, arguing that Plaintiff was precluded from pursuing any additional payment once it accepted “payment in full” from the Medicaid program for the services it provided, relying on 42 CFR 447.15 and 18 NYCRR 504.3[c].

The First Department held that the regulations relied on by Defendant have no bearing on the contractual relationship between a commercial insurance company that is the primary payor (here, Empire) and a provider such as Montefiore.  The Court further stated that the cases cited by Defendant do not compel a different result, as each of those cases involved a patient who was eligible for Medicaid and the provider attempted to engage in impermissible balance billing, as opposed to a patient who was covered by commercial insurance at the time of treatment.


Mirna M. Santiago

[email protected]

Are insurance companies’ “approved panel lists” a hotbed for racial inequity? Some people seem to think so. Read my ruMIRNAtions cover note to find out why.


Scott D. Storm

[email protected]


02/05/21       Country-Wide Ins. Co. v. CPM Medical Supply
Supreme Court, New York County
PIP EUOs – an Arbitration Affidavit Submitted in Support of a Coverage Denial Based on the Failure to Attend an EUO must be Based Upon Actual Knowledge of the Affiant and not Merely a Review of the File; and Referenced Exhibits must be Attached

Country-Wide Insurance Company (“CWI”) commenced this proceeding pursuant to CPLR § 7511(b)(1) to vacate a lower Arbitrator's Award and a Master Arbitration award on the grounds that the arbitrator exceeded her authority or imperfectly executed it that a final and definite award upon the subject matter submitted was not made and that the Master Arbitrator erred in affirming the award.

This matter arises from a motor vehicle accident involving a vehicle insured by CWI. Ivan Tufino-Vicuna (“Claimant”) was the driver of a vehicle insured by CWI that was struck by another vehicle. The Claimant sustained injuries and received medical services from Respondent CPM Medical Supply ("CPM"). CPM thereafter sought reimbursement from CWI. CWI denied CPM's claim based on Claimant's failure to attend an examination under oath.

The lower Arbitrator held that CWI's "denials premised on the EUO no-show were without merit" finding that CWI failed to demonstrate that the Assignor failed to appear at two properly scheduled EUOs. In support of its denials, CWI submitted the EUO scheduling letters with affidavits of service.  However, CWI failed to submit proof that the Assignor failed to appear at the EUOs. CWI submitted an affidavit from its EUO clerk but the affiant did not have personal knowledge of the Assignor's failure to appear at the EUOs and relied upon her review of the file. Moreover, the affiant noted that a statement was placed on the record which was annexed to CWI's submission but no such transcript was submitted by CWI. As such, the Arbitrator found that CWI's denials premised on the EUO no-show were without merit.

CWI appealed the decision and the Master Arbitrator affirmed the decision as consistent with the evidence, was rational and based on case law support. The transcript alleged to prove CWI's case was referenced but not submitted. In addition, there was not sufficient evidence to support non-appearance for two properly scheduled EUO's as only an Affidavit by CWI's representative was submitted without actual knowledge and merely based on the CWI's file.

The court initially cited case law stating that the failure of a person eligible for no-fault benefits to appear for a properly noticed EUO constitutes a breach of a condition precedent vitiating coverage.  It must be shown that the notices for EUOs were timely and properly mailed to the claimants and that they failed to appear.

Pursuant to CPLR § 7511(b), the grounds for vacating an arbitration award are "(i) corruption, fraud or misconduct in procuring the award; (ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; (iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; and (iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection."

Generally, an arbitration award made after all parties have participated will not be overturned merely because the arbitrator committed an error of fact or of law. In the absence of proof of fraud, corruption, or other misconduct, the arbitrator's determination on issues of law as well as fact is conclusive.  To establish that an arbitrator has "exceeded his power" under CPLR § 7511, a party must show that the award "violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on an arbitrator's power".  

Further, the power of the master arbitrator to review factual and procedural issues is limited to "whether the arbitrator acted in a manner that was arbitrary and capricious, irrational or without a plausible basis."  Courts are required to uphold the determinations of the master arbitrator on questions of substantive law if there is a rational basis for the finding. 

The Court upheld the findings of the arbitrators.  The lower Arbitrator demonstrated a rational basis for the Award. The Master Arbitrator properly concluded that lower Arbitrator did not exceed her powers and determined that the decision was rational and neither arbitrary, capricious nor incorrect as a matter of law.


02/04/21       Country-Wide Insurance Company v. Jeffrey Delacruz, et al.  
Supreme Court, New York County
PIP EUOs – Insurer’s Motion for Summary Judgment was Premature Because it had not yet Disclosed to Defendant Providers in Discovery the Justification for its EUO Request.  Neither the Insured nor the Providers Waived their Challenge to the Justification for the EUO Request by not Questioning the Need for the EUO when it was First Requested (No Basis to Impose What Would in Effect be an Exhaustion Requirement on Challenges to the Basis for an Insurer's EUO Request)

Jeffrey Delacruz was the driver of a vehicle involved in a collision and covered by a no-fault policy issued by Country-Wide (“CWI”). Delacruz assigned the right to collect no-fault benefits under the policy to various treating medical providers. Those providers applied for no-fault benefits from CWI but were denied.

