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Coverage Pointers - Volume XXII, No. 19

Volume XXII, No. 19 (No. 584)
Friday, March 5, 2021

A Biweekly Electronic Newsletter  
 

As a public service, Hurwitz & Fine, P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York and Connecticut appellate courts and Canadian appellate courts.  The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.  

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

 

Dear Coverage Pointers Subscribers:

Do you have a situation?  We love situations.  Our issue is attached, as always.


N.B. If we run out of space, fear not, we will find another chance to accommodate.

 

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.

 

Newsletters:      

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

  • Employment & Business Pointers aims to provide our clients and subscribers with timely information and practical, business-oriented solutions to the latest employment and general business law developments.  Contact Joseph S. Brown  jsb@hurwitzfine.com 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 jeb@hurwitzfine.com 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 dra@hurwitzfine.com 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 bfm@hurwitzfine.com 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 vcp@hurwitzfine.com  to subscribe.

     

ruMIRNAtions:

Sometimes it’s good to go over the basics. In this issue of Coverage Pointers, I provide a refresher on the tripartite relationship between an insurer, the insured and defense counsel.

Mirna
Mirna M. Santiago

mms@hurwitzfine.com

 

A Century Ago – Second Woman Seated in House of Representatives:

Buffalo Morning Express and
Illustrated Buffalo Express

Buffalo, New York
05 Mar 1921

Woman in House.

            For the second time in history the House will have a woman member.  Miss Alice M. Robertson of the second Oklahoma district who succeeds William W. Hastings.  For the first time in the history of the house the territory east of the Mississippi and north of the Ohio rivers will dominate legislation. Republicans from that area being in full control and strong enough to overcome all combinations of Republicans and Democrats from the South and West.

            Many places formerly held by veterans were captured by men young in years and politics, but some veteran politicians came in, among them Theodore Burton of Ohio, a former senator, and Bourke Cockran of New York.

Editor’s Note:  Since 1917, when Representative Jeannette Rankin of Montana became the first woman to serve in Congress, a total of 393 women have served as U.S. Representatives, Delegates, or Senators. This Web site, based on the publication Women in Congress, contains biographical profiles of former women Members of Congress, links to information about current women Members, essays on the institutional and national events that shaped successive generations of Congresswomen, and images of each woman Member, including rare photos.

For those who do not know Jeannette Rankin’s fascinating history, she served in the 65th Congress (1917-1919) and the 77th Congress (1941-1943) and voted against the United States entering both World War I and World War II.

 

Peiper on Property and Potpourri:

It was nice to have a “normal” winter for a change.  Lots of snow, and relatively normal temperatures, made for excellent skiing and skating from mid-January through the close of February.

I enjoyed skiing with my eleven-year-old at the start of the season.  As the season moved on, and his courage emboldened, he spent less on time on piste and more time weaving through trees.  My courage, conversely, fades with each passing season, so our trips down the hill diverted with us meeting back up at the lift.  By the end of the season, he had abandoned me completely to ski with his like-minded, tree dodging friends.  I am sure more than a few of you can relate.

With the start of March, however, we’re seeing a warm-up emerging.  We’ll happily trade ski poles for baseball gloves moving forward.

Not much else to report this week.  We do suggest that all of you aspiring coverage lawyers pay attention to the First Department’s opinion in VPC Projects reviewed in this week’s columns.  The case is a legal malpractice claim driven, at its heart, by allegedly incorrect coverage advice.  Essentially, the plaintiff asserts it lost revenue from its business when it was advised not to pursue an insurance claim.  The claim was dismissed on the speculative nature of the alleged damages, but the theory of legal malpractice, it appears, was sound.

The moral of the story is…when in doubt, tender.  The worst thing, as counsel to a policyholder, is getting a denial.  Even still, that result is far better than never asking the question to begin with.

That’s it for now.  See you in two weeks.

Steve
Steven E. Peiper

sep@hurwitzfine.com

 

A Century Ago – New Jersey Assembly Passes Civil Rights Bill:

The New York Age
New York, New York

05 Mar 1921

N.J. ASSEMBLY PASSES CIVIL RIGHTS BILL

(Special to THE NEW YORK AGE)

            Trenton, N.J. – The civil rights’ bill introduced into the State Legislature by Assemblyman Walter G. Alexander of Essex county, was passed by the Assembly on Tuesday, March 1st.

            Dr. Alexander, who is the first and only Negro Assemblyman ever elected in New Jersey modeled his bill after the famous Levy civil rights’ bill now in force in New York State.

 

Wilewicz’ Wide-World of Coverage:

Dear Readers,

Not much new to report this week. The world keeps turning (and warming) and every day we are nearer to Spring. Frankly, I really enjoy the winter, particularly the part when the world gets quiet and the snow falls and everything is white and peaceful. Moreover, I appreciate being trapped in my house more when there are physical barriers preventing going out, rather than the invisible ones that have been menacing us for the past year.

In any event, this week in the Wide World of Coverage, we bring you a case about non-party subpoenas in DJ actions and the proper procedures for quashing them. In Main Street America v. Savalle, the insured sought to quash a non-party subpoena that his carrier had issued, which was seeking to obtain notice documents relative to a claim. The insured sought a writ of mandamus to overturn the Order that had denied his motion to quash. The Second Circuit treated it as an appeal and looked at the precedent. Interestingly, between the time it issued its order, another matter in the Second Circuit determined that a party cannot immediately appeal from a nonparty witness subpoena based upon the assertion of privilege. As such, the appeal had to be dismissed for lack of appellate jurisdiction. Not for nothing, the insured hadn’t presented sufficient evidence for the applicability of the privilege anyway, but either way, he was out of luck.

Until next time!

Agnes
Agnes A. Wilewicz

aaw@hurwitzfine.com

 

100 Years Ago:  Harding Assumes Presidency and Takes Keys to White House:

Buffalo Morning Express and
Illustrated Buffalo Express

Buffalo, New York
05 Mar 1921

HANDS KEYS TO HARDING

28th President steps out of office carrying wound stripes of eight storm tossed years.

ACCOMPANIES SUCCESSOR IN AUTO TO THE CAPITOL

“The senate has thrown me down, but I am not going to fall down,” he tells Senator Knox.

By the Associated Press

            Washington, D.C., March 4 – Soon after reaching his new home, Mr. Wilson, upon the advices of Dr. Grayson, took a short rest in the endeavor to recover from the unusual fatigue to which he had been subjected during the day.

            By 3 o’clock several thousand people had assembled outside the Wilson home as a part of a demonstration organized by the League of Nations association and the Democratic central committee of the District of Columbia.  While a committee went inside to present to the former President a gift of flowers, those outside united in a noisy and enthusiastic greeting.

 

Barnas on Bad Faith:

Hello again:

The Sabres’ season is going so poorly that I strangely cannot stop watching it.  It should almost be impossible to be as bad as they are considering how many high first round draft choices they have on the roster.  It probably does not help that Jack Eichel, Jeff Skinner, Taylor Hall, and Kyle Okposo are making a combined total of $33 million this season and have a combined three goals between them.  $33 million just does not buy what it used to apparently.  The Sabres are welcoming fans back into the arena on March 20.  I can’t wait to see and hear what that crowd looks like.  Maybe Eichel, Skinner, Hall, and Okposo will have four goals between them by then.

At home, I have recently undertaken a DIY kitchen renovation and remodel with the assistance of my Dad.  My kitchen was straight out of 1965 and really was due for an update.  We are coming along pretty well so far with resurfaced cabinets and handles, a new sink, and a new stove done and a new countertop and backsplash still to come.  My Dad is the skilled labor and I am merely the assistant/manual labor.  I would not describe myself as someone who particularly enjoys home improvement projects, but it is nice to spend the time together, and I am sure it will look so much better once it is done.

I have one case in my column today from the Northern District of New York.  The court dismissed a claim against Hanover based on the two-year suit limitation clause in the policy.  However, it allowed the breach of the implied covenant of good faith and fair dealing to proceed because it was based on different factual allegations.  Give it a look if you are so inclined.

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

Brian
Brian D. Barnas

bdb@hurwitzfine.com

 

A Century Ago:  Five Dollar Fine for Trespass (in Bed):

Times Union
Brooklyn, New York

05 Mar 1921

WOMAN FINDS STRANGER IN HER BED; HE IS FINED $5

            Flushing, March 5.—When Mrs. Ida Wasserberger, who conducts a restaurant on Morris Avenue, near Mt. Olivet Cemetery, returned to her home from a motion picture theatre Wednesday evening, she discovered a man, fully dressed, asleep in her bed.  She screamed and Policeman Herman, who was on duty in the neighborhood, answered her calls for help.

            “What are you doing here?” demanded the patrolman of the sleeping man.  “Please go away and let me sleep,” pleaded the man.  “You’ll sleep all right, but not here.” Replied Herman.  The man was taken to the police station where he said he was Frederick Steinman and that he lived at 109 Greenpoint Avenue, Woodside.

            When he was arraigned before Magistrate Miller in the Flushing police court yesterday on a charge of disorderly conduct, Steinman said he had been drinking with Mrs. Wasserberger’s father and that he became intoxicated.  He recalled having been put to bed by the plaintiff’s father.  Steinman was fined $5 which he paid.

 

Off the Mark:

Dear Readers,

The NYC Metro area is finally free of the snow that has been on the ground throughout February and spring seems to be on its way.  Although the temperature on Tuesday was only 20 degrees, today is a much more manageable 50 degrees.  Here’s to hoping for more of that.

This edition of “Off the Mark” brings you a recent construction defect decision from the United States Court of Appeals for the Eleventh Circuit.  In Morgan Concrete Co. v. Westfield Ins. Co., the U.S. Court of Appeals examined a carrier’s duty to defend and indemnify its insured, finding no duty to defend as there was no claim for "property damage" that was covered by the insurance policy.

Until next time …

Brian
Brian F. Mark

bfm@hurwitzfine.com

 

100 Years Ago – Woodrow Wilson’s Term Ends:

Wilkes-Barre Times Leader, the Evening News, Wilkes-Barre Record
Wilkes-Barre, Pennsylvania
05 Mar 1921

BACK TO THE LAW AFTER 40 YEARS

Woodrow Wilson, Blindly Idolized, and Then Repudiated

BECOMES PLAIN CITIZEN AGAIN

Was Ill When Elected Eight Years Ago—One Eye Practically Gone.  Retirement Throws Intimate Glimpse On Untold Stories—Third Term Question—Thought of Retiring When Incapacitated.

            Washington, March 4. — Woodrow Wilson leave the White House today to resume the role of a private citizen and again takes up the practice of law, a profession in which he has not been active for forty years.  With Bainbridge Colby, the retiring Secretary of State, the retiring President has formed a partnership, and the new firm will maintain offices in New York and Washington.

            Mr. Wilson’s announcement that he would take up the law again came as a surprise to all Washington which had been led to believe that the next few months at least he would go in for a life of rest and recreation and then probably pursue, in some unannounced way, his work for world peace, It was thought too, that the out-going President would take up the business of literature where he left off when he quit the presidency of Princeton University to enter politics and become governor of New Jersey.

            Frail in health with his body racked by eighteen months of illness, it had been supposed by Mr. Wilson’s closest friends that he planned nothing else than rest.  But, Rear Admiral Garyson, his personal physician, says he is able to take up legal work and could even possible appear occasionally before the Supreme Court of the United States, to which the retiring President soon will make application for admission to practice.

 

Boron’s Benchmarks:

I hope all is well with you.  A year into the pandemic and we are as busy as ever.  Thank you for entrusting us with your coverage “situations”.  It is a pleasure to work with and for all of you.

It appears more likely than not to this writer that in the coming months there will be a slow return to some semblance of “business as usual” in the courts.  But operational changes made by the courts due to the pandemic whereby we have gone from mostly in-person court appearances to mostly virtual court appearances seem destined to continue for some time going forward. (Perhaps for even longer than this writer cares to contemplate.)  I very much look forward to the day when I can finally return to courtrooms and represent clients in person.  There’s little else in life that matches, at least for me, the feelings and emotions of an in-person courtroom experience with something meaningful on the line.

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 19, 2021, by the Supreme Court of Nebraska in State Farm Fire & Cas. Co. vs. TFG Enterprises, LLC.  The case concerns a Rental Dwelling Policy of Insurance.  State Farm sought an order declaring State Farm owed no coverage obligations to its insured who was a defendant in an underlying lawsuit.  The underlying suit alleged the insured had misrepresented and/or concealed property defects from the purchaser of the insured's house.

Have a healthy and happy next two weeks, folks.

Eric
Eric T. Boron

etb@hurwitzfine.com

 

Nightgown in Court – OK, a Century Ago:

New-York Tribune
New York, New York

05 Mar 1921

Nightgown O.K.’d in Court

Mrs. Marie Caruso Rebuked for Accusing Girl’s Father

            Magistrate Rosenblatt gave his official approval to Margaret Bollina’s nightgown as an indoor costume yesterday in Jefferson Market police court and expressed official disapproval of the conduct of Mrs. Marie Caruso, who lives in the same house with the Bollinas, at 20 King Street, in having the young woman’s father, Louis Bollina, summoned to court because she went through the hall in a nightgown.

            “You are simply looking for publicity,” said the magistrate to Mrs. Caruso, who says she is Enrico Caruso’s second cousin.  “Take your troubles to a preacher of the gospel.  Miss Margaret Bollina has a perfect right to go through the halls in her nightgown, and if you, Mrs. Caruso, bring this nightgown story to this court again I will have you locked up.”

           

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

JJ Watt made the wrong choice. That’s all. That’s the cover note.

This edition of Ryan’s Capital Roundup contains discussion of a bill that recently passed New York’s Senate that would exempt wholesale excess line insurance brokers from the diligent effort requirement in the name of insurance consumer and market efficiency.

Until next time,

Ryan
Ryan P. Maxwell

rpm@hurwitzfine.com

 

Appropriate PD Under Auto Policy – a Century Ago:

The Buffalo Enquirer
Buffalo New York

05 Mar 1921

DAMAGES FOR STOLEN CAR

Court Rules Underwriter Must Re-Paint Recovered Auto

            If a man’s automobile is insured and is stolen and damaged, he is entitled to a new coat of paint at the expense of the insurance company, according to a verdict given to Philip Setel of No. 193 William Street, in his action before Justice Dudley against the Glen Falls Insurance company.

            Setel’s automobile was stolen from in front of a hotel during a New Year’s eve party.  It was found later in a ditch near Batavia.  He and the insurance company could not agree on a settlement for damages, so appraisers were appointed, and they would not allow the cost of a new coat of paint.  Setel brought action for damages.  The jury reported to Justice Dudley allowing the appraisal figure of $247 and $200 in addition to paint the car and buy a new battery, according to Frank J. Fitzpatrick. 

 

CJ on CVA and USDC (NY):

Hello Readers,

We are two weeks into my quest to find Buffalo’s best fish fry and the results are astounding. My first fish fry of the year came from the Buffalo Tap Room and Grill, with a crisp batter, light flaky haddock, and well-seasoned fries on the side, it certainly seemed like the fish to beat. Last week I headed to Williamsville and tasted the fish and chips from the Irishman. The beer batter had a hint of Guinness and the fries have always been one of my favorite sides at any restaurant. I have a feeling come Easter the Irishman will be in the top three. This week we head down to Cattaraugus County to see what Ellicottville has to offer.

We return to the District Courts this week with a case from the Southern District of New York. Are alleged violations of New York’s Labor Law enough to prove that a contractor was in some way negligent, thus allowing for an additional insured to gain coverage? Read below to find out!

See you in two weeks,

CJ
Charles J. Englert, III
cje@hurwitzfine.com
       

 

Harding’s Inauguration:

Daily News
New York, New York

05 Mar 1921

PRESIDENT HARDING’S CREED

HARDING INAUGURATION.—Warren G. Harding was inaugurated the twenty-ninth President of the United States yesterday.  Immediately after being administered the oath of office by Chief Justice White he launched into the inaugural speech.  His first message as President was a call for a return to the American form of Government, as adopted by the founders of the nation.  As the President spoke electric amplifiers echoed his voice  to the 50,000 persons who witnessed the inauguration.  Standing but a few feet from her husband, Mrs. Harding seemed to repeat every word of the message and at times nodded vigorous approval.  Yielding to the last minute entreaties of his family and physician, President Wilson took no part in the ceremonies other than to accompany Mr. Harding from the White House to the Capital Building, where Mr. Harding became President and Mr. Wilson’s term as First Citizen came to a dramatic close. 

 

Dishing Out Serious Injury Threshold:

Dear Readers,

Hope everyone is doing well. We got through a couple weeks of snowy weather down here but are looking forward to Spring and the warmer weather coming with it. Hopefully, we will be able to get out of the house more for some time outdoors soon.

In the Serious Injury Threshold world, unfortunately, we have not had a Serious Injury Threshold case from the Appellate Division in the last two weeks. We’ll have to wait with bated breath to see what comes down from the Appellate Division in the next two weeks.

Be well,

Michael
Michael J. Dischley
mjd@hurwitzfine.com
  

 

This One Isn’t 100 Years Ago, It is 68, but who’s counting?  (Me): Joseph Stalin died that day, March 5, 1953, on the Day I was born – not one of our crack CP staff remembered.  Sniff.

The Brooklyn Daily Eagle
Brooklyn, New York

05 Mar 1953

 

STALIN IN NEW RELAPSE

Pravda Appeals to People for Unity

Editorial Hints Malenkov Will Take Command

By HENRY SHAPIRO

            Moscow, March 5 (UP)—Stricken Premier Josef Stalin took another turn for the worse today and the Communist Party newspaper Pravda, in a rallying call to the Russian people, told them to unite behind their “experienced leadership.”

            Stalin entered his fourth day of deep coma and his nine attending physicians used oxygen, drugs and blood-drawing leeches in a desperate effort to keep him alive. …

 

Bucci on “B”: 

Hello all:

How is everyone faring today?  I am getting my vaccine on Monday, and I was quite excited until I remembered that I can still spread COVID so need to keep wearing a mask and social distancing.  But at least we can be around others with the vaccine and not have to worry (too much).

On that happy note, I found only one coverage B case for this issue and it is a trial court decision.  Question is, am I happy because I only had to write one up, or because I was able to find one to write up?  Could be a little bit of both.

I may be getting ahead of myself, but it is almost spring, another reason to be happy.  I live in New England and spring is no picnic here.  Nevertheless, in my view, anything is better than winter.   And we can go outside and do things again.  So exciting.  You will be hearing a lot about the weather from me until winter comes around again.  To me, being able to stay outside for long periods again is especially important these days.

One more thing…shoutout to H&F’s Diversity Committee.  Last month we learned so much about black history and our implicit biases.  This month, we are celebrating women’s history.  Here are some interesting points from the committee’s cover email:

  • Women were not legally guaranteed equal employment opportunity until 1964 with the passage of Title VII, and were not legally guaranteed equal education opportunity until 1972 with the passing of Title IX.

  • Women earn 77 cents for every $1 earned by men.

  • Women outrank men in all educational achievement levels except professional and doctoral degrees.

  • In 2017, 57% of current college students were women.

Go women!!

This all I have to say this issue, folks.  See you next time.

Diane
Diane L. Bucci

dlb@hurwitzfine.com

 

NY Governor Under Fire – Even 100 Years Ago:

The Brooklyn Daily Eagle
Brooklyn, New York

05 Mar 1921

SHARP DEBATE OVER MILLER AND HYLAN

B.R. Duncan Defends Governor. Russell Champions Mayor.

            Bruce R. Duncan, president of the Young Republican Club, and Assistant Corporation Counsel Winston Russell last night turned a drawing-room meeting of the League of Women Voters of the 10th A.D. into a heckling match.  Mr. Duncan precipitated a heated argument on the merits of Governor Miller’s traction plan into a spirited defense of the chief executive, in which he challenged his opponents to prove alleged accusations.  The league had invited the two men to the home of Mrs. Alfred Best of 457 Clinton Ave. to voice their views.

            “It does not lie in the mouth of any man to accuse the Governor,” shouted Mr. Duncan.  “Everything that you say is manufactured out of the whole cloth.  It is pure demagoguery.  You condemn a Governor and approve a Board of Estimate which amounts to absolutely nothing, and you know nothing of what you say.”

            That the subways of New York City are a “menace to the morals of the young” was the charge made by Mr. Duncan.  “For three years,” he said, “the railroads and the Board of Estimate have been blackguarding each other, and you see the spectacle that they have produced.  This trampling of one upon another has become a menace to the health and morals of a community just as the Board of Estimate is a menace.  Young girls are subjected to insults and children are riding in an atmosphere far from pure.”

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Pitchers and catchers reported. That’s all we need to know for right now, everything else is just commentary. Oh, and if you’re interested in knowing just how much a UM/UIM insurer stands in the shoes of the tortfeasor, read my commentary of a case seeking punitive damages for an accident caused by the recklessness of a drunk driver.

To warmer days.

Lee
Lee S. Siegel

lss@hurwitzfine.com
       

 

Gym Teacher too Aggressive – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York

05 Mar 1921

PHYSICAL INSTRUCTOR WAS TOO HANDY WITH HIS FIST, PUPIL CHARGES

(Special Telegram to the Enquirer.)

            Dunkirk, March 5.—Karl Hoeppner, physical instructor and coach of Dunkirk High school athletic teams, was arrested yesterday charged with assaulting Julien T. Williams, a pupil.  It is alleged that Mr. Hoeppner struck young William a number of blows in the face, blackening his eye and bruising his face.  The defendant pleaded not guilty when arraigned before Municipal Court Judge Anglim and the case was adjourned to Tuesday morning.

 

Rauh’s Ramblings:

Dear Readers:

It’s hard to believe it is already March.  It feels like February flew by!  It is nice to finally be able to see grass again as the snow starts to melt, but my entire backyard is a big mud pit, which my son has already fallen victim to twice, although I’m not convinced it was totally accidental.  I am really looking forward to warmer temperatures and being able to sit on my back patio again.

This week, I have a case from the Second Department where the Court ruled that some of the Plaintiffs’ claims against the insurance company and broker were time-barred, while the Plaintiffs’ remaining claims failed to state a cause of action.  This case is also another reminder that it is always in an insured’s best interest to actually read their insurance policy!

Until next time,

Patty
Patricia A. Rauh

par@hurwitzfine.com
      

Great Falls Tribune
Great Falls, Montana

05 Mar 1921

May Postpone Trial of Indicted Sox

            Chicago, May 4.—Indications of a postponement of the trial of the indicted members of the Chicago White Sox in connection with the baseball scandal in the world series of 1919, was given by the prosecution Friday.

            Former Judge George F. Larrett, special counsel for the prosecution made a motion before Judge Devor that the case set for March 14 be stricken from the calendar.  He explained he required additional time to prepare for trial.

            The motion was strongly opposed by defense counsel on the ground that postponement would prevent the indicted players returning to the game this season.

            It was finally agreed that a date for the trial would be set next Monday.  Judge Devor expressed himself as willing to proceed with the case March 14 and added that any other date must not be many days later.

 

Storm’s SIU Examen:

Hi everyone:

This week in the Examen I have included a case involving a petition to compel disclosure of documents made under a FOIL request after it had been denied.  It is highly aggravating when conducting an SIU investigation and a FOIL request for municipal police or fire reports and records is rejected. 