CWI then brought this declaratory judgment action alleging that it is not required to pay the medical-provider assignees.  CWI moved for summary judgment under CPLR R. 3212 arguing that Delacruz's failure to appear for his scheduled examination under oath defeats coverage.  The Court denied the motion without prejudice as premature under CPLR 3212(f)(“Facts unavailable to opposing party”). 

The court stated the general rule that a PIP insurer seeking to avoid coverage due to violations of the terms of the policy must first demonstrate that it complied with each of the procedural and timeliness requirements of 11 NYCRR § 65-3.5, governing the handling of no-fault claims. A claimant's failure without reasonable cause to appear for a timely and properly scheduled EUO is grounds to deny coverage. An EUO request "must be based upon the application of objective standards so that there is specific objective justification supporting the use of such examination" (§ 65-3.5[e]). And the request must be made within 15 days of the insurer's receipt of the forms that it requires to verify no-fault claims (such as the standard NF-3 form) (§ 65-3.5[a]-[b]).

CWI demonstrated that its EUO request was timely and properly transmitted to Delacruz, who nonetheless failed twice to appear.  Defendants , however, questioned whether CWI had sufficient justification to have made that EUO request in the first place. Defendants also had shown that they requested—but had not yet received—material discovery from CWI on this issue. The court concluded, therefore, that CWI’s motion for summary judgment must be denied as premature. 

The documents submitted by CWI did not include any NF-3 forms submitted by Dr. Parisien. CWI had not shown that it satisfied § 65-3.5's 15-business-day timeframe with respect to Dr. Parisien. The motion for summary judgment was denied as to Dr. Parisien.

In regard to the remaining three providers, CWI met its prima facie burden to establish its compliance with §§ 65-3.5(b) and 65-3.6(b). CWI has provided documentary evidence that: (i) it received verification forms from the medical providers (NF-3 forms with date-stamps indicating receipt); (ii) it timely mailed its EUO request to Delacruz; and (iii) it mailed the request to the address appearing on Delacruz's NF-2.  CWI also had provided documentary evidence that after the EUO was rescheduled, Delacruz twice failed to appear despite receiving proper notice of the rescheduled EUO dates.

Defendants argued that material discovery remained outstanding, rendering CWI's motion premature.  An insurer's request that a no-fault applicant appear for an EUO must be reasonable and have specific objective justification. The EUO notices that CWI provided did not include that justification on their face, stating only that CWI "would like to clarify some of the facts and circumstances surrounding this claim." The defendants served a request for CWI’s investigative file to learn the basis for the EUO request, which remained pending when CWI moved for summary judgment. The court, therefore, ruled the motion to be premature under CPLR 3212(f) because plaintiff insurer had not yet provided defendant providers with the justification for its EUO request.  The reason for the EUO request is an essential fact to justify opposition to plaintiff's summary judgment motion and such is exclusively within the knowledge and control of the movant. 

CWI argued that its representative’s affidavit included in its motion papers sufficiently explained the factors that raised questions as to the legitimacy of the claim thereby prompting the EUO request.  The Court, however, found it to be insufficient to only provide selected documents supporting the reasonableness of its EUO request at the time of the motion itself, as opposed to turning over all relevant and responsive documents in discovery before moving for summary judgment.

The supporting affidavit also stated only that "material facts surrounding the accident required clarification." It did not identify what facts required clarification, or why.  The affidavit also referred to "objective criteria stated herein" for making the EUO request but no such criteria was in fact stated.  As such, even if CWI could satisfy its burden to show a proper objective basis for its EUO request through its summary judgment papers, it did not do so here.

CWI alleged that defendants' challenge to the justification for the EUO request was waived because neither Delacruz nor his medical-provider assignees questioned the need for the EUO when it was first requested. The court saw no basis to impose what would be in effect an exhaustion requirement on challenges to the basis for an insurer's EUO request for several reasons:

  • The regulations require not merely that the insurer have a specific, objective justification for requesting an EUO, but also that the justification stems from applying preexisting objective standards prepared by the insurer, and that these standards be made "available for review by [Insurance Department] examiners" (11 NYCRR § 65-3.5[e]). Imposing an exhaustion requirement on challenges to the basis for an EUO request would run contrary to the Insurance Department's evident policy aim of policing insurers' use of EUO requests.