Although the particular documents requested in this case are not necessarily relevant to our investigations, examining the case is very useful as the decision demonstrates that such denials may be challenged and it summarizes the applicable standards involved.  The agency has the burden to demonstrate that the requested material falls squarely within a FOIL exemption by articulating a particularized and specific justification for denying access, otherwise disclosure is compelled.  Conclusory assertions are insufficient to deny access.  Alternatives must also be considered, such as providing summaries of factual data or the records with the challenged information redacted.  Moral of the story -- do you need records from a municipality and it has denied your FOIL request?  Don’t give up, we can help!  

In furthering our firm’s interest in maritime insurance coverage issues, I have also included a maritime choice of law case where the insurer denied coverage due to the insured’s misrepresentations at the time of policy renewal and its breach of an express warranty.  The policy’s choice-of-law provision designating federal maritime law and, in its absence New York law, which was found to be the law of the case, as opposed to Pennsylvania law, the law of the forum in which the suit is pending. 

For the COVID-19 litigation junkies following the many decisions, we will also consider four Pennsylvania federal cases involving COVID-19 litigation.  In the first decision the federal court remands the case back to state court after considering an eight multi-factor test.  The other three federal courts appropriately decide the cases in favor of the insurers, recognizing that the vast majority of courts analyzing these claims have sided with the carriers, largely agreeing that the commercial insurance policies unambiguously foreclose coverage where the business property suffered no physical damage or any tangible injury other than pure economic loss. 

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

This edition’s encouraging word: “Develop An ‘Attitude Of Gratitude’. Say Thank You To Everyone You Meet For Everything They Do For You.” ~ Brian Tracy

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
Scott D. Storm

sds@hurwitzfine.com

 

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane

ddk@hurwitzfine.com

  • A Factual Finding that an Offending Hit and Run Vehicle was Insured, Affirmed
  • Issue of Fact on Whether Offending Vehicle Driver was Involved in Accident Leads to Framed Issue Hearing in Uninsured Motorist Claim
  • Court Distinguishes “Prior Acts” Exclusion from “Prior Knowledge” Exclusion in Claims Made and Reported Policy
  • Work on the Interior of a Building is Not Subject to Exterior Work Exclusion
  • Court Distinguishes Between Deductible and Self-Insured Retention

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

sep@hurwitzfine.com

  • Question of Fact on Apparent Authority of Agent Precludes Insurer’s Motion for Summary Judgment on Title Policy
  • Bad Coverage Advice Leads to Malpractice Claim for Lost Profits

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley

mjd@hurwitzfine.com

  • No cases to discuss this issue.

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz

aaw@hurwitzfine.com

  • Second Circuit Denies Writ of Mandamus in Connection with Non-Party Subpoena in a DJ Action Where Insured Asserted Attorney-Client Privilege as to Documents Sought

 

BARNAS ON BAD FAITH
Brian D. Barnas

bdb@hurwitzfine.com

  • Claim for Breach of the Implied Covenant of Good Faith and Fair Dealing Was Not Duplicative of Dismissed Breach of Contract Claim

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

lss@hurwitzfine.com

  • Drunk Driver’s Recklessness Not Recoverable in UM/UIM Action

 

BUCCI ON “B”
Diane L. Bucci
dlb@hurwitzfine.com

  • When is Trade Dress Protected Under the Lanham Act?  

 

OFF THE MARK
Brian F. Mark
bfm@hurwitzfine.com

  • U.S. Court of Appeals Finds No Duty to Defend or Indemnify as the Underlying Claims Only Involved Damage to the Insured’s Product Itself and Economic Losses for Repairs Necessitated by the Defective Product

 

BORON’S BENCHMARKS
Eric T. Boron

etb@hurwitzfine.com

  • Rental Dwelling Policy of Insurance – Liability Coverage - Duty to Defend and Indemnify - Supreme Court Affirms Grant of Summary Judgment to State Farm Because Policy Provides No Coverage For Damages Alleged in Underlying Suit

 

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell

rpm@hurwitzfine.com

Legislative List

  • Bill Passes Senate That Would Exempt Wholesale Insurance Brokers From Excess Line Diligent Effort Requirement

 

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

cje@hurwitzfine.com

  • Without a Clear Nexus Between a Named Insured and a Claimant’s Injury, the Duty to Defend Does Not Apply to a Putative Additional Insured

 

RAUH’S RAMBLINGS
Patricia A. Rauh

par@hurwitzfine.com

  • Plaintiffs’ Claims Against Defendants For Violations of the Insurance Law and Breach of Fiduciary Duty Were Time-Barred.  Plaintiffs’ Cause of Action Alleging Fraud Was Properly Dismissed as Plaintiffs Failed to Exercise Ordinary Diligence by Not Reading the Insurance Policies

 

ruMIRNAtions
Mirna. M. Santiago

mms@hurwitzfine.com

  • Refresher on the Tripartite Relationship between an Insurer, the Insured and Defense Counsel

 

STORM’S SIU EXAMEN
Scott D. Storm

sds@hurwitzfine.com

  • FOIL Request – Article 78 Proceeding To Compel Production.  The Agency has the Burden to Demonstrate that the Requested Material Falls Squarely Within a FOIL Exemption by Articulating a Particularized and Specific Justification for Denying Access, Otherwise Disclosure is Compelled.  Conclusory Assertions are Insufficient to Deny Access 
  • Maritime Choice of Law Issue in a Case Where the Insurer Denied Coverage Due to the Insured’s Misrepresentations at the Time of Policy Renewal and Breach of an Express Warranty.  The Policy’s Choice-Of-Law Provision Designating Federal Maritime Law and, in its Absence New York Law, was Found to be the Law of the Case, as Opposed to Pennsylvania Law, the Law of the Forum in Which the Suit is Pending


COVID-19 Cases

  • COVID-19 Litigation – Federal Court Remands Case Back to State Court After Considering an Eight Multi-Factor Test
  • COVID-19 Litigation – Federal Court Grants Insurer’s Motion for Judgment on the Pleadings
  • COVID-19 Litigation – Federal Court Grants Insurer’s Motion to Dismiss
  • COVID-19 Litigation – Federal Court Grants Insurer’s Motion to Dismiss

 

That’s all we have in this week’s issue.  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.


NEWSLETTER EDITOR
Dan D. Kohane

ddk@hurwitzfine.com

ASSOCIATE EDITOR
Agnes A. Wilewicz

aaw@hurwitzfine.com

ASSISTANT EDITOR
Patricia A. Rauh

par@hurwitzfine.com

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
ddk@hurwitzfine.com

Steven E. Peiper, Co-Chair
sep@hurwitzfine.com

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

Ryan P. Maxwell

Charles J. Englert

Patricia A. Rauh

Diane F. Bosse

Joel R. Appelbaum

FIRE, FIRST-PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
sep@hurwitzfine.com

Michael F. Perley

Scott D. Storm

Eric T. Boron

Brian D. Barnas

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
ddk@hurwitzfine.com

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com

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”

Ryan’s Capital Roundup

CJ on CVA and USDC(NY)

Rauh’s Ramblings

ruMIRNAtions

 

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

03/03/21       Matter of GEICO v. Charris
A Factual Finding that an Offending Hit and Run Vehicle was Insured, Affirmed

On December 1, 2017,  Charris claims to have had her car struck by a red van that fled the scene. lA bystander took photographs, allegedly of the van that struck Charris's vehicle, and sent them to Charris via text message. The van shown in those photographs was owned by Truck Tan, LLC (“Truck Tan”), and insured by State Farm.

State Farm denied payment of the claim on the ground that its insured denied involvement in the accident and Charris had insufficient evidence to prove liability against its insured. Charris then filed a claim for Uninsured Motorist benefits against her carrier, GEICO, and GEICO commenced this proceeding pursuant to CPLR article 75, to permanently stay the arbitration, on the ground that the van was insured by State Farm and, thus, Charris had no valid claim under the uninsured motorist endorsement of her policy.

A framed issue was held to determine whether Truck Tan's vehicle was involved in the subject accident. At the hearing, Charris testified that she saw the vehicle that struck her vehicle. She described it as a red "construction van" with writing on the side doors, a metal rack or rails on top, and painting on the back doors.

Charris further testified that, while she was at the scene of the accident, a bystander sent photographs depicting the van, with a visible license plate, to Charris via text message, which Charris shared with the responding police officer. Charris testified that the van depicted in those photographs was the van that struck her vehicle. The photographs were admitted into evidence over the objection of Truck Tan and State Farm.

At the conclusion of the hearing, the Supreme Court found that GEICO had established that the van which struck Charris's vehicle was the vehicle registered to Truck Tan and insured by State Farm, and that no evidence was offered to rebut these findings.

The appellate court affirmed the finding, held that the red van was the State Farm insured Truck Tan vehicle and permanently stayed the arbitration.

 

03/02/21       Matter of GEICO v. Hernandez
Appellate Division, First Department
Issue of Fact on Whether Offending Vehicle Driver was Involved in Accident Leads to Framed Issue Hearing in Uninsured Motorist Claim

GEICO sought to permanently stay its insured's demand for arbitration on his claim for uninsured motorist benefits by submitting a police report and DMV records indicating that its insured, a pedestrian at the time, was struck by Mr. Soto's vehicle, which left the scene of the accident after stopping briefly, and that Soto's vehicle was insured by proposed additional respondent Country-Wide.

In opposition, Country-Wide admitted, via an attorney's affirmation, that it insured Soto's vehicle, but referred to a denial-of-coverage letter that it had sent to petitioner (and that petitioner had submitted with the petition) explaining that Soto had indicated that he had no involvement in the accident. This letter raises an issue of fact whether Country-Wide's insured was involved in the accident, which warrants a hearing.

Editor’s Note:  Why a “letter” is considered proof enough to justify a hearing, we don’t know. Hearsay upon hearsay.

 

03/02/21       WMOP, LLC v. Scottsdale Insurance Company
Appellate Division, First Department
Court Distinguishes “Prior Acts” Exclusion from “Prior Knowledge” Exclusion in Claims Made and Reported Policy

A May 19, 2017 letter from a law firm, which requested records from WMOP but made no demands for relief, cannot be deemed a "claim" made during the Scottsdale policy period. Despite the fact that WMOP was contacted by Scottsdale for additional information regarding the matter, it failed to comply with policy reporting requirements under Scottsdale's claims made and reported policy, a condition precedent to coverage .

Although the law firm letter may not have constituted a claim, occurrence, or medical incident under the Mt. Hawley policy, the letter, with the threat of a legal proceeding relating to the care that WMOP had provided to the decedent, concerned "facts, matters, [or] events" that were not disclosed, but for which WMOP now demanded coverage from Mt. Hawley. Guided by the plain language of the Mt. Hawley policy, the "Prior Acts" exclusion of the Mt. Hawley policy was triggered. The cases relied upon by the motion court and WMOP are inapposite, as they involve the "Prior Knowledge" exclusion, as opposed to the exclusion at issue in this appeal.

 

02/21/21       Dormitory Authority — State of New York v.  RLI Ins. Co.
Appellate Division, First Department
Work on the Interior of a Building is Not Subject to Exterior Work Exclusion

In April 2010, plaintiff Dormitory Authority of the State of New York (“DASNY”) entered into a contract with Charan Electrical Enterprises, Inc. (“Charan”), whereby Charan would replace 500 MCM feeder at Baruch College. Pursuant to the contract, Charan made DASNY an additional insured on its policies. Its primary policy was issued by Harleysville. Its excess policy was issued by defendant Mt. Hawley Insurance Company (Mt. Hawley), a subsidiary of defendant RLI Insurance Company (RLI).

Mt. Hawley's policy states in relevant part that, "This insurance does not apply to 'bodily injury' arising out of ongoing operations described in the Schedule of this endorsement". In turn, the schedule includes "[e]xterior work above ground level, interior work over 15 feet above the floor, whether performed by the insured or by subcontractors on the insured's behalf" (id.).

In April 2014, Singh  — a Charan employee — was injured at the Baruch College jobsite. According to Singh, the job required Charan's employees to pull cable from the top of the building to the basement through a pipe. Singh was injured when a reel of cable which he had brought to the roof of the building rolled down a flight of stairs and crushed his leg.

In June 2014, DASNY received a notice of claim from Singh. On October 21, it demanded defense and indemnification from Harleysville and RLI. On November 20, 2014, Mt. Hawley received an investigative report about Singh's accident.

The next day, it disclaimed coverage on the basis of the "exterior work above ground level" exclusion. In March 2015, Harleysville accepted DASNY's tender.

RLI has no obligations here because Mt. Hawley was the underwriting company and Mt. Hawley’s disclaimer, send a day after it learned of the accident, was timely.

Here, however, Mt. Hawley has not met its prima facie burden in demonstrating that Singh's work replacing the cables in the library was "exterior work above ground level". The schedule is unambiguous. Mt. Hawley intended to differentiate between work done exteriorly and interiorly, and not where the injury occurred (see West 56th St. Assoc. v Greater N.Y. Mut. Ins.Co., 250 AD2d 109, 113-114 [1st Dept 1998] [between two similarly worded provisions, the phrase "in the course of any job" made difference as to whether liability was within scope of the exclusion]). Since Charan was rewiring the interior of the library, the work falls outside the scope of the exclusion.

 

02/24/20       Trumbull Equities LLC v. Mt. Hawley Insurance Company
Appellate Division, First Department
Court Distinguishes Between Deductible and Self-Insured Retention

A “self-insured retention" in the Mt. Hawley policy was expressly entitled  "Deductible Liability Insurance." Specifically, the endorsement states that Mt. Hawley's "obligation . . . to pay damages" on its insured's behalf "applies only to the amount of damages in excess of any deductible."

The endorsement allowed Mt. Hawley to settle a case and pay any part of the deductible and then seek reimbursement from the insured for that part of the deductible.  The insured would have 30 days to reimburse the carrier.

Based on the policy language, the $35,000 contributed by the named insured was a true deductible, properly subtracted from the policy limits, and not a self-insured retention.

In setting the date from which prejudgment interest accrues, the courts lacked discretion to take into account any delay by the plaintiff in prosecuting the action.  However, the court did decide on a "reasonable intermediate date" for prejudgment interest.

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

sep@hurwitzfine.com

 
03/03/21       Schwartz v. WFG Nat. Title Ins. Co.
Appellate Division, Second Department
Question of Fact on Apparent Authority of Agent Precludes Insurer’s Motion for Summary Judgment on Title Policy

At some point prior to 2014, WFG was engaged in a business relationship with NMR wherein NMR served as an authorized agent of WFG.  As part of the arrangement, NMR was specifically authorized to issue title policies on WFG paper.  WFG terminated that relationship due to perceived fraudulent activities by NMR, and even took the affirmative step of pursuing a temporary restraining order prohibiting NMR from continuing to do business as an agent of WFG.

NMR was served with the restraining order on September 22, 2014, but nevertheless issued a title policy to the plaintiff on the very next day.  That policy insured that there were no liens on a property being purchased in Brooklyn.  In fact, however, the property was encumbered by millions of dollars in liens which resulted in the plaintiff’s mortgage not having priority.   Plaintiff sought coverage under the WFG policy issued by NMR, and WFG not surprisingly denied the claim on the basis that the policy was improperly issued.

Plaintiff commenced the instant action against both NMR and WFG, but argued that NMR had authority to bind and, as such, the coverage was enforceable as written.  WFG moved for summary judgment, and the trial court granted that relief.

On appeal, the Appellate Division overruled in part.  While WFG would have been liable for the terms of the policy issued by NMR, it was only those policies issued with actual authority which are binding.  Here, WFG was able to establish that NMR had no actual authority to issue the policy at issue

The Court, however, also reviewed the claims that NMR still possessed apparent authority.  Even without actual authority, a principal may still be bound where its words or conduct give the impression to the third party that the agent has actual authority to bind.  Here, WFG failed to meet its burden as movant that NMR did not possess apparent authority. 


02/25/21       VPC Projects, LLC v. Golenbock Eiseman, et al.
Appellate Division, First Department
Bad Coverage Advice Leads to Malpractice Claim for Lost Profits

Plaintiff owned a bar/café which was sued by neighbors on a noise-based nuisance claim.  Upon receipt of the lawsuit, the insured sought an opinion from counsel on whether the claim would be covered by its insurance.  When counsel apparently opined that it was not covered, the plaintiff elected to close its bar operations.

Plaintiff, apparently, later sought a second opinion, and now argues that coverage would have been provided.  As such, it alleges that poor legal advice from counsel resulted in the closure of the business and the loss of $1,000,000 in anticipated revenue.

The Appellate Division, in affirming the trial court, noted that plaintiff’s damages calculations are based upon “gross speculation” about the future success and profitability of the business. Without evidence to substantiate the estimate, the Court ruled that plaintiff could not establish that any alleged loss was proximately caused by the incorrect legal advice.

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley
mjd@hurwitzfine.com

No cases to discuss this issue.

 

WILEWICZ’S WIDE WORLD of COVERAGE
Agnes A. Wilewicz

aaw@hurwitzfine.com

02/22/21       Main Street America Assurance v. Vincent Savalle
United States Court of Appeals, Second Circuit
Second Circuit Denies Writ of Mandamus in Connection with Non-Party Subpoena in a DJ Action Where Insured Asserted Attorney-Client Privilege as to Documents Sought

Vincent Savalle originally sought a writ of mandamus to overturn a District Court Order that had denied his motion to quash a subpoena served by his insurer, plaintiff Main Street America Assurance Company ("Main Street"). The subpoena had been for nonparty witness disclosure to the extent that it called for production of information and materials as to which Savalle asserted attorney-client-privilege confidentiality.

The Second Circuit proceeded to treat the mandamus petition as an appeal and sought further briefing, because, under the case law at the time, the denial of such a motion to quash was immediately appealable under the collateral order doctrine which made mandamus an inappropriate remedy. After they issued the order, however, but before the matter could be resolved, the Second Circuit also ruled in another matter that a party cannot immediately appeal the denial of a motion to quash a subpoena that calls for the production of information from a nonparty witness subpoena based on the party's assertion of privilege. As that decision had since become the law of the Circuit, they had to dismiss the appeal here for lack of appellate jurisdiction and denied Savalle's petition for a writ of mandamus.

Main Street had been suing Savalle for a declaratory judgment asserting that it had no duty to defend Savalle against claims for allegedly defective construction work brought by his customer, or to indemnify Savalle if the defense was unsuccessful. The argument was that Savalle had failed to give Main Street timely notice of the claims as required under the policy. Savalle asserted that Main Street had been timely informed of the claims on Savalle's behalf by a Terri Davis. During discovery, Main Street subpoenaed Davis for all communications relating to the underlying suit, including email communications between Davis and Savalle's attorneys. Savalle moved to quash the subpoena, stating that he personally did not use electronic mail or a computer, and that Davis was his agent for electronic communications. Savalle thus asserted that the hundreds of emails exchanged between his attorneys and Davis were protected by his attorney-client privilege. Rejecting Savalle's arguments, the lower district court found that Savalle had not adduced sufficient evidence about Davis's role or the contents of the communications to demonstrate that attorney-client privilege should apply. Savalle then sought the mandamus review.

The writ of mandamus is a "'drastic and extraordinary remedy,'" which is granted "only in 'exceptional circumstances amounting to a judicial usurpation of power, or a clear abuse of discretion.'" The Court will not grant mandamus to overturn pretrial discovery orders unless the "discovery question is of extraordinary significance or there is extreme need for reversal of the district court's mandate before the case goes to judgment."

To obtain mandamus relief from a discovery order that involves privilege, a party must show that "(i) the petition raises an issue of importance and of first impression; (ii) the [party's] privilege will be lost if review must await final judgment; and (iii) immediate resolution will avoid the development of discovery practices or doctrine undermining the privilege." "The second factor--loss of the petitioner's privilege if review must await final judgment--is normally present when the privilege is meant to protect the confidentiality of a communication" because "a remedy after final judgment cannot unsay the confidential information that has been revealed," but that factor alone cannot be dispositive.

Here, while a remedy after final judgment could not undo the disclosure of such confidential information in response to Main Street's subpoena, Savalle had not demonstrated exceptional circumstances amounting to a judicial usurpation of power or a clear abuse of discretion. Nor had he shown that the district court's decision raised a novel, important issue or that mandamus was needed to avoid the development of detrimental discovery practices.

 

BARNAS on BAD FAITH
Brian D. Barnas
bdb@hurwitzfine.com

03/01/21       Sportsinsurance.com, Inc. v. Hanover Ins. Co.
United States District Court, Northern District of New York
Claim for Breach of the Implied Covenant of Good Faith and Fair Dealing Was Not Duplicative of Dismissed Breach of Contract Claim

Plaintiff sells sports insurance to teams, leagues, and events.  Plaintiff’s vice president of finance and CFO embezzled approximately $250,000 CAD, and Plaintiff fired her in January 2016 when it found out.  Plaintiff submitted multiple claims to Hanover seeking recovery under its policy for losses related to the embezzlement.  Both claims were denied.

Plaintiff commenced this action against Hanover in March 2020.  Hanover moved to dismiss based on the policy’s suit limitation clause, which required Plaintiff to bring suit within two years of discovery of the loss.  The loss was discovered in January 2016, but the lawsuit was not commenced until over four years later in March 2020.  Accordingly, the breach of contract claim was dismissed.

However, the court declined to dismiss Plaintiff’s breach of the covenant of good faith and fair dealing claim.  Plaintiff alleged that Hanover violated the implied covenant of good faith and fair dealing by deliberately, carelessly and wrongfully: (1) mishandling Plaintiff's claim; (2) delaying payment of the claim; and (3) claiming baselessly that Plaintiff intentionally misrepresented and concealed material facts.  The court concluded these allegations were not duplicative of the breach of contract claim, and thus it survived dismissal.

Plaintiff also asserted a GBL 349 claim, which was dismissed.  The court noted that private contractual disputes unique to two parties do not fall within the ambit of GBL 349.  While Plaintiff alleged that Defendant failed to have reasonable standards and procedures to resolve its claim, the court concluded that such allegations related only to a single policy holder.  Thus, the GBL claim was dismissed.

Finally, Plaintiff sought punitive damages, consequential damages, and attorneys’ fees.  Plaintiff’s request for punitive damages was dismissed because Plaintiff did not allege any independent tort by Hanover.  However, the court declined to dismiss the claims for consequential damages and attorneys’ fees at the motion to dismiss stage.

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
lss@hurwitzfine.com

02/17/21 Felleter v. Regent Insurance Company
United States District Court, District of Connecticut
Drunk Driver’s Recklessness Not Recoverable in UM/UIM Action

While an underinsured/uninsured motorist carriers stands in the shoes of the tortfeasor, apparently there are limitations. Wendy Felleter was rear-ended by a drunk driver in 2017. The tortfeasor’s carrier paid its $100,000 limits, but Felleter claimed she was entitled to more and turned to her UIM carrier. Regent declined to pay and Felleter sued for breach of contract, bad faith (CUTPA), and sought treble damages and attorney’s fees as a result of the drunk drivers’ recklessness. Regent moved to dismiss the bad faith and treble damages claims.