  • Requiring a no-fault claimant to seek more information about the basis for an EUO request when made would not ward off disputes about whether a given EUO request was justified. Nor would it enable a specialist expert to resolve such disputes at the outset. Instead, it would simply mean that the issue of EUO justification could potentially arise twice—first at the time of the request itself, then later during any coverage litigation should the claimant not appear for the requested EUO.

  • The party required in the first instance to object to the lack of a basis for the EUO request would be no-fault claimants themselves. But the party foreclosed later from raising the challenge in litigation absent an objection often would not be claimants, but their medical-provider assignees. Those assignees likely would be unable to ensure that the claimant raised the issue at the time of the EUO request; yet they would be bound anyway by the absence of such a request. Such a result would be neither fair nor efficient.


01/29/21       Airell Mazer , et al., v. Frederick Mutual Insurance Company
United States District Court, M.D. Pennsylvania
Fire Insurer’s Motion to Quash or, in the Alternative, for a Protective Order to Limit the Plaintiff’s Subpoena to Depose the Municipal Fire Investigator

Plaintiff’s had a fire to their property allegedly resulting in a total loss, suing their insurer Frederick Mutual Insurance Company alleging breach of contract and bad faith. Plaintiffs served a subpoena ad testificandum (to appear for deposition testimony) on a fire detective with the City.  The insurer filed a motion to quash and for a protective order. 

The insurer asserted that any testimony the Detective may have is irrelevant to the outstanding issues in this case because he was not involved with the defendant's processing, handling, and payment of the plaintiffs' claim; and because any information he may have has already been discovered by the plaintiffs by other means—i.e. is embodied in his written reports which are already in the possession of plaintiffs' counsel. In the alternative, the defendant requested a protective order limiting the areas of inquiry which may be explored in the deposition.

In response, the plaintiffs argued that the defendant has not asserted a privilege to the information which will be the subject matter of the deposition; and the Detective’s deposition is relevant their statutory bad faith claim  as the Detective acted in concert with the defendant's privately retained fire investigator during the investigation of the fire loss and both had communications with representatives of the Pennsylvania Insurance Department.

Pursuant to Fed. R. Civ. P. 26(b)(1) which establishes a liberal discovery policy, parties may obtain discovery regarding "any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.  Information within this scope of discovery need not be admissible in evidence to be discoverable. Further, the federal rules' relevancy requirement is to be construed broadly and material is relevant if it bears on, or reasonably could bear on, an issue that is or may be involved in the litigation.  The burden is on the objecting party to demonstrate that the requested materials do not fall within the broad scope of relevance or else are of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure.

A subpoena under Fed. R. Civ. P. Rule 45 must fall within the scope of proper discovery under Fed. R. Civ. P. 26(b)(1).  Generally speaking, a party does not have standing to quash a subpoena served on a third party. If, however, a party claims a property right or privilege in the subpoenaed documents, then an exception to this general rule may arise and provide that individual or entity with standing.  The defendant had neither alleged nor shown that this narrow exception has any application.

The Court said that its inquiry, however, does not end there. Under Fed. R. Civ. P. 26(c)(1), the court may, for good cause, protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense including forbidding the discovery. Here, the defendant had not shown how it would be unduly burdened or harassed by preparing for and attending the Detective’s deposition. As such, the Court denied the defendant's request for a protective order.


01/28/21       State Farm Fire and Casualty Co. v. Charles Joseph Simone
United States District Court, Western District of Pennsylvania
No Duty on Insurer to Defend or Indemnify for Willful Assault and the Insured’s Alleged Intoxication was not Sufficient in this Case to Negate Intent

In this this declaratory judgment action State Farm filed a motion for judgment on the pleadings seeking a judicial determination that it does not have a duty to defend or a duty to indemnify Simone with respect to allegations set forth in an underlying complaint filed in State Court.  This Federal Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a).

State Farm issued a Homeowners Policy to Simone and had been providing a defense to Simone in the underlying action pursuant to a reservation of rights.  The underlying complaint sets forth claims against Simone for assault, negligence, and loss of consortium.  The plaintiff in the underlying action, Michael Wain, alleged that when attending a crowded concert Simone and Wain "bumped into" one another and then Simone assaulted Wain, striking Wain in the face with his fist causing serious bodily injury, including multiple fractures and a traumatic brain injury. 

Federal Rule of Civil Procedure 12(c) provides: "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). In reviewing a motion for judgment on the pleadings, a court must accept the nonmovant's allegations as true and view all facts and inferences drawn therefrom in the light most favorable to the nonmoving party. A court presented with a motion for judgment on the pleadings must consider the plaintiff's complaint, the defendant's answer, and any written instruments or exhibits attached to the pleadings. The motion may be granted where the movant clearly establishes that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law.