Felleter alleged that her injuries were the result of the tortfeasor's reckless operation of his vehicle. Although Regent argued that Felleter failed to plead recklessness, the court found that the sufficiency of the pleadings was irrelevant. Controlling Connecticut law does not allow a UIM insured to recover treble or common law punitive damages from her UIM policy. The Connecticut Supreme Court held in a similar context, that a UIM plaintiff was not entitled to punitive damages or attorneys’ fees as a result of the drunk driver’s recklessness because his claim ran “afoul of the well-established rule that, in the absence of express contractual terms to the contrary, allowance of fees [against an insurer] ... does not extend to services rendered in establishing the right to indemnification.” Significantly, the court explained that public policy further supported its conclusion because “[t]he public policy established by the uninsured motorist statute is that every insured is entitled to recover for the damages he or she would have been able to recover if the uninsured motorist had maintained a policy of liability insurance.”

The court concluded that because the plaintiff would not have been able to recover punitive damages from the tortfeasor's insurer had the tortfeasor been insured, allowing a recovery of punitive damages under uninsured motorist coverage would, in effect, place the insured in a better position than would exist if the tortfeasor had been fully insured. The court dismissed Felleter's claim for attorneys’ fees and statutory treble damages based on the tortfeasor's recklessness.

 

BUCCI on “B”
Diane L. Bucci

dlb@hurwitzfine.com

06/25/21       The Aluminum Trailer Company v. Westchester Fire Ins. Co.
United States District Court, Northern District of Indiana
When is Trade Dress Protected Under the Lanham Act?  

Sidi Spaces, LLC d/b/a BizBox (“BizBox”) sued the Aluminum Trailer Company d/b/a ATC Trailers (“ATC”) in the United States District Court for the District of Arizona for breach of contract and interference with its business expectations after ATC allegedly sold a “knockoff” trailer to BizBox's customer using BizBox’s design with an ATC logo.    

According to the underlying complaint, ATC was the manufacturer of BizBox trailers for years. At some point, ATC allegedly sold the “knockoff” trailer and thereafter allegedly increased the price for the manufacture of BizBox’s trailers allegedly so the public would have to pay more for BizBox trailers, and ATC could continue selling its own trailers at the lower price.

ATC’s insurer, Westchester Fire Ins. Co., (“Westchester Fire”), denied coverage.  In the declaratory judgment action that followed, Westchester Fire moved to dismiss the complaint pursuant to §12(b)(6) because ATC allegedly failed to state a claim upon which relief could be granted.  The District Court acknowledged that there were no covered claims according to the labels, contract and interference with business expectations, but considered the substance of the allegations, not the labels.

Specifically, the court examined whether underlying complaint alleged a protected trade dress infringement under the Lanham Act.  The court explained that trade dress refers to a product's total image, including features such as “size, shape, color or color combinations, texture, graphics, or even particular sales techniques.” ATC, at *3. (citing Roulo v. Russ Berrie & Co., 886 F.2d 931, 935 (7th Cir. 1989)).

According to the court, trade dress infringement is protected under the Lanham Act when the design or packaging of a product...acquires a distinct secondary meaning that causes recognition of the product, such as Louie Bouton’s red soled shoes.   A protected trade dress must not be used by others in a manner that may “cause confusion as to the origin, sponsorship, or approval of the goods.” ATC, at *3 (citing TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 28, 121 S. Ct. 1255, 1259, 149 L. Ed. 2d 164 (2001).

However, the Lanham Act does not provide trade dress protection for product features that are functional. Id at *3 ( citing Specialized Seating, Inc. v. Greenwich Indus., LP, 616 F.3d 722, 727 (7th Cir. 2010) (product's design is functional when it “looks the way it does in order to be a better [product], not in order to be a better way of identifying who made it”) (alteration in quotation)).  ATC at *3-4.

The ATC court explained that a changed feature that elevates the product, or improves functionality, is not protected under the Lanham Act.  Trade dress can be protected only if the owner of the trade dress can show that the average consumer would be confused as to the origin of a product if another product appears in the same or similar packaging.

The ATC court stated as follows:

Even when a product's design is unusual or idiosyncratic, the design “almost invariably serves purposes other than source identification,” so the law ultimately favors competition, reverse engineering, and downright copying if a product remains otherwise unprotected by a recognized intellectual property right (such as a patent or copyright).

Id at *3 (quoting TrafFix, 532 U.S.at 29.

According to the court, when a manufacturer admits that its product's features are functional, they are ineligible for Lanham protection, even when they affect quality or aesthetic appeal as long as they do not identify the product’s source.  ATC, at *3 (citing Arlington Specialties, Inc. v. Urban Aid, Inc., 847 F.3d 415, 420 (7th Cir. 2017)(noting that a choice of features made for aesthetic appeal is not inherently non-functional because attractiveness is a kind of function); Specialized Seating, 616 F.3d at 727-28 (no trade dress when “[a]ll of the claimed features are functional; none was added to produce a distinctive appearance that would help the consumer identify the product's source”). Similarly, despite some functional features, the overall design or dress of the product is protected if it is still primarily non-functional. ATC, at *3 (citing Roulo, 886 F.2d at 935).

The test for determining whether a feature is functional, stated by the ATC court is: (1) based on any utility patent, expired or unexpired, that involves or describes the feature's functionality; (2) the utilitarian properties of the product's unpatented design elements; (3) advertising that touts the utilitarian advantages of the design features; (4) the dearth of, or difficulty in creating, alternative designs for the product's purpose; and (5) the effect of the design feature on the product's quality or cost.  ATC, at *3-4 (citing Bodum USA, Inc. v. A Top New Casting Inc., 927 F.3d 486, 491 (7th Cir. 2019), cert. denied, 2019 U.S. LEXIS 7598 (Dec. 16, 2019).

Because the allegations in the underlying action involved a particular product instead of just a feature, the court was required to move away from an itemized assessment of the functionality of each product feature, and instead focused on the total appearance and combination of features. ATC, at *4.  Under this approach, the existence of one or more functional features does not necessarily render the entire product design functional.  Id.

The court found that with one exception, all of BizBox’s allegations involved the functionality of its product including:

the “unique and specific design and layout of aluminum frame glass windows and opening doors...to allow multiple access and egress points for the flow of traffic/people in and out of the trailer; the use of two batteries inside the storage room to operate the LED puck lights and the generator;” the “black rubber coin flooring...to allow for non-slip and cleaning;” the “AC unit placed in the center of the roof...to distribute cool air evenly;” “rear aluminum glass fold-out doors to allow a third access and egress point;” “white aluminum rivitless [sic] walls and ceilings that can be wrapped with graphic vinyl for branding;” and the “unique metal barrier...that encloses the side opening fold down hinged deck.” The design features that make BizBox's trailer unique are pleaded, almost to a one, as functional features, not primarily non-functional features….[t]he only item that might be construed as non-functional aesthetic is the “curved fenderette design” of the wheel well that otherwise allows for the wheels to be hidden.

Id., at *5.

Despite the obvious conclusion that the claim involved functionality, the court still went on to determine if BizBox’s claim involved an advertisement as required under the policy.

The policy defined advertisement as “a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers.” The court examined the dictionary definition of “notice, broadcast, and publish.”   Notice, according to the court, relying on Merriam-Webster, https://www.merriam-webster.com/dictionary/notice, was a written or printed announcement.  To broadcast was to send something out or transmit by means of radio, television or streaming over the internet or otherwise make something widely known.  Publish, according to the court, was defined as to make generally known. 

According to the court, selling the “knockoff” trailer did not constitute notice.  Id. (citing United States Fid. & Guar. Co. v. Fendi Adele S.R.L., 823 F.3d 146, 152 (2d Cir. 2016) (“As a matter of common sense, there is a difference between the placement of a counterfeit brand label on a handbag and the act of soliciting customers through printed advertisements or other media.”).

The court held that the ATC logo could not qualify as an advertisement because it only involved one customer as opposed to making its product widely known. Nor, according to the court, was it intended to.  Id. at *7.   In addition, held the court, BizBox did not allege that its injury resulted from ATC's logo on the knockoff trailer but instead only that the knockoff happened and the injury happened.  BizBox sought to recover for ATC’s alleged abuse of long-standing business relationships with BizBox customers and tried to sell knockoff trailers and perhaps also to undersell. There was no allegation, according to the court, that a customer saw a knockoff trailer out in public with ATC's logo and was influenced to buy the product.  The court granted Westchester Fire’s 12(b)(6) motion to dismiss. 

 

OFF the MARK
Brian F. Mark
bfm@hurwitzfine.com

02/26/21       Morgan Concrete Co. v. Westfield Ins. Co.
United States Court of Appeals, Eleventh Circuit
U.S. Court of Appeals Finds No Duty to Defend or Indemnify as the Underlying Claims Only Involved Damage to the Insured’s Product Itself and Economic Losses for Repairs Necessitated by the Defective Product

This declaratory-judgment action arises out of an underlying action related to deficient concrete supplied by Morgan Concrete Company (“Morgan”) to Georgia Concrete.  Georgia Concrete hired Morgan to supply ready-mix concrete for a multi-level building being constructed.  The specifications required concrete that could withstand 5,000 pounds per square inch.  During the construction, Georgia Concrete experienced strength deficiencies with the concrete supplied by Morgan.  Thereafter, Georgia Concrete refused to pay Morgan, who, in turn, refused to supply more concrete.

Morgan claimed that the strength issues were caused by mishandling of its product by Georgia Concrete, which included exposing it to high ambient temperatures, and that Georgia Concrete failed to properly sample, maintain, and test the concrete.

The project owner, the general contractor, and Georgia Concrete elected to repair rather than replace the damaged slab.  Morgan was notified that they were liable for two incidents of concrete failure.  Thereafter, Morgan filed a mechanic’s lien on the building and made a claim to its insurance carrier, Westfield Insurance Company (“Westfield”).  Westfield agreed to defend Morgan under a reservation of rights warning that Morgan’s claim may not constitute “property damage” caused by an “occurrence” and may be barred by several policy exclusions.

Georgia Concrete sought a portion of the repair costs from Morgan, which Morgan rejected.  Morgan disclaimed responsibility for the strength of its concrete and responded that, after it advised Georgia Concrete several times how to handle the concrete, Georgia Concrete disregarded standard practices.  Additionally, Morgan identified two deliveries when test cylinders showed that its concrete exceeded the strength of 5,000 pounds per square inch.

Morgan then sued Georgia Concrete for foreclosure on the mechanic's lien bond, breach of contract, and quantum meruit, and Georgia Concrete filed an answer and a counterclaim for breach of contract. Georgia Concrete alleged that Morgan breached its agreement to provide concrete of a specified strength, which required Georgia Concrete to perform repairs on the portions of the project in which the inferior concrete was used.

Westfield notified Morgan Concrete that it was withdrawing its defense as it had determined that Morgan caused Georgia Concrete no "property damage," which its policy defined as "[p]hysical injury to tangible property, including all resulting loss of use of that property."  Westfield also determined that the spoilage of the concrete Morgan supplied was barred by exclusions in the policy for "'Property damage' to [its] product," "'Property damage' to [its] work," and "Damages claimed for any loss, cost, or expense incurred by [it] or others for the loss of, . . . inspection, repair, replacement, [or] adjustment . . . of '[its] product,' '[its] work,' or 'Impaired Property.'"

Following receipt of Westfield’s disclaimer of coverage, Morgan commenced a declaratory-judgment action against Westfield seeking a defense and indemnity for the costs it incurred in its action against Georgia Concrete.

Westfield filed a motion for summary judgment, which the district court granted, holding that Westfield had no duty to defend or indemnify.  The district court presumed the existence of an occurrence based on "the unexpected (and unintended) self-desiccation of the concrete used for the slab, but determined the "property damage" was to the concrete and not to any other parts of the slab or to the structure as a whole.  Alternatively, the district court determined that the "property damage" to the concrete supplied by Morgan "f[ell] squarely within the policy's Exclusion for Damage to Product" and that the remediation of the damaged slab to ameliorate problems with the concrete was excluded from coverage as damage to the work of Morgan.

Morgan argued that Westfield was obligated to defend and indemnify it and that the concrete it supplied caused "property damage" because Georgia Concrete had to purchase and install external cable support systems to strengthen the slab.  Morgan also argued that the exclusions for damage to its product or work do not apply because its "bad ready-mix concrete damaged other subcontractors' property" and the affected slab.

In examining the policy language, the Court of Appeals noted that the Georgia Supreme Court has held that the term "property damage" means damage to property that was previously undamaged "and to damage beyond mere faulty workmanship."  As a result, there is no coverage for "liabilities for the repair or correction of the faulty workmanship of the insured."

The only "property damage" identified in the state lawsuit was damage to the product that Morgan supplied.  Morgan alleged in its complaint that its concrete was damaged through mishandling by Georgia Concrete.  Georgia Concrete alleged in its counterclaim that it incurred economic losses to strengthen the concrete.

The Court of Appeals held that Westfield had no duty to continue to defend because there was no claim for "property damage" that was covered by the insurance policy.  The insurance policy excluded from coverage "property damage" to a "product" that was "manufactured, sold, handled or distributed" by Morgan.  That exclusion applied to the allegations by Morgan that Georgia Concrete damaged its product.  The policy covered "property damage" that Morgan caused, but the claim against it was for breach of contract to recover costs attributable to repairing its defective product.  And Morgan Concrete identified no allegation or evidence that its inferior concrete damaged "any property that [was] nondefective" in the slab or the structure.  Because the dispute between the concrete companies involved only damage to the inferior concrete and economic losses for repairs necessitated by the defective product, the Court of Appeals determined that the insurance policy did not require Westfield to provide a defense.

 

BORON’S BENCHMARKS
Eric T. Boron
etb@hurwitzfine.com

02/19/21       State Farm Fire & Cas. Co. vs. TFG Enterprises, LLC
Supreme Court of Nebraska
Rental Dwelling Policy of Insurance – Liability Coverage - Duty to Defend and Indemnify - Supreme Court Affirms Grant of Summary Judgment to State Farm Because Policy Provides No Coverage For Damages Alleged in Underlying Suit

The background facts are as follows.  In March 2019, the claimant in the underlying suit, Jeffrey Barkhurst (“Barkhurst”) filed a lawsuit against TFG Enterprises, LLC (“TFG”) and its principal Mr. Leonard (“Leonard”) alleging that when he purchased a house from TFG in August 2015, TFG failed to disclose and actively concealed several defects, including the intrusion of water, presence of mold, substandard repairs, and structural issues. Based on these allegations, Barkhurst asserted that TFG and Leonard were liable for breach of contract, negligent misrepresentation, and fraudulent concealment.  Barkhurst asserted that he was entitled to receive in damages the costs necessary to bring the property to its represented condition at the time of sale.

State Farm had previously issued TFG a “Rental Dwelling Policy of Insurance” (the “rental policy”) in January 2015. TFG and Leonard submitted a claim under the rental policy requesting that State Farm provide a defense in the underlying lawsuit. State Farm agreed – but only under a reservation of rights - to defend TFG and Leonard.

State Farm subsequently filed the declaratory judgment action at issue in this appeal. State Farm sought a declaration that it owed no coverage obligations to TFG or Leonard under several provisions of the rental policy.

State Farm alleged in is declaratory judgment action that it owed no coverage obligations under the portion of the rental policy initially extending liability coverage to TFG. That portion of the policy provided State Farm would indemnify and defend TFG “[i]f a claim is made or a suit is brought against any insured for damages because of bodily injury, personal injury, or property damage to which this coverage applies, caused by an occurrence, and which arises from the ownership, maintenance, or use of the insured premises ....” The rental policy defined “occurrence” as “an accident, including exposure to conditions” which results in “a. bodily injury; b. property damage; or c. personal injury[,] during the policy period.” State Farm alleged that it owed no coverage to TFG because there had been no “occurrence” and no “property damage.”

State Farm also alleged that it owed no coverage obligations because of several exclusions in the rental policy. The exclusions relied upon by State Farm provided that there would be no liability coverage for “property damage to property owned by any insured”; “property damage to property rented to, occupied or used by or in the care of the insured”; or “property damage or personal injury to premises [the insured] sell[s], give[s] away, or abandon[s], if the property damage, or personal injury arises out of those premises.”

State Farm filed a motion for summary judgment. At the hearing on the motion for summary judgment, State Farm put before the court a copy of the rental policy, a copy of the complaint in the underlying lawsuit, copies of letters State Farm sent to TFG and Leonard reserving its rights, and discovery responses of TFG and Leonard. In the discovery responses, TFG and Leonard admitted that they purchased the house at issue in January 2015 and that none of the conditions or defects identified in Barkhurst's lawsuit existed when it purchased the property. TFG and Leonard also admitted that from the time they purchased the house in January 2015 until the time they sold it in August 2015, they used it, and the house was in their care and possession. In response to an interrogatory asking them to describe in detail what they contended was the “occurrence” triggering coverage under the rental policy, TFG and Leonard objected that the question called for a legal conclusion. TFG and Leonard did not offer any evidence in opposition to State Farm's motion for summary judgment.

The district court granted State Farm summary judgment. It found State Farm owed no coverage obligations for three reasons. First, the district court found that any breaches of the contract between Barkhurst and TFG, and any fraudulent concealment or negligent misrepresentations by TFG, did not cause property damage as required to trigger coverage under the rental policy. Second, it determined that the allegations of breach of contract, fraudulent concealment, and negligent misrepresentation did not meet the definition of an “occurrence,” because they were not accidental. It also determined that the exclusions relied upon by State Farm barred coverage.

In deciding the appeal by TFG and Leonard to the Nebraska Supreme Court, the Supreme Court noted it was skeptical that TFG and Leonard showed in their opposition papers that there was a genuine issue of material fact as to whether there was an “occurrence” under the rental policy and whether the underlying lawsuit is a suit for property damage.  But Supreme Court determined it was unnecessary for the Court to reach those questions, because, even if it is assumed that the defects in the house were caused by an accident that took place while TFG owned the property and that the underlying lawsuit is a suit brought for property damage and thus falls within the initial grant of coverage in the rental policy, the exclusions relied upon by State Farm would still bar coverage.

Supreme Court’s opinion recited that an exclusion in an insurance policy is a limitation of liability, or a carving out of certain types of loss, to which the insurance coverage never applied. To determine whether an exclusion applies, the terms of the insurance policy must be interpreted. A court construes insurance contracts like other contracts, according to the meaning of the terms that the parties have used. When the terms of an insurance contract are clear, a court gives them their plain and ordinary meaning as a reasonable person in the insured's position would understand them.

Supreme Court read the exclusions in the rental policy to exclude coverage for the damages claimed in the underlying lawsuit.   The exclusions section of the rental policy provided that the liability coverage did not apply to “property damage to property owned by any insured”; “property damage to property rented to, occupied or used by or in the care of the insured”; and “property damage or personal injury to premises [the insured] sell[s], give[s] away, or abandon[s], if the property damage, or personal injury arises out of those premises.” To the extent that, as TFG and Leonard contended, the underlying lawsuit was one for property damage to the house, it fell squarely within each of these exclusions. It was undisputed that the house was owned, in the care of, and then sold by TFG.

The Court advised it “was not blazing a new trail” by finding that there is no possibility of coverage under the exclusions in the rental policy, noting that many other courts around the country have found that similar insurance policies containing exclusions for property damage to property owned by or occupied by the insured provide no liability coverage when the insured is sued for making misrepresentations in the sale of property. Similarly, many courts have found that insurance policies containing exclusions for property damage to property that is sold by the insured provide no liability coverage for lawsuits alleging misrepresentations in the sale of property.

The ambiguity argument of TFG and Leonard was dismissed as unfounded because the Court saw no basis for a finding that the exclusions are ambiguous.

Given the plain language of the exclusions, State Farm had no potential liability from the underlying lawsuit under the rental policy.  It thus, ruled the Nebraska Supreme Court, had no duty to defend or indemnify TFG and Leonard.

 

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell
rpm@hurwitzfine.com

Legislative List
02/22/21       
Proposed Streamlining of Excess Lines Declination Affidavits
New York State Senate
Bill Passes Senate That Would Exempt Wholesale Insurance Brokers From Excess Line Diligent Effort Requirement

On February 22, Senate Bill No. S00498 passed the Senate and was delivered the Assembly, where it was referred to the Insurance Committee. The proposed bill would permit licensed excess line brokers to place certain insurance coverage with unauthorized insurers without regard to the diligent effort requirement, simplifying the excess line insurance placement affidavit requirements.

Recall that the excess line market exists to undertake risks which New York admitted insurers opt not to because they are distressed, unique, volatile, untested and/or without loss history. Wholesale brokers handle approximately 17% of excess line business from New York licensed insurance brokers, strongly indicating that that retailers use wholesalers solely where admitted markets refuse to insure a risk. However, today, wholesale excess line insurance broker’s face challenges in obtaining affidavits of due diligence from retail insurance brokers for filing with Excess Line Association of New York (ELANY), since they are complicated, burdensome, and time consuming to complete. This serves to delay a market of vital importance to New York insurance consumers.

Outside of the exemption for the diligent effort requirement, all other requirements regarding the filing of insurance coverage documents and affidavits with the ELANY would remain the same.

 

CJ on CVA and USDC(NY)
Charles J. Englert III
cje@hurwitzfine.com

03/01/21       Ohio Security Ins. Co. v. Travelers Indemnity Co.        
United States District Court, Southern District of New York
Without a Clear Nexus Between a Named Insured and a Claimant’s Injury, the Duty to Defend Does Not Apply to a Putative Additional Insured

This action arose out of a job site trip and fall. The claimant fell while working as an HVAC installer for Airforce 1 Mechanical (Airforce), and an insured of Travelers Indemnity Company of Connecticut (Travelers), on a Kings County construction project. Claimant sued the property owners and construction manager (MJM Associates) in state court. MJM implead the HVAC contractor (TRV Mechanical) seeking indemnity from TVR’s insurer Ohio Security Insurance Company (Ohio).  Claimant then amended his complaint adding TVR as a first party defendant. Claimant alleged that negligence on the part of the state court defendants was the sole cause of his injuries. Claimant’s bill of particulars, like the complaint, did not allege any acts or omissions by Airforce. It mentioned Airforce only once, in connection with Mena’s claim for lost wages as a result of the injury. Both Ohio and Travelers investigated the accident. Ohio’s investigation found that claimant’s injury occurred on the roof of the premises at the construction site and that “claimant was allegedly injured when he, while walking across this roof, tripped over a piece of plywood and/or temporary floor covering.” Travelers determined that claimant was “carrying a metal air conditioning duct when he tripped on a piece of plywood.”  

The two policies at issue in this action were an Ohio commercial general liability policy issued to TVR and a Travelers plumbing and mechanical policy issued to Airforce. Airforce is the only named insured under the Travelers policy. The Travelers policy provides that it protects those listed as additional insureds for liability for personal injury and property damage only as follows:

“If, and only to the extent that, the injury or damage is caused by acts or omissions of you or your subcontractor in the performance of ‘your work’ to which the ‘written contract requiring insurance’ applies. The person or organization does not qualify as an additional insured with respect to the independent acts or omissions of such person or organization.”

Thus, for someone to qualify as an additional insured with respect to a particular claim, they must be listed as an additional insured and the injury must be the result of acts or omissions of the named insured. The parties agree that the subcontract between TRV and Airforce is a written contract requiring insurance and designates Ohio’s insureds as additional insureds under the Travelers policy. The question is whether or not the Travelers policy applies to claimant’s claims.