In determining whether an insurer has a duty to defend its insured, a Pa. court compares the scope of coverage under the policy to the allegations of the underlying complaint. Pennsylvania adheres to the "four corners" rule under which a court, in determining if there is coverage, does not look outside the allegations of the underlying complaint or consider extrinsic evidence.  If the allegations of the underlying complaint potentially could support recovery under the policy, there will be coverage at least to the extent that the insurer has a duty to defend its insured in the case.

The duty to defend is a distinct obligation, different from and broader than the duty to indemnify.   Because the duty to defend is broader than the duty to indemnify, there is no duty to indemnify if there is no duty to defend.

Interpretation of an insurance policy is a question of law.  In construing the policy, if the words of the policy are clear and unambiguous, the court must give them their plain and ordinary meaning. When a term is ambiguous, and the intention of the parties cannot be discerned from the policy, the court may look to extrinsic evidence of the purpose of the insurance, its subject matter, the situation of the parties, and the circumstances surrounding the making of the contract. Ambiguous terms must be strictly construed against the insurer, but the policy language must not be tortured to create ambiguities where none exist. 

To prevent artful pleading designed to avoid policy exclusions, it is necessary to look at the factual allegations in the complaint, and not how the underlying plaintiff frames the request for relief. In other words, it is the substance, not the form, of the allegations that is the focus of the coverage inquiry.

State Farm argued that it did not have a duty to defend or indemnify Simone in the underlying action because the underlying complaint does not allege that Wain's injuries were caused by an "occurrence" -- an "accident".

Pa. courts have said that when "accident" is undefined in a policy, they should treat the term as "referring to an unexpected and undesirable event occurring unintentionally." The key term in the definition of the "accident" is "unexpected" which implies a degree of fortuity. An injury therefore is not "accidental" if the injury was the natural and expected result of the insured's actions.  In determining whether the injuries alleged in an underlying complaint resulted from an accident, a court considers the operative events from the insured's, as opposed to the underlying plaintiff's, perspective. It is thus irrelevant in the present case whether the events alleged in the underlying complaint were unexpected from Wain's perspective.

The Supreme Court of Pa. has held that willful and malicious assaults are not accidents.  Accordingly, it is clear that Count I of the underlying complaint, which asserts a claim for assault, cannot support coverage. The underlying complaint, however, also asserts a claim for negligence. Courts look to the factual allegations alleged in the underlying complaint, and not the particular cause of action that a complainant pleads, in determining whether coverage has been triggered. 

Simone argues that the underlying complaint sets forth allegations of negligent behavior by: (1) "[n]egligently striking Wain and causing him to suffer personal injuries"; (2) "[f]ailing to observe Wain and avoid striking him"; and (3) "[f]ailing to stop his arm before striking Wain." The underlying complaint also alleges that Simone was negligent in: "[p]ermitting himself to either become intoxicated which caused him to strike Wain"; "[a]llowing his emotions to control his actions which caused him to strike Wain"; and "[l]osing control of his emotions which caused him to strike Wain."

The allegations in the underlying complaint are clearly allegations of intentional conduct, and specifically a willful assault.  The allegations set forth in support of the negligence claim in the underlying complaint also allege intentional conduct. Each of the underlying complaint's negligence allegations rely exclusively on and relate only to Simone's alleged actions in striking Wain in the face with his fist. Consistent with the above-cited case law, the Court finds that the factual allegations in the underlying complaint, while characterized as both negligence and assault, describe only an intentional physical assault.

The Court noted that the underlying complaint also included an allegation that Simone was intoxicated when he struck Wain, stating that "[u]nder Pennsylvania law, imbibed intoxicants must be considered in determining if the actor has the ability to formulate an intent." "However, while voluntary intoxication may so cloud the mind as to deprive it of the power of pre-meditation and deliberation, it will not prevent the formation of the general intent necessary for the commission of an assault and battery." 

The court cited another case which noted under similar facts that there was no allegation that the insured was in the midst of an alcoholic blackout and had lost awareness of his actions at the time of the assault. The only allegations to support a conclusion that the case involves an accident are that the insured was intoxicated and cognitively impaired at the time of the attack.  Although these allegations indicate that the insured was drunk during the events at issue, they do not suggest that he lacked awareness of his actions.

Where, as here, the injured party does not make allegations indicating that an insured's intoxication prevented him from intending the consequences of his violent behavior, the court said that it is satisfied that Pa. law does not permit an insured or his representative to shift responsibility for the damages resulting from his behavior to his insurer.

The single, general allegation in the underlying complaint that Simone was intoxicated at the time he allegedly struck Wain clearly did not rise to the level required under Pa. law to negate intent such that the Court could find that the underlying complaint sets forth an allegation that Simone's alleged striking of Wain was an unintentional accident. 

The Court found that the factual allegations set forth in the underlying complaint describe only a willful physical assault, which is an intentional tort and not an accident.  Accordingly, State Farm did not owe a duty to defend or a duty to indemnify.

© Hurwitz & Fine, P. C. 2021
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