The court began its assessment of this claim by outlining two New York Court of Appeals cases dealing with additional insureds. First the court reminded us that when an insurance policy extends coverage to additional insureds only for injuries “‘caused, in whole or in part,’ by the ‘acts or omissions’ of the named insured, the coverage applies to injury proximately caused by the named insured.” Burlington Ins. Co. v. NYC Transit Auth., 79 N.E.3d 477, 478 (N.Y. 2017). Thus, an obligation to indemnify does not attach if a named insured’s innocent conduct is merely a but-for cause of the injury. The court then discussed an insured’s duty to defend, reminding us that “[A]n insurer has a duty to defend if the allegations state a cause of action that gives rise to the reasonable possibility of recovery under the policy.” Belt Painting Corp. v. TIG Ins. Co., 795 N.E.2d 15, 17 (N.Y. 2003) (citing Fitzpatrick v. Am. Honda Motor Co., 575 N.E.2d 90, 92 (N.Y. 1991)). To determine if the duty to defend applies the court looks to the complaint and determines whether or not the pleadings suggest a reasonable possibility of coverage.

Looking to the underlying pleadings, the court found no allegations that claimant’s injuries were the result of any negligence by Airforce, meaning the Travelers policy would not be implicated. Ohio contended that because claimant asserted claims for violations of the New York Labor Law, his claims must stem from Airforce’s acts or omissions. The court rejected Ohio’s argument because the cited portions of New York Labor Law impose nondelegable duties on property owners to maintain safe premises, and do not impose any duty on an employer or contractor. Ohio then attempted to look beyond the complaint and at the contract between TVR and Airforce. The relevant contracts however do not support the view that Airforce was responsible for hazards at the worksite that it did not create. As there was no clear nexus between negligent conduct on the part of Airforce and claimant’s alleged injuries the court holds that the Travelers policy should not provide a defense to Ohio’s insured, TVR.

 

RAUH’S RAMBLINGS
Patricia A. Rauh
par@hurwitzfine.com

02/17/21       Roumi v. Guardian Life Ins. Co. of Am.
Appellate Division, Second Department
Plaintiffs’ Claims Against Defendants For Violations of the Insurance Law and Breach of Fiduciary Duty Were Time-Barred.  Plaintiffs’ Cause of Action Alleging Fraud Was Properly Dismissed as Plaintiffs Failed to Exercise Ordinary Diligence by Not Reading the Insurance Policies

Plaintiffs, Nessim Roumi and Claudine Roumi, both purchased life insurance policies issued by Guardian Life Insurance Company of America (“Guardian”), with effective dates of October 6, 2010 and May 12, 2010, respectively.  The Guardian policies were procured through an insurance broker and defendant in this action, Aron Zelcer (“Zelcer”).

On October 6, 2016, the Plaintiffs commenced this action against the Defendants alleging fraud, breach of fiduciary duty, and violations of Insurance Law §§ 2123 and 4226.  Plaintiffs claimed that Zelcer induced them into purchasing the Guardian policies by misrepresenting that the policies would not incur annual premiums.  The Supreme Court granted the Defendants’ motion to dismiss on the grounds that the causes of action for violations of Insurance Law §§ 2123 and 4226, as well as the claim for breach of fiduciary duty were time-barred.  The Supreme Court also held that the causes of action for fraud and for aiding and abetting fraud, failed to state a cause of action.  The Supreme Court further denied Plaintiffs’ motion for leave to renew and reargue their opposition to the Defendants’ motion.  The Plaintiffs appealed both orders.

The Appellate Division upheld the Supreme Court’s dismissal of the case.  The Court reasoned that an action based upon violation of the Insurance Law is governed by a three-year statute of limitations.  Moreover, New York law does not provide a single statute of limitations for breach of fiduciary duty claims.  Instead, the applicable limitations period depends on whether the remedy sought is monetary in nature or equitable in nature.  If the remedy sought is purely monetary, a three-year statute of limitations applies.  On the other hand, if the remedy sought is equitable in nature, then the six-year statute of limitations applies.  The Plaintiffs commenced this action on October 6, 2016, more than six years after they were allegedly induced by Zelcer to purchase the Guardian policies.  Therefore, the causes of action for violations of the Insurance Law and breach of fiduciary duty were time-barred.

Further, the Appellate Court agreed with the Supreme Court’s determination that the causes of action alleging fraud and aiding and abetting fraud failed to state a cause of action.  A cause of action alleging fraud requires a plaintiff to plead: (1) a material misrepresentation of fact; (2) knowledge of its falsity; (3) an intent to induce reliance; (4) justifiable reliance; and (5) damages.  However, a plaintiff is expected to exercise ordinary diligence and may not claim to have reasonably relied on a defendant’s representations or silence where he has the means available of knowing, by the exercise of ordinary intelligence, the truth of the subject matter or representation.  Here, the plaintiffs admitted that they relied solely on Zelcer’s alleged misrepresentations without ever requesting to see copies of the subject insurance policies.  Plaintiffs also signed applications for the policies that contradicted Zelcer’s alleged assurances that the policies would not have annual premiums associated with them.

 

ruMIRNAtions
Mirna M. Santiago

mms@hurwitzfine.com

Refresher on the Tripartite Relationship between an Insurer, the Insured and Defense Counsel

The tripartite relationship is what is created when a carrier retains defense counsel to represent its insured against a claim or suit.

What makes the tripartite relationship unique is that—in most jurisdictions in the United States—both the insured and the insurance company are the clients of the attorney. (In a minority of states, the sole client is the insured.) Where both the insured and the insurer are considered clients of the attorney, however, conflicts may arise between the insured and the carrier.

What constitutes a conflict?  A carrier may decide to provide a defense to the insured under a reservation of rights (ROR).  A ROR allows the carrier to retain its ability to evaluate or deny coverage for some or all of the claims alleged against the insured if, among other reasons, some of the allegations do not fall within the policy’s coverage or an exclusion applies or the damages exceed the policy limits. In addition, because the insurance company directs the defense and pays the attorney’s fees in most instances, the attorney has a duty to report to the insurance company.  However, the reporting must be done in such a way that it does not tip the equities in favor of the insurance company in the delicately balanced tripartite relationship.

In addition, there are certain Rules of Professional Conduct that an attorney must be aware of and comply with when engaged in a tripartite relationship.  For instance, Rule 1.4 addresses “Communication” and provides that a lawyer must provide information to the client “to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”

With respect to “Confidentiality,” Rule 1.6 requires that the lawyer must protect the confidentiality of each client and the lawyer may not reveal any information relating to the representation unless the client gives informed consent.

Rule 1.7 governs “Conflicts of Interest.”  This Rule prohibits the lawyer from using information relating to the representation that would disadvantage the client without the client’s informed consent.  Going hand-in-hand with this Rule is Rule 2.3(b), which limits the information to be provided by an attorney for use by third persons (such as an insurance adjuster): “When the lawyer knows or reasonably should know that the evaluation is likely to affect the client’s interests materially and adversely, the lawyer shall not provide the evaluation unless the client gives informed consent.”

Last, Rule 5.4(c) demands the “Professional Independence of a Lawyer” in the representation of a client (the insured in this scenario) even where the other client (the insurance company) is footing the legal bills: A “lawyer shall not permit a person who recommends, employs or pays the lawyer to render legal service for another to direct or regulate the lawyer’s professional judgment in rendering such legal services or to cause the lawyer to compromise the lawyer’s duty to maintain confidential information of the client under rule 1.6.”

The law is well-settled in most states that the paramount interest independent counsel represents is that of the insured, not the insurer. So, for attorneys, when in doubt, the insured’s interests must come first. 

 

STORM’S SIU EXAMEN
Scott D. Storm

sds@hurwitzfine.com

02/03/21       In The Matter of Aron Law, PLLC v. N.Y.F.D.
Appellate Division, Second Department 
FOIL Request – Article 78 Proceeding To Compel Production.  The Agency has the Burden to Demonstrate that the Requested Material Falls Squarely Within a FOIL Exemption by Articulating a Particularized and Specific Justification for Denying Access, Otherwise Disclosure is Compelled.  Conclusory Assertions are Insufficient to Deny Access  

This is a proceeding pursuant to CPLR Article 78 to compel the production of records from the New York City Fire Department pursuant to the Freedom of Information Law (Public Officers Law art 6).  The Supreme Court, Kings County denied a petition to compel the production of the records under FOIL.  The Appellate Division reversed.

The FDNY responded to the FOIL request, providing certain records and withholding others which sought records concerning requests for religious accommodations.  The FDNY withheld those records on the grounds that releasing them would be an unwarranted invasion of personal privacy under Public Officers Law § 87(2)(b) and the records were inter-agency materials exempt by Public Officers Law § 87(2)(g).  The FDNY provided a summary report of the factual data, but withheld the specific records requested.

The Court recognized that FOIL provides the public with broad access to the records of the government, referring to Public Officers Law § 84. An agency must make available for public inspection and copying all records unless it can claim a specific exemption to disclosure.  Public Officers Law § 87(2) and (3). The exemptions are to be narrowly interpreted so that the public is granted maximum access to the records of government. FOIL is based on a presumption of access to the records. The agency seeking to prevent disclosure carries the burden of demonstrating that the requested material falls squarely within a FOIL exemption by articulating a particularized and specific justification for denying access. Public Officers Law § 89(4)(b). If the agency fails to prove that a statutory exemption applies, FOIL compels disclosure, not concealment.

As relevant in this case, an agency may deny access to records to prevent unwarranted invasions of personal privacy.  Public Officers Law § 89(2)(a) and (b).  This includes "disclosure of information of a personal nature reported in confidence to an agency and not relevant to the ordinary work of such agency" (Public Officers Law § 89[2][b][v]). It also provides, however, that disclosure shall not be construed to constitute an unwarranted invasion of personal privacy "when identifying details are deleted" (Public Officers Law § 89[2][c][i]).

Here, the FDNY failed to sustain its burden of proving that the personal privacy exemption applied to the records sought, since it did not establish that the identifying details could not be redacted so as to not constitute an unwarranted invasion of personal privacy.  Its conclusory assertions that the records fall within the exemption were insufficient to meet its burden of proving that the statutory exemption applies.  The FDNY should have produced the requested records, redacting whatever portions are necessary to safeguard the identities of the individuals who sought the accommodation, leaving nonidentifying information intact.  

 

02/22/21       Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC
United States District Court, E.D. Pennsylvania
Maritime Choice of Law Issue in a Case Where the Insurer Denied Coverage Due to the Insured’s Misrepresentations at the Time of Policy Renewal and Breach of an Express Warranty.  The Policy’s Choice-Of-Law Provision Designating Federal Maritime Law and, in its Absence New York Law, was Found to be the Law of the Case, as Opposed to Pennsylvania Law, the Law of the Forum in Which the Suit is Pending

This is an insurance coverage declaratory judgment case involving maritime law and a marine insurance policy issued by GLI affording hull coverage for a vessel owned by Raiders which ran aground suffering damage. GLI denied coverage due to Raiders misrepresentations and breach of an express warranty.  Raiders asserted counterclaims against GLI for: (I) breach of contract, (II) breach of implied covenant of good faith and fair dealing, (III) breach of fiduciary duty, (IV) bad faith liability, in violation of 42 Pa. Cons. Stat. § 8371, and (V) violations of Pennsylvania's Unfair Trade Practices and Consumer Protection Law.  GLI moves for judgment on the pleadings with respect to Counts III, IV, and V of the counterclaims.

GLI contends that the policy contains a choice-of-law provision designating federal maritime law and, in its absence, the policy provides for New York law as the law of the case. Raiders contends that the choice-of-law provision is unenforceable and, therefore, Pennsylvania law, the law of the forum in which the suit is pending, applies. The court found the contractual choice-of-law provision applicable to bar the counterclaims at issue.

As part of the policy renewal process, a third-party conducted a survey of the vessel's condition finding deficiencies (i.e., Halon system service and date tag; fire extinguishers, purchase and store aboard).  Raiders subsequently submitted a compliance letter to GLI which then renewed coverage.  The policy also contained a warranty that if the vessel is fitted with fire extinguishing equipment, then it is warranted that such equipment is properly installed and is maintained in good working order. This includes the weighing of tanks once a year, certification/tagging and recharging as necessary.

When the vessel ran aground no fire occurred and, therefore, no fire equipment was needed or used. GLI investigated and determined that the vessel's fire extinguishers had not been inspected or recertified. GLI therefore concluded that Raiders had misrepresented the compliance letter and breached the express warranty.  Raiders alleges the vessel's fire extinguishers were fully functional and maintained, emphasizing that the damage to the vessel was not caused by anything having to do with the fire extinguishers.

This decision disposed of three of the counterclaims (Counts III, IV, and V) and left to another day the issue of whether Raiders has asserted a valid claim under the policy.

A motion for judgment on the pleadings (Fed. R. Civ. P. 12(c)) is designed to dispose of cases when the material facts are not in dispute and a judgment can be achieved by analyzing the pleadings. When considering a Rule 12(c) motion, the Court must view the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the nonmoving party.

A federal court sitting in diversity must apply the choice-of-law rules of the state in which it sits.  But where a Court's jurisdiction is grounded in admiralty, federal choice-of-law principles apply. Marine insurance contracts fall within the federal courts' maritime jurisdiction. As such, federal choice-of-law principles govern in this action.

GLI argues that it is entitled to judgment with respect to counterclaim Counts IV (bad faith liability) and V (unfair trade practices) because the causes of action arise under Pennsylvania statutes and, therefore, contravene the policy's choice-of-law provision; and with respect to Count III (breach of fiduciary duty) because federal admiralty law is silent on the cause of action and New York law does not recognize a cause of action for breach of fiduciary duty arising out of the alleged breach of an insurance contract.

The Court recognized that under federal maritime choice of law rules, contractual choice of law provisions are generally recognized as valid and enforceable.  The parties' choice of law clause in an admiralty case will govern unless the chosen state has no substantial relationship to the parties or the transaction or the state's law conflicts with the fundamental purposes of maritime law.  The Court found that GLI has sufficient contacts with New York, as: (1) it maintains an agent for service of process in New York, (2) it maintains its trust accounts in New York, and (3) it was admitted as a surplus lines insurer in New York.

Raiders argued that enforcing the choice-of-law provision would also be unreasonable and unjust because applying New York law would frustrate Pennsylvania's strong public policy of punishing insurers who deny coverage in bad faith. However, the Court concluded that the public policy of a state where a case was filed cannot override the presumptive validity, under federal maritime choice-of-law principles, of a provision in a marine insurance contract where the chosen forum has a substantial relationship to the parties or the transaction. The Court's conclusion was said to be consistent with maritime law's primary purpose: "to protect and encourage commercial maritime activity." The three counterclaims at issue were found not cognizable under New York law.


COVID-19 Cases

02/23/21       Schwartz Law Firm v. Selective Ins. Co. of So. Car.
United States District Court, Eastern District of Pennsylvania
COVID-19 Litigation – Federal Court Remands Case Back to State Court After Considering an Eight Multi-Factor Test

The Court granted the plaintiff’s motion to remand this case back to state court. Schwartz alleges that shutdown orders in Pennsylvania slow the spread of the COVID-19 pandemic forced it to close its offices, causing significant losses in revenue. It seeks to recover these losses from Selective, with whom it has two insurance policies that allegedly cover losses in business income, extra expenses and losses caused by actions of a civil authority.

Schwartz originally sought a declaratory judgment in the Philadelphia County Court of Common Pleas.  Selective timely removed the case to this Court to exercise its jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201. Schwartz argued that the unprecedented pandemic coupled with the unsettled and important matters of state insurance coverage law and state public policy weigh in favor of remand. Selective responded that remand is not warranted because this case involves the application of rudimentary principles of contract interpretation, not unsettled issues of state law and Pennsylvania public policy.

In considering the following multi-factor test, the Court remanded:

(1) the likelihood that a federal court declaration will resolve the uncertainty of obligation which gave rise to the controversy;

(2) the convenience of the parties;

(3) the public interest in settlement of the uncertainty of obligation;

(4) the availability and relative convenience of other remedies;

(5) a general policy of restraint when the same issues are pending in a state court;

(6) avoidance of duplicative litigation;

(7) prevention of the use of the declaratory action as a method of procedural fencing or as a means to provide another forum in a race for res judicata; and

(8) (in the insurance context), an inherent conflict of interest between an insurer's duty to defend in a state court and its attempt to characterize that suit in federal court as falling within the scope of a policy exclusion.

The Court said that a declaration from this Court would do nothing to clarify the state court landscape for COVID-19 insurance disputes because in the absence of a controlling decision by the Pennsylvania Supreme Court, a federal court applying that state's substantive law must predict how Pennsylvania's highest court would decide the case which would not bind any courts considering similar disputes. By contrast, state court resolution would contribute to a necessary and still developing legal framework governing COVID-19 insurance disputes. This case, like the many others involving insurance disputes stemming from COVID-19 shutdowns, presents novel and unsettled state law and public policy issues. Despite Defendant's arguments to the contrary, this matter does not involve a run-of-the-mill insurance coverage dispute. Rather, this dispute emanates from a once-in-a-lifetime pandemic that has spurred the mass closure of businesses throughout the State of New Jersey, and in that context, whether the losses caused by those closures are covered by commercial insurance contracts. Invariably, consideration of these claims will require careful weighing of public policy in an area of state law that is not only unsettled, but the outcome of this dispute would undoubtedly have a far-reaching effect on businesses in New Jersey. Because of this unique circumstance, the Court is hesitant to exercise jurisdiction and weigh in on an important state issue in the first instance.

The factors also counsel restraint when the same issue in a federal case is pending in state court.  Courts in this Circuit have recognized that such cases are pending and, as a result, weighs against retaining jurisdiction.  Plus, by declining to exercise jurisdiction, this Court will leave the matter to be decided by a state court and avoid the potential for duplicative litigation.  The Court will therefore adhere to the principle that it is important that district courts step back and allow the state courts the opportunity to resolve unsettled state law matters. 

 

02/12/21       Whiskey Flats Inc. v. Axis Ins. Co.
United States District Court, Eastern District of Pennsylvania
COVID-19 Litigation – Federal Court Grants Insurer’s Motion for Judgment on the Pleadings

The Plaintiff in this case is a restaurant/bar that has been forced to close and modify its operations due to the COVID-19 pandemic and consequent Shutdown Orders. Plaintiff suffered business income losses and sought indemnity from its insurance provider, Axis Insurance Company under its all-risk commercial property policy. Axis denied Plaintiff's claim. Plaintiff then filed suit against Axis seeking a declaratory judgment that its losses are indeed covered.  Axis filed a Motion for Judgment on the Pleadings. The Court granted Defendant's motion because Plaintiff's claims are not covered by the terms of its policy.

Business Income coverage applies when the insured must suspend its operations during a period of restoration as a result of "direct physical loss of or damage to" its premises. The Policy only pays Business Income coverage during a period of restoration, measured from the start of the physical loss until the "date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality" or when "business is resumed at a new permanent location."  In addition, the Policy includes special exclusions for the Business Income coverage that apply to an "increase of loss caused by or resulting from a delay in resulting, repairing, or replacing the property due to interference at the location by strikers or other persons", which make clear that there must be some sort of physical damage to the property that can be the subject of a repair, rebuilding, or replacement. The COVID-19 pandemic does not fall within that definition. The parties' agreement to provide Business Income coverage only during a period of restoration and to measure that period of restoration against the time it takes to repair the premises indicates that they intended the Policy to cover losses for physical damage, and that intent controls the Court's interpretation of the Policy.

Whiskey Flats argues that there is no scientific proof that the coronavirus has not caused physical damage to Plaintiff's property. However, scientific proof is not necessary. It is apparent to the Court that the Plaintiff's income losses were caused by the Shutdown Orders and modifications to its operations due to the risk of transmission of the virus at its premises, not some speculative, unprovable physical damage or unknown condition of the property. Even if there was coronavirus present at the property, to find that contamination that can be cured with simply disinfecting surfaces satisfies the "physical loss or damage" requirement would strain the words beyond "their natural, plain, and ordinary sense" meaning. While the Court agrees that "loss of" the premises can mean the loss of use, that loss of use must be tied to a physical condition actually impacting the property, which is not satisfied here. Plaintiff did not lose use because the premises suffered physical damage; nor was the loss of use caused by actual contamination of the property. Business Income coverage therefore does not apply.

The Policy's Civil Authority coverage applies only if there is "damage to property other than property at the described premises" and if a civil authority prohibits access to the area immediately around the covered premises in response to dangerous physical conditions in the area. But Whiskey Flats did not close because of damage to a nearby property or because there was some dangerous physical condition at another nearby property. It closed because the Shutdown Orders applied to its own operations. Thus, its shutdown and resulting losses fall outside the scope of the Civil Authority coverage.

The Virus Exclusion applies to "loss or damage caused by or resulting from any virus ... that induces or is capable of inducing physical distress, illness or disease." The language is not ambiguous, and it applies to COVID-19, which is caused by a coronavirus that causes physical illness and distress.  The Virus Exclusion clearly states that it "applies to all coverage under all forms and endorsements, including ... forms or endorsements that cover business income, extra expense or action of civil authority. Even if Plaintiff's claimed losses fell within the grant of coverage under the Business Income or Civil Authority provisions, the Virus Exclusion would still prevent recovery.

 

02/08/21       Richard Kahn v. Pennsylvania National Mutual Cas. Ins. Co.
United States District Court, Middle District of Pennsylvania
COVID-19 Litigation – Federal Court Grants Insurer’s Motion to Dismiss

This case arises from the economic havoc wrought by the COVID-19 pandemic. Plaintiffs operated a restaurant that, like far too many businesses across the country, had no choice but to close its doors soon after the virus reached the United States last spring. Plaintiffs submitted a claim to their insurance company, hoping that their business losses would be covered in their all-risk policy. Unfortunately for Plaintiffs, their insurance company rejected their claim. Like thousands of similarly situated business owners, Plaintiffs challenged that denial in federal court. The vast majority of courts analyzing these claims have sided with the insurers, largely agreeing that the commercial insurance policies unambiguously foreclosed coverage where the business property suffered no physical damage or any tangible injury other than pure economic loss. We wholeheartedly regret that business owners across the country, who paid hundreds if not thousands of dollars in monthly premiums under the impression that they would be protected in the event a calamity forced them to close their doors to the public, have had little to no luck seeking recourse in federal court. But upon review of the pleadings and the relevant case law, we are compelled to agree with most of our colleagues.

 

02/11/21       Fuel Recharge Yourself, Inc. v. Amco Ins. Co.
United States District Court, Eastern District of Pennsylvania
COVID-19 Litigation – Federal Court Grants Insurer’s Motion to Dismiss

This is another in a series of cases pertaining to what, if any, insurance coverage exists to protect businesses from income losses and expenses sustained during state-ordered shutdowns resulting from the COVID-19 pandemic. Here, a Philadelphia-based delicatessen alleges that its insurance carrier wrongfully denied a claim to recoup substantial and ongoing financial losses directly attributable to a series of COVID-19 closure orders. In response, the carrier invokes a "Virus Exclusion" provision that denies coverage for "loss or damage caused directly or indirectly" by "[a]ny virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease." Because the Court concludes that the insurer's Virus Exclusion clause unambiguously applies to the claim here, it says that it is obligated to grant Defendant's motion to dismiss.

 

